UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Arcadia Resources, Inc.

(Name of Registrant as Specified In Its Charter)

 

Not Applicable

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Arcadia Resources, Inc.
9229 Delegates Row, Suite 260
Indianapolis, IN 46240
P: 317-569-8234 F: 317-575-6195
www.ArcadiaHealthCare.com
NYSE Amex: KAD

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 14, 2009

To the Stockholders of Arcadia Resources, Inc.:

NOTICE IS HEREBY GIVEN that the fiscal year 2009 annual meeting (the “Annual Meeting”) of the stockholders of Arcadia Resources, Inc. (the “Company”) will be held at the Company’s principal executive offices, 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240, on Wednesday, October 14, 2009, commencing at 4:00 p.m. (local time), or at any adjournment or postponement thereof, for the following purposes:

1.

To elect two (2) Class A directors to the Board of Directors of the Company, each to serve until our 2012 annual meeting of stockholders or until such person shall resign, be removed or otherwise leave office.

2.

To consider an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of our common stock.

3.

To consider an amendment to the Company’s 2006 Equity Incentive Plan to increase the number of available shares under the plan.

4.

To consider and act upon any other proposal or business as may properly come before the Annual Meeting or any adjournment thereof.

Only stockholders of record at the close of business on Friday, August 21, 2009, are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. A list of all stockholders entitled to vote at the Annual Meeting will be available for inspection by any stockholder for any purpose reasonably related to the Annual Meeting during ordinary business hours for a period of ten (10) days prior to the Annual Meeting, at our principal executive offices located at 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240. This list will also be available for examination during the Annual Meeting.

All stockholders are cordially invited to attend the meeting in person. However, to ensure that your shares are represented at the Annual Meeting, you are urged to complete, sign, date and return the accompanying proxy card promptly in the enclosed postage paid envelope. Please sign the accompanying proxy card exactly as your name appears on your share certificate(s). You may revoke your proxy at any time before it is voted at the Annual Meeting. If you attend the Annual Meeting, you may vote your shares in person even if you have returned a proxy card.

		By Order of the Board of Directors,
		/s/ Marvin R. Richardson
		Marvin R. Richardson
		Chief Executive Officer & President

September 18, 2009

TABLE OF CONTENTS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FREQUENTLY ASKED QUESTIONS AND ANSWERS			1
GENERAL INFORMATION			5
SOLICITATION AND REVOCATION OF PROXIES			5
PROPOSALS REQUIRING YOUR VOTE			6
• Election of Directors			6
• Amendment of Restated Articles of Incorporation to Increase Authorized Shares			7
• Amendment of 2006 Equity Incentive Plan to Increase Number of Shares Available for Awards			8
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD			11
GOVERNANCE OF THE COMPANY			13
• Corporate Governance Guidelines			13
• Director Independence			13
• Nomination and Qualification of Directors			14
• Communications with the Board			14
• Meetings of the Board and its Committees			14
• Committees of the Board			14
• Code of Ethics and Conduct			17
• Compensation Committee Interlocks and Insider Participation			17
• Certain Transactions and Relationships			17
• Certain Information about Insurance and Indemnification			18
• Section 16(a) Beneficial Ownership Reporting Compliance			18
• Stockholder Communication with the Board			18
EXECUTIVE OFFICERS			18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			19
AUDIT COMMITTEE REPORT			21
• Independent Public Accountants and Change in Independent Public Accounting Firm			22
• Fees Paid to Independent Registered Public Accounting Firm			22
COMPENSATION DISCUSSION AND ANALYSIS			23
• Summary			23
• Compensation Philosophy and Objectives			23
• Determination of Compensation			24
• Overview of Executive Compensation Components and Decisions for Fiscal 2009			25
• Overview of Fiscal Year 2010 Compensation Components			26
• Overview of Fiscal Year 2010 Compensation Program			27
COMPENSATION COMMITTEE REPORT			28
COMPENSATION TABLES			28
• Summary Compensation Table			28
• Grants of Plan-Based Awards			29
• Executive Officer Agreements			30
• Outstanding Equity Awards at Fiscal Year End			31
• Option Exercises and Stock Vested			32
• Payments Upon Termination or Change in Control			32
DIRECTOR COMPENSATION			33
EQUITY COMPENSATION PLAN INFORMATION			35
OTHER MATTERS			35
• Other Matters to be Considered at the Annual Meeting			35
• Expenses of Solicitation			35
• Stockholder Proposals			35
• Availability of our Forms 10-K, 10-Q and Subsequently Filed Documents			35
APPENDIX A — AMENDED & RESTATED ARTICLES OF INCORPORATION			37
APPENDIX B — 2006 EQUITY INCENTIVE PLAN AS AMENDED			39
EXHIBIT A — 2006 AUDIT COMMITTEE CHARTER AS AMENDED			50
EXHIBIT B — FORM OF PROXY CARD			55

Arcadia Resources, Inc.
9229 Delegates Row, Suite 260
Indianapolis, IN 46240
P: 317-569-8234 F: 317-575-6195
www.ArcadiaHealthCare.com
NYSE Amex: KAD

PROXY STATEMENT

FREQUENTLY ASKED QUESTIONS AND ANSWERS

Q:		Why am I receiving these materials?
A:		The Board of Directors (the “Board”) of Arcadia Resources, Inc., a Nevada Corporation (“Arcadia” or the “Company”) is providing these proxy materials (this “Proxy Statement”) to you in connection with the Board’s solicitation of proxies for use at Arcadia’s annual meeting of Stockholders (the “Annual Meeting”) for the fiscal year ending March 31, 2009 (“Fiscal 2009”), which will take place on Wednesday, October 14, 2009 at 4:00 p.m. local time. Stockholders are invited to attend the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement. This Proxy Statement, the Notice of Annual Meeting and the accompanying form of the proxy card are being first mailed to stockholders on or about September 18, 2009.
Q:		What information is contained in these materials?
A:		The information included in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of directors and our most highly paid executive officers and certain other required information. Arcadia’s Fiscal 2009 annual report on Form 10-K filed with the SEC on July 14, 2009 (the “Annual Report”), which includes Arcadia’s audited consolidated financial statements for Fiscal 2009, is also included with this Proxy Statement.
Q:		What proposals will be voted on at the Annual Meeting?

A:

There are three (3) proposals scheduled to be voted on at the Annual Meeting: 1) to elect two (2) Class A directors to the Board, each to serve until our 2012 annual meeting of stockholders or until such person shall resign, be removed or otherwise leave office; 2) to amend the Company’s Restated Articles of Incorporation to increase the number of authorized shares of our common stock; and 3) to amended the Company’s 2006 Equity Incentive Plan to increase the number of shares available for awards under such plan.

Q:		What is Arcadia’s Board of Directors’ voting recommendation?
A:		Arcadia’s Board recommends that you vote your shares “FOR” each of the scheduled proposals.
Q:		What happens if additional matters are presented at the Annual Meeting?
A:		Other than the items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy by executing the enclosed form of proxy card, the persons named as proxy holders, Marvin R. Richardson and Matthew R. Middendorf, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting in accordance with Nevada law and our Bylaws.

Q:		How many shares are entitled to vote?
A:		Each share of Arcadia’s common stock outstanding as of the close of business on August 21, 2009, the record date, is entitled to one (1) vote at the Annual Meeting. At the close of business on August 21, 2009, 161,738,399 shares of common stock were outstanding and entitled to vote. You may vote all of the shares owned by you as of the close of business on the record date of August 21, 2009 and are entitled to cast one (1) vote per share of common stock held by you on the record date. These shares include shares that are (1) held of record directly in your name and (2) held for you as the beneficial owner through a stockbroker, bank or other nominee.
Q:		What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:		Many stockholders of Arcadia hold their shares beneficially through a stockbroker, bank or other nominee rather than directly in their own name. There are some distinctions between shares held of record and shares owned beneficially, specifically:

•

Shares held of record

If your shares are registered directly in your name with Arcadia’s transfer agent, National City Bank, you are considered the stockholder of record with respect to those shares, and these proxy materials are being sent to you directly by Arcadia. As the stockholder of record, you have the right to grant your voting proxy directly to Arcadia or to vote in person at the Annual Meeting. Arcadia has enclosed a proxy card for you to use.

