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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB/A

(Amendment No. 1)

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

EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2008

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

EXCHANGE ACT OF 1934

Commission file number: 000-5137

THE CENTER FOR WOUND HEALING, INC.

(Name of Small Business Issuer in Its Charter)

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

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

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

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

None

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

Common Stock, $0.001 par value per share

(Title of Class)

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

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

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE: None.

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

EXPLANATORY NOTE

We filed our Annual Report on Form 10-KSB for fiscal year ended June 30, 2008 with the Securities and Exchange Commission (the “SEC”) on September 25, 2008. We are filing this Amendment No. 1 on the Form 10-KSB/A on October 9th, 2009 to amend and restate our financial statements for fiscal year ended June 30, 2008 and the related footnote disclosures to reflect the correction of an accounting error, all as more fully described in the following paragraph.

During the preparation of its consolidated financial statements for the fiscal year ended June 30, 2009, the Company discovered that the initial recording of a financing transaction entered into on March 31, 2008 had incorrectly accounted for certain elements of the transaction related to the pricing of warrants to purchase shares of the Company’s common stock, the amortization of costs associated with such financing, and the issuance of appropriate number of warrants to a former debt holder and to Bison Capital Equity Partners II-A, L.P. and Bison Capital Equity Partners II-B, L.P. (collectively, the “Bison Capital Entities”), with which the Company consummated a financing transaction on March 31, 2008 (the “Bison Note”). As it effects the June 30, 2008 filing, it was determined that the shareholders’ equity was understated and interest expense, long-term liabilities and other assets were overstated. In conjunction with its review of its accounting for warrants as described above, the Company has issued warrants to purchase an additional 3,093,750 shares of common stock to the former debt holder, which warrants were required to be issued as a result of a January 2008 private financing that the Company undertook with other investors, and the exercise price of all of the warrants held by such former debt holder has been adjusted to $2.00 per share, and the Company also issued warrants to purchase an additional 773,438 shares of common stock to the Bison Capital Entities in accordance with the warrant agreement between the Bison Capital Entities and the Company.

This amendment No. 1 to our Annual Report on Form 10-KSB for the fiscal year ended June 30, 2008 amends only the following items:

PART II, Item 5 – Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

PART II, Item 6 – Management’s Discussion and Analysis or Plan of Operation was amended to reflect the corrections to the Company’s reported operating results and financial position.

PART II, Item 7 – Consolidated Financial Statements, and the Notes to the Consolidated Financial Statements

THE CENTER FOR WOUND HEALING, INC.

Report on Form 10-KSB/A

For the Fiscal Year Ended June 30, 2008

TABLE OF CONTENTS

		PAGE
PART I

Item 1.	Description of Business	4
Item 2.	Description of Property	12
Item 3.	Legal Proceedings	12
Item 4.	Submission of Matters to Vote of Security Holders	12

PART II

Item 5.	Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	13
Item 6.	Management’s Discussion and Analysis or Plan of Operation	17
Item 7.	Financial Statements	24
Item 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
Item 8A.	Controls and Procedures	50
Item 8B.	Other Information	51

PART III

Item 9.	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act	51
Item 10.	Executive Compensation	54
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	58
Item 12.	Certain Relationships and Related Transactions, and Director Independence	59
Item 13.	Exhibits	60
Item 14	Principal Accountant Fees and Services	61

Signatures		63

Forward-Looking Statements

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

PART I

ITEM 1. DESCRIPTION OF BUSINESS

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

Business Development:

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

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

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

The debenture agreement contained EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) targets which, if not met, would result in a downward adjustment to the conversion price although the conversion price could not be less than $2.00 per share. As the Company failed to meet the EBITDA targets as specified under the debenture, the conversion price was reduced to its minimum of $2.00 per share.

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 and reduced the exercise price for all of the warrants to $2 per share.

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

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

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

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

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

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

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

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

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

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

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

Business of Issuer:

Hyperbaric Oxygen Treatment (“HBOT”) is a medical treatment administered by delivering one-hundred percent (100%) oxygen at pressures greater than atmospheric (sea level) pressure to a patient inside an enclosed chamber. This means that the pressure is typically 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, people are using HBOT to help themselves heal faster from surgeries and injuries.

