Center for Wound Healing, Inc. - FORM 10-K

Attached files

file	filename
EX-32.1 - Center for Wound Healing, Inc.	v198731_ex32-1.htm
EX-32.2 - Center for Wound Healing, Inc.	v198731_ex32-2.htm
EX-31.1 - Center for Wound Healing, Inc.	v198731_ex31-1.htm
EX-21.1 - Center for Wound Healing, Inc.	v198731_ex21-1.htm
EX-31.2 - Center for Wound Healing, Inc.	v198731_ex31-2.htm
EX-10.17 - Center for Wound Healing, Inc.	v198731_ex10-17.htm
EX-10.14 - Center for Wound Healing, Inc.	v198731_ex10-14.htm
EX-10.15 - Center for Wound Healing, Inc.	v198731_ex10-15.htm
EX-10.16 - Center for Wound Healing, Inc.	v198731_ex10-16.htm
EX-10.18 - Center for Wound Healing, Inc.	v198731_ex10-18.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2010

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

EXCHANGE ACT OF 1934

Commission file number: 000-51317

THE CENTER FOR WOUND HEALING, INC.

(Name of registrant as specified in its charter)

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

155 White Plains Road, Suite 200, Tarrytown, NY 10591

[Address of Principal Executive Offices]

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

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

None

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

Common Stock, $0.001 par value per share

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or J5 (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: YES x 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.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NOx

State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: As of October 12, 2010 there were 24,123,638 shares of common stock issued and outstanding.

10-K

THE CENTER FOR WOUND HEALING, INC.

Report on Form 10-K

For the Fiscal Year Ended June 30, 2010

TABLE OF CONTENTS

		PAGE
PART I

Item 1.	Business	3
Item 2.	Properties	9
Item 3.	Legal Proceedings	9
Item 4.	Submission of Matters to a Vote of Security Holders	9

PART II

Item 5.	Market for Registrants’ Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 8.	Financial Statements	15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33
Item 9A.	Controls and Procedures	34
Item 9B.	Other Information	34

PART III

Item 10	Directors, Executive Officers and Corporate Governance	35
Item 11.	Executive Compensation	39
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
Item 13.	Principal Accountant Fees and Services	45
Item 14	Exhibits	46

Signatures		49

10-K10-K

FORWARD-LOOKING STATEMENTS

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

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

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

Additionally, all discussion regarding our financial condition and results of operations (including the information contained in Item 7 of Part I of this Annual Report on Form 10-K as part of Management’s Discussion and Analysis of Financial Condition and Results of Operations) should be read in conjunction with the financial statements and related notes contained in Item 8 of Part II of this Annual Report on Form 10-K.

PART I

ITEM 1.

BUSINESS

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

Business Development:

The Center for Wound Healing, Inc. (“CFWH” or the “Company”), a Nevada corporation, was organized on July 2, 1988. The Company’s current business was initially conducted by American Hyperbaric, Inc. (“American Hyperbaric), a Florida corporation that was organized on May 25, 2005. The Company became engaged in its current business as a result of in a “reverse merger” share exchange transaction between the Company and American Hyperbaric that was completed on December 9, 2005. CFWH develops and manages wound care centers, which are marketed as “THE CENTER FOR WOUND HEALING TM” throughout the United States. These centers render the specialized service of wound care and hyperbaric medicine. The centers are developed in conjunction with acute care hospitals. CFWH can be contracted to start up and manage the wound care program as well as offer a turnkey operation including the furnishing of hyperbaric oxygen chambers to hospitals.

As of June 30, 2010, CFWH operates thirty-two (32) wound care centers with various institutions. The Company operates such centers through either wholly-owned or majority-owned limited liability company subsidiaries. The Company also manages Hyperbaric Medical Associates, P.C., a New York professional staffing company, owned by an employee of CFWH, which provides professional healthcare staffing services, including services of physicians, to the Company. CFWH is headquartered in Tarrytown, New York.

Business of Issuer:

Wound care treatments include a myriad of products and therapies, with the services ranging from the prosaic, i.e., applying bandages to open wounds, to complex treatments including debridements and the application of artificial skin. Hyperbaric Oxygen Treatment (“HBOT”) is a medical treatment administered by delivering one-hundred percent (100%) oxygen at pressures greater than atmospheric (sea level) pressure to a patient inside an enclosed chamber. This means that the pressure is typically 2½ times greater than normal atmospheric pressure, causing blood to carry larger amounts of oxygen, which is delivered to organs and tissues in the body. The increased pressure combined with the increased oxygen dissolves oxygen in the blood and throughout all body tissues and fluids at up to 20 times normal concentration. By doing so, wounds, particularly infected wounds, heal more quickly.

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

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

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

We contract with hospitals to manage their wound care facilities. Generally, for each individual wound care center, appropriate space is allocated to us by the institution. We are responsible for the management of the center including patient scheduling and all non-medical staff, and we assist the hospital in its billing of patient services, which are billed directly by the hospital to insurance companies. We also are responsible for designing and installing the necessary leasehold improvements of the hospital-provided space and supplying the appropriate furniture, fixtures and equipment, including the hyperbaric chambers, used in the wound center. We either acquire the chambers under three year capital leases with $1 buyout arrangements or under operating leases. This has allowed us to leverage our resources and maximize the number of centers that we can support. As our operation grows, we have the ability to transfer chambers between individual wound care centers in order to balance demand and maximize the use of our resources.

CFWH is a provider of contract services for wound care and hyperbaric medicine in the United States. Through medical leadership based upon a multi-disciplinary team of physicians and defined clinical standards, CFWH is committed to achieving patient results while simultaneously providing both physicians and hospitals with professional and economic opportunities. For the period ended June 30, 2010, CFWH has entered into separate multi-year operating agreements to manage the wound care programs in 32 hospitals. Although there can be no assurance that we will be successful in each instance, our plan at each center requires a multi-year contract with the hospital providing for a fixed or variable fee schedule based on the services provided whether for hyperbaric treatment, wound care procedures, or both. The expected fees are adequate for us to recover our investment in leasehold improvements (a sunk cost and non-transferable asset), our start-up costs, including recruiting and training of personnel, and the amortization of chamber lease financing.

Management’s goal is to broaden the Company’s geographic reach and to establish relationships with community and acute care hospitals across the United States. CFWH’s individualized therapies, established protocols and proactive care and case management has proven successful in treating chronic wounds that have previously resisted healing with outcomes exceeding national averages. In all of its centers, CFWH utilizes a best practice model enhanced by nationally accepted wound care algorithms to significantly improve the medical results for patients with chronic non-healing wounds.

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

Acute arterial insufficiency

Osteomyelitis

Radiation injury/necrosis

Necrotizing infection

Compromised skin grafts and flaps

Diabetic wounds of the lower extremities

Gas gangrene

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

Competition:

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

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

Marketing:

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

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

Grand opening ceremonies

Outcome data presented at vascular, podiatric and wound care conferences

Sponsored healthcare events for the community served by a hospital

Distribution of collateral materials to medical referral sources and consumers

Media advertising

Sponsorship of local and national wound care and podiatry society meetings and lectures

Efforts to secure patients from other local hospitals’ medical staffs

Efforts to engage community medical providers to treat patients in the wound care center

Government Regulation:

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

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

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

Licensing:

Health care providers are generally required to be licensed by various state regulatory bodies. If our hospital customer or we are found to not be in compliance with state licensing laws, we or our hospital customer could be subject to fines and penalties or ordered to cease operations which could have an adverse effect on our business.

False Claims Act:

The Federal False Claims Act and some state laws impose requirements in connection with the submission of claims for payment for health care services and products, including prohibiting the knowing submission of false or fraudulent claims and submission of false records or statements for reimbursement and payment to the United States government or state government. Such requirements would apply to the hospitals to which we provide wound care management services. Although we do not submit claims to the federal health care programs, we consult with our hospital customers regarding billing matters and are involved to a certain extent in the claims process. Not only are government agencies active in investigating and enforcing actions with respect to applicable health laws, but also health care providers are often subject to actions brought by individuals on behalf of the government. As such "whistleblower" lawsuits filed as “qui tam” actions are generally filed under seal with a court to allow the government adequate time to investigate and determine whether it will intervene in the action, health care providers affected are often unaware of the suit until the government has made its determination and the seal is lifted. The Federal False Claims Act provides for penalties equal to three (3) times the actual amount of any overpayments plus $11,000 per claim. Under legislation passed in 2009, those who bill third parties are now obligated to discover and disclose any overpayments received or be subject to False Claims Act penalties as well.

Fraud and Abuse Laws:

Since a significant portion of reimbursement for healthcare products and services are currently paid through reimbursements under Medicare, Medicaid or similar programs, the federal government and many states have adopted statutes and regulations that address fraudulent and/or abusive behavior in connection with such programs.

As part of this regulatory scheme, the federal government believes that an “inducement” to refer a Medicare or Medicaid patient is likely to result in fraud or abuse on the Medicare or Medicaid programs. Therefore, the federal government adopted a number of laws and regulations to recoup funds and assess penalties which it believes were paid inappropriately. In cases of criminal fraud, the individuals responsible for the fraudulent activity can be subject to imprisonment.

One of the principal federal statutes regulating fraud and abuse is the Anti-Kickback Statute. The Anti-Kickback statute prohibits the solicitation, payment, receipt or offering of any direct or indirect remuneration in exchange for the referral of Medicare and Medicaid patients or for the purchasing, arranging for or recommending the purchasing, leasing or ordering of Medicare or Medicaid covered services, items or equipment. To be convicted of a violation of the Anti-Kickback Statute, the party must have had specific intent to induce the referral of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item or service reimbursable by Medicare or Medicaid. Some of the federal courts have broadly construed the Anti-Kickback Statute and held that the “intent” required to support a criminal conviction will exist if only one purpose of the referral is to induce a prohibited referral.

To clarify some of the issues created by the Anti-Kickback Statute, the Center for Medicare and Medicaid Services issued “safe harbor” regulations identifying actions which will not be deemed to violate the Anti-Kickback Statute. Some of these “safe harbors” are in the area of joint ventures, personal services, and other arrangements. Conducting an activity that falls within a “safe harbor” regulation provides comfort that such activity will not be prosecuted. Compliance with each element of a particular “safe harbor” is required in order to be assured of the protection provided by such “safe harbor.” Even though a transaction that does not fall within a “safe harbor” may be perfectly appropriate, the arrangement will be evaluated based on its facts and circumstances to determine if the parties intended to induce the referral of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item or service reimbursable under Medicare or Medicaid.

The federal government also has adopted an Advisory Opinion procedure where a proposed transaction can be submitted to the Office of Inspector General for an opinion as to whether it violates the Anti-Kickback Statute. If a proposed arrangement receives a satisfactory Advisory Opinion, then the parties would be immune from prosecution under the Anti-Kickback Statute.

Also, in many companies, Compliance Plans are adopted. These plans take a number of forms. Should a company ever violate the Anti-Kickback Statute having a Compliance Plan (the “Plan”) which the Company follows will mitigate the sentence that might otherwise be imposed on the affected individuals. Although there is not necessarily any one right way to draft or implement a Compliance Plan, there are some elements which the authorities will be looking for in the Plan, including a “hot” line for the reporting of suspected fraudulent or abusive activity, dissemination of the Plan, actions taken or not taken as the result of a report of wrongful activity, including whether those who reported the activity were terminated.

An allegation of violation and/or a conviction for violation of the Anti-Kickback Statute and parallel state laws could have a significant impact on our ability to conduct our business. As noted earlier, significant fines, penalties, exclusion from Medicare and Medicaid programs and imprisonment of individuals can result. Additionally, the federal government or a “whistleblower” could bring an action under the federal False Claims Act alleging that a violation of the Anti-Kickback Statute “tainted” our hospital customers’ claims to the federal health care programs, and, thus, allege that we or our hospital customers are liable for damages and per claim penalties under the False Claims Act.

The Stark Law:

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

Physician Fee Splitting/Corporate Practice of Medicine:

The laws of many states prohibit physicians from sharing professional fees with non-physicians and prohibit entities not solely owned by physicians, including us, from practicing medicine and from employing physicians to practice medicine. The laws in most states regarding the corporate practice of medicine have been subjected to judicial and regulatory interpretation and while we have attempted to structure our relationships with physicians and our operations in a manner that complies with these requirements, there is no assurance that various state regulators will agree that we are in compliance. Violation of a state’s prohibitions on the corporate practice of medicine and the splitting of professional fees with lay individuals or corporations could result in civil or criminal liability, and/or the unenforceability of certain of our contracts. As a result, we may be required to restructure or reduce our business in a particular state. Any one of these consequences could have a material adverse effect on the operations and financial performance of our business.

HIPAA:

The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the United States Congress in 1996. Title I of HIPAA protects health insurance coverage for workers and their families when they change or lose their jobs and amends the Employment Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code.

Title II of HIPAA defines numerous offenses relating to health care and sets civil and criminal penalties for them. It also creates several programs to control fraud and abuse within the health care system. However, the most significant provisions of Title II are its Administrative Simplification rules which require the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers. The Administration Simplification provisions also address the privacy of “protected health information” (including individually identifiable patient information) and the security of electronic protected health information. The standards are meant to improve the efficiency and effectiveness of the nation's health care system by encouraging the widespread use of electronic data exchange in the United States. These rules apply to "covered entities" as defined by HIPAA and the Department of Health and Human Services (HHS). Covered entities include health care providers that submit electronic claims for reimbursement, health plans and health care clearinghouses, such as billing services.