•

Shares owned beneficially

		If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner or nominee, you have the right to direct your broker or other nominee on how to vote the shares in your account and you are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you request and receive a valid proxy from your broker or nominee. Your broker or nominee has enclosed a voting instruction card for you to use in directing the broker or nominee regarding how to vote your shares.
Q:		Can I attend the Annual Meeting?
A:		You are invited to attend the Annual Meeting if you are a stockholder of record or a beneficial owner as of August 21, 2009. If you are a stockholder of record, you must bring proof of identification. If you hold your shares through a stockbroker or other nominee, you will need to provide proof of ownership by bringing either a copy of the voting instruction card provided by your broker or nominee or a copy of a brokerage statement showing your share ownership as of August 21, 2009.
Q:		How can I vote my shares in person at the Annual Meeting?
A:		Shares held directly in your name as the stockholder of record may be voted in person at the Annual Meeting. If you choose to vote in person, please bring proof of identification. Even if you plan to attend the Annual Meeting, Arcadia recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting. Shares held in street name through a brokerage account or by a bank or other nominee may be voted in person by you if you obtain a valid proxy from the record holder giving you the right to vote the shares.
Q:		How can I vote my shares without attending the Annual Meeting?
A:		Whether you hold shares directly as the stockholder of record or beneficially in street name, you may vote without attending the Annual Meeting by completing and mailing your proxy card or voting instruction card in the enclosed pre-paid envelope. Please refer to the enclosed materials for details.

Q:		Can I change my vote or revoke my proxy?
A:		If you are the stockholder of record, you may change your proxy instructions or revoke your proxy at any time before your proxy is voted at the Annual Meeting. Proxies may be revoked by any of the following actions: (1) filing a timely written notice of revocation with our Corporate Secretary at our principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240); (2) submitting a new proxy at a later date by mail to our Corporate Secretary at our principal executive offices; or (3) attending the Annual Meeting and voting in person (attendance at the meeting will not, by itself, revoke a proxy). If your shares are held in a brokerage account by a bank or other nominee, you should follow the instructions provided by your broker or nominee.
Q:		How are votes counted?
A:		In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one (1) or more of the nominees. With respect to all of the proposals, if you sign and return your proxy card or broker voting instruction card without giving specific voting instructions, your shares will be voted as recommended by our Board.
Q:		Who will count the votes?
A:		David C. Wright, the Assistant Secretary of Arcadia, will work together with an independent third party to tabulate the votes and Mr. Wright will act as the inspector of the Annual Meeting.
Q:		What is the quorum requirement for the Annual Meeting?
A:		The quorum requirement for holding the Annual Meeting and transacting business at the Annual Meeting is a majority of the outstanding shares entitled to be voted. The shares may be present in person or represented by proxy at the Annual Meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum.
Q:		What is the voting requirement to approve each of the proposals?
A:		In the election of directors (Proposal Number 1), the two (2) persons receiving the highest number of “FOR” votes will be elected. In the authorizations for the amendments to our Restated Articles of Incorporation and 2006 Equity Incentive Plan (Proposal Numbers 2 and 3), each require the affirmative vote of holders of a majority of our outstanding voting shares.
Q:		What are broker non-votes and what effect do they have on the proposals?
A:		Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because: (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote those shares. A broker is generally entitled to vote shares held for a beneficial owner on routine matters, such as the election of our directors, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on certain non-routine items. Broker non-votes count for purposes of determining whether a quorum exists but do not count as entitled to vote with respect to individual proposals such as Proposals 2 and 3.
Q:		What does it mean if I receive more than one (1) proxy card or voting instruction card?
A:		It means your shares are registered in different names or are held in more than one (1) account. Please provide voting instructions for each proxy card and voting instruction card you receive to ensure that all of your shares are voted.
Q:		Where can I find the voting results of the Annual Meeting?
A:		Arcadia will announce preliminary voting results at the Annual Meeting and will publish final results in Arcadia’s next quarterly report on Form 10-Q following the date of the Annual Meeting.

Q:		Who will bear the cost of soliciting votes for the Annual Meeting?
A:		Arcadia will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. Arcadia will provide copies of these proxy materials to banks, brokerage houses, fiduciaries and custodians holding in their names shares of our common stock beneficially owned by others so that they may forward these proxy materials to the beneficial owners. In addition, Arcadia may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Solicitations may also be made by personal interview, telephone and electronic communication by directors, officers and other employees of Arcadia, but we will not additionally compensate our directors, officers or other employees for these services.
Q:		May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors?
A:		You may submit proposals for consideration at future annual stockholder meetings. In order for a stockholder proposal to be considered for inclusion in the proxy materials for our fiscal year 2010 annual meeting of stockholders, your proposal must be received by our Corporate Secretary no later than May 21, 2010. A stockholder proposal or a nomination for director that is received after this date will not be included in our fiscal year 2010 proxy statement but will otherwise be considered at the fiscal year 2010 annual meeting of stockholders so long as it is submitted to our Corporate Secretary no earlier than July 16, 2010 and no later than August 16, 2010. We advise you to review our Bylaws, which contain this and other requirements with respect to advance notice of stockholder proposals and director nominations. Our Amended and Restated Bylaws were filed with the Securities Exchange Commission (the “SEC”) as an Exhibit 3.2 of Form 10-Q filed on November 6, 2008, which can be viewed by visiting our investor section of our website at www.ArcadiaHealthCare.com and also may be obtained by writing to the Corporate Secretary at our principal executive office (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240).
Q:		How can I get electronic access to the Proxy Statement and Annual Report?
A:		This Proxy Statement and our Fiscal 2009 Annual Report may be viewed online in the Investor section of our website at www.ArcadiaHealthCare.com.
Q:		How do I obtain a separate set of proxy materials if I share an address with other stockholders?
A:		To reduce expenses, in some cases, we are delivering one (1) set of proxy materials to certain stockholders who share an address, unless otherwise requested. A separate proxy card is included in the proxy materials for each of these stockholders. If you reside at such an address and wish to receive a separate copy of the proxy materials, including our Annual Report, you may contact Arcadia’s Corporate Secretary at our principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240) or by telephone at (317) 569-8234. You may also contact Arcadia’s Corporate Secretary if you would like to receive separate proxy materials in the future or if you are receiving multiple copies of our proxy materials and would like to receive only one (1) copy in the future.
Q:		How can I obtain an additional proxy card?
A:		If you lose, misplace or otherwise need to obtain a proxy card, and you are a stockholder of record, contact Arcadia’s Corporate Secretary at our principal executive office (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240) or by telephone at (317) 569-8234. If you are the beneficial owner of shares held indirectly through a bank, broker or similar institution, contact your account representative at that organization.
Q:		Whom should I call with other questions?
A:		If you have additional questions about this Proxy Statement or the Annual Meeting contact Arcadia’s Corporate Secretary at our principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240) or by telephone at (317) 569-8234.

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of the Company to be voted at our Fiscal 2009 Annual Meeting of stockholders to be held at the Company’s principal executive offices at 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240 on Wednesday, October 14, 2009 at 4:00 p.m. local time, or any postponement or adjournment or postponement thereof. This Proxy Statement, the Notice of Annual Meeting and the accompanying form of proxy card are being first mailed to stockholders on or about September 18, 2009.

As of August 21, 2009, the established record date for the Annual Meeting, there were outstanding 161,738,399 shares of our common stock. Only holders of record of our voting securities at the close of business on such date will be eligible to vote at the Annual Meeting. The common stock is our only class of equity securities outstanding and entitled to vote at the Annual Meeting. Holders of shares of our common stock are entitled to one (1) vote on each matter to be voted upon by the stockholders at the Annual Meeting for each share held. Under our Bylaws, as amended through the date hereof, we must have present, in person or by proxy, holders of at least a majority of our common stock outstanding and entitled to vote on the matters to be considered at the Annual Meeting to constitute a quorum for the transaction of business at the Annual Meeting.

A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder, for any purpose reasonably relating to the Annual Meeting, at our principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240) during ordinary business hours for the ten (10) days immediately prior to the Annual Meeting. This list also will be available for examination during the Annual Meeting.