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

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

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

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

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

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

Acute arterial insufficiency

Osteomyelitis

Radiation injury/necrosis

Necrotizing infection

Compromised skin grafts and flaps

Diabetic wounds of the lower extremities

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

Competition:

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

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

Marketing:

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

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

Grand opening ceremonies

Outcome data presented at annual vascular conferences

Sponsored healthcare events for the community

Distribution of collateral materials

Media advertising –both radio and print

Sponsorship of local and national podiatry society meetings and lectures

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

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

Government Regulation:

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

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

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

Licensure:

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

False Claims Act:

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

Fraud and Abuse Laws:

The Anti-Kickback Law

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

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

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

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

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

The Stark Law:

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

Professional Fee Splitting:

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

Professional Licenses:

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

HIPAA:

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

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

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

With respect to the privacy standards, HHS published final rules in December of 2000. However, on August 14, 2002, HHS published final modifications to the privacy standards. The final modifications eliminate the need for patient consent when the protected information is disclosed for treatment payment issues or health care operations. In addition, the final modifications clarified the requirements related to the authorizations, marketing and minimum necessary disclosures of information. All health care providers were required to be compliant with the new federal privacy requirements no later than April 14, 2003. HIPAA privacy standards contain detailed requirements regarding the use and disclosure of individually identifiable health information. Improper use or disclosure of identifiable health information covered by HIPAA privacy regulations can result in the following fines and/or imprisonment: (i) civil money penalties for HIPAA privacy violations are $100 per incident, up to $25,000, per person, per year, per standard violated; (ii) a person who knowingly and in violation of HIPAA privacy regulations obtains individually identifiable health information or discloses individually identifiable health information to another person may be fined up to $50,000 and imprisoned up to one year, or both; (iii) if the offense is committed under false pretenses, the fine may be up to $100,000 and imprisonment for up to five years; and (iv) if the offense is done with the intent to sell, transfer or use individually identifiable health information for commercial advantage, personal gain or malicious harm, the fine may be up to $250,000 and imprisonment for up to ten years. We must meet the various HIPAA standards by the deadlines noted above. The decentralized nature of our operations could represent significant challenges to us in the implementation of these standards. If we are found to not be in compliance, we could be subject to fines, penalties and other actions which could have an adverse effect on our business.

Confidentiality:

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

Ongoing Investigations:

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

Intellectual Property:

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

Our Subsidiaries:

Name of Subsidiary		Jurisdiction of Incorporation of Organization
Atlantic Associates, LLC		Delaware
Atlantic Hyperbaric, LLC		New York
Bayonne Hyperbaric, LLC		New Jersey
CEF Products, LLC		New York
CFWH Mezzanine, LLC		New Jersey
CMC Hyperbaric, LLC		Pennsylvania
EIN Hyperbaric, LLC		New York
Elise King, LLC		New York
Far Rockaway Hyperbaric, LLC		New York
Forest Hills Hyperbaric, LLC		New York
Greater Bronx Hyperbaric LLC		New York
JFK Hyperbaric LLC		New Jersey
Lowell Hyperbaric LLC		Massachusetts
Maimonides Hyperbaric, LLC		New York
Massachusetts Hyperbaric, LLC		Massachusetts
Meadowlands Hyperbaric, LLC		New Jersey
Muhlenberg Hyperbaric LLC		New Jersey
New York Hyperbaric & Wound Care Centers LLC		New York
New York Hyperbaric & Wound Care Centers LLC		Delaware
Newark BI LLC		New Jersey
NJ Hyperbaric, LLC		New Jersey
NY Hyperbaric, LLC		New York
Passaic Hyperbaric, LLC		New Jersey
Pennsylvania Hyperbaric, LLC		Pennsylvania
Raritan Bay Hyperbaric, LLC		New Jersey
Scranton Hyperbaric LLC		Pennsylvania
South N Hyperbaric LLC		New York
South Nassau Hyperbaric, LLC		New York
St. Josephs Hyperbaric LLC		New York
The Center For Wound Healing I, LLC		New Jersey
The Center For Wound Healing II, LLC		New York
The Square Hyperbaric, LLC		New York
Trenton Hyperbaric, LLC		New Jersey
VB Hyperbaric, LLC		New York

Employees

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

ITEM 2. Description of Properties:

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

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

Years Ending June 30,
2009	$	140,201
2010		108,084
2011		105,133
2012		98,978
2013		35,100

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

ITEM 3.