The new Health Information Technology for Economic and Clinical Health Act (HITECH Act), which is Title XIII of the American Recovery and Reinvestment Act of 2009 (ARRA), amended HIPAA and included provisions for its heightened enforcement and stiffer penalties for privacy and security violations. The new privacy and security provisions expand the reach of HIPAA’s privacy and security standards to include “business associates” of covered entities and mandate certain actions in the event of a breach of unsecured personal health information that could harm the reputation or finances of individuals, among other provisions. Covered entities must incorporate these additional requirements in their agreements with their business associates. Business associates are vendors that provide services to covered entities involving the use and disclosure of protected health information. The new requirements for breach notification of unsecured protected health information provide a strong incentive for covered entities and their business associates to implement technical, physical and administrative safeguards to prevent unauthorized access to protected health information. The new HITECH penalties for privacy and security violations are the same for covered entities and for their business associates. These include a tiered increase in the amount of civil monetary penalties. Where the person did not know, and by exercising reasonable diligence would not have known, that such person violated a provision: (i) $100 to $50,000 for each violation; (ii) the total amount per calendar year for all such violations of an identical requirement may not exceed $1,500,000. Where the violation was due to reasonable cause and not to willful neglect: (i) $1,000 to $50,000 for each violation, (ii) the total amount per calendar year for all such violations of an identical requirement may not exceed $1,500,000. Where the violation was due to willful neglect and was corrected: (i) $10,000 to $50,000 for each violation, (ii) the total amount per calendar year for all such violations of an identical requirement may not exceed $1,500,000. Where the violation was due to willful neglect and was not corrected: (i) at least $50,000 for each violation, (ii) the total amount per calendar year for all such violations of an identical requirement may not exceed $1,500,000. The Secretary of HHS will base the amount of the penalty on: (i) the nature and extent of the violation, (ii) the nature and extent of the harm resulting from such violation. In addition, many states also have laws that protect the privacy and security of health and other confidential, personal information. These laws may be similar to or even more protective than the federal HIPAA and HITECH provisions. Not only may some of these state laws impose fines and penalties upon violators, but some may afford private rights of action to individuals who believe that their personal information has been misused.

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

Health Care Reform:

We believe the Patient Protection and Affordable Care Act signed into law March 23, 2010 will have no immediate impact on our business. Over the long-term, as the cuts in Medicare payments to our hospital customers take effect, and more uninsured people are brought into the healthcare system, our revenues per hospital customer could change. There could be an increase in the number of insured patients who can avail themselves of wound care and hyperbaric therapies, which more than offsets cuts in Medicare payments to our hospital customers. If this turns out to be the case, our business may increase as a result; however, we cannot predict at this time what that impact will be as this increase in insurance coverage to this population is several years into the future.

Confidentiality:

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

Ongoing Investigations:

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

Intellectual Property:

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

Employees:

The Company counts 224 full-time employees coming from various backgrounds. In addition to over 100 physicians accredited in hyperbaric medicine, including some of the top physicians practicing in vascular surgery today, the Company boasts a number of ex-hospital executives, registered nurses, financial professionals, and business executives. To ensure and facilitate the successful planning, implementation and continued operations of our numerous wound care centers, our team also utilizes architects, engineers, contractors, and healthcare counsel. Currently, CFWH provides management and operations for 32 hospital-based wound care and HBOT programs.

Proposed Acquisition of the Company:

On October 5, 2010, the Company, CFWH Holding Corporation, a Delaware corporation (“Parent”) and CFWH Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). Parent and Merger Sub are affiliates of Sverica International, a private equity firm. Under the terms of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”). As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger and a wholly owned subsidiary of Parent. At the closing of the Merger, each share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”), issued and outstanding immediately prior to the closing, other than shares held by Parent as a result of the exchange by one of the Company’s founders of a portion of his shares of Company Common Stock for shares of capital stock of Parent, shall be converted into the right to receive an amount in cash, not to exceed $0.60, subject to certain adjustments as set forth in the Merger Agreement. The amount of cash consideration that holders of shares of Company Common Stock will be entitled to receive in the Merger, giving effect to all possible adjustments, will be at least $0.579 per share. All amounts payable to holders of Company Common Stock in the Merger are without interest and subject to applicable tax withholding requirements.

Holders of a total of approximately 68.3% of the issued and outstanding shares of Company Common Stock, including all of the directors and executive officers of the Company who hold shares of Company Common Stock, have entered into a Voting Agreement with Parent pursuant to which such holders have agreed to vote their shares in favor of approval of the Merger Agreement.

Completion of the transaction is subject to customary closing conditions, including CFWH shareholder approval, and the receipt by Sverica of financing for the transaction in accordance with financing commitments received. The transaction is expected to be completed in the fourth quarter of 2010, subject to customary closing conditions.

ITEM 2.

Properties:

The corporate office is located in Tarrytown, NY. On July 21, 2010, the Company extended its Tarrytown, NY lease to include additional space. The lease was extended through January 31, 2016 at a starting base rate of $11,182 per month.

The minimum payments under non-cancelable operating lease obligations for office space at June 30, 2010 are as follows:

Years Ending June 30,
2011	$	130,969
2012	$	136,482
2013	$	139,707
2014	$	141,393
2015	$	143,754
Thereafter	$	83,857

Rent expense under all operating leases in fiscal years ended June 30, 2010 and 2009 was $146,767 and $125,848, respectively. The lease obligation calculation, shown above, includes the new office space.

ITEM 3.

Legal Proceedings:

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

ITEM 4.

Submission of Matters to a Vote of Security Holders:

No matters were submitted to shareholders during the fiscal year ended June 30, 2010.

PART II

ITEM 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities:

Our common stock was quoted on the Over-The-Counter Bulletin Board system and the Financial Industry Regulatory Authority (“FINRA”) Electronic Bulletin Board under the symbol "CFWH.OB."

The closing price of our common stock on October 12, 2010, as reported on CFWH.OB was $0.51 per share.

Quarter Ended	High		Low

September 2008	$	1.50	$	0.75
December 2008	$	1.10	$	0.36
March 2009	$	0.45	$	0.05
June 2009	$	0.90	$	0.10

September 2009	$	0.80	$	0.40
December 2009	$	0.70	$	0.45
March 2010	$	0.65	$	0.36
June 2010	$	0.45	$	0.25

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

Holders:

As of October 12, 2010, there were approximately 221 shareholders of record of our common stock.

Dividends:

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

Equity Compensation Plan Information:

The following table gives information about our common stock that may be issued upon the exercise of options, or rights under our existing equity compensation plan, the 2006 Stock Option Plan (as amended and restated April 20, 2009). The information in this table is as of June 30, 2010.

Plan Category	Number of securities to be issued upon exercise of outstanding options and rights		Weighted average exercise price of outstanding options and rights		Number of securities remaining available
Equity compensation plans approved by security holders (1)		3,932,500	$	1.09		3,567,500
Equity compensation plans not approved by security holders		-		-		-
Total		3,932,500	$	1.09		3,567,500

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

ITEM 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

GENERAL OVERVIEW

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand our company. The discussion is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes thereto.

GENERAL

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

We are responsible for the development and management of the wound care and hyperbaric centers, including providing direct staff and billing support to ensure hospitals are reimbursed appropriately. We also are responsible for designing and installing necessary leasehold improvements of the hospital-provided space and to supply the appropriate equipment, including the hyperbaric chambers. We acquire the chambers under both operating and capitalized lease financing transactions with a nominal buyout arrangement (treated as capitalized leases in our accompanying consolidated financial statements). As our operation grows, we have the ability to transfer chambers between institutions to balance demand and maximize the use of our resources.

Patient service revenue is recognized when the service is rendered in accordance with the terms of the contracts with hospitals. Certain hospitals are not billed for the service until the hospital is paid by the third party payers. As a result, accounts receivable include amounts not yet billed to the hospitals, collection of which by CFWH can take several months.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. On an on-going basis, we evaluate these estimates, including those related to revenue recognition, allowance for doubtful accounts, fair value of warrants, goodwill, and stock-based compensation. We base these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of the financial statements.

Revenue Recognition: The Company derives revenue from providing patient care services. Patient service revenue is recognized when the service is rendered, the amount due is estimable, in accordance with the terms of the individual contracts with hospitals (the hospital retains a percentage of each patients’ fee) and collection is reasonably assured. The net amounts realizable as revenue (net of the amount retained by the hospital), which the Company records, are based on reimbursement rates settled and paid by insurance companies for wound care and hyperbaric treatments, which vary in accordance with the insurance companies’ contracts with the hospital. Although revenue is recognized at the time of service, the hospitals are usually not billed for the service until the hospital is paid by the third party payers. As a result, the accounts receivable of the Company include amounts not yet billed to the hospitals. Because the collection of receivables from certain hospitals encompasses two separate billing processes, by the hospital to third party payers and by CFWH to the hospitals, the elapsed time between rendering of patent services and collection by CFWH may be several months.

The Company considers many factors when applying accounting principles generally accepted in the United States of America related to revenue recognition. These factors include, but are not limited to contract terms, such as payment terms and expected insurance reimbursement rates, and creditworthiness of the customer.

Each of the relevant factors is analyzed to determine its impact, individually and collectively with other factors, on the revenue to be recognized. Management is required to make judgments regarding the significance of each factor in applying the revenue recognition standards, as well as whether or not each factor complies with such standards. Any misjudgment or error by management in its evaluation of the factors and the application of the standards, especially with respect to complex or new types of transactions, could have a material adverse affect on the Company’s future revenues and operating results.

Allowance for Doubtful Accounts: The Company maintains an allowance for doubtful accounts based on its estimates of collectability. The Company bases these estimates on historical collections, performance and specific collection issues. If actual bad debts differ from the reserves calculated, the Company records an adjustment to bad debt expense in the period in which the difference occurs. If creditworthiness of the Company’s clients were to weaken or the Company’s collection results relative to historical experience were to decline, it could have a material adverse impact on operating results and cash flows.

Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the value of the award. This value is expensed ratably over the vesting period for time-based awards and when the achievement of performance goals is probable in our opinion for performance-based awards. Determining the fair value of share-based awards at the grant date requires judgment; including volatility, expected terms, estimating the amount of share-based awards that are expected to be forfeited, and the likelihood of achieving performance or market conditions if present. If actual results differ significantly from these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted.

Fair Value of Warrants: The Company estimates the fair value of warrants recorded as a liability using the Black-Scholes model.

Long-Lived Assets: The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. If carrying value of the long-lived assets is not considered to be recoverable, the amount of impairment loss to be recognized is determined by comparing long-lived assets’ carrying value to their fair value determined using future discounted cash flows.

Goodwill: Goodwill is not amortized but reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount may be greater than its fair value.

RESULTS OF OPERATIONS:

REVENUES:

Revenues for the year ended June 30, 2010, were approximately $28.7 million, a decrease of approximately $503,000 or approximately 0.2% from the revenues of approximately $29.2 million generated during the fiscal year ended June 30, 2009. The reduction in revenue is primarily due to three fewer centers operating during the last five months of the fiscal year ended June 30, 2010. The decline in revenue as a result of the closing of the three centers was partially offset by increased revenue from other existing centers.

OPERATING EXPENSES:

Overview: Operating expenses for the year ended June 30, 2010 were approximately $31.9 million or approximately 111.3% of total revenues compared to approximately $28.3 million or approximately 96.8% of revenues for the twelve months ended June 30, 2009. The increase in operating expenses for the fiscal year ended June 30, 2010 resulted from approximately $2.5 million in higher payroll costs associated with the operations of new centers and increased staffing at the corporate level, including in the business development, marketing, finance and human resources departments; approximately $386,000 in licensing fees for software not deployed the prior year; approximately $410,000 in higher health insurance costs due to greater number of employees participating in the Company’s health insurance plan and overall cost increases for health insurance premiums; approximately $108,000 of impairment loss incurred in connection with a closed center: and approximately $296,000 due to a combination of other center operating cost increases including supplies and commercial insurance premiums. In addition, the Company incurred increased bad debt expense of approximately $576,000, the result of the Company’s assessment of its accounts receivable allowance estimates based in large part on enhanced information derived from its recently deployed accounts receivable collection tracking system. As a result, the Company recorded approximately $2.7 million of bad debt expense for year ended June 30, 2010.

Cost of services: Cost of services, which are comprised principally of payroll and payroll related costs for administrative, professional and nursing staff required to administer treatments at our centers, as well as depreciation relating to hyperbaric medical chambers and leasehold improvements, was approximately $16.1 million or approximately 55.9% of total revenues for year ended June 30, 2010 compared with approximately $14.9 million or approximately 50.9% in the year ended June 30, 2009. This increase of approximately $1.2 million or approximately 8.1%, is primarily attributable to higher direct labor costs, increases in software licensing fees, and higher health and commercial insurance costs.

Sales and marketing: Sales and marketing expenditures of approximately $467,000 for the fiscal year ended June 30, 2010, increased by approximately $213,000 from the prior fiscal year due to increased business development, education, marketing and promotional costs including trade show participation, hospital sponsorships, and other similar efforts.

General and administrative: General and administrative expenses are comprised primarily of payroll and payroll related costs, insurance, accounting, travel and entertainment costs, and professional fees. General and administrative costs increased by approximately $1.4 million to approximately $11.3 million or approximately 39.4% of revenues for the fiscal year ended June 30, 2010, compared to approximately $9.8 million or approximately 33.7% of revenues for the fiscal year ended June 30, 2009. The increase is due to increased payroll and payroll related costs for business development; marketing; center management and corporate staff, including in the finance, marketing and human resources departments; and professional fees.

Impairment loss: Abandonment loss was approximately $108,000 or approximately 0.4% of total revenue for the year ended June 30, 2010 compared with approximately $134,000 or approximately 0.5% of total revenues for the prior fiscal year. These losses resulted from the closing of centers in each of the fiscal years.

Depreciation and amortization: Depreciation and amortization expense related to corporate property and equipment and intangible assets aggregated approximately $1.3 million or approximately 4.6% of revenues for the year ended June 30, 2010 compared to approximately $1.1 million or approximately 3.7% of total revenues for the fiscal year ended June 30, 2009. The increase is due to the acquisition and deployment of various software applications and hardware necessary for the Company to conduct its business and to the amortization of the intangible assets associated with the buyout of the non-controlling interests.

Bad debt expense: Bad debt expense was approximately $2.7 million or approximately 9.4% of total revenues for the year ended June 30, 2010 compared to approximately $2.1 million or approximately 7.2% of revenues for the fiscal year ended June 30, 2009. The Company assessed its accounts receivable allowance estimates based in large part on an analysis of its accounts receivable balances enabled by its recently deployed collection tracking system.