At the Annual Meeting, stockholders will be asked to take the following actions:

1.

To elect two (2) Class A directors to the Board, each to serve until our 2012 annual meeting or until such person shall resign, be removed or otherwise leave office (the “Board Nominees Proposal”).

2.

To consider an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of our common stock (the “Authorized Share Increase Proposal”).

3.

To consider an amendment to the Company’s 2006 Equity Incentive Plan to increase the number of available shares under such plan (the “Incentive Plan Share Increase Proposal”).

4.

To consider and act upon any other proposal or business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

The Board Nominees Proposal will be decided by the affirmative vote of a plurality, and the Authorized Share and Incentive Plan Share Increase Proposals will be decided by a majority of the voting rights attached to the common stock present, in person or by proxy, at the Annual Meeting, and entitled to vote thereon.

Stockholders have no right under Nevada law or under the Company’s Restated Articles of Incorporation or Bylaws to appraisal rights or to dissent from the proposals outlined above.

Throughout this Proxy Statement, the terms “we,” “us,” “our” and “our company” refer to Arcadia Resources, Inc. and, unless the context indicates otherwise, our subsidiaries on a consolidated basis and “you” and “your” refers to the stockholders of our company.

SOLICITATION AND REVOCATION OF PROXIES

Proxies in the form enclosed are being solicited by, or on behalf of, the Board. The persons named in the accompanying form of proxy card have been designated as proxies by the Board. Such persons designated as proxies serve as our officers. Any stockholder desiring to appoint another person to represent him or her at the Annual Meeting may do so by completing and executing another form of proxy and delivering it to the attention of our Corporate Secretary at our principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240), before the time of the Annual Meeting. It is the responsibility of the stockholder appointing such other person to represent him or her to inform such person of this appointment.

All shares of common stock represented by properly executed proxies that are returned and not revoked will be voted in accordance with the instructions, if any, given thereon. If no instructions are provided in an executed proxy card, it will be voted “FOR” each of the proposals described herein and set forth on the accompanying form of proxy card, and in accordance with the proxyholder’s best judgment as to any other business as may properly come before the Annual Meeting. If a stockholder appoints a person other than the persons named in the enclosed form of proxy card to represent him or her, such person will vote the shares in respect of which he or she is appointed proxyholder in accordance with the directions of the stockholder appointing him or her. Member brokerage firms of the NYSE Amex Exchange (“AMEX”) that hold shares in street name for beneficial owners may, to the extent that such beneficial owners do not furnish voting instructions with respect to any or all proposals submitted for stockholder action, vote in their discretion upon the Board Nominees Proposal. Any “broker non-votes” and abstentions will be treated as shares present for purposes of determining the presence of a quorum, will be treated as votes against the Authorized Share and Incentive Plan Share Increase Proposals, but will have no effect on the vote for the Board Nominees Proposal. Any stockholder who executes a proxy card may revoke it any time before it is voted by delivering to the attention of our Corporate Secretary a written statement revoking such proxy, by executing and delivering a later dated proxy card, or by voting in person at the Annual Meeting. Attendance at the Annual Meeting by a stockholder who has executed and delivered a proxy card to us shall not in and of itself constitute a revocation of such proxy.

We will bear the cost of solicitation of proxies. Our directors, officers and employees may solicit proxies, personally, by telephone, electronically or otherwise, but such persons will not be specifically compensated for such services. We may also make, through bankers, brokers, dealers, banks or similar entities acting as nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the Annual Meeting to the beneficial owners of common stock that such persons hold of record.

PROPOSALS REQUIRING YOUR VOTE

(Board Nominees Proposal)

General

At the Annual Meeting, two (2) nominees will be elected Class A directors. The Nominating and Governance Committee of the Board has recommended that the full Board remain comprised of six (6) directors and that two (2) Class A directors be elected for a three (3) year term at the Annual Meeting. If elected, each of the two (2) Class A nominees will serve on the Board until the 2012 annual meeting of stockholders, or until their successors are duly elected and qualified in accordance with our Bylaws. All Class A nominees recommended for election at the Annual Meeting are current directors and are standing for re-election.

The nominees for re-election are John T. Thornton and Marvin R. Richardson. If no contrary indication is made, proxies in the accompanying form are to be voted “FOR” each of the Class A directors, or, in the event either of the Class A nominees is not a candidate or is unable to serve as a director at the time of election, for any nominee that is designated by the Board to fill such vacancy, unless the Board determines to reduce the number of directors pursuant to our Bylaws. Each nominee has consented to his nomination and neither our Board nor management has any reason to believe that either of the two (2) Class A nominees for election will be unable to serve. Other than as reported in this Proxy Statement, there are no arrangements or understandings between any nominees and any other persons pursuant to which the nominees were nominated for election as directors. Information with respect to the two (2) nominees can be found elsewhere in this Proxy Statement under the section “Board of Directors and Committees of the Board”.

Vote Required

Directors are elected by a plurality of the votes cast, so that only votes “FOR” directors are counted in determining which directors are elected. The two (2) nominees receiving the most votes “FOR” will be elected. Broker non-votes (if any) and withheld votes will be treated as shares present for the purposes of determining a quorum, but will have no effect on the vote for the election of directors.

Recommendation of Our Board

Our Board recommends a vote “FOR” the election of John T. Thornton and Marvin R. Richardson as Class A directors. Our directors (including the director nominees) and executive officers own approximately 8.71% of the voting power entitled to be cast at the Annual Meeting based upon the information contained in the section of this Proxy Statement titled “Security and Ownership of Certain Beneficial Owners and Management”. We anticipate that these directors and executive officers will cast all of their votes in favor of the proposal to elect John T. Thornton and Marvin R. Richardson as Class A directors.

PROPOSAL NUMBER 2

(Authorized Share Increase Proposal)

Overview

As previously approved by our shareholders, our Amended and Restated Articles of Incorporation currently provide that the number of shares of common stock which we are authorized to issue is 200,000,000, par value $0.001 per share. Our Board of Directors has determined that it is advisable to further amend our articles of incorporation to increase the number of authorized shares of our common stock to 300,000,000, par value $0.001. A copy of the proposed Amended and Restated Articles of Incorporation is attached hereto as Appendix A to this Proxy Statement.

If this proposal number 2 is approved by you, the additional shares of our common stock so authorized, as well as shares of our common stock currently authorized but not issued or outstanding, may be issued from time to time upon authorization of our Board of Directors, without further approval by our stockholders, unless otherwise required by applicable law, and for such consideration as our Board may determine and as may be permitted by applicable law. Our Board believes the increase in the authorized shares of our common stock is necessary to provide us with the flexibility and ability to act in the future with respect to financing programs including offerings to raise capital for debt repayment and other purposes, acquisitions, and other corporate purposes without the delay and expense associated with obtaining special stockholder approval each time an opportunity requiring the issuance of shares of our common stock may arise. Such a delay might deny us the flexibility that our Board views as important in facilitating the effective use of the securities of our company. At this time, we have no definitive need or plan to use the additional shares that would be authorized by approval of this proposal number 2. Proposal number 2 does not otherwise affect actions which the Board may take at any time without a vote of the shareholders as permitted by Nevada law.

The following table illustrates the effect of the increase in the number of authorized shares of our common stock.

		Before the Amendment				After the Amendment
Authorized			200,000,000				300,000,000
Outstanding			161,738,399				161,738,399
Reserved			8,269,555				8,269,555
Available for future issuance			30,037,046				130,037,046

The increase in authorized shares is not being proposed as a means of preventing or dissuading a change in control or takeover of our company. However, use of these shares for such a purpose is possible. Shares of our authorized but unissued common stock could be issued in an effort to dilute the stock ownership and voting power of persons seeking to obtain control of our company or could be issued to purchasers who would support our Board of Directors in opposing a takeover proposal. In addition, the increase in authorized shares, if approved, may have the effect of discouraging a challenge for control or making it less likely that such a challenge, if attempted, would be successful.

The additional shares of our common stock for which authorization is sought will have the same voting rights, the same rights to dividends and distributions and will be identical in all other respects to the shares of our common stock now authorized. Adoption of the proposed amendment to our articles of incorporation would not affect the rights of the holders of currently outstanding shares of our common stock.