Legal Proceedings:

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

ITEM 4.

Submission of Matters to a Vote of Security Holders:

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

PART II

ITEM 5.

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

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

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

Quarter Ended	High		Low

September 2006	$	5.10	$	5.10
December 2006	$	5.25	$	2.75
March 2007	$	3.75	$	3.75
June 2007	$	2.75	$	2.75

September 2007	$	2.75	$	2.50
December 2007	$	2.50	$	2.50
March 2008	$	3.00	$	1.40
June 2008	$	3.50	$	0.76

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

Holders:

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

Dividends:

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

Recent sales of unregistered securities:

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

CFWH Mezzanine Financing

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

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

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

December 2007 and January 2008 Financing

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

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

15% Senior Secured Subordinated Promissory Note.

On March 31, 2008, the Company 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 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 proceeds to retire certain debts with accrued interest, certain accounts payable and other obligations.

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

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

Under the terms of the Bison Note, the Company has to pay monthly cash interest at 12% per annum starting from October 2008 and 6% non-cash interest, which is added to the principal amount. Upon fulfillment by the Company of certain conditions, the non-cash interest is reduced to 3% and, provided no event of default has occurred, the Company can further defer scheduled payments of cash interest for up to 12 months. The Company met the required conditions in September 2008 and therefore the non-cash interest rate reset at 3% and payments of cash interest were deferred until October 31, 2009. The interest rate increases by 2% 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 Bison Note is redeemable by annual payments 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 security purchase agreement 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 shares 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 relative fair value of warrants to be $8,391,893 and recorded such amortization as a discount to the Bison Note in addition to $2.5 million cash discount. Additionally, based on the relative 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 using the interest method rate, which it determined to approximate 37%.

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

Equity Compensation Plan Information

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

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

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

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

GENERAL OVERVIEW

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

FORWARD-LOOKING INFORMATION

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

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

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

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 7 of Part II of this Form 10-KSB/A.

GENERAL

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

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

RESULTS OF OPERATIONS:

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

2007 RESTRUCTURING CHARGE

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

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

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

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

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

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

REVENUES:

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

OPERATING EXPENSES:

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

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

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

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

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

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

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

OTHER INCOME (EXPENSE):

Interest expense: The Company incurred interest expense of $6.8 million or 25.7% of total revenues for the year ended June 30, 2008 compared with $3.6 million and 18.1% in the fiscal year ended June 30, 2007. The increase of $3.2 million is mostly attributable to $2.0 million in financing costs paid to the 8% secured convertible debenture holders, $600 thousand of interest charged for the Mezzanine Loan, $700 thousand of interest charged for the Bridge Financing Note and $100 thousand of amortization of the discount of the 15% Senior Secured Subordinated Promissory Note, inclusive of related debt issuance cost amortization.

Minority interest in net income or loss of consolidated subsidiaries: Minority interest was $154 thousand or 0.6% of total revenues for the year ended June 30, 2008 compared to a $172 thousand or 0.9% income benefit in the prior fiscal year. This expense varies directly with the results of operations of the entities having minority interests.

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

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

INCOME TAXES:

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

NET LOSS:

For the fiscal year ended June 30, 2008, the Company lost $3.9 million or $0.17 cents per diluted share compared with a net loss of $9.4 million or $0.41 cents per year loss incurred in fiscal 2007. The $5.5 million reduction is the result of the aforementioned revenues and expense differences between the two fiscal years.