OTHER INCOME (EXPENSE):

Interest expense: The Company incurred interest expense of approximately $6.5 million or approximately 22.5% of total revenues for the year ended June 30, 2010, compared to approximately $4.9 million or approximately 16.9% of revenues for the year ended June 30, 2009. Interest expense increased by approximately $1.5 million due to an increase in the principal amount of the Bison Note, the result of adding accrued interest to the Note principal. Cash paid for interest for the year ended June 30, 2010 was approximately $2.1 million, including approximately $2.0 million of interest paid to Bison Capital. Cash paid for interest expense for the year ended June 30, 2009 was approximately $333,000.

Loss on disposal of property and equipment: The loss on disposal of property and equipment was approximately $124,000 or approximately 0.4% of total revenues for the fiscal year ended June 30, 2010.

Change in fair value of warrants: The Company recorded approximately $2.9 million of income for the year ended June 30, 2010 due to the decrease in the fair value of the warrant obligation for the year as described in Note 2r to the Company’s consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES:

Operating Activities: Net cash provided by operating activities was approximately $7.1 million for the year ended June 30, 2010. While our net loss was approximately $7.0 million, noncash expenses incurred during the fiscal year included (a) approximately $5.9 million of interest accrued for the notes payable and long-term debt, (b) approximately $2.7 million of bad debt expense, (c) depreciation and amortization of approximately $4.9 million related to equipment, leasehold improvements and certain hospital contracts, and (c) approximately $0.6 million of stock based compensation expense, partially offset by approximately $2.9 million of non-cash income recorded for the change in the fair value of the warrant liability.

Investing Activities: Net cash used in investing activities was approximately $0.9 million for the year ended June 30, 2010. The primary use of cash was for the purchase of software and other infrastructure projects necessary to support the Company’s information technology needs and leasehold improvements at a new center. Net cash used in investing activities was approximately $2.3 million for the year ended June 30, 2009, primarily for purchase of information technology equipment and applications development.

Financing Activities: Net cash used in financing activities was approximately $6.5 million for the year ended June 30, 2010. The Company repaid approximately $0.7 million of the bank line of credit, retired approximately $600,000 aggregate principal amount of notes and loans, paid approximately $2.0 million of capitalized interest due on the Bison Note, paid approximately $2.5 million of principal due on the Bison Note, and made the required payments of approximately $100,000 to former majority members.

We participate in a working capital financing and term loan arrangement with Signature Bank, which matures on December 1, 2012. The maximum amount that can be borrowed under the bank loan – revolving line of credit, at June 30, 2010, is $6.0 million. At June 30, 2010, there were no outstanding balances against this revolving line of credit.

As more fully described in Note 10 to the Company’s consolidated financial statements for the fiscal year ended June 30, 2010, the Company failed to comply with covenants in its Loan Agreement with Signature Bank, the Company’s senior lender, requiring that the Company’s debt service coverage ratio, and total debt to EBITDA ratio not exceed specified amounts, and requiring that the Company maintain a specified minimum effective net worth as of June 30, 2010. Signature has waived such non-compliance through July 1, 2011, provided that the Company complies with such covenants based upon the current ratios and effective net worth as they existed on June 30, 2010, in each case subject to certain specified adjustments, resulting in less stringent requirements that the Company believes it can satisfy.

Also, as more fully described in Note 10 to the Company’s consolidated financial statements for the fiscal year ended June 30, 2010, the Company and Bison have entered into agreements to address the Company’s failure to comply with certain financial covenants at the end of the fiscal year ended June 30, 2010, to change the interest rate on the Bison Note while Bison’s agreement to forbear from exercising remedies by reason of such noncompliance remains in effect, to add an additional event of default if the Company enters into a definitive agreement relating to a change of control and fails to satisfy certain conditions in connection therewith, and to provide for the recomputation of certain parameters for the fiscal year ended June 30, 2008 for purposes of calculating the Base Multiple, and consequently the Put Price (as such terms are defined in the Securities Purchase Agreement relating to the Bison Note.)

We believe that the Company will be able to comply with the modified covenants described above.

We believe that the cash flows from operations and borrowings under the senior bank line of credit will provide sufficient liquidity for the Company to be able to finance our operations for at least the next 12 months.

OFF-BALANCE SHEET ARRANGEMENTS:

We do not currently have any off-balance sheet arrangements that have, or are likely to have, a material current or future effect on us.

RECENT ACCOUNTING PRONOUNCEMENTS:

See Note 2 to the Consolidated Financial Statements regarding the effects on the Company’s financial statements of the adoptions of recent accounting pronouncements.

ITEM 8. Financial Statements

THE CENTER FOR WOUND HEALING, INC.

Report of Independent Registered Public Accounting Firm	16
Consolidated Balance Sheets as of June 30, 2010 and 2009	17
Consolidated Statements of Operations for the Years Ended June 30, 2010 and 2009	18
Consolidated Statements of Stockholders' (Deficit) Equity for the Years Ended June 30, 2010 and 2009	19
Consolidated Statements of Cash Flows for the Years Ended June 30, 2010 and 2009	20
Notes to Consolidated Financial Statements	21-33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of The Center for Wound Healing, Inc.

We have audited the accompanying consolidated balance sheets of The Center for Wound Healing, Inc. and subsidiaries (the “Company”) as of June 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Center for Wound Healing, Inc. and subsidiaries as of June 30, 2010 and 2009, and the consolidated results of their operations, and their consolidated cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

EisnerAmper LLP

New York, New York

October 13, 2010

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	JUNE 30,
	2010			2009
ASSETS
CURRENT ASSETS
Cash	$	86,891		$	339,859
Accounts receivable, net of allowance for doubtful
accounts of $1,029,398 and $3,088,272 respectively		9,397,814			14,730,767
Prepaid expenses and other current assets		389,520			295,135

Total current assets		9,874,225			15,365,761

Property and equipment, net		5,479,896			7,585,373
Intangible assets, net		1,092,280			3,110,378
Goodwill		751,957			751,957
Other assets		1,444,552			1,427,391

TOTAL ASSETS	$	18,642,910		$	28,240,860

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,951,681		$	3,080,796
Current maturities of obligations under capital leases		4,850			133,295
Current maturities of senior collateralized subordinated promissory note		426,170			532,227
Current maturities of notes payable		1,093,000			1,957,626
Payable to former majority members		-			118,034
Total current liabilities		4,475,701			5,821,978

Senior collaterized subordinated promissory note, net of current maturities		15,139,502			13,772,810
Notes payable, net of current maturities		947,640			1,323,629
Oligations under capital leases, net of current maturities		-			4,850
Warrant obligation		769,484			-

TOTAL LIABILITIES		21,332,327			20,923,267

COMMITMENTS AND CONTINGENCIES (NOTE 15)

STOCKHOLDERS' (DEFICIT) EQUITY
The Center for Wound Healing, Inc. stockholders' equity:
Common stock, $0.001 par value; 290,000,000 shares authorized;
24,123,638 shares issued and outstanding		24,123			24,123
Additional paid-in capital (including cumulative effect of change in
accounting principle (see Note 2 p.)		20,475,444			31,625,135
Accumulated deficit (including cumulative effect of change in
accounting principle (see Note 2 p.)		(23,350,850	)		(24,646,815	)
Total The Center for Wound Healing, Inc stockholders' (deficit) equity		(2,851,283	)		7,002,443

Non-controlling interest		161,866			315,150
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY		(2,689,417	)		7,317,593

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$	18,642,910		$	28,240,860

See accompanying notes to consolidated financial statements.

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For The Years Ended June 30,
	2010			2009

NET SERVICE REVENUE	$	28,702,898		$	29,206,208

OPERATING EXPENSES
Cost of services		16,054,788			14,854,283
Sales and marketing		467,284			253,999
General and administration		11,295,834			9,849,924
Impairment and/or abandonment loss		107,700			133,589
Depreciation and amortization		1,327,558			1,082,914
Bad debts		2,687,929			2,111,499

TOTAL OPERATING EXPENSES		31,941,093			28,286,208

OPERATING (LOSS) INCOME		(3,238,195	)		920,000

OTHER EXPENSES (INCOME)
Interest expense		6,452,411			4,937,657
Interest income		(14,358	)		(19,550	)
Loss on disposal of property and equipment		124,354			-
Change in fair value of warrant obligation		(2,864,057	)		-
Other expenses		52,500			49,801

TOTAL OTHER EXPENSES		3,750,850			4,967,908

LOSS BEFORE PROVISION FOR INCOME TAXES		(6,989,045	)		(4,047,908	)

PROVISION FOR INCOME TAXES		-			130,222

NET LOSS		(6,989,045	)		(4,178,130	)

Net loss attributable to non-controlling interest		(134,894	)		(10,418	)

NET LOSS ATTRIBUTABLE TO THE CENTER FOR WOUND HEALING, INC	$	(6,854,151	)	$	(4,167,712	)

NET LOSS PER COMMON SHARE - BASIC AND DILUTED	$	(0.29	)	$	(0.18	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC AND DILUTED		24,123,638			23,548,029

See accompanying notes to consolidated financial statements.

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

	The Center for Wound Healing, Inc Stockholders
	Common Stock				Additional Paid-			Accumulated			Noncontrolling
	Shares		Amount		in Capital			Deficit			Interest			Total

Balance at June 30, 2008		23,373,281	$	23,373	$	29,764,982		$	(20,479,103	)	$	580,558		$	9,889,810

Issuance of shares in settlement of obligations		98,381		98		79,254			-			-			79,352
Issuance of shares in connection with acquisition of
non-controlling interest		651,976		652		207,980			-			-			208,632
Stock-based compensation						1,572,919									1,572,919
Distribution to non-controlling interest holders												(254,990	)		(254,990	)
Net loss		-		-		-			(4,167,712	)		(10,418	)		(4,178,130	)
Balance at June 30, 2009		24,123,638	$	24,123	$	31,625,135		$	(24,646,815	)	$	315,150		$	7,317,593

Cumulative effect of change in accounting principle (see Note 2 p.)						(11,783,655	)		8,150,116						(3,633,539	)

Stock-based compensation						633,964									633,964
Distribution to non-controlling interest holders												(18,390	)		(18,390	)
Net loss		-		-		-			(6,854,151	)		(134,894	)		(6,989,045	)

Balance at June 30, 2010		24,123,638	$	24,123	$	20,475,444		$	(23,350,850	)	$	161,866		$	(2,689,417	)

See accompanying notes to consolidated financial statements.

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For The Years Ended June 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,989,045	)	$	(4,178,130	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		4,888,757			4,833,943
Impairment loss		107,700			133,589
Change in fair value of warrant liability		(2,864,057	)		-
Amortization of deferred financing costs		427,760			245,099
Bad debt expense		2,687,929			2,111,499
Loss on disposal of property and equipment		124,354			-
Fees related to waiver added to debt principal		300,000			-
Accrued interest added to debt principal		5,850,739			4,336,298
Stock-based compensation expense		633,964			1,572,919
Issuance of shares in settlement of obligations		-			79,352
Changes in operating assets and liabilities:
Accounts and notes receivable		2,645,024			(1,863,784	)
Prepaid expenses and other current assets		(94,385	)		108,082
Other assets		(96,046	)		-
Accounts payable and accrued expenses		(511,423	)		(976,083	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		7,111,271			6,402,784

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(903,459	)		(1,594,111	)
Proceeds of the disposal of fixed assets		2,271			-
Acquisition of non-controlling interest		-			(702,714	)
NET CASH USED IN INVESTING ACTIVITIES		(901,188	)		(2,296,825	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments from bank loan - revolving line of credit		(744,988	)		(3,455,012	)
Proceeds from bank loan - term note		-			2,000,000
Repayment of bank loan - term note		(500,000	)		(250,000	)
Repayment of Bison Note		(2,500,000	)		-
Repayment of accrued interest added to principal on Bison Note		(1,998,547	)		-
Payment of deferred financing costs		-			(36,462	)
Repayment of Boyer/Morris notes payable		(124,000	)		-
Repayment of all other notes payable		(325,797	)		(935,722	)
Principal payments on capital lease obligations		(133,295	)		(519,736	)
Payments to former majority members		(118,034	)		(500,000	)
Distributions to non-controlling interest		(18,390	)		(124,307	)
NET CASH USED IN FINANCING ACTIVITIES		(6,463,051	)		(3,821,239	)

NET (DECREASE) INCREASE IN CASH		(252,968	)		284,720

CASH – BEGINNING OF YEAR		339,859			55,139

CASH – END OF YEAR	$	86,891		$	339,859

Cash paid during the year:
Interest	$	2,113,446		$	333,302
Income taxes	$	-		$	101,351
Non -cash financing and investing activities:
Issuance of common stock in connection with acquisition of non-controlling interest		-		$	208,632
Issuance of shares in settlement of obligations		-		$	79,352

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010 AND 2009

Note 1 - Organization and Nature of Business

The Center for Wound Healing, Inc. (“CFWH” or the “Company”) was organized on May 25, 2005. CFWH develops and manages comprehensive wound care centers, which are marketed as “THE CENTER FOR WOUND HEALING tm” throughout the United States. These centers render wound care treatments and the specialized service of hyperbaric medicine, and are developed in partnerships with community and acute care hospitals. CFWH is contracted by the hospital on a multi-year basis to start up and manage the hospital’s wound care program.

As of June 30, 2010, CFWH operates thirty-two (32) wound care centers with various institutions. Such centers operate as either wholly-owned or majority-owned limited liability subsidiaries of CFWH. CFWH manages and provides administrative services to Hyperbaric Medical Associates, P.C. (“HMA”), a New York professional staffing company, owned by a Company employee, under the terms of the Management Service Agreement between the Company and HMA. In return, HMA provides professional healthcare staffing services to CFWH, its sole customer, under the terms of the Technical Service Agreement. CFWH is headquartered in Tarrytown, New York.