The authorization of additional shares of our common stock pursuant to this proposal will have no dilutive effect upon the proportionate voting power of our present stockholders. However, to the extent that shares are subsequently issued to persons other than our current stockholders and/or in proportions other than the proportion that presently exists, such issuance could have a substantial dilutive effect on our current stockholders.

As of the record date for the annual meeting, we had 161,783,399 shares of our common stock outstanding and approximately 8.3 million shares of our common stock reserved for issuance pursuant to various outstanding options and warrants to purchase our common stock.

Interest of Our Management in the Proposal

None of our directors or executive officers has any financial or other personal interest in the amendment to our articles of incorporation pursuant to this proposal.

Vote Required

The affirmative vote of the holders of a majority of the shares of our common stock issued and outstanding on the record date for the annual meeting will be required to approve this amendment to our articles of incorporation.

Recommendation of Our Board of Directors

Our Board of Directors recommends a vote FOR approval of this amendment to our articles of incorporation.

PROPOSAL NUMBER 3

(Incentive Plan Share Increase Proposal)

At the Annual Meeting of Stockholders held on September 26, 2006, shareholders ratified the Board of Directors’ approval of the Arcadia Resources, Inc. 2006 Equity Incentive Plan (the “2006 Plan” or “Equity Incentive Plan”). The text of the 2006 Plan, as proposed to be amended and restated if this Proposal Number 3 is approved by you, is set forth in Appendix B to this proxy statement, and the following discussion is qualified in its entirety by reference to Appendix B. Approval by you will constitute a ratification of an amendment of the 2006 Plan adopted, subject to shareholder approval, by the Company’s Board of Directors on January 27, 2009.

Overview

The purpose of the 2006 Plan is to make available a means of compensation to employees of the Company and its subsidiaries which encourages and enables the acquisition of a personal proprietary interest in the Company by employees upon whose judgment and interest the Company and its subsidiaries are largely dependent for the successful conduct of their operations. It is anticipated that the acquisition of such a proprietary interest in the Company will stimulate the efforts of these employees on behalf of the Company and its subsidiaries, and strengthen their desire to remain with the Company and its subsidiaries. It is also expected that the opportunity to acquire such a proprietary interest will enable the Company and its subsidiaries to attract and retain desirable personnel.

The 2006 Plan provides for grants of incentive stock options, non-qualified stock options, stock appreciation rights and restricted shares (collectively “Awards”). The 2006 Plan will terminate and no more Awards will be granted after August 2, 2016, unless terminated by the Board of Directors sooner. The termination of the 2006 Plan will not affect previously granted Awards. Currently, the total number of shares of Common Stock that may be issued pursuant to Awards under the 2006 Plan may not exceed an aggregate of 2.5% of the Company’s authorized shares of common stock as of September 26, 2006. At that time, the Company’s authorized number of shares was 200 million, resulting in a limit on the number of shares available for issuance under the Plan of 5 million shares. If Proposal Number 2 described above is approved by the shareholders, the maximum number of shares which may be issued under the Plan will increase to 7.5 million shares. If this Proposal Number 3 is also approved by shareholders, thereby ratifying the amendment adopted by the Board, the 2006 Plan will provide that the total number of shares of Common Stock that may be issued pursuant to Awards may not exceed 5.0% of the Company’s authorized shares of common stock as of the date of adoption, thereby increasing the maximum number of shares which may be issued to 15 million shares. If this Proposal is approved, but Proposal Number 2 is not approved, the number of shares which may be issued may not exceed 10 million shares. Awards may be either treasury shares or authorized and unissued shares. As of the close of business on August 21, 2009, the price of a share of Common Stock on the NYSE American Stock Exchange was $0.76.

All non-employee directors, executive officers and employees of the Company and its subsidiaries are eligible to receive Awards under the 2006 Plan. As of July 31, 2009, the Company and its subsidiaries had approximately 3,300 employees.

Administration; Other Limitations

The 2006 Plan is administered by the Board or Directors or by a compensation committee of the Board of Directors, if established. Awards may be granted under the 2006 Plan to such employees of the Company and its subsidiaries, as well as directors, officers and other persons, as the Board may determine.

To the extent that (i) an Award is paid, settled or exchanged or expires, lapses, terminates or is cancelled for any reason without the issuance of shares, (ii) any shares under an Award are not issued because of payment or withholding obligations or (iii) restricted shares revert back to the Company prior to the lapse of the restrictions or are applied by the Company for purposes of tax withholding obligations, then the Company may also grant Awards with respect to such shares. Awards payable only in cash or property other than shares do not reduce the aggregate remaining number of shares with respect to which Awards may be made under the 2006 Plan and shares relating to any other Awards that are settled in cash or property other than shares, when settled, shall be added back to the aggregate remaining number of shares with respect to which Awards may be made under the 2006 Plan. Any shares with respect to which the Company becomes obligated to make Awards through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, shall not count against the shares available to be delivered pursuant to Awards under the 2006 Plan. No single employee may be issued Awards during any one calendar year that have a fair market value greater than $100,000, in the case of incentive stock options. In the event of any dividend or other distribution whether in the form of cash, shares, other securities or other property, recapitalization, forward or reverse stock split, reorganization, merger, consolidation, separation, spin-off, combination, repurchase, share exchange, recapitalization, liquidation, dissolution or other similar corporate transaction or event that affects shares such that an adjustment is determined by the Board of Directors to be appropriate under the 2006 Plan (each, a “Capital Adjustment”), then the number of shares issuable under the 2006 Plan in the aggregate and to any particular employee shall be adjusted to reflect such transaction.

Awards

Under the 2006 Plan, the Company may grant options and stock appreciation rights, which shall be exercisable at a price determined by the Board of Directors on the date of the Award grant, which price may be less than the fair market value of a share of Common Stock on the date the option or stock appreciation right is granted. Such options and stock appreciation rights may be exercised for a term no longer than ten years from the date of grant. An award agreement may provide that, in the event the participant dies while the option or stock appreciation right is outstanding, the option or stock appreciation right will remain outstanding for 12 months following the participant’s death, but in no event beyond the term of the option or stock appreciation right. Upon its exercise, a stock appreciation right will be settled (and an option may be settled, in the Board’s discretion) for an amount equal to the excess of the fair market value of a share of Common Stock on the date of exercise over the exercise price of the stock appreciation right (or option).

The Company may also grant restricted shares. A restricted share is a share of Common Stock that is registered in the participant’s name, but that is subject to certain transfer and/or forfeiture restrictions for a period of time as specified in the participant’s award agreement. The recipient of a restricted share will have the rights of a shareholder, subject to any restrictions and conditions specified by the Board of Director’s in the recipient’s award agreement. Notwithstanding the previous sentence, unless the Board determines otherwise, all ordinary cash dividends paid upon any restricted share prior to its vesting may, at the discretion of the Board, be retained by the Company for the account of the relevant participant and upon vesting will be paid to the relevant participant.

Under the 2006 Plan, the Board of Directors has the authority, in its discretion, to add conditions to the vesting of any Award that relate to performance and/or continued employment. The Board has the authority to equitably adjust the terms of any outstanding Awards under the 2006 Plan for any Capital Adjustment pursuant to which it determines an adjustment is appropriate.

Amendment; Termination

The Board of Directors may discontinue the 2006 Plan at any time and from time to time may amend or revise the terms of the 2006 Plan or any award agreement, except that it may not make any amendment or revision in a manner unfavorable to a participant (other than if immaterial), without the consent of the participant or make any of the following amendments or revisions without the approval of the stockholders of the Company: (i) increase the number of Shares available for issue under the 2006 Plan (except as provided in the 2006 Plan); (ii) extend the term of the 2006 Plan or the period during which Awards may be granted or exercised; (iii) reduce the exercise price, in the case of an incentive stock option, below 100% (110% in the case of a 10% Holder) of the fair market value of the shares which are the subject of such stock option at the time of the grant, other than to change the manner of determining the fair market value of such shares; (iv) modify the requirements as to eligibility for participation in the 2006 Plan; and (v) amend the 2006 Plan in any respect which would cause any stock options to no longer qualify as incentive stock options.