LIQUIDITY AND CAPITAL RESOURCES:

Operating Activities: Net cash provided by operating activities was $2.2 million for the year ended June 30, 2008. While our net loss was $3.9 million, substantial noncash expenses were incurred during the year such as (a) depreciation and amortization of $4.0 million related to equipment, leasehold improvements, and certain hospital contracts, (b) interest charged for the amortization of deferred financing costs of $2.0 million, (c) interest accrued for convertible debenture and notes payable of $1.1 million, (d) amortization of stock options of $1.5 million, (e) interest charged for the beneficial conversion features of 8% senior convertible debentures of $0.9 million, (f) warrants issued in payment of interest expense of $0.56 million, and (g) $0.2 million for the abandonment of leasehold improvements at one hospital that management determined was underperforming and will be closed within the next several months. In addition, the allowance for bad debts increased $0.7 million to a total of $2.9 million. Gross accounts receivable increased $4.5 million for the year ended June 30, 2008, which was anticipated as the number of centers operated by the Company increased from the prior year. The growth in accounts payable and accrued expenses experienced during the prior year ending June 30, 2007 was partially reversed in the current year by $1.5 million. These impacts were partially offset by income tax refunds collected of $0.9 million.

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

Financing Activities: Net cash provided by financing activities was $1.0 million for the year ended June 30, 2008. As described in Part II, Item 5, the Company refinanced certain existing debt on March 31, 2008 through the issuance of a 15% Senior Secured Subordinated Promissory Note with Bison Equity Capital Partners from which we received approximately $16 million in net proceeds after consideration of related debt issuance costs. Additional proceeds were received from notes payable of $1.6 million and $0.4 million from the issuance of common stock. The total proceeds were used by (a) deferred financing costs of $1.6 million, (b) repayment of $7.4 million of principal, interest and penalties associated with the 8% senior convertible debentures, (c) repayment of certain notes and loans of $5.0 million, and (d) repayment of the bank line of credit of $1.3 million. In addition, we made disbursements of $1.7 million for the year ended June 30, 2008, of which $1.3 million was for payments on capital lease obligations and $0.4 million was for distributions to minority members.

We participate in a working capital accounts receivable financing and term loan arrangement with Signature Bank, which matures March 31, 2010. The use of these funds will be required to support our operations in the future and will be dependent upon satisfying borrowing base requirements, among other covenants. We were in full compliance with all the terms of the bank financing as of June 30, 2008. As of June 30, 2009, the Company was in compliance with all required covenants except for the minimum effective tangible net worth covenant, for which the Company has received a waiver from the lender.

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 from the date of filing this Form 10-KSB/A, on October 9, 2009.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

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

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

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

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

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

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

ITEM 7. FINANCIAL STATEMENTS

THE CENTER FOR WOUND HEALING, INC.

Report of Independent Registered Public Accounting Firm		26
Consolidated Balance Sheets as of June 30, 2008 and 2007		27
Consolidated Statements of Operations for the Years Ended June 30, 2008 and 2007		28
Consolidated Statement of Cash Flows for the Years Ended June 30, 2008 and 2007		29, 30
Consolidated Statements of Changes in Stockholders' Equity for the
Years Ended June 30, 2008 and 2007		31
Notes to Consolidated Financial Statements		32 – 50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of The Center for Wound Healing, Inc

We have audited the accompanying consolidated balance sheets of The Center for Wound Healing, Inc. as of June 30, 2008 (as restated) and 2007, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2008. The Center for Wound Healing, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Center for Wound Healing, Inc. as of June 30, 2008 (as restated) and 2007, and the consolidated results of its operations, stockholders’ equity and its cash flows for each of the years in the two-year period ended June 30, 2008, in conformity with accounting principles generally accepted in the United States of America.

As described in Note 2 “Restatement of Consolidated Financial Statements” to the financial statements, the Company has restated its June 30, 2008 consolidated financial statements.