Note 2 - Summary of Significant Accounting Policies

a. Principles of Consolidation. The accompanying consolidated financial statements include the accounts of CFWH and its wholly-owned and majority-owned subsidiaries and of HMA, a variable interest entity, whose primary beneficiary is CFWH. Purchases of majority ownership interests are accounted for under the acquisition method of accounting and initially reflect the fair value of net assets acquired at the dates of acquisition. All intercompany profits, transactions, and balances have been eliminated. Non-controlling interests in the net assets and earnings or losses of the Company’s majority-owned subsidiary are reflected in the caption “Non-controlling interest” in the accompanying consolidated balance sheets and the caption “Net income (loss) attributable to non-controlling interest” in the accompanying consolidated statements of operations. Non-controlling interest adjusts the Company's consolidated results of operations to reflect only the Company's share of the earnings or losses of its subsidiaries, and in the consolidated balance sheet represents the portion of the net assets of subsidiaries not attributable to the Company.

b. Revenue Recognition and Accounts Receivable. Patient service revenue is recognized when the service is rendered, the amount due is estimable, in accordance with the terms of the individual contracts with hospitals (the hospital retains a percentage of each patients’ fee) and collection is reasonably assured. The net amounts realizable as revenue (net of the amount retained by the hospital), which the Company records, are based on reimbursement rates settled and paid by insurance companies for wound care and hyperbaric treatments, which vary in accordance with the insurance companies’ contracts with the hospital. Although revenue is recognized at the time of service, the hospitals are usually not billed for the service until the hospital is paid by the third party payers. As a result, the accounts receivable of the Company include amounts not yet billed to the hospitals. As of June 30, 2010 and June 30, 2009 approximately $6.7 and $10.7 million, respectively, of accounts receivable were unbilled. Because the collection of receivables from certain hospitals encompasses two separate billing processes, by the hospital to third party payers and by CFWH to the hospitals, the elapsed time between rendering of patent services and collection by CFWH may be several months.

Allowance for Doubtful Accounts - The reported balance of accounts receivable, net of the allowance for billed and unbilled doubtful accounts, represents the Company’s estimate of amounts that ultimately will be realized in cash. The Company reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using management estimates based on historical trends, age of the receivables, and knowledge of specific accounts. When the analysis so indicates, the allowance is increased or decreased accordingly.

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

d. Fair Value of Financial Instruments. The carrying amount of cash, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to short-term maturities of the instruments. The carrying amount of the Company’s Bank Loan, (Note 10), approximates fair value due to the variable interest rates applicable to such indebtedness. The fair value of the Bison Note (Note 11), was estimated to be approximately $25 million at June 30, 2010, based on the present values of future cash flows discounted at estimated borrowing rates for similar loans. The fair value of the Company’s other indebtedness, notes payable, and capital lease obligations approximates their carrying value due to their short term nature.

e. Loss Per Share. Basic net earnings (loss) per share is calculated based on the weighted average number of common shares outstanding for each period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants. Common shares issuable upon the exercise of warrants and options outstanding that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented. Potential common shares as of June 30, 2010 and 2009 are as follows:

	June 2010		June 2009
Options to purchase shares of common stock		3,932,500	3,402,500
Warrants to purchase shares of common stock		14,085,676	14,085,676
Total potential shares of common stock		18,018,176	17,488,176

f. Stock Based Compensation. The Company recognizes all stock based payments, including grants to employees of common stock options, as an expense based on fair values of the grants measured on award dates, using the Black-Scholes valuation model, over vesting periods of such grants and net of an estimated forfeiture rate for grants to employees. The Company estimates the expected life of options granted based on historical exercise patterns and volatility based on trading patterns of its common stock over a period similar to the vesting period of the grants.

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

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

h. Leases. Leases are classified as capital leases or operating leases in accordance with the terms of the underlying lease agreements. Capital leases at inception are recorded as property and equipment and the related obligations as liabilities. Such assets are amortized over their estimated useful lives. The lease payments under capital leases are applied as a reduction of the capital lease obligation and accrued expense.

The operating lease expense for rent is recorded using the straight-line method over the term of the rent agreement.

i. Long-Lived Assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Impairment may be recognized if the carrying value of the long-lived assets is less than the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. If carrying value of the long-lived assets is not considered to be recoverable, the amount of impairment loss to be recorded is determined by comparing long-lived assets’ carrying value to their fair value determined using future discounted cash flows.

j. Income Taxes. The Company uses the asset and liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is provided when it is more likely than not that the deferred tax asset will not be fully realized.

k. Impairment. The Company reviews its long-lived assets and goodwill for impairment at least annually and whenever events or changes in circumstances indicate the carrying value may not be recoverable. As of year ended June 30, 2010 $108,000 of intangible assets were written off due to the closing of one of our centers.

l. Concentrations. The Company places its cash primarily with one financial institution, and at times the balance may exceed amounts in excess of the FDIC insurance limit.

m. Advertising Costs. Advertising costs are expensed as incurred. Advertising costs incurred for the fiscal years ended June 30, 2010 and 2009 were approximately $14,000 and $25,000, respectively and included in sales and marketing expenses

n. Goodwill. Goodwill is not amortized but reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount may be greater than its fair value. As of the fiscal year ended June 30, 2010, no impairment of goodwill has occurred.

o. Amortization of Intangible Assets. Intangible assets with finite lives are amortized over the estimated useful lives of these assets, generally from three to five years.

p. Recently Issued and/or Adopted Accounting Pronouncements.

In June 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standard Codification (the “Codification”). Effective July 1, 2009, the Codification became the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP), superseding existing rules and related literature issued by the FASB, American Institute of Certified Public Accounts (“AICPA”) and Emerging Issues Task Force (“EITF”). The Codification also eliminates the previous US GAAP hierarchy and establishes one level of authoritative GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other literature is considered non-authoritative. The Codification which has not changed GAAP, was effective for interim and annual periods ending after September 15, 2009. The Company adopted the Codification for the quarter ended September 30, 2009. Other than the manner in which new accounting guidance is referenced, the adoption of the Codification had no impact on the Company’s consolidated financial statements.

Guidance issued by the FASB in June 2009 requires companies to recognize in the financial statements the effects of subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Companies are not permitted to recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued. Some non-recognized subsequent events must be disclosed to keep the financial statements from being misleading. For such events a company must disclose the nature of the event, an estimate of its financial effect, or a statement that such an estimate cannot be made. This guidance applies prospectively for interim or annual financial periods ending after June 15, 2009. The adoption of this guidance did not affect the consolidated financial position, results of operations or cash flows of the Company.

In August 2009, the FASB issued amended guidance on the measurement of liabilities at fair value. The guidance provides clarification that in circumstances in which a quoted market price in an active market for an identical liability is not available, the fair value of a liability is measured using one or more of the valuation techniques that uses the quoted price of an identical liability when traded as an asset or, if unavailable, quoted prices for similar liabilities or similar assets when traded as assets. If none of this information is available, an entity should use a valuation technique in accordance with existing fair valuation principles. This guidance is effective for the first reporting period (including interim periods) after issuance. The Company adopted this guidance in the quarter ended September 30, 2009. The adoption had no impact on the Company’s consolidated financial statements.

In June 2009, the FASB issued amendments to the accounting rules for variable interest entities (VIEs) and for transfers of financial assets. The new guidance for VIEs eliminates the quantitative approach previously required for determining the primary beneficiary of a variable interest entity and requires ongoing qualitative reassessments of whether an enterprise is the primary beneficiary. In addition, qualifying special purpose entities (QSPEs) are no longer exempt from consolidation under the amended guidance. The amendments also limit the circumstances in which a financial asset, or a portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented, and/or when the transferor has continuing involvement with the transferred financial asset. For the Company, the amendments are effective as of the first quarter of fiscal 2011. The company does not believe that adoption of these amendments will have a material effect on its consolidated financial statements.

In April, 2009, the FASB issued additional requirements regarding interim disclosures about fair value of financial instruments to require disclosures about fair value of financial instruments in interim and annual statements. The new requirements are effective for interim periods ended after June 15, 2009 and the Company adopted this requirement in the quarter ended September 30, 2009.

In March 2008, the FASB issued new disclosure requirements regarding derivative instruments and hedging activities. These requirements give financial statement users better information about the reporting entity’s hedges by providing for qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about fair value of gains and losses on derivative contracts, and details of credit-risk-related contingent features in their hedged positions. These requirements are effective for financial statements issued for fiscal years beginning after November 15, 2008 and interim periods within such fiscal year with early application encouraged but not required. The Company adopted the requirements effective July 1, 2009, and they did not have any effect on the Company’s consolidated financial statements.

In June 2008, a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock was established, including evaluating the instrument’s contingent exercise and settlement provisions. The standard was effective for financial statements issued for fiscal years beginning after January 1, 2009 and interim periods within such fiscal year. The Company adopted these requirements as of July 1, 2009 and determined that 13,785,676 of the 14,085,676 outstanding warrants to purchase the Company’s common shares are not considered indexed to the Company’s own stock, as the respective agreements include reset features. The 13,785,676 warrants were issued by the Company as follows: (1) 2,750,000 warrants in April 2006 in a transaction with convertible debt; (2) 3,093,750 warrants in January 2008 in satisfaction of the reset provision related to the above April 2006 warrants; (3) 7,941,926 warrants in March 2008 in connection with the Bison Note. The Company initially recorded the fair value or relative fair value of these warrants as additional paid-in capital. As of July 1, 2009, the Company recorded a warrant obligation of approximately $3.6 million, which represents the fair value of the warrants as of that date, and also recorded approximately $8.1 million decrease in the fair value of these warrants during the period from their respective dates of issuance through the July 1, 2009 adoption date of the new accounting pronouncement as a cumulative effect of a change in accounting principle, as a reduction to accumulated deficit and a reduction of $11.8 million in additional paid-in capital. The decrease in the fair value of the warrant obligation during the year ended June 30, 2010 of approximately $ 2.9 million is recorded as other income in the condensed consolidated statement of operations. The fair value of the above warrants and the assumptions employed in the Black-Scholes valuation model, which were used to determine the fair value of the warrants at various measurement dates were as follows:

	June 30, 2010		July 1, 2009		Issuance Date

Number of warrants		13,785,676		13,785,676		13,785,676
Fair value of each warrant, $ per share		0.003 – 0.096		0.18 – 0.33		1.07 – 2.00
Combined fair value of warrants, $*		769,484		3,633,541		22,440,279

Market price, $ per common share		0.25		0.55		1.68 – 4.00
Exercise price, $ per common share		2 – 5		2 - 5		2 - 5
Volatility, %		109 - 113		114 – 123		95 – 111
Dividend yield, %		0		0		0
Risk free interest rate, %		3.5		3.5		3.5 – 4.9
Contractual life, years		.75 – 4.75		1.75 – 5.75		3.2 - 7

*Consists of the fair value of the warrants determined using the Black-Scholes model.

In December 2007, the FASB issued new guidance on non-controlling interests in consolidated financial statements. This guidance requires that ownership interests in subsidiaries held by parties other than the parent, be clearly identified, labeled, and presented in the consolidated financial statements within equity, but separate from the parent’s equity. It also requires that once a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be initially measured at fair value. Sufficient disclosures are required to clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. This guidance is effective for fiscal years beginning after December 15, 2008, and is to be applied prospectively, except for the presentation and disclosure requirements, which are required to be applied retrospectively for all periods presented. As a result of adoption, effective July 1, 2009 the Company has retrospectively adjusted its financial statements for the year ended June 30, 2009 to include net loss attributable to non-controlling interest (previously referred to as minority interest) in consolidated net loss as presented below:

				Attributable to
	Total Equity			Company			Non-controlling interest

Beginning balance	$	9,889,810		$	9,309,252		$	580,558
Distribution to non-controlling interest		(254,900	)					(254,990	)
Issuance of shares in settlement of obligations		79,352			79,352
Issuance of shares in connection with the acquisition of non-controlling interest		208,632			208,632
Share-based compensation		1,572,919			1,572,919			-
Net loss		(4,178,130	)		(4,167,712	)		(10,418	)
Ending balance	$	7,317,593		$	7,002,443		$	315,150

In December 2007, the FASB issued new accounting guidance related to the accounting for business combinations and related disclosures. This guidance establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree, and any goodwill acquired in a business combination. It also establishes disclosure requirements to enable the evaluation of the nature and financial effects of a business combination. The guidance is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted this guidance, effective July 1, 2009, and it did not have any effect on the Company’s consolidated financial statements.

In February 2008, the FASB issued amended guidance to delay the fair value measurement and expanded disclosures about fair value measurements for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008. Effective July 1, 2009, the Company adopted the guidance related to fair value measurements for nonfinancial assets and nonfinancial liabilities and the adoption of such guidance did not have a material effect on the Company’s consolidated financial statements.

Note 3 – Capital Transactions

Common Stock

During the year ended June 30, 2010, the Company did not issue any common stock.

During the year ended June 30, 2009, the Company issued 98,381 shares of its common stock in settlement of various obligations and 651,976 shares as part of the purchase price for the acquisition of minority interests in subsidiaries in April 2009 (see Note 4).

The issuances of common stock for cash or services or in connection with acquisitions were recorded at fair value, determined by reference to the market price of the shares as of the dates of issuance.

Warrants

On March 31, 2008, the Company issued a $20 million 15% Bison Note (see Note 11). In connection with the Bison Note, the Company issued 7,941,926 seven year warrants to purchase the Company’s shares of common stock at an exercise price of $5 per share. Sixty percent of the warrants or 4,765,156 warrants vest immediately and the remaining warrants vest ratably over three years on a monthly basis. Unvested warrants are subject to cancelation if the Company meets specified EBITDA targets and/or Bison Note redemption terms, which the Company has been unable to achieve. The fair value of each warrant was determined to be $1.07 on the grant date based on the Black-Scholes valuation models using the following assumptions: expected volatility of 101%, dividend yield of 0%, risk free interest rate of 3.5%, and expected life of seven years. The relative fair value of warrants was determined to be approximately $8,400,000, with an expectation that the Company will meet redemption requirements and was recorded as debt discount which is being amortized over the life of the Bison Note under the effective interest rate method.