Consent of a participant shall not be required in respect of any adjustment (even if unfavorable to a participant and not immaterial) made in the light of a Capital Adjustment unless the terms of the relevant award agreement provide for specific terms in the case of a Capital Adjustment.

U.S. Federal Tax Implications of Options and Stock Appreciation Rights

The following summary generally describes the principal Federal (but not state and local) income tax consequences of the issuance and exercise of options and stock appreciation rights under the 2006 Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant or the Company. The provisions of the Internal Revenue Code and the regulations there under relating to these matters are complex and subject to change and their impact in any one case may depend upon the particular circumstances.

An employee will generally not realize any income when an incentive stock option is granted under the 2006 Plan or when such an option is exercised, and the Company will not be entitled to a deduction with respect to the grant or exercise of such an option. The difference between the fair market value of the shares acquired upon the exercise of an incentive stock option and the exercise price of the shares subject to the option at the time of exercise is an item of tax preference which may result in the employee being subject to the alternative minimum tax. If the employee holds the shares acquired under an incentive stock option for at least two years from the date the option is granted and at least one year from the date of exercise of the option, any gain realized by the employee when the shares are sold will be taxable as capital gain. If the holding periods are not satisfied, the employee will realize ordinary income in the year of the disposition of the shares in an amount equal to the excess of the fair market value of such shares on the date of exercise (or the proceeds of the disposition, if lower) over the option price. Any remaining gain will generally be capital gain. If an incentive stock option is settled by the Company in cash, shares or a combination thereof, the employee will recognize ordinary income at the time of settlement equal to the fair market value of such cash, shares or combination thereof.

A participant will not realize any income, and the Company will not be entitled to a deduction, at the time that a non-qualified stock option or stock appreciation right is granted or vests under the 2006 Plan. Upon exercising a non-qualified stock option or stock appreciation right, an employee will realize ordinary income in an amount equal to the excess of the fair market value on the exercise date of the shares subject to the option or stock appreciation right over the exercise price of the option or stock appreciation right. In the case of options, the participant will have a basis in the shares received as a result of the exercise, for purposes of computing capital gain or loss, equal to the fair market value of those shares on the exercise date and the employee’s holding period in the shares received will commence on the day following the date of exercise. The Company generally will be entitled to a tax deduction equal to the amount recognized as ordinary income (not as capital gain) by the participant in connection with the exercise of a non-qualified option or stock appreciation right. The Company generally is not entitled to a tax deduction with respect to any amount that represents compensation in excess of $1 million paid to “covered employees” that is not “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code. Under current regulations interpreting Section 162(m), the grant by a committee of “outside directors” of at-or above-the-money options or stock appreciation rights under a stockholder approved plan that expressly limits the amount of grants that can be made to any individual participant over a specified period of time is considered “qualified performance-based compensation.”

Awards granted under the 2006 Plan may be subject to Internal Revenue Code Section 409A and related regulations and other guidance. Code Section 409A imposes certain requirements on compensation that is deemed under Code Section 409A to be deferred compensation. If Code Section 409A is deemed to apply to the 2006 Plan or any Award, and the 2006 Plan and Award do not, when considered together, satisfy the requirements of Code Section 409A during a taxable year, the participant will have ordinary income in the year of non-compliance in the amount of all deferrals subject to Code Section 409A to the extent that the Award is not subject to a substantial risk of forfeiture. The participant will be subject to an additional tax of 20% on all amounts includable in income and may also be subject to interest charges under Code Section 409A. Subject to Code Section 162(m) and certain reporting requirements, the Company will be entitled to an income tax deduction with respect to the amount of compensation includable as income to the participant. The Company does not undertake to have any responsibility to take, or to refrain from taking, any actions in order to achieve a certain tax result for any participant.

Amended Plan Benefits

The amount of each participant’s future Awards will be determined based on the discretion of the Board of Directors and therefore cannot be calculated. The following table sets forth the number of awards that were received by the persons and groups named below during the 2009 fiscal year, subject to shareholder approval of the amendment described in this Proposal:

		Dollar				Number of				Number of
Name and Position		Value($) (1)				Options (2)				Restricted Shares (3)
Marvin R. Richardson		$	552,000				1,200,000				0
Matthew R. Middendorf		$	153,334				333,334				0
Steve L. Zeller		$	138,000				300,000				0
All Executive Officers		$	843,334				1,833,334
All Directors who are not Executive Officers		$	0				0				0
All Employees who are not Executive Officers		$	193,200				420,000				0

Other Equity Compensation Plans

The information regarding plans and other arrangements not subject to security holder action required by Item 201(d) of Regulation S-K is set forth under the caption Equity Compensation Plan Information.

Interest of Our Management in the Proposal

None of our directors nor executive officers has any financial or other personal interest in the 2006 Plan, except to the extent that in the future, our directors and executive officers, as well as other Company employees, may be granted securities pursuant to the terms of the 2006 Plan.

Vote Required

The affirmative vote of the holders of a majority of the shares of our common stock outstanding on the record date for the annual meeting will be required to approve this amendment to our articles of incorporation.

Recommendation of Our Board of Directors

Our Board of Directors recommends a vote FOR approval of this proposal to ratify the 2006 Plan amendment.

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The full Board currently consists of six (6) directors. Our articles of incorporation provide for the classification of the Board into three (3) classes, with staggered terms of office and provides that upon expiration of the term of office of a class of directors, nominees for such class shall be elected for a term of three (3) years or until their successors are duly elected and qualified.

The current members of the Board, and the committees of the Board on which they serve, are identified below:

Nominating and

Audit

Compensation

Governance

Name

Age

Position

Class

Director Since

Committee

Committee

Committee

Marvin R. Richardson

52

President, Chief Executive Officer & Director

A

April 5, 2007

—

—

—

John T. Thornton

71

Director

A

June 15, 2004

**

—

*

Peter A. Brusca, M.D.

68

Director

C

July 1, 2006

*

**

—

Joseph Mauriello

64

Director

B

March 1, 2007

*

—

**

Russell T. Lund, III

48

Director

C

April 1, 2007

—

*

*

Daniel Eisenstadt

39

Director

B

May 24, 2007

*

*

—

Mr. Richardson does not qualify as an independent director, therefore he does not participate on any committee of the Board. Mr. Thornton, Dr. Brusca, Mr. Mauriello, Mr. Eisenstadt and Mr. Lund were elected to the Board by the stockholders of the Company. Mr. Richardson was appointed by the members of the Board to fill a vacancy on the Board. Mr. Thornton and Mr. Richardson are nominees for election to the Board by the stockholders at the Annual Meeting.

Set forth below is a brief description of the background of each of our directors, based on information provided to us by them.

Marvin R. Richardson. Marvin R. Richardson is President and Chief Executive Officer of Arcadia Resources, Inc. He joined Arcadia in February 2007 when, as co-founder and CEO of Minneapolis, Minnesota based PrairieStone Pharmacy, LLC (“PrairieStone”), he completed the sale of PrairieStone to Arcadia. Richardson is a 33-year veteran of health care and retail pharmacy services. He worked for the Walgreen Company for ten (10) years beginning in 1979 before co-founding Low Cost Health Care, where he was President and CEO for 11 years. In 2000, he joined Rite Aid Corporation as part of a newly formed management team focused on the turn-around of its operations. He served as Senior Vice President, Pharmacy Operations and was responsible for pharmacy operations and pharmacy technology for 3,600 pharmacies in the Rite Aid drug chain. In 2003, he co-founded PrairieStone. PrairieStone was formed to focus on the implementation of automation designed to allow the pharmacist more time for patient interaction. The company was named “Chain of the Year” by Drug Topics magazine in 2005. Richardson is a 1980 graduate of Purdue University in West Lafayette, Indiana, where he earned his Bachelor of Science degree in Pharmacy. He received the Pharmacy Distinguished Alumni Award in 2008, serves on the Purdue University School of Pharmacy Dean’s Advisory Council, The Purdue University Foundation Board and is on the Board of Directors for the Mental Health America of Indiana Association. He has been an advisor to several major government leaders on healthcare policy, including Vice President Dan Quayle and Mr. Stephen Goldsmith, former Mayor of Indianapolis, Indiana and current Indiana Governor Mitch Daniels.