/s/ Raich Ende Malter & Co. LLP

Raich Ende Malter & Co. LLP

New York, NY

September 24, 2008, except for Notes 2 and 12, as to which the date is October 9, 2009

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30,

	2008			2007
	(As Restated)
ASSETS
CURRENT ASSETS
Cash in bank	$	55,139		$	216,458
Accounts receivable, net of allowance for doubtful accounts of $2,941,917 and $2,202,510 respectively		14,563,325			10,754,557
Notes Receivable		460,872			367,484
Income tax refunds receivable		2,090			883,596
Prepaid expenses and other current assets		398,631			157,801
Total current assets		15,480,057			12,379,896

Notes Receivable		134,295			385,478
Property and equipment, net		8,886,005			7,970,325
Invesment in unconsolidated affiliates		-			75,702
Intangible assets		4,402,495			3,131,184
Goodwill		751,957			447,531
Other assets		1,507,192			1,959,717
TOTAL ASSETS	$	31,162,001		$	26,349,833

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	4,105,548		$	5,867,893
Current maturities of capital leases		526,107			1,530,862
Short-term borrowings		4,200,000			5,500,000
Notes payable		939,856			2,429,260
8% Secured convertible debentures		-			6,485,601
Payable to former Majority Members		618,033			771,357
Total current liabilities		10,389,544			22,584,973

15% senior secured note payable		9,968,740			-
Notes payable, net of current maturities		782,133			65,254
Capital lease obligations, net of current maturities		131,774			498,688
Minority interest in consolidated subsidiaries		580,558			908,202

TOTAL LIABILITIES		21,852,749			24,057,117

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized and unissued		-			-
Common stock, $0.001 par value; 290,000,000 shares authorized; 23,373,281 and 22,655,781 issued and outstanding at June 30, 2008 and 2007, respectively		23,373			22,656
Additional paid-in capital		29,764,982			18,866,478
Accumulated deficit		(20,479,103	)		(16,596,418	)

TOTAL STOCKHOLDERS' EQUITY		9,309,252			2,292,716

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	31,162,001		$	26,349,833

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

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended June 30,

	2008			2007
	(As Restated)
REVENUES
Treatment fees	$	26,357,619		$	19,842,064

OPERATING EXPENSES
Cost of Services		13,157,728			11,642,333
Sales and marketing		180,367			287,060
General and administration		8,466,779			11,785,313
Abandonment & and Impairment Loss		189,992			2,076,266
Depreciation and amortization		443,581			59,917
Bad debt expense		796,027			965,553

TOTAL OPERATING EXPENSES		23,234,474			26,816,442

OPERATING INCOME (LOSS)		3,123,145			(6,974,378	)

OTHER EXPENSE (INCOME)
Interest expense		6,783,110			3,595,044
Interest income		(41,344	)		(25,281	)
Minority interest in net loss (income) of consolidated subsidiaries		154,254			(172,390	)
Loss on disposal of property and equipment		68,880			29,270
Other expenses		20,865			432,500

TOTAL OTHER EXPENSE		6,985,765			3,859,143

(LOSS) BEFORE INCOME TAXES		(3,862,620	)		(10,833,521	)

PROVISION (BENEFIT) FOR INCOME TAXES
Current taxes		20,065			(356,511	)
Deferred taxes		-			(1,094,984	)
TOTAL PROVISION (BENEFIT) FOR INCOME TAXES		20,065			(1,451,495	)

NET (LOSS)	$	(3,882,685	)	$	(9,382,026	)

NET (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.17	)	$	(0.41	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		22,997,476			22,655,781

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

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended June 30,

	2008			2007
	(as Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,882,685	)	$	(9,382,026	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		4,046,018			2,164,956
Abandonment and impairment loss		189,992			2,076,266
Interest charged for beneficial conversion features of 8% senior convertible debebtures		912,524
Interest charged for fair valuation of warrants issued in connection with 8% senior
convertible and other debentures		-			1,959,915
Interest charged for amortization of deferred financing costs		2,141,561			1,269,701
Bad debts		796,027			965,553
Deferred income taxes		-			(1,094,984	)
Minority interest in net income of consolidated subsidiaries		154,254			(172,390	)
Loss on disposal of property and equipment		68,880			29,270
Interest accrued for convertible debenture and notes payable		1,135,634			13,889
Amortization of stock options		1,516,604			2,787,240
Warrants issued in payment of interest expense		564,659			-
Changes in operating assets and liabilities:
Accounts and notes receivable		(4,447,000	)		(2,508,318	)
Prepaid expenses and other current assets		(357,981	)		30,046
Other assets		-			27,194
Accounts payable and accrued expenses		(1,517,287	)		3,484,862
Income taxes		881,506			(1,685,596	)
Payments to former majority members		(45,330	)		149,089
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,157,377			114,667