In December 2007 and January 2008, the Company raised $1.6 million from individual investors in the form of an unsecured note. Under the terms of the note, the Company could pay interest expense in cash or in lieu of cash, in warrants to purchase shares of the Company’s common stock with an exercise price of $2 per share and a five year term. The Company issued 300,000 warrants to purchase shares of its common stock as compensation to the holders of the note with a fair value of $564,659.

Issuance of the warrants to the holders of the $1.6 million of notes triggered certain anti-dilution provisions under the warrant agreement related to 2,750,000 warrants outstanding at June 30, 2007. As the result, the Company issued an additional 3,093,750 warrants to purchase shares of its common stock at an exercise price of $2 per share and the exercise price for 2,750,000 warrants previously outstanding under this warrant agreement was reset to $2 per share.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Intrinsic Value (*)
Outstanding, at June 30, 2008		14,085,676	$	2.00		3.8	$	0
Outstanding, at June 30, 2009 and 2010		14,085,676	$	3.69		4.5	$	0
Exercisable at June 30, 2010		12,232,560	$	3.49		3.8	$	0

(*) The intrinsic value of stock warrants is the amount by which the market value of the underlying stock exceeds the exercise price of the warrants.

Note 4 – Acquisitions

In April 2009, the Company completed the acquisition of the remaining minority interests in 12 subsidiaries not previously owned by the Company. As a result, the Company owns 100% of the interests in all but one subsidiary, in which the Company owns 81.75%. The purchase price paid by the Company includes 651,976 shares of the Company’s common stock, with a fair value at the date of issuance of approximately $176,000, and $142,000 in cash. The Company incurred approximately $463,000 of transaction costs in connection with these acquisitions. As the result of the acquisitions the Company recognized an intangible asset consisting of hospital contracts, in the amount of $781,000.

Note 5 – Stock options

During the year ended June 30, 2010 the Company granted options to purchase 650,000 shares of its common stock at an exercise price of $1.05 to one of the Company’s employees. The grants vest between 2.5 to 3.0 years, and the fair value of the grants was determined to be approximately $205,000 based on the Black-Scholes valuation model using the assumptions below, which amount is recognized as compensation expense over the relevant vesting period.

In April 2009, the Company amended its 2006 Stock Plan (the “Plan”). The Plan is administered by a committee, appointed by the Board of Directors of the Company, which consists of at least two non-executive directors of the Company. Under the terms of the Plan the Company can issue, within 10 years of initial adoption of the Plan, equity grants such as restricted stock or stock appreciation rights and either incentive or non-statutory stock options to purchase up to 7,500,000 shares of common stock, to employees, outside directors, and consultants. Not more than 1,500,000 options and stock appreciation rights and 500,000 shares of restricted stock may be granted to an employee within a calendar year. The exercise price of any option granted under the Plan may not be less than the fair market value of the common stock at the grant date or, in the case of incentive stock options granted to a 10% or greater stockholder, 110% of such fair market value. The terms of the options shall not exceed 10 years from a grant date or five years for the grants to a 10% or greater stockholder. Unvested options are terminated within a certain period after termination of employment. The Company may issue new shares or use shares held in treasury to deliver shares for equity grants or upon exercise of non-qualified stock options. Shares related to terminated, canceled, forfeited, expired or surrendered equity grants or options become available for issuance under the future grants.

During the year ended June 30, 2009 the Company granted options to purchase 777,500 shares of the Company’s common stock at an exercise price of $1.05 to its employees with various vesting periods ranging from the grant date and up to the third anniversary date. The Company determined fair value of the options to be approximately $474,000 at the grant date using the assumptions described below. Additionally, during the year ended June 30, 2009 the Company granted options to purchase 975,000 shares of the Company’s common stock to its officers, which will vest if the Company meets certain EBITDA targets over a three year period provided the officers continue to be employed by the Company. At the grant date, the Company determined that it’s probable that the Company will meet EBITDA targets. The Company estimated the aggregate fair value of these options on the date of grant to be $809,444 and, will recognize compensation expenses over the relevant service periods.

In July and October 2008 the Company modified the option exercise prices for 1,310,000 and 350,000, respectively, of previously granted options to purchase shares of the Company’s common stock effectively exchanging previous awards for new awards with increased new fair value for measurement of compensation expenses. As the result of such modification the Company recognized additional compensation expense of approximately $250,000 determined as the increase in the fair value of the grants as a result of the modification.

The fair value of the stock options granted during the years ended June 30, 2010 and 2009 was determined at the dates of grant and is being charged to compensation expense over the vesting period of the options. The fair value of options granted at the dates of the grants was estimated using the Black-Scholes option pricing model utilizing the following assumptions for the years ended June 30, 2010 and 2009:

	For the Year Ended June 30, 2010			For the Year Ended June 30, 2009

Average expected life (years)		2.8			5.8
Average risk free interest rate		3.5	%		4.48	%
Expected volatility		112	%		104	%
Expected dividend rate		0	%		0	%
Expected forfeiture rate		1.0	%		1.0	%

The compensation expense related to stock grants to employees was $0.6 million in 2010 and $1.6 million in 2009. The following is a summary of stock options granted by the Company:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value
Outstanding, at June 30, 2008		1,857,667		$	3.37				-
Granted		1,752,500		$	1.05
Forfeited/expired		(207,667	)	$	1.68
Outstanding, at June 30, 2009		3,402,500		$	1.15		5.86		-
Granted		650,000		$	1.15
Forfeited		(120,000	)	$	2.68
Outstanding at June 30, 2010		3,932,500			1.09		4.87		-
Exercisable at June 30, 2010		2,782,500		$	1.10		4.40		-

As of June 30, 2010, there was $184,201 of unrecognized compensation cost.

The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company uses historical data to estimate option exercise and employee and director termination within the valuation model; separate groups of employees and directors that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted represents the period of time that options granted are expected to be outstanding; the range given above results from groups of employees and directors exhibiting different behavior. Expected volatilities are based on historical volatility of the Company’s stock. The Company has not paid any dividends in the past and does not expect to pay any in the near future.

The weighted average fair value at dates of grant for options granted during the fiscal year ended June 30, 2010 was $0.32 per share.

Note 6 - Property and Equipment

Property and equipment consists of the following at June 30, 2010 and 2009:

	2010		2009
Medical chambers and equipment, including $0 for 2010 and $569,552 for 2009 under capital leases	$	7,903,183	$	8,069,417
Furniture, fixtures and computers		3,051,120		2,704,464
Leasehold improvements		5,898,820		5,632,550
Autos and vans		481,747		494,051
Construction in progress		204,896		25,366
		17,539,766		16,925,848
Less: Accumulated depreciation and amortization – including $0 and $235,880 for medical chambers and equipment under capital lease		12,059,870		9,340,475
	$	5,479,896	$	7,585,373

Depreciation expense for 2010 was $2,882,312 of which $2,174,282 is included in cost of services. Depreciation expense for 2009 was $2,894,742 of which $2,234,127 is included in cost of services.

Note 7 - Intangible Assets

Intangible assets consist of the following as of June 30:

	2010		2009
Hospital contracts acquired	$	5,873,090	$	5,884,745
Covenants not to compete		1,206,462		1,206,462
Total intangible assets with finite lives		7,079,552		7,091,207
Less: Accumulated amortization		5,987,272		3,980,829
	$	1,092,280	$	3,110,378

Amortization expense related to intangible assets for the years ended June 30, 2010 and 2009 was $2,006,443 and $1,939,201 and amortization expense included in cost of services was $1,461,070 and $1,516,903, respectively.

The following represents the amortization of the intangible assets over the next five years:

Year Ending June 30,
2011	$	801,129
2012		200,846
2013		68,234
2014		18,937
2015		3,134

	$	1,092,280

During the year ended June 30, 2010, the Company recognized an impairment loss of $107,700 representing the unamortized balance of hospital contracts at one hospital closed during the year.

Note 8 - Other Assets

Other Assets consist of the following as of June 30:

	2010		2009
Deferred financing costs, applicable to the Bison Note, net of amortization of approximately $632,000 and $288,000	$	1,035,729	$	1,380,222
Deferred commissions, net of amortization of approximately $74,000		370,761		0
Bank loan fees, net of amortization of approximately $9,000 and $5,000		22,798		31,902
Security deposit		15,264		15,267
Total other assets	$	1,444,552	$	1,427,391

Note 9 – Accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following at June 30, 2010 and 2009:

	2009		2008
Accrued compensation	$	1,435,771	$	1,370,063
Accounts payable		710,877		984,968
Other current liabilities		805,033		725,765
	$	2,951,681	$	3,080,796

Note 10 – Notes payable

Notes payable consist of the following at June 30, 2010 and 2009:

	2010		2009

Bank Loan - Term Note	$	1,250,000	$	1,750,000
Bank Loan - Revolving Line of Credit		0		744,988
Med-Air promissory note		431,496		554,614
Warantz promissory note		24,638		117,999
JD Keith promissory note		0		79,702
AMT, LLC and Boyer Marketing Associates, Inc promissory note		330,170		0
Vans and auto loans		4,336		33,952
		2,040,640		3,281,255
Less: Current maturities		1,093,000		1,957,626
	$	947,640	$	1,323,629

Maturities of the long-term portion of notes payable as of June 30, 2010 are as follows:

Year Ending June 30,
2012	$	638,272
2013		309,368
	$	947,640

Bank loan:

On December 18, 2008, the Company entered into an $8.0 million bank loan with Signature Bank (the “Bank Loan”), which consists of a $6 million revolving line of credit that matures in two years (the “Revolving Line of Credit”), and a $2 million term loan that matures in four years and requires 48 monthly principal payments of $41,667 (the “Term Note”). The maturity of the Revolving Line of Credit has been extended to July 1, 2011. The Term Note bears interest at a rate per annum equal to the prime rate plus 1.0%. As of June 30, 2010 and 2009, the interest rate for the Revolving Line of Credit was 3.75%. The interest rate for the Term Note was 4.25% and 4.75% as of June 30, 2010 and 2009, respectively.

Under the terms of the Bank Loan the Company is subject to certain covenants requiring minimum or maximum levels of quarterly tangible net worth, annual capital expenditures and various financial ratios. Additionally, the Bank Loan restricts the Company in dividend distributions, lending, and investing activities and sale of its assets. The Bank Loan is collateralized by all assets of the Company, except leased equipment.

The Company failed to comply with covenants in its Loan Agreement with Signature Bank, the Company’s senior lender, requiring that the Company’s debt service coverage ratio, and total debt to EBITDA ratio not exceed specified amounts, and requiring that the Company maintain a specified minimum effective net worth as of June 30, 2010, and Signature Bank has agreed to waive the Company’s failure to comply with these financial covenants as of June 30, 2010. Signature has waived such non-compliance through July 1, 2011, provided that the Company complies with such covenants based upon the current ratios and effective net worth as they existed on June 30, 2010, in each case subject to certain specified adjustments, resulting in less stringent requirements that the Company believes that it can satisfy.

The balance outstanding under the Revolving Line of Credit was $0 and $744,988 at June 30, 2010 and 2009, respectively. The unused amount of the Revolving Line of Credit as of June 30, 2010 and 2009 was $6,000,000 and $5,255,012, respectively. During the fiscal year ended June 30, 2010 and 2009, the company recorded interest expense of $78,978 and $161,938, respectively, in relation to the Bank Loan.

Med-Air promissory Note:

In August, 2007, the Company issued a non-interest bearing note of $1,894,000 to Med-Air as part of the purchase consideration for 51% of the membership interest of Raritan Bay LLC and 40% of the membership interest of Bayonne LLC. The note is payable in 36 equal monthly installments. The Company valued the note at its fair value calculated using the effective interest rate, which was determined based on terms of financing available to the Company at that time and recorded a discount of $202,000 to the note. The discount is being amortized to interest expense over the term of the note using the interest method. The interest expense related to the amortization of discount for the year ended June 30, 2010 and 2009 was $30,650 and $74,932, respectively and the unamortized portion of the note discount at June 30, 2010 and 2009 was $18,504 and $30,065, respectively.

Warantz promissory notes:

The Company issued various notes totaling approximately $378,000 to Warantz and other parties together with shares of common stock as the purchase price for the additional 40% interest in Modern Medical, LLC in October 2007. The notes are non-interest bearing and have maturities which range from six to thirty three months. The Company determined the fair value of the notes using an effective interest rate of 8.75% estimated based on credit facilities available to the Company at the time of the transaction and recorded a discount of $45,002 on the notes. The discount is being amortized to interest expense over the terms of the notes using the interest method. Interest expense recorded during the years ended June 30, 2010 and 2009 was $5,083 and $16,771, respectively and the remaining portion of the note discount was $1,067 and $5,083, respectively.

JD Keith promissory note:

In September 2007, the Company terminated the five year employment agreement of Ms. Elise Greenberg, the former Director of Human Resources at the Company, in which all of the Company’s obligations under the employment agreement were terminated. Additionally, the Company terminated a consulting agreement with Ms. Greenberg’s spouse, under which JD Keith LLC, the spouse’s consulting firm, was to be paid $10,000 per month for five years as well as commissions and other compensation. As part of the settlement, the Company entered into an agreement with the Greenbergs. The Company is obligated to pay JD Keith LLC approximately $600,000 in 52 bi-weekly installments during the first two years of the five year agreement. The fair value of the future payments was determined to be $548,150 calculated using the effective interest rate. Interest expense for the liability related to the Greenbergs for the years ended June 30, 2010 and 2009 was $0 and $19,879.

AMT, LLC and Boyer Marketing Associates, Inc. promissory note:

In February 2010, the Company terminated the consulting agreements it had with AMT, LLC (Robert J. Morris) and Boyer Marketing Associates, Inc (Thomas L. Boyer) and negotiated a settlement that included two notes totaling $432,000. The notes are non-interest bearing with monthly payment of $6,000 through November 30, 2012. The Company determined the fair value of the notes using an effective interest rate of 4.25% estimated based on credit facilities available to the Company at the time of the transaction and recorded a discount of $27,078 on the notes. The discount is being amortized to interest expense over the terms of the notes using the interest method. Interest expense recorded during the year ended June 30, 2010 was $9,248, and the remaining portion of the note discount was $17,830.