John T. Thornton. Mr. Thornton owns and manages J.T. Investments, Inc., a real estate development and investment company. Mr. Thornton was a member of the board, and the compensation, audit and finance committees of XL Capital Ltd. (NYSE: XL), an insurance, reinsurance and financial products company until April 2009. From 1987 to 1999, Mr. Thornton served as executive vice president and chief financial officer of Norwest Corporation (now Wells Fargo). From 1984 to 1987, Mr. Thornton was senior vice president and controller of Norwest Corporation. Mr. Thornton received a law degree from St. John’s University and was admitted to the New York State Bar in 1972. Mr. Thornton became a Certified Public Accountant in 1964.

Peter A. Brusca, M.D. Dr. Brusca is a physician who practiced otolaryngology in the Chicago, Illinois area through 2004. Dr. Brusca earned his medical degree in 1967 from Loyola University Stritch School of Medicine. He earned his Bachelor of Science Degree in 1963 from Loyola University, Chicago. He is certified by the American Board of Otolaryngology, and is a Fellow of the American College of Surgeons, American Academy of Otolaryngology Head and Neck Surgery, and other professional organizations. Dr. Brusca also is a board member, executive & audit committee member and chairman of the investment committee of ISMIE Mutual Insurance Company located in Chicago, Illinois.

Joseph Mauriello. Mr. Mauriello retired in 2006 as Deputy Chairman & COO of KPMG, LLP after 40 years with the accounting firm. He was responsible for its day-to-day operations and financial affairs. As Deputy Chairman, he also chaired the firm’s Management Committee. In addition, Mr. Mauriello was COO for the Americas Region and member of the Boards of KPMG LLP and KPMG Americas. After joining KPMG in 1965, he held a series of leadership positions and serviced some of the firm’s most prestigious global clients. Prior to his most recent position, he was a member of the Board of Directors of KPMG from 1990 to 1994 and Partner in Charge of the firm’s Financial Institution Practices from 1987 to 1996. In addition, Mr. Mauriello serves on the Board of Directors of XL Capital Ltd. (NYSE:XL), the Board of Trustees of the Fidelity Funds, the Board of Overseers of the School of Risk Management, Insurance and Actuarial Sciences of the Peter J. Tobin College of Business at St. John’s University, the Board of Directors of the Alliance for Lupus Research, New York, NY and the Board of Trustees of the St. Barnabas Medical Center and Health System, Livingston, NJ.

Russell T. Lund, III. Mr. Lund is the Chairman and Chief Executive Officer of Lund Food Holdings, Inc., which owns and operates the Lunds and Byerly supermarkets in Minnesota and two (2) manufacturing facilities and a distribution center which support the store operations. Mr. Lund joined the family business in 1985 and held various positions before being named Chairman and Chief Executive Officer in 1991. Mr. Lund is a member of the Board of the Food Marketing Institute. In addition, he is a trustee for the Russell T. Lund Charitable Trust.

Daniel Eisenstadt. Mr. Eisenstadt began his career as a corporate lawyer in the New York office of Fulbright & Jaworski, L.L.P., with a practice focused on securities offerings and mergers and acquisitions. He then served as Vice President and founding Executive Director of the Auschwitz Jewish Center Foundation from 1998 to 2002. In addition, Mr. Eisenstadt has been involved in several entrepreneurial ventures. Since August 2009, Mr. Eisenstadt is a partner with MDM Equity Partners LLC. From 2004 until August 2009, Mr. Eisenstadt served as Director of Private Equity at CMS Companies, an investment fund based in Philadelphia. He is a member of the Investment Committee of Quad Partners II, serves on the Board of Directors of Beckfield College LLC, and serves as an observer on the boards of HB&G Building Products Inc. and High Response Holdings LLC. Mr. Eisenstadt received a B.A. from Clark University with a major in International Relations, a J.D. from the University of Virginia School of Law and an MBA from Harvard Business School. Mr. Eisenstadt was a Raoul Wallenberg Scholar in International Affairs at the Hebrew University of Jerusalem.

GOVERNANCE OF THE COMPANY

Corporate Governance Guidelines

The Board sets high standards for our employees, officers and directors. Implicit in this philosophy is the importance of sound corporate governance. All of our corporate governance materials, including the charters of our various committees of the Board and our Code of Ethics and Conduct are available in the Investor section of our website at www.ArcadiaHealthCare.com. Such documents are also available in print to any stockholder who requests it. Stockholders may send a written request for such documents to the attention of the Corporate Secretary of Arcadia Resources, Inc., 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240. The Board regularly reviews corporate governance developments and modifies our corporate governance materials as warranted. We will post any modifications to our corporate governance materials on our website.

Director Independence

It is the policy of the Board that a substantial majority of its members be independent from management and the Board has adopted director independence guidelines that meet the listing standards of NYSE Amex and the independence standards under the applicable rules and regulations of the SEC. In accordance with our corporate governance guidelines, the Board undertook its annual review of director independence during Fiscal 2009. The Board considered any and all commercial and charitable relationships of directors, including transactions, arrangements and relationships between us and each director or any member of his or her immediate family. Following this review, the Board determined, by applying the independence standards contained in Part 8 of the AMEX Listed Company Manual and the independence standards under the applicable rules and regulations of the SEC, that each of Peter A. Brusca, M.D., Daniel Eisenstadt, Russell T. Lund III, Joseph Mauriello and John T. Thornton, is independent of us and our management in that none has a direct or indirect material relationship with our Company. Marvin R. Richardson is not considered an independent director because he currently serves as the Chief Executive Officer and President of the Company and receives compensation from the Company for being an executive officer of the Company.

Nomination and Qualifications of Directors

The Nominating and Governance Committee is responsible for screening potential director candidates and recommending qualified candidates to the Board for nomination. The Nominating and Governance Committee does not solicit director nominations but will consider stockholder recommendations sent to the attention of the Chairman of the Nominating and Governance Committee of Arcadia Resources, Inc., 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240. Stockholders’ nominations for directors must be made in writing and contain a sufficient description of the qualifications and background of the candidate to enable the Nominating and Governance Committee to assess his or her qualifications. The Board, with the assistance of the Nominating and Governance Committee, is responsible for reviewing, on an annual basis, the requisite skills and characteristics of members of the Board. This assessment includes an evaluation of the independence, business, strategic and financial skills of each director and how each director’s overall experience relates to the needs of the Board as a whole.

Communications with the Board

Stockholders and other interested parties may communicate directly with the Board or the non-management directors, individually or as a group, by sending written correspondence to the attention of the Chairman of the Nominating and Governance Committee of Arcadia Resources, Inc., 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240. Additional methods of communicating with the Board are disclosed in our Code of Ethics and Conduct, which is available in the Investor section of our website at www.ArcadiaHealthCare.com. All such communications will be forwarded to the Board or its members as requested in the communication. Communications that relate to our accounting, internal accounting controls or auditing matters are referred to the Chairman of the Audit Committee.

Meetings of the Board and its Committees

During Fiscal 2009, the Board met twelve (12) times and acted by written consent five (5) times. Each director attended at least 75% of all meetings of the Board and 50% of all meetings of the committees on which he served. Board and committee meetings are scheduled generally nine (9) to twelve (12) months in advance and are scheduled without regard to anticipated releases or other major announcements by the Company. We do not have a policy with regard to attendance by our board members at the annual meetings of stockholders, however, we encourage all of our directors to attend, either in person, by telephone or by other similar means of live communication (including video conference or webcast). At our last annual meeting of Stockholders held in September 2008, all six (6) directors attended either in person or by teleconference.

Committees of the Board

The Board has three (3) standing committees to facilitate and assist the Board in the execution of its responsibilities. The current committees are the Audit Committee, the Compensation Committee and the Nominating and Governance Committee.

Audit Committee

The Audit Committee currently consists of John T. Thornton (Chair), Peter A. Brusca, M.D., Joseph Mauriello and Daniel Eisenstadt. During Fiscal 2009, the Audit Committee met four (4) times and acted by written consent one (1) time. The Board has determined that each of John T. Thornton, Peter A. Brusca, M.D., Joseph Mauriello and Daniel Eisenstadt meets the independence standards of AMEX for audit committee members and the independence standards under the applicable rules and regulations of the SEC. The Board has also determined that Mr. Thornton satisfies the requirements for serving as an “audit committee financial expert” and has designated Mr. Thornton as our audit committee financial expert.