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(3,385,296	)		(2,577,325	)
Proceeds from sale of property and equipment		45,000			68,222
(Increase) decrease in security deposits		(460	)		-
Investment in unconsolidated affiliates		-			(105,000	)
NET CASH USED IN INVESTING ACTIVITIES		(3,340,756	)		(2,614,103	)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations		(1,309,079	)		(1,955,179	)
Advances from affiliates		25,948			100,870
Net (repayment) proceeds from bank line of credit		(1,300,000	)		2,300,000
Proceeds from issuance of 15% senior secured subordinated note payable		17,500,000			-
Deferred financing costs		(3,138,306	)		(522,831	)
Repayment of notes and loans		(4,990,268	)		(1,940,240	)
Repayment of minority member loans		-			(70,943	)
Repayment of 8% senior convertible debentures		(7,398,125	)		-


Proceeds from issuance of common stock		400,000			-
Proceeds from notes payable		1,600,000			1,000,000
Distributions to LLC members		(368,109	)		--
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,022,060			(1,088,323	)

NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(161,319	)		(3,587,759	)

CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR		216,458			3,804,218

CASH AND CASH EQUIVALENTS – END OF YEAR	$	55,139		$	216,459

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

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended June 30,

	2008		2007
	(as Restated)
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Cash paid during the year:
Interest	$	2,029,146	$	739,260
Income taxes	$	22,405	$	1,230,451

Non -cash financing and investing activities:
Equipment acquired through capital lease obligation	$	217,148	$	213,410
Discount of convertible debenture for fair value of beneficial conversion feature	$	-	$	912,524
Warrants and common stock issued in payment of accrued interest	$	839,659	$	-
Issuance of common stock in connection with MedAir settlement	$	825,000	$	-
Issuance of common stock in connection with Warantz settlement	$	75,000	$	-
Debt issued in connection with Intangible asset acquired	$	2,617,744	$	-
Warrants issued in connection with Bison financing	$	8,391,893	$	-

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

THE CENTER FOR WOUND HEALING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED JUNE 30, 2008 AND 2007

(As Restated)

	Common Stock				Additional Paid-		Accumulated
	Shares		Amount		in Capital		Deficit			Total

Balance at July 1, 2006		22,655,781	$	22,656	$	15,362,539	$	(7,214,392	)	$	8,170,803

Share-Based Compensation		-		-		2,439,328		-			2,439,328
Net effect of increased relative fair value of beneficial conversion feature of 2006 convertible debentures due to extension		-		-		1,064,611		-			1,064,611
Net loss		-		-		-		(9,382,026	)		(9,382,026	)

Balance at June 30, 2007		22,655,781		22,656		18,866,478		(16,596,418	)		2,292,716
Share-Based Compensation		-		-		1,783,527		-			1,783,527
Issuance of common stock in connection with MedAir settlement		300,000		300		824,700		-			825,000
Issuance of common stock in connection with Warantz settlement		30,000		30		74,970		-			75,000
Issuance of warrants in connection with Bison refinancing		-		-		6,976,035		-			6,976,035
Issuance of warrants in Connection with Bridge Financing		-		-		564,659		-			564,659
Issuance of shares for cash		200,000		200		399,800		-			400,000
Issuance of Shares in Connection with Mezzanine Loan		187,500		188		274,813		-			275,000
Net loss		-		-		-		(3,882,685	)		(3,882,685	)

Balance at June 30, 2008		23,373,281	$	23,373	$	29,764,982	$	(20,479,103	)	$	9,309,252

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2008 AND 2007

Note 1 - Organization and Nature of Business

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

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

Note 2 - Summary of Significant Accounting Policies

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

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

b. Restatement of Consolidated Financial Statements: The condensed consolidated financial statements have been restated for the year ended June 30, 2008 to reflect the correction of errors in the accounting for the warrant issuance and warrant valuation, and the debt issuance costs associated with the Company’s 15% Senior Secured Subordinated Promissory Note (the “Bison Note”).