Note 11 – Senior Collateralized Subordinated Promissory Note

On March 31, 2008, the Company entered into a financing agreement with Bison Capital Equity Partners II-A, L.P. and Bison Capital Equity Partners II-B, L.P. and issued a $20 million senior collateralized subordinated promissory note (“Senior Collateralized Subordinated Note” or “Bison Note”). The Company received cash proceeds of $17.5 million, net of a $2.5 million discount, and incurred approximately $3.1 million of expenses related to this transaction. The Company used these proceeds to retire certain debts with accrued interest, certain accounts payable and other obligations.

Under the terms of the Bison Note, cash interest accrues at the rate of 12% per annum. Initial Payment-in-Kind (“PIK”) interest accrued at 6% per annum until certain conditions were met in September 2008. Beginning in October 2008, PIK interest decreased to 3% per annum. Provided no event of default had occurred, the Company had the option to defer up to 12 months of scheduled payments of cash interest until maturity of the note. Payment of cash interest began in October 2009.

Also under the terms of the Bison Note, PIK interest rate increases upon an event of default and if such default is not cured within a certain period of time or waived by the Bison Note holders, the outstanding principal balance and accrued interest become due and payable. The Company failed to comply with a covenant requiring the Company to have a specified minimum Consolidated Adjusted EBITDA for the fiscal quarter ended December 31, 2009. A waiver for such default was obtained which included an increase in PIK interest from 3.0% per annum to 4.5% per annum effective January 1, 2010. PIK interest remained at 4.5% per annum through June 30, 2010.

The Bison Note is required to be paid in annual installments of $2.5 million starting from the second anniversary and until the fifth year at which point the Company is required to retire the remaining balance. The Bison Note and other obligations under the securities purchase agreement under which the Bison Note was issued are collateralized by a lien granted by the Company and its subsidiaries on substantially all of their assets, including all stock held by either the Company or its subsidiaries. The Bison Note is subordinated to the Bank Debt.

Additionally, the Company entered into a common stock warrant agreement with the holders of the Bison Note and issued warrants to purchase 7,941,926 shares of its common stock with an exercise price of $5 per share and a seven year term. 4,765,156 or 60% of the warrants vested immediately and the remaining warrants vest monthly over a three year period. Under the terms of the common stock warrant agreement, part of the unvested warrants might be canceled, provided the Company meets certain EBITDA targets and required Bison Note redemption conditions.

The Company determined the fair value of warrants to be $8,391,893 and recorded such amount as a discount to the Bison Note in addition to $2.5 million discount. Additionally, based on the fair values of the Bison Note and warrants the Company allocated $3.1 million of expenses related to the transaction as follows: $1.7 million to deferred expenses and $1.4 million to additional paid-in capital. The Company amortizes the deferred financing cost and debt discount, and records interest expense at an effective rate of 37%, using the interest method.

Presented below are balances and related expenses for the Bison Note as of and for the years ended June 30, 2010 and 2009:

	2010			2009

Bison Note	$	17,500,000		$	20,000,000
Debt discount		(8,373,309	)		(10,150,744	)
Interest payable at maturity – Bison Note		6,438,981			4,455,781
Senior collateralized subordinated promissory note		15,565,672			14,305,037
Less current maturities		426,170			532,227
Non-current maturities	$	15,139,502		$	13,772,810

Interest expense, including amortization of debt discount and issuance cost	$	5,944,424		$	4,576,838

Under the terms of the financing agreement the Company is required to maintain certain financial ratios and covenants related to its indebtedness, is subject to a lien on its assets and is restricted in respect to certain transactions, including compensation to its employees and members of its board of directors, and payment of dividends.

The Company and Bison have amended the Securities Purchase Agreement relating to the Bison Note, among other things, to change the definition of Consolidated Adjusted Earnings Before Interest, Taxes Depreciation and Amortization (“Consolidated Adjusted EBITDA”) applicable to periods from and after December 31, 2009.

The Company failed to comply with the covenant requiring the Company to have a specified minimum trailing twelve-month Consolidated Adjusted EBITDA (as revised) and a covenant requiring the Company’s Consolidated Leverage Ratio not to exceed a specified maximum amount. The Company and Bison have entered into a Waiver and Forbearance Agreement (and amendments thereto) under which Bison agreed to waive the Company’s failure to comply with such financial covenants as of June 30, 2010 and waived the failure by the Company to comply with such covenants for the measuring period ending June 30, 2010. In this connection, Bison also has agreed to forbear from accelerating the Company’s obligations to Bison under the Securities Purchase Agreement through and including July 1, 2011.

The Waiver and Forbearance Agreement also changed the interest rate on the Bison Note from 15.0% to 16.5% during the period while Bison’s agreement to forbear under the Waiver and Forbearance Agreement is in effect.

The Company and Bison also further amended the Securities Purchase Agreement to provide that it will be an event of default if the Company enters into a definitive agreement with respect to a Change of Control prior to December 31, 2010 and fails for any reason to consummate such transaction by July 1, 2011 or to file a proxy or information statement with the Securities and Exchange Commission within 45 days after the execution such definitive agreement.

The Securities Purchase Agreement also was amended to require the recomputation, starting with the quarter ending June 30, 2010, of certain financial parameters for the fiscal year ended June 30, 2008 for purposes of determining Base Multiple and consequently the Put Price, as such terms are defined in the Securities Purchase Agreement.

Maturities of the Bison Note as of June 30, 2010 are as follows:

Year ending June 30,
2011	$	2,500,000
2012		2,500,000
2013		18,938,981
	$	23,938,981

Note 12 – Income Taxes

The provision for income taxes is comprised of the following:

	For the Year Ended June 30, 2010		For the Year Ended June 30, 2009
Current:	$	-	$	-
Federal		-		-
State		-		130,222
	$	-	$	130,222

The provision for fiscal 2009 includes approximately $107,000 of adjustments and true-ups related to prior year accruals.

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

	For the Year Ended June 30, 2010			For the Year Ended June 30, 2009
Expected tax benefit		(34.0	)%		(34.0	)%
State and local taxes, net of federal benefit		(7.2	)%		3.2	%
Minority interest		0.9	%		2.2	%
Permanent Items		(15.0	)%		(0.2	)%
Change in valuation allowance		55.3	%		32.0	%

Total tax provision		-			3.2	%

The Company has a federal tax operating loss carry-forward of approximately $12.3 million at June 30, 2010 of which $0.8 million expires in 2027, $2.9 million expires in 2028, $0.9 million expires in 2029 and $7.7 million expires in 2030.

The components of the net deferred tax asset (liability) at June 30, 2010 and 2009 consist of the following:

	2010			2009
Deferred tax assets:
Allowance for doubtful accounts	$	399,000		$	1,165,000
Property assets		55,000	)		(476,000	)
Intangibles		865,000			-
Accrued expenses		273,000			254,000
Stock option compensation		2,667,000			2,404,000
Net operating loss carry-forward		4,695,000			2,806,000
Total deferred tax asset		8,954,000			6,153,000
Less valuation allowance		(8,954,000	)		(6,153,000	)

Net deferred assets	$	0		$	0

In June 2006, the FASB issued guidance related to recognition threshold and measurement attributes for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. The guidance also addresses de-recognition, classification, interest and penalties and accounting in interim periods and requires expanded disclosures with respect to the uncertainty in income taxes. This guidance was effective for the Company on July 1, 2007.

Under this guidance, the Company applied the “more-likely-than-not” recognition threshold to all tax positions, commencing at the adoption date and determined that there were no uncertain tax positions at the adoption date or at June 30, 2010. The Company will recognize accrued interest and penalties, if any, in future years, in income tax expense.

The Company is subject to U.S. federal and state examinations by tax authorities for fiscal years ending June 30, 2007 and thereafter.

Note 13 - Defined Contribution Plan

The Company maintains a 401(k) defined contribution plan in which all employees, over the age of 21, are eligible to participate after three months of employment. The Company is allowed to but chose not to match employee contributions during the years ended June 30, 2010 and 2009.

Note 14 – Payable to Former Majority Members of Limited Liability Company Subsidiaries

The Company acquired certain wound care centers operated through limited liability companies from the majority members of such limited liability companies during the year ended June 30, 2006, some of whom are also employees, directors and stockholders of the Company. As part of the purchase consideration the Company recognized a liability to former majority members of these limited liability companies in the amount of $0.6 million. The Company paid $118 thousand of this liability to the former majority members during the year ended June 30, 2010.

Note 15 - Commitments and Contingencies

Registration Rights Agreement

In connection with the issuance of the Bison Note (Note 11), the Company entered into a Registration Rights Agreement with the holders of the Bison Note under which the Company is required, after October 15, 2008, to be in a position to file, within 60 days upon a request, and maintain its effectiveness for at least 180 days, a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the shares of common stock issuable pursuant to exercise of the warrants issued with Bison Note. If the Company fails to file or maintain effectiveness of the registration statement or if the registration statement is not declared effective by the SEC, the Company is subject to a penalty equal to 2% of the securities to be registered per month. Such penalty is doubled if the Company’s failure extends for more than 90 days but the maximum amount of penalty cannot exceed 20% of securities to be registered. The Company has not accrued any amounts in connection with these commitments, because management believes that it is not probable that any such penalties will be incurred.

Other Contingencies and Uncertainties

The Company is from time to time involved in routine litigation incidental to the conduct of its business, including employment disputes and other claims. The Company believes that no such routine litigation currently pending against it, if adversely determined, would have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Employment Agreements

Two officers and two members of the Company’s board, who are former officers of the Company, have employment agreements. In 2010, the Company paid these four individuals a total of $1,719,918 in salary and bonuses. The four employment agreements have terms that run through June 30, 2011 and have annual minimum compensation obligations of approximately $1,490,300 in fiscal years 2011. Certain of these employment agreements for the Company’s officers provide, in addition to their base salaries, minimum cash bonuses, stock options and other executive benefits common for these types of employment arrangements.

Note 16 - Lease Commitments:

The corporate office is located in Tarrytown, NY. On July 21, 2010, the Company extended its Tarrytown, NY lease to include additional space. Future payments under non-cancelable operating lease obligations for office space are as follows:

Years Ending June 30,
2011	$	130,969
2012		136,482
2013		139,707
2014		141,393
2015		143,754
Thereafter		83,857

Rent expense under the operating leases in fiscal years ended June 30, 2010 and 2009 was $146,767 and $125,848, respectively.

Note 17 - Valuation and qualifying accounts

The following is a summary of the allowance for doubtful accounts related to accounts and notes receivable for the years ended June 30, 2010 and 2009:

	2010			2009
Balance at beginning of year	$	3,088,272		$	2,941,917
Provision for doubtful accounts and notes		2,687,929			2,111,499
Uncollectible accounts written off		( 4,746,803	)		(1,965,144	)
Balance at the end of year	$	1,029,398		$	3,088,272

Note 18 – Subsequent Event

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:

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

Item 9A. Controls and Procedures:

Disclosure Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

The Company’s management carried out an evaluation, conducted by its chief executive officer and chief financial officer, on the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2010, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures as of June 30, 2010 were effective.

(b) Changes in Internal Control over Financial Reporting.

During the quarter ended June 30, 2010, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

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

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

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

The Company’s management has assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2010. In making this assessment, the Company referenced the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework.” These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The Company’s assessment included documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting.

Based on the Company’s processes and assessment, as described above, management has concluded that, as of June 30, 2010, the Company’s internal controls are effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Such report is not required by the Company’s registered public accounting firm.

Item 9B. Other Information:

None.

PART III

ITEM 10.

Directors, Executive Officers, and Corporate Governance:

Our directors, executive officers and control persons and their respective ages as of October 12. 2010, are as follows:

Name	Age	Position
Andrew G. Barnett	56	CEO, Secretary, Director
David Walz	50	President, Treasurer
Michael J. Jakolat	50	CFO
John Capotorto, MD	49	Chairman of the Board and Director
Paul Basmajian	53	Director
John DeNobile	37	Director
Dr. Phillip Forman	51	Director
Douglass Trussler	39	Director
Peter S. Macdonald,	51	Director

Business Experience of Current Officers and Directors:

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

Andrew G. Barnett has been our Chief Executive Officer since January 19, 2007, our Chief Financial officer through June 29, 2010 and is also our Corporate Secretary. From January 1, 2001 through January, 2007, Mr. Barnett was a principal of Morris Anderson & Associates, Ltd., a financial and management consulting firm. Mr. Barnett brings extensive expertise in the development and implementation of strategic plans, and operational and financial strategies. Mr. Barnett has served in advisory and senior management capacities as CEO, COO, and CFO to both publicly and privately held companies. Mr. Barnett has acted in such capacities in many companies including a $1 billion tobacco and HBA distributor, a $100 million outdoor security lighting company, a $150 million periodicals agency, a $90 million consumer products company, a $100 million financial services company, a $100 million industrial parts distributor, and a $50 million professional services firm. Mr. Barnett has served a broad range of clients with operations throughout the United States as well as in Europe, the Middle East and Asia. Industry experience includes retail, manufacturing, consumer products, publishing, financial services, wholesale distribution and professional services. Mr. Barnett has served as a director since 2008.