The Audit Committee has adopted a charter which is attached hereto as Exhibit A and is also available in the Investor section of our website at www.ArcadiaHealthCare.com. The Audit Committee reviews and reassesses the adequacy of its charter annually and recommends any proposed changes to the Board for approval.

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to:

•

The accounting and financial reporting processes and systems of internal accounting and financial controls;

•

The effectiveness of our internal controls;

•

The integrity of our financial statements;

•

The annual independent audit of our financial statements;

•

The engagement of our independent auditor;

•

The evaluation of the independent auditor’s function;

•

The compliance with legal and regulatory requirements, including disclosure controls and procedures, management’s report on internal controls over financial reporting and the report required by SEC rules to be included in this Proxy Statement; and

•

The policies, practices and compliance regarding our Code of Ethics and Conduct.

In addition, the Audit Committee provides an avenue for communication between our independent registered public accounting firm and the Board. The Audit Committee has the sole authority to employ our independent registered public accounting firm, and to approve any proposed non-audit work to be conducted by our independent registered public accounting firm. The Audit Committee is expected to regularly review the independent registered public accounting firm’s work plan, staffing comments, invoices and work product.

The Audit Committee Report is included in a later section of this Proxy Statement.

Compensation Committee

The Compensation Committee consists solely of independent directors and the Compensation Committee charter is available in the Investor section of our website at www.ArcadiaHealthCare.com. The Compensation Committee reviews and reassesses the adequacy of its charter periodically and recommends any proposed changes to the Board for approval.

The Compensation Committee currently consists of Peter A. Brusca, M.D. (Chair), Daniel Eisenstadt and Russell T. Lund, III. During Fiscal 2009, the Compensation Committee met seven (7) times and acted by written consent two (2) times. The Board has determined that each of Peter A. Brusca, M.D., Daniel Eisenstadt and Russell T. Lund, III meet the independence standards of AMEX for compensation committee members and the independence standards under the applicable rules and regulations of the SEC.

The Compensation Committee’s responsibilities, which are discussed in detail in its charter, include, among other duties, the responsibility to:

•

Annually review and approve the Company’s corporate goals and objectives relevant to the Chief Executive Officer and to evaluate his or her performance in light of such goals and objectives and determine and approve changes in the Chief Executive Officer’s compensation level based on this evaluation;

•

Annually review, and approve changes in, executive officer compensation, including: (i) annual base salary levels; (ii) annual incentive compensation levels; (iii) long-term incentive compensation levels; (iv) employment agreements, severance agreements and change of control agreements/provisions; and (v) any supplemental or special benefits;

•

Identify any performance measures to be used in executive and management incentive plans, and the levels of performance for which incentive compensation is paid;

•

Administer the Company’s incentive compensation plans and equity based-plans as in effect and as adopted from time to time by the Board;

•

Approve any new equity compensation plan or any material change to an existing plan where stockholder approval has not been obtained;

•

Provide oversight regarding the Company’s retirement, welfare and other benefit plans, policies and arrangements; and

•

Approve any stock option award or any other type of award as may be required for complying with any tax, securities or other regulatory requirement, or otherwise determined to be appropriate or desirable by the Compensation Committee or Board.

Please see the Compensation Discussion and Analysis section of this Proxy Statement for a description of the processes and procedures for considering and determining executive officer compensation. The Compensation Committee Report follows the Compensation Discussion and Analysis included in this Proxy Statement.

Nominating and Governance Committee

The Nominating and Governance Committee, consists solely of independent directors and its charter is available in the Investor section of our website at www.ArcadiaHealthCare.com. The Nominating and Governance Committee reviews and reassesses the adequacy of its charter periodically and recommends any proposed changes to the Board for approval.

The Nominating and Governance Committee consists of Russell T. Lund, III, Joseph Mauriello (Chair) and John T. Thornton. The Board has determined that each of Russell T. Lund, III, Joseph Mauriello and John T. Thornton meet the independence standards of AMEX and the independence standards under the applicable rules and regulations of the SEC. The Nominating and Governance Committee met two (2) times and acted by written consent one (1) time during Fiscal 2009.

The Nominating and Governance Committee’s responsibilities, which are discussed in detail in its charter, include, among other duties, the responsibility to:

•

Monitor the size and composition of the Board and committees of the Board;

•

Consider and make recommendations to the Board with respect to the nominations or elections of directors of the Company;

•

Identify individuals believed to be qualified as candidates to serve on the Board and select, or recommend that the Board select, the candidates for all directorships to be filled by the Board or by the stockholders at an annual or special meeting;

•

Solicit periodic input from the Board and conduct a review of the effectiveness of the structure and operations of the Board;

•

Make recommendations to the Board concerning the appointment and removal of directors to committees of the Board and suggest rotations for chairpersons of committees;

•

Make recommendations to the Board regarding committee member qualifications, committee structure and operations, delegated responsibilities of the committees and revisions to the charter of each Board committee;

•

Evaluate and recommend any revisions to Board and committee meeting policies and logistics;

•

Administer the annual self-evaluation by the Board, share the evaluation results with the full Board and lead Board discussions and analysis thereof;

•

Develop orientation materials for new directors and corporate governance-related continuing education for all Board members;

•

Implement, evaluate and monitor compliance of the Company’s Code of Conduct and Ethics, promptly inform the Board of any non-compliance and make recommendations to the Board regarding any revisions to the Code from time to time as appropriate;

•

Establish, implement and monitor the processes for effective communication between the Company’s stockholders and members of the Board;

•

Establish, implement and monitor the processes for consideration of stockholder proposals properly submitted in accordance with the provisions of the Bylaws;

•

Review all stockholders proposals properly submitted to the Company in accordance with any applicable provisions of the Bylaws and recommend to the Board appropriate action on each such proposal;

•

Advise the Board periodically with respect to significant developments in the law and practice of corporate governance and make recommendations to the Board on all matters of corporate governance;

•

Review the Company’s compliance with the AMEX corporate governance listing requirements;

•

Oversee the management continuity process; and

•

Make recommendations to the Board with respect to outside director compensation.

The Nominating and Governance Committee may use various means to identify director candidates, including recommendations from existing Board members and management. Candidates are not evaluated on the basis of any specific minimum qualifications. In selecting candidates, the Nominating and Governance Committee relies on all relevant factors regardless of the source of the candidate’s nomination. Some of the factors on which the Nominating and Governance Committee relies in selecting candidates include, without limitation: personal characteristics, including personal and professional ethics and integrity; expertise useful to the Company and complementary to the background and experience of the existing directors; willingness to represent the best interest of stockholders and objectively appraise management performance; and diversity in personal background, such as gender, age and nationality. The Nominating and Governance Committee examines the candidate’s qualifications in light of the portfolio of skills, experience, perspective and background required for the effective functioning of the Board, taking into consideration the Company’s strategy, and its regulatory and market environments. While the Nominating and Governance Committee does not solicit director nominations from stockholders, it will evaluate candidates recommended by stockholders in the same manner as candidates identified by our officers, the Nominating and Governance Committee or other members of our Board.

Code of Ethics and Conduct

We have adopted a Code of Ethics and Conduct that applies to all of our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics and Conduct is available in the Investor section of our website at www.ArcadiaHealthCare.com. In addition, any waivers of compliance granted by the Board with respect to our Code of Ethics and Conduct are available in the Investor section of our website at www.ArcadiaHealthCare.com.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serve as members of the board of directors or compensation committee of any entity that has an executive officer serving as a member of our Board or Compensation Committee.

Certain Transactions and Relationships

Information about transactions involving related persons is assessed by the independent Audit Committee of the Board. Related persons include the Company’s directors and executive officers, as well as the immediate family members of directors and executive officers. If the determination is made that a related person has a material interest in any Company transaction, then the Company’s Audit Committee would review, approve or ratify it, and the transaction would be required to be disclosed in accordance with SEC rules. If the related person at issue is a director of the Company or a family member of a director, then that director would not participate in those discussions. In general, the Company is of the view that the following transactions with related persons are not significant to investors because they take place under the Company’s standard policies and procedures: (i) the sale or purchase of products or services in the ordinary course of business and on an arms’-length basis; and (ii) the employment by the Company where the compensation and other terms of employment are determined on a basis consistent with the Company’s human resources policies.