The number of warrants to be issued were initially reported to be 7,168,488, and included a fair-value of $0.48 per warrant, were exercisable at $5.00 per share, used a ten year life in their fair-value computation and carried standard anti-dilution and registration rights provisions yielding a total warrant valuation of $3,431,341, which served to discount the Bison Note and correspondingly increase additional paid-in capital for the same amount. The number of warrants issuable and their fair-value have been properly calculated in this amended filing at 7,941,926 and $8,391,893 (prior to the reduction for allocation of amended debt issuance costs of $1,180,368), respectively. Additionally, the amended filing adjusted the warrants contractual life to the correct term of 7 years (See the tables set forth below and Note 12 for additional information on the restatement). During the year ended June 30, 2008, the Company had originally recorded $2,717,064, in deferred expenses, in relation to the debt issuance costs associated with the Bison Note. This amended filing records a reduction to the previously capitalized debt issuance costs of $1,180,368 attributable to the warrant’s relative fair value as a component of the total debt proceeds received, effectively restating the deferred debt issuance costs to $1,536,696.

The effect of the restatement on the Company’s consolidated financial statements as of June 30, 2008, and for the fiscal year ended June 30, 2008 are shown below:

	As of June 30, 2008
	(As Previously
	Reported)			(Adjustments)			(Restatement)
ASSETS

CURRENT ASSETS
Total current assets	$	15,480,057		$	-		$	15,480,057
Notes receivable		134,295			-			134,295
Property and equipment, net		8,886,005			-			8,886,005
Intangible assets		4,402,495			-			4,402,495
Goodwill		751,957			-			751,957
Other assets		2,822,687			(1,315,495	)		1,507,192
TOTAL ASSETS	$	32,477,496		$	(1,315,495	)	$	31,162,001

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Total current liabilities	$	10,389,544		$	-		$	10,389,544
15% senior secured subordinated promissory note		15,291,782			(5,323,042	)		9,968,740
Notes payable, net of current maturities		782,133			-			782,133
Capital lease obligations, net of current maturities		131,774			-			131,774
Minority interest in consolidated subsidiaries		558,205			22,353			580,558

TOTAL LIABILITIES		27,153,438			(5,300,689	)		21,852,749

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common Stock		23,373			-			23,373
Additional paid-in capital		26,220,288			3,544,694			29,764,982
Accumulated deficit		(20,919,603	)		440,500			(20,479,103	)
TOTAL STOCKHOLDERS' EQUITY		5,324,058			3,985,194			9,309,252
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	32,477,496		$	(1,315,495	)	$	31,162,001

	June 30, 2008
	(As Previously
	Reported)			(Adjustments)			(Restatement)

REVENUES
Treatment fees	$	26,357,619		$	-		$	26,357,619

TOTAL OPERATING EXPENSES		23,234,474			-			23,234,474

OPERATING INCOME (LOSS)	$	3,123,145		$	-		$	3,123,145

OTHER EXPENSE (INCOME)
Interest expense	$	7,245,963		$	(462,853	)	$	6,783,110
Interest income		(41,344	)		-			(41,344	)
Minority interest in net loss (income) of consolidated subsidiaries		131,901			22,353			154,254
Loss on disposal of property and equipment		68,880			-			68,880
Other expenses		20,865			-			20,865
TOTAL OTHER EXPENSE		7,426,266			(440,500	)		6,985,766

(LOSS) BEFORE INCOME TAXES		(4,303,121	)		440,500			(3,862,621	)

PROVISION (BENEFIT) FOR INCOME TAXES
Current taxes		20,065			-			20,065
Deferred taxes		-			-			-
TOTAL PROVISION (BENEFIT) FOR INCOME TAXES		20,065			-			20,065