David J. Walz was named President on September 27, 2006 and is also our Treasurer. Mr. Walz joined the predecessor company in November 2003 as Executive Vice President and Chief Operating Officer. Mr. Walz is an executive with over 21 years of experience in hospital operations, financial management, business development and strategic planning within complex healthcare organizations. From November 2000 to September 2003, Mr. Walz was Executive Director/Vice President of Operations at St. John’s Queens Hospital, a teaching division of Saint Vincent’s Catholic Medical Centers in New York, where he was responsible for the day-to-day operations. Prior to this role, Mr. Walz held various positions in finance, including director of finance for a four-hospital system. Mr. Walz has a Bachelors degree in Finance, Banking and Investments and also holds a Master Degree in Healthcare Administration. Mr. Walz is a Fellow (“FHFMA”) and a Certified Managed Care Professional (“CMCP”) in the Healthcare Financial Management Association

Michael J. Jakolat was named Chief Financial and Chief Accounting Officer on June 29, 2010. Mr. Jakolat served as Vice President, Finance of the Company since July 1, 2009. Prior to joining the Company, Mr. Jakolat founded the BeaconView Group, a boutique advisory firm serving a number of middle market public and private companies, including the Company. Prior to founding the BeaconView Group, Mr. Jakolat was Vice President and Chief Financial Officer of Life Fitness, an upper-middle-market manufacturer of high-end consumer and commercial fitness equipment. At Life Fitness, Mr. Jakolat was responsible for global financial and information technology operations

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

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

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

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

Douglas B. Trussler co-founded Bison Capital in 2001 and is a partner and serves as its president. Previously, he was at Windward Capital Partners LP, and at Credit Suisse First Boston. Mr. Trussler is currently a member of the Board of Directors of GTS Holdings, Inc., Performance Team Freight Systems, Inc., Royal Wolf Australia Ltd., Royal Wolf Trading New Zealand Limited, Precision Assessment Technology Corporation, and Big Rock Sports, LLC. He was formerly a member of the Board of Directors of Twin Med, LLC and Helinet Aviation, Inc. Mr. Trussler earned a BA with honors in Business Administration from the University of Western Ontario in Canada. Mr. Trussler has served as a director of the Company since 2008.

Peter Macdonald is a general partner of Bison Capital. Mr. Macdonald joined Bison Capital in 2009. Prior to joining Bison Capital, Mr. Macdonald was a Managing Director of BlackRock Kelso Capital Management from 2006 to 2009. From 1994 until 2006, Mr. Macdonald was a Partner of Windward Capital Partners, LP. Prior to co-founding Windward, Mr. Macdonald was a member of the Mergers & Acquisitions Group of CS First Boston.

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

Family and Other Relationships:

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

Bison Capital Equity Partners II-A., L.P. Bison Capital Equity Partners II-B., L.P. (collectively, the “Bison Entities”), the Company and certain executive officers and stockholders of the Company, including Dr. Capotorto, Dr. Forman, Mr. Barnett, Mr. Walz, Mr. De Nobile, Mr. Basmajian and the Elise Trust, are parties to a Voting Agreement dated as of March 31, 2008, pursuant to which such parties have agreed to vote their shares of common stock of the Company in favor of the election of two representatives designated by the Bison Entities, initially Messrs. Trussler and Bissette, as directors of the Company. At a meeting held on June 29, 2010, the Company’s Board of Directors elected Peter S. Macdonald, director of the Company and a member of the Audit Committee of the Board of Directors, filling the vacancy on the Board of Directors and the Audit Committee of the Board of Directors created by reason of Mr. Bissette’s resignation. Such voting agreement also provides that, under certain circumstances following an Event of Default (as defined in the Securities Purchase Agreement dated as of March 31, 2008, between the Bison Entities and the Company), the Bison Entities shall be entitled to designate a majority of the Company’s directors. The Voting Agreement also provides that the number of directors constituting the entire board of directors shall not exceed seven without the written consent of the Bison Entities.

Board Committees and Independence:

Director Independence; Audit and Compensation Committees

Director Independence

The Board assesses each director’s independence in accordance with the applicable rules and regulations of NASDAQ. This assessment includes a review of any potential conflicts of interest and significant outside relationships. In determining each director’s independence, the Board broadly considers all relevant facts and circumstances, including specific criteria included in NASDAQ’s corporate governance standards. For these purposes, the Board of Directors considers certain relationships that existed during a three-year look-back period. The Board of Directors considers the issue not merely from the standpoint of a director, but also from the standpoint of persons or organizations with which the director has an affiliation. An independent director is free of any relationship with the Company or management that impairs the director’s ability to make independent judgments.

Based on this assessment, the Board of Directors has determined that Messrs. Basmajian, Trussler and Macdonald are independent.

Audit and Compensation Committees

In October 2008, the Board of Directors established an Audit Committee, and on March 5, 2009, appointed the initial members of f the Audit Committee. The principal functions of the Audit Committee are to recommend the annual appointment of the Company’s auditors, to discuss with the auditors matters concerning the scope of the audit and the results of their examination, to review and approve any material accounting policy changes affecting the Company’s operating results and to review the Company’s internal control procedures.

The current members of the Audit Committee are Messrs. Trussler and Macdonald. The Board of Directors has determined that Messrs. Trussler and Macdonald are audit committee financial experts within the meaning of applicable SEC rules. Mr. Macdonald was appointed to the Audit Committee on June 29, 2010, filling the vacancy created by reason of the resignation of Mr. Louis Bissette from the Board of Directors.

On March 5, 2009 the Board of Directors authorized the establishment of a Compensation Committee. The principal functions of the Compensation Committee are to review and recommend compensation and benefits for the executives of the Company.

Certain Additional Information Concerning the Board of Directors

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

Compliance with Section 16(a) of the Exchange Act

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

To our knowledge, based upon a review of the copies of such reports furnished to us and based upon written representations that no other reports were required, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with for the fiscal year ended June 30, 2010.

Code of Ethics

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

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

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

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

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

5) Accountability for adherence to the code.

The company adopted a formal code of ethics statement that is designed to deter wrong doing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the company files or submits to the SEC and others. A copy of the code of ethics is filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the SEC on September 24, 2004, and may be obtained without charge from the Company upon request. Such request may be directed to the Company at its principal executive offices, 155 White Plains Road, Suite 200, Tarrytown, NY 10591, attention: Corporate Secretary.

ITEM 11. Executive Compensation:

FISCAL 2010 SUMMARY COMPENSATION TABLE

The following table summarizes the compensation of the Named Executive Officers for the fiscal years ended June 30, 2010, 2009 and 2008. The Named Executive Officers are the Company’s Chief Executive Officer and Chief Financial Officer and the Company’s President. Listed below are the only two executive officers of the Company that served in positions that would cause them to be Named Executive Officers during the year ended June 30, 2010.

												Non-Qualified
										Non-Equity		Deferred
						Stock		Option		Incentive Plan		Compensation		All Other
	Fiscal	Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation			Total
Name and Principal Position	Year	($)		($)		($)		($) (1)		($)		($)		($)			($)

Andrew G. Barnett (2)	2010		403,992		150,000										34,782	(2)		588,774
Chief Executive Officer	2009		382,313		250,000		-		767,259						35,973	(2)		1,435,545

David J. Walz (2)	2010		340,560		50,000										35,754	(2)		426,314
President	2009		290,557		60,000		-		254,222		-		-		25,771	(2)		630,550

(1)

The values for option awards in this column represent the cost recognized for financial statement reporting purposes for fiscal year 2010 and 2009, respectively, in accordance with FAS 123R. However, pursuant to SEC rules these values are not reduced by an estimate for the probability of forfeiture. The assumptions used to value these awards can be found in Note 5 to the financial statements in this Form 10-K.

(2)	We reimbursed automobile expenses for Messrs. Barnett and Walz in the amounts of $24,629 and $15,000, respectively, and health benefit expenses in the amounts of $10,153 and $10,606, respectively.

Employment Agreements with the Named Executive Officers

Employment Agreement for Andrew G. Barnett

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

Under the terms of the agreement, Mr. Barnett will receive an annual base salary of $375,000 beginning March 31, 2008, which salary will be reviewed annually by the board of directors. In addition, Mr. Barnett is eligible to earn annual cash performance bonuses based on the Company’s achievement of certain adjusted EBITDA targets for fiscal years 2009 through 2013 and thereafter. The amount of the annual cash performance bonus, if earned, will be set by the Board in its sole discretion, but will be no less than $50,000 and no greater than 50% of his then-existing base salary. Mr. Barnett is also eligible for all employee benefits made available generally to other senior executive officers, including participation in medical and life insurance programs and profit sharing plans, and is entitled to reimbursement for automobile expenses, provided such expenses do not exceed $15,000 per year and $3,000 per month. We have agreed to establish a long-term incentive plan, in which Mr. Barnett will be entitled to participate. If Mr. Barnett is subject to an excise tax under the Internal Revenue Code of 1986, as amended, he will be entitled to a gross-up payment.

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

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

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

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

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

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

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

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

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

Employment Agreement for David Walz

On December 2, 2008, The Center for Would Healing, Inc. (the “Company”) entered into an Amended and Restated Employment Agreement with David Walz, the Company’s President and Treasurer (the “Amended Agreement”).

The Amended Agreement, effective as of October 7, 2008, amended and restated the Employment Agreement dated April 1, 2005. The prior agreement was filed with the Company’s Form 10-K for the fiscal year ended June 30, 2007. The material amendments to the Amended Agreement are described below. The description is qualified by the Amended Agreement filed as Exhibit 10.1 to this Form 8-K.

The initial term of the Amended Agreement is three years, commencing October 7, 2008 and ending on June 30, 2011, and will be automatically renewed for an additional 12 months unless Mr. Walz or the Company provides written notice of the intent not to renew on or before January 1, 2011. After each 12 month extension, the term will continue to renew for successive 12 month periods unless Mr. Walz or the Company provides written notice of the intent not to renew no less than 180 days prior to the end of the renewal term.

Mr. Walz’s annual base salary is $285,000 and is subject to annual cost of living increases not to exceed 4% per year. The Board will also review the base salary at least annually and may increase it in its sole discretion. Mr. Walz will receive a $10,000 signing bonus upon execution of the Amended Agreement. He is eligible to earn annual cash performance bonuses based on the Company’s achievement of certain gross margin targets for fiscal years 2009 through 2011 and thereafter. The amount of the annual cash performance bonus, if earned, will be set by the Board in its sole discretion, but will be no less than $50,000 and no greater than 50% of his applicable base salary. Mr. Walz’s car allowance is increased to an amount not exceeding $15,000 per year, and his vacation is increased to 6 weeks per year.

The exercise price of the 210,000 time vesting options previously granted to Mr. Walz is decreased to $1.05 per share, which represents the fair market value of a share of the Company’s stock as determined by the Board as of October 8, 2008. The expiration date of the time vesting options is extended to April 1, 2011. In addition, on October 8, 2008, Mr. Walz was granted (i) an additional 300,000 time vesting options and (ii) an additional 225,000 performance vesting options, at an exercise price of $1.05 per share. The time vesting options will vest 25% per year on each anniversary of the grant date. The performance vesting options will vest 33 1/3% per year if we meet certain quarterly Adjusted EBITDA targets during fiscal years 2009, 2010 and 2011.

In the event of a termination of his employment by the Company without cause, by Mr. Walz for good reason or by Mr. Walz following a change in control, he is entitled to (1) continuation of his then-existing base salary through the end of the term or for 24 months, whichever is longer, (2) a pro-rata amount of his annual bonus, (3) payment of any accrued employment benefits and (4) continued health or medical benefits for 24 months. Any unvested time vesting options will immediately vest and become exercisable. With respect to performance vesting options, if the Company’s annualized EBITDA for the quarter during which the termination takes place exceed any of the EBITDA vesting thresholds, then any performance vesting options that would have vested as a result of the Company’s achieving such EBITDA threshold at any time shall vest and become exercisable.

However, if his employment is terminated as a result of the Company’s failure to renew the initial term of this Amended Agreement, then he is generally entitled to receive the continuation of his base salary and his health or medical benefit plans for a period of 12 months.

Employment Agreement for Michael J. Jakolat

The Company employs Mr. Jakolat pursuant to an Employment Agreement dated July 1, 2009. The description of Mr. Jakolat’s Employment Agreement set forth below is qualified in its entirety by reference to the text of such Employment Agreement.

Mr. Jakolat’s Employment Agreement provides that he is to be employed by the Company as Vice President-Finance. No changes were made to Mr. Jakolat’s Employment Agreement in connection with his election to the positions of Chief Financial Officer and Chief Accounting Officer of the Company.

The initial term of Mr. Jakolat’s Employment Agreement is for two years, commencing July 1, 2009 and ending June 30, 2011, and will be automatically renewed for an additional 12 months unless either Mr. Jakolat or the Company provides written notice to the other of intent not to renew on or before January 1, 2011. Following such initial 12 month renewal term, Mr. Jakolat’s employment shall be automatically renewed for successive 12 month periods unless either Mr. Jakolat or the Company has provided written notice to the other of intent not to renew prior to the expiration of the prior renewal term.

Mr. Jakolat’s annual base salary is $260,000, subject to review and possible increase by the Company’s Chief Executive Officer at least annually. In addition, Mr. Jakolat is eligible to receive an annual cash performance bonus for each fiscal year during the term of his employment if he remains employed by the Company on the last day of the applicable fiscal year, such bonus to be based upon the annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) and accounts receivable days sales outstanding (“Accounts Receivable DSO”) targets set forth in the Company’s Business Plan. The amount of Mr. Jakolat’s cash bonus, if any, shall be established by the Company’s Chief Executive Officer following the close of the applicable fiscal year.

Mr. Jakolat was granted options to purchase a total of 400,000 shares of Common Stock, par value $0.001 per share, of the Company (“Common Stock”) under the Company’s 2006 Stock Option Plan, at an exercise price of $1.05 per share. Such options are exercisable for a term of five years. Options to purchase 250,000 shares were fully vested at the time of grant, and the options to purchase the remaining 150,000 shares will vest as follows: If the Company achieves the annual EBITDA and Accounts Receivable DSO targets set forth in the Company’s business plan for the fiscal year ending June 30, 2010, then Mr. Jakolat’s option to purchase 100,000 shares of Common Stock shall vest as of the last day of the applicable quarter. If the Company achieves the annual EBITDA and Accounts Receivable DSO targets set forth in the Company’s business plan for the fiscal year ending June 30, 2011, then Mr. Jakolat’s option to purchase 50,000 shares of Common Stock shall vest as of the last day of the applicable quarter. All of Mr. Jakolat’s options will become fully vested upon a Change in Control (as defined in Mr. Jakolat’s Employment Agreement). Mr. Jakolat also holds options, exercisable for five years, to purchase a total of 280,000 shares of Common Stock at an exercise price of $1.05 per share that were granted as partial consideration for consulting services rendered prior to his full-time employment by the Company.