NET (LOSS)	$	(4,323,185	)	$	440,500			(3,882,685	)

NET (LOSS) PER COMMON SHARE - BASIC AND DILUTED	$	(0.19	)	$	0.02		$	(0.17	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		22,997,476			-			22,997,476

	June 30, 2008
	(As Previously
	Reported)			(Adjustments)			(Restatement)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,323,185	)	$	440,500		$	(3,882,685	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		4,046,018			-			4,046,018
Abandonment and impairment loss		189,992			-			189,992
Interest charged for beneficial conversion features of 8% senior convertible debebtures		912,524			-			912,524
Interest charged for amortization of deferred financing costs		2,099,399			42,162			2,141,561
Bad debts		796,027			-			796,027
Deferred income taxes		-
Minority interest in net income of consolidated subsidiaries		131,901			22,353			154,254
Loss on disposal of property and equipment		68,880			-			68,880
Interest accrued for convertible debenture and notes payable		1,184,030			(48,396	)		1,135,634
Amortization of 15% convertible debenture original issue discount		142,526			(142,526	)		-
Amortization of stock options		1,516,604			-			1,516,604
Warrants issued in payment of interest expense		736,226			(171,567	)		564,659
Changes in operating assets and liabilities:
Accounts and notes receivable		(4,447,000	)		-			(4,447,000	)
Prepaid expenses and other current assets		(357,981	)		-			(357,981	)
Other assets		-			-			-
Accounts payable and accrued expenses		(1,517,287	)		-			(1,517,287	)
Income taxes		881,506			-			881,506
Payments to former majority members		(45,330	)		-			(45,330	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,014,851			142,526			2,157,377

CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES		(3,340,756	)		-			(3,340,756	)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations		(1,309,079	)		-			(1,309,079	)
Advances from affiliates		25,948			-			25,948
Net (repayment) proceeds from bank line of credit		(1,300,000	)		-			(1,300,000	)
Proceeds from issuance of 15% senior secured subordinated note payable		17,500,000			-			17,500,000
Deferred financing costs		(2,995,780	)		(142,526	)		(3,138,306	)
Repayment of notes and loans		(4,990,268	)		-			(4,990,268	)
Repayment of 8% senior convertible debentures		(7,398,125	)		-			(7,398,125	)
Proceeds from issuance of common stock		400,000			-			400,000
Proceeds from notes payable		1,600,000			-			1,600,000
Distributions to LLC members		(368,109	)		-			(368,109	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,164,586			(142,526	)		1,022,060

NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(161,319	)		-			(161,319	)

CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR		216,458			-			216,458

CASH AND CASH EQUIVALENTS – END OF YEAR	$	55,139		$	-		$	55,139

	June 30, 2008
	(As Previously
	Reported)		(Adjustments)		(Restatement)

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:

Cash paid during the year:
Interest	$	2,029,146		-	$	739,260
Income taxes	$	22,405		-	$	1,230,451

Non -cash financing and investing activities:
Equipment acquired through capital lease obligation	$	217,148			$	213,410
Discount of convertible debenture for fair value of beneficial conversion fea	$	-			$	912,524
Warrants and common stock issued in payment of accrued interest	$	839,659			$	-
Issuance of common stock in connection with MedAir settlement	$	825,000			$	-
Issuance of common stock in connection with Warantz settlement	$	75,000			$	-
Debt issued in connection with Intangible asset acquired	$	2,617,744			$	-
Warrants issued in connection with Bison financing	$	3,431,341	$	4,960,552	$	8,391,893

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

Note 3 – Private Placements and Common Stock

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

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

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

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

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

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

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

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

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

h. On March 31, 2008, the Company 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 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 proceeds to retire certain debts with accrued interest, certain accounts payable and other obligations.

The Company determined the relative fair value of warrants to be $7,055,355 and recorded such amortization as a discount to the Bison Note in addition to $2.5 million discount. Additionally, based on the relative 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 using the interest method rate, which it determined to be 37%.

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

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

Center for Wound Healing, Inc. - FORM 10-K/A - October 13, 2009