In the event of the termination of Mr. Jakolat’s employment by the Company without cause or after the Company notifies Mr. Jakolat in writing of its intent not to renew the term of Mr. Jakolat’s Employment Agreement, or by Mr. Jakolat for “Good Reason” (as defined in Mr. Jakolat’s Employment Agreement), or by Mr. Jakolat following a Change in Control, then Mr. Jakolat is entitled to continuation of his base salary then in effect for a period of 12 months after the termination of his active employment, accrued but unpaid base salary and any annual bonus earned for any prior years, accrued employment benefits (including accrued vacation) and continued participation at the Company’s expense for six months in the Company’s employee benefit plans and programs (or reimbursement for costs incurred by Mr. Jakolat to procure continuation coverage if he is not then eligible to participate in such plans). All unvested stock options granted to Mr. Jakolat also shall immediately vest.

In Mr. Jakolat’s Employment Agreement, the Company also agrees to indemnify Mr. Jakolat under the Company’s Articles of Incorporation and By-Laws, to cover Mr. Jakolat pursuant to the terms of the Company’s standard indemnification agreement, and to provide directors’ and officers’ liability insurance coverage in amounts appropriate for the Company’s size for a period during the term of Mr. Jakolat’s employment and for a period of three years thereafter.

OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR END

The following table shows the number of shares covered by exercisable and unexercisable options held by the Company’s Named Executive Officers on June 30, 2010. All options were granted under the Center for Wound Healing 2006 Stock Option Plan, formerly called the Kevcorp Services Inc. 2006 Stock Option Plan. There were no stock awards outstanding on June 30, 2010

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)			Option Exercise Price ($)		Option Grant Date	Option Expiration Date
Andrew G. Barnett		1,050,000							1.05	January 19, 2007	January 19, 2017
		250,000							1.05	July 21, 2008	July 21, 2018
									1.05	January 19, 2007	January 19, 2017
						100,000	(2)		1.05	January 19, 2007	January 19, 2017
						250,000	(3)		1.05	July 21, 2008	July 21, 2018
David J. Walz		210,000							1.05	April 1, 2006	April 1, 2011
		300,000							1.05	October 8,2008	October 8, 2013
			150,000	(4)					1.05	October 8,2008	October 8,2013
						75,000	(5)		1.05	October 8,2008	October 8,2013

(1)	Of these options, 100,000 will vest related to each respective fiscal year if the Company meets certain financial targets during fiscal fiscal 2011.

(2) Of these options, 250,000 will vest related to each respective fiscal year if the Company meets certain financial targets during fiscal 2011.

(3) Of these options, 75,000 will vest in each October of , 2010, and 2011.

(4) Of these options, 75,000 will vest related to each respective fiscal year if the Company meets certain financial targets during fiscal 2010 and fiscal 2011.

FISCAL 2010 DIRECTOR COMPENSATION

The following table sets forth the compensation paid to our non-executive officer directors in fiscal year 2010. Mr. Barnett’s compensation is set forth in the Fiscal 2010 Summary Compensation Table.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)			Total ($)
Paul Basmajian		—		—		—		—		—			—
Louis Bissette		—		—		—		—		—			—
John Capotorto, M.D.		—		—		—		—		426,315	(2)		426,315
John DeNobile		—		—		—		—		—			—
Phillip Forman, M.D.		—		—		—		—		458,400	(2)		458,400
Douglas B. Trussler		—		—		—		—		—			—

(1)	As of June 30, 2010, Mr. Basmajian held 110,000 vested options that expire on July 18, 2012.

(2)

Dr. Capotorto received $ 340,561 in salary, $10,754 in health benefit expense and $25,000 for a car allowance for his service as Co-Medical Director, a non-executive position; and Dr. Forman received $340,561 in salary, and $10,639 for health benefit expense and $57,200 for a car allowance for his service as Co-Medical Director, a non-executive officer position. The employment agreements are described below.

Employment Agreements for John Capotorto and Phillip Forman

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

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

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

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

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

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

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

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters:

The following tables set forth certain information with respect to the beneficial ownership of The Center for Wound Healing’s Common Stock as of October 12, 2010 by each director and named executive officer of the Company, all executive officers and directors as a group, and each person known to the Company to own beneficially more than 5% of the Common Stock.

(A)	Security Ownership of Certain Beneficial Owners

	AMOUNT OF		PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER	OWNERSHIP (1)		OF CLASS (2)
The Elise Trust P.O. Box 562, Goldens Bridge, NY 10526		4,221,181		17.5	%

(B)	Security Ownership of Management

	AMOUNT OF		PERCENT
NAME OF BENEFICIAL OWNER	OWNERSHIP (1) (2) (3)		OF CLASS (4)
Andrew G. Barnett		1,036,450		4.1	%
Paul Basmajian		337,776		1.3	%
Peter Macdonald (5)		7,941,926		24.8	%
John Capotorto, M.D.		4,242,266		17.6	%
John DeNobile		2,050,924		8.5	%
Phillip Forman, M.D.		3,894,682		16.1	%
Douglas B. Trussler (5)		7,941,926		24.8	%
David Walz		525,999		2.16	%

Directors and executive officers as a group (9 persons)		20,280,423		60.0	%

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

(2) Under the rules of the Securities and Exchange Commission, a person is deemed to be the beneficial owner of a security if that person, directly or indirectly has or shares the powers to direct the voting of the security or the power to dispose or direct the disposition of the security. Accordingly, more than one person may be deemed to be a beneficial owner of the same securities.

(3) Includes shares which may be acquired through stock options or warrants exercisable through December 13, 2010 in the following amounts: Barnett - 950,000; Basmajian - 110,000; Walz - 435,000 and Jakolat – 250,000.

(4) Based on 24,123,638 shares of Common Stock issued and outstanding as of October 11, 2010; 1,495,000 exercisable stock options; and 7,941,926 outstanding warrants.

(5) Includes the following for which the named person has shares voting and investment power: warrants held by Bison Capital Equity Partners II-A, L.P. to purchase a total of 526,153 shares of Common Stock at the initial exercise price of $5.00 per share and warrants held by Bison Capital Equity Partners II-B, L.P. to purchase a total of 7,415,773 shares of Common Stock at the initial exercise price of $5.00 per share.

Item 13. Principal Accountant Fees and Services:

Audit Fees:

The following is a summary of the fees incurred or expected to be incurred by the Company for professional services rendered by its principal accountants for fiscal 2010 and 2009:

	Year Ended June 30,
	2010		2009
Audit fees(a)	$	300,000	$	406,000
Audit related fees		-		-
Tax fees (b)	$	93,000		-
All other(c)	$	15,000		-
Total	$	408,000	$	406,000

(a)

Audit fees for the year ended June 30, 2009 include $116,000 for quarterly review services provided by our former principal accounting firm.

(b)

Tax fees consist of tax compliance and tax planning services. Such services aggregated approximately $133,000 for the year ended June 30, 2009 and were provided by a firm other than our principal accounting firm.

(c)

All other fees for the year ended June 30, 2010 consist of fees for the audit of the Company’s 401-k Plan.

Based on the review and discussions referred to above, the Board approved the inclusion of the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for its 2010 fiscal year for filing with the SEC.

The Board pre-approved all fees described above.

ITEM 14 Exhibits:

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

Exhibit No.		Description of Exhibit

3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i) to Form 10-K filed on April 10, 2008)

3.2		Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to Form 8- filed on July 25, 2008)

4.1		Securities Purchase Agreement dated as of April 7, 2006 among the Company and the purchasers named therein with respect to $5.5 million principal amount of Debentures and Warrants to purchase common stock of the Company, including the form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 of Annual Report on Form10-KSB filed on September 25, 2008)

4.2		Securities Purchase Agreement dated as of March 31, 2008 among the Company and Bison Capital Equity Partners II-A, L.P. and Bison Capital Equity Partners II-B, L.P. (“Bison”) (incorporated by reference to Exhibit 4.1 to Form 8-K filed on April 7, 2008)

4.3		15% Senior Secured Subordinated Promissory Note in the principal amount of $20 million due March 31, 2013 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on April 7, 2008)

4.4		Common Stock Warrant Agreement dated as of March 31, 2008 among the Company and Bison, and the related Series W-1 and W-2 Warrants (incorporated by reference to Exhibits 4.3, 4.4 and 4.5 to the Current Report on Form 8-K filed on April 7, 2008)

4.5		Registration Rights Agreement dated as of March 31, 2008 among the Company and Bison (incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K filed on April 7, 2008)

9.1		Form of Voting Agreement dated as of March 31, 2008 among the Company, Bison and certain shareholders of the Company (incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K filed on April 7, 2008)

10.1*		Employment Agreement between American Hyperbaric, Inc. and Dr. John Capotorto dated December 1, 2005 (incorporated by reference to Exhibit 10.4 to Form 10-QSB filed February 21, 2006)

10.2*		Employment Agreement between American Hyperbaric, Inc. and Dr. Phillip Forman dated December 1, 2005 (incorporated by reference to Exhibit 10.5 to Form 10-QSB filed February 21, 2006)

10.3*		Amended and Restated Employment Agreement between The Center for Wound Healing, Inc. and David Walz, executed December 2, 2008 (incorporated by reference to Exhibit 10.1 to Form 10-QSB filed December 2, 2008)

10.4 *		Amended and Restated Employment Agreement between The Center for Wound Healing, Inc. and Andrew Barnett executed July 21, 2008 (incorporated by reference to Exhibit 10.5 of Annual Report on Form 10-KSB filed on September 25, 2008)

10.5*		Employment Agreement dated July 1, 2001 between The Center For Wound Healing, Inc., and Michael J. Jakolat (incorporated by reference to Exhibit 10.1 to Current Report on Form 80K filed on July 2, 1010)

10.6		2006 Stock Option Plan, as Amended and Restated July 21, 2008 (incorporated by reference to Exhibit 10.6 of Annual Report on Form 10-KSB filed on September 25, 2008)

10.7		Settlement Agreement between the Company and Keith Greenberg, Elise Greenberg, the Elise Trust, Raintree Development, LLC, JD Keith LLC and Braintree Properties LLC dated September 21, 2007 (incorporated by reference to Exhibit 10.7 of Annual Report on Form 10-KSB filed on September 25, 2008)

10.8		Settlement Agreement between the Company and Med-Air Consultants, Inc., Alan Richer and Joel Macher dated August 9, 2007 (incorporated by reference to Exhibit 10.8 of Annual Report on Form 10-KSB filed on September 25, 2008)

10.9		Seventh Amendment to Amended and Restated Loan Agreement dated March 31, 2008 by and among the Company, certain borrowers named therein and Signature Bank (incorporated by reference to Exhibit 10.10 of Annual Report on Form 10-KSB filed on September 25, 2008)

10.10		Eighth Amendment to Amended and Restated Loan Agreement dated December 18, 2008 by and among the Company, certain borrowers named therein and Signature Bank (incorporated by reference to Exhibit 10.11 of Annual Report on Form 10-K filed on October 13, 2009)

10.11		Waiver dated as of October 9, 2009, in respect of Amended and Restated Loan Agreement dated December 18, 2008 by and among the Company, certain borrowers named therein and Signature Bank (incorporated by reference to Exhibit 10.12 of Annual Report on Form 10-K filed on October 13, 2009

10.12		Waiver dated May 24, 2010 in respect of Amended and Restated Loan Agreement among the Company and its subsidiaries and Signature Bank (incorporated by reference to Exhibit 4.1 of Quarterly Report on Form 10-Q filed on May 26, 2010).

10.13		Third Amendment to Securities Purchase Agreement dated May 24, 2010 between Bison Capital Equity Partners II-A, L.P. and Bison Capital Equity Partners II-B, L.P., and the Company (incorporated by reference to Exhibit 4. of Quarterly Report on Form 10-Q filed on May 26, 2010).

10.14†		First Amendment dated September 17, 2010, to Waiver and Forbearance Agreement between Bison Capital Equity Partners II-A, L.P., and Bison Capital Equity Partners II-B, L.P. and the Company.

10.15†		Fourth Amendment to Securities Purchase Agreement dated September 17, 2010 between Bison Capital Equity Partners II-A, L.P.and Bison Capital Equity Partners II-B, L.P., a Delaware limited partnership and the Company.

10.16†		Second Amendment dated October 13, 2010, to Waiver and Forbearance Agreement between Bison Capital Equity Partners II-A, L.P., and Bison Capital Equity Partners II-B, L.P. and the Company.

10.17†		Fifth Amendment to Securities Purchase Agreement dated October 13, 2010, between Bison Capital Equity Partners II-A, L.P.and Bison Capital Equity Partners II-B, L.P., a Delaware limited partnership and the Company.

10.18†		Waiver and Ninth Amendment dated as of October 13, 2010, among the subsidiaries of the Company, the Company and Signature Bank.

14.1		Code of Ethics (incorporated by reference to Exhibit 99.1 to Form 10-K filed on September 24, 2004)

21.1†		Subsidiaries

31.1†		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

31.2†		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1†		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

32.2†		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

† Filed herewith

* Management contract

SIGNATURES

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

Signature	Title	Date

/s/ Andrew G. Barnett	Chief Executive Officer	October 13 , 2010
Andrew G. Barnett

In accordance with the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date

/s/ Andrew G. Barnett	Chief Executive Officer;	October 13, 2010
Andrew G. Barnett	Director

/s/ Michael J. Jakolat	Chief Financial Officer;	October 13, 2010
Michael J. Jakolat	Chief Accounting Officer

/s/ Paul Basmajian	Director	October 13, 2010
Paul Basmajian

/s/ Dr. John Capotorto	Director	October 13, 2010
Dr. John Capotorto

/s/ John De Nobile	Director	October 13, 2010
John DeNobile

/s/ Dr. Phillip Forman	Director	October 13, 2010
Dr. Phillip Forman

/s/Peter S. Macdonald	Director	October 13, 2010
Peter S. Macdonald

/s/Douglas B. Trussler	Director	October 13, 2010
Douglas B. Trussler

Attached files

Center for Wound Healing, Inc. Reports

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