Outlined below are certain related party transactions that have been reviewed and approved by the Company’s Audit Committee during Fiscal 2009 or prior to Fiscal 2009:

Russell T. Lund, III has minority ownership interests in each of Lunds, Inc. and LFHI Rx, LLC and serves as the Chairman and CEO of Lunds, Inc. These two entities held an ownership interest in PrairieStone prior to its acquisition by the Company. Lunds, Inc. and LFHI Rx, LLC received 2,400,000 shares of Company common stock at the closing of the transaction and an additional 47,437 shares in February 2008 due to a stock price guarantee provision relating to the acquisition. Immediately prior to Company’s acquisition of PrairieStone, PrairieStone closed on the sale of the assets of fifteen retail pharmacies located within grocery stores owned and operated by Lunds, Inc. and Byerly’s, Inc. to Lunds, Inc., which transaction included execution of a five-year Management Services Agreement and a five-year Licensed Services Agreement between Lunds, Inc. and PrairieStone. Under the terms of the Management Services Agreement, PrairieStone provided such services that were appropriate for the day-to-day management of the pharmacies. In conjunction with these two agreements, the Company recognized $27,000 and $64,000 in revenue during the three-month periods ended June 30, 2009 and 2008, respectively. The Asset Purchase Agreement with Lunds also included a “post-closing risk-share” clause whereby PrairieStone will pay Lunds 50% of the first two years’ losses, if any, up to a cumulative total loss of $914,000. $457,000 was accrued during the fiscal 2007. In March 2009, the Company entered into an Override Agreement with Lunds whereby the Company agreed to pay the post-closing risk-share balance of $457,000 with an initial payment of $50,000 and then eleven monthly equal installments plus interest through February 2010. As of June 30, 2009, the remaining principal balance is $296,000. The Override Agreement also terminated the Management Services Agreement and provided for the granting of 100,000 shares of the Company’s common stock to Lunds.

Daniel Eisenstadt was formerly the Director of Private Equity of CMS Companies. Entities affiliated with CMS Companies purchased 4,201,681 shares of the Company’s common stock for $5,000,000 as part of the May 2007 private placement. In addition, these entities received 1,050,420 warrants to purchase shares of common stock at $1.75 per share for a period of seven years. These warrants were converted to 1,050,420 shares of common stock in conjunction with the March 25, 2009 debt refinancing.

Steven L. Zeller has a beneficial ownership interest in an affiliated agency and thereby has an interest in the affiliate’s transactions with the Company, including the payments of commissions to the affiliate based on a specified percentage of gross margin. The affiliate is responsible to pay its selling, general and administrative expenses. Commissions totaled $212,000 for the three-month period ended June 30, 2009 and commissions totaled $1.4 million in Fiscal 2009. In addition, the Company has an agreement with this affiliate, which is terminable under certain circumstances, to purchase the business under certain events, but in no event later than 2011.

Certain Information about Insurance and Indemnification

The Company has renewed its directors and officers indemnification coverage. This insurance covers directors and officers individually where exposures exist other than those for which the Company is able to provide direct or indirect indemnification.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s directors and executive officers, and persons who own beneficially more than ten percent (10%) of the common stock, to file reports of ownership and changes of ownership with the SEC. Copies of all filed reports are required to be furnished to us. Otherwise, based solely upon a review of Forms 3, 4 and 5 and amendments to these forms furnished to us, together with all written representations received by us from applicable parties that no Form 5 was required to be filed by such parties, all parties subject to the reporting requirements of Section 16(a) of the Exchange Act timely filed all such required reports during and with respect to Fiscal 2009.

Stockholder Communication with the Board

A stockholder who wishes to communicate directly with the Board or with any director may send the communication, addressed to the Board or to the individual director, to the Company’s principal executive offices (9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240) and the communication will be forwarded to the Board or the director(s) to whom it is addressed, as applicable.

EXECUTIVE OFFICERS

The following table sets forth the names, titles and ages of our executive officers as of September 18, 2009:

Name		Age				Position(s)		Served as Officer Since
Marvin R. Richardson			52			President, Chief Executive Officer and Director		February 2007
Matthew R. Middendorf			39			Chief Financial Officer and Treasurer		February 2008
Steven L. Zeller			52			Chief Operating Officer		September 2007

Set forth below is a brief description of the background of each of our executive officers, based on information provided to us by them, all of whom serve on the Executive Committee of the Company:

Marvin R. Richardson. See the section of this Proxy Statement titled “Board of Directors and Committees of the Board” for Mr. Richardson’s biographical data.

Matthew R. Middendorf. Mr. Middendorf joined the Company on February 1, 2008 as Chief Financial Officer and Treasurer. Mr. Middendorf started his career with the Company in January 2007 by working as a financial consultant to the Company, providing day-to-day financial and accounting support to the Interim CFO and working on special projects for the Chief Executive Officer. He has responsibility for internal and external reporting, planning and analysis and corporate and business unit accounting. From 2004 to 2006 Mr. Middendorf served as the Corporate Controller and Director of Financial Reporting for Workstream, Inc., a publicly-traded software company. Prior to his time with Workstream, he worked in public accounting for more than a decade, most recently with Grant Thornton in its Seattle office. Mr. Middendorf has significant experience working with mid-size companies in the technology, healthcare and banking industries. Mr. Middendorf holds a Bachelor of Science Degree in Accountancy from the University of Illinois and passed the CPA Exam in 1992.

Steven L. Zeller. Mr. Zeller, the Chief Operating Officer, joined the Company in September 2007 as part of the Executive Committee. Mr. Zeller is responsible for managing the Company’s day-to-day operations that are reported to the Board and Chief Executive Officer. From 2006 to September 2007, Mr. Zeller was President of BestCare Travel Staffing, LLC, an Arcadia affiliate providing travel nursing and allied health services, a position he held until February 2009. Prior to becoming an Arcadia affiliate in 2006, Mr. Zeller served as a division president for SPX Corporation from 2003 to 2005 and was employed for 18 years at Cummins, Inc., where he last served as Vice President and Managing Director for a European-headquartered power generation subsidiary. He received his Juris Doctor degree from Indiana University in 1981 where he graduated Summa Cum Laude, and received a B.A. in Economics from The College of William and Mary in 1978.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Our common stock is the only class of our voting securities presently outstanding. The following table sets forth information with respect to the beneficial ownership of shares of our common stock as of June 30, 2009 by: (a) each person known by us to beneficially own five percent (5%) or more of the outstanding shares of such class of stock, based on filings with the SEC and certain other information; (b) each of our named executive officers, as defined in Item 402(a) of Regulation S-K (the “Named Executive Officers”), including the Chief Executive Officer, Chief Financial Officer and the individuals listed in the Summary Compensation Table contained in this Proxy Statement; (c) our directors; and (d) all of our current Named Executive Officers and directors as a group. Except as otherwise indicated in the notes to the following table, we believe that all shares are beneficially owned, and investment and voting power is held by, the persons named as owners, and the address for each beneficial owner listed in the table, except where otherwise noted, is c/o Arcadia Resources, Inc., 9229 Delegates Row, Suite 260, Indianapolis, Indiana 46240.

On June 30, 2009, there were 161,291,415 shares of our common stock outstanding. Except as noted, all information with respect to beneficial ownership has been furnished by the respective director, Named Executive Officer or beneficial owner of more than five percent (5%) of our common stock, or is based on filings with the SEC. Unless otherwise indicated below, the persons named below have sole voting and investment power with respect to the number of shares set forth opposite their names. Beneficial ownership of the common stock has been determined for this purpose in accordance with the Exchange Act which provides, among other things, that a person is deemed to be the beneficial owner of the common stock if that person, directly or indirectly, has or shares voting power or investment power with respect to such stock or has the right to acquire such ownership within 60 days. Accordingly, the amounts shown in the table do not purport to represent beneficial ownership for any purpose other than compliance with SEC reporting requirements. Further, beneficial ownership as determined in this manner does not necessarily bear on the economic incidence of ownership of our common stock.

Name and Address of		Amount and Nature of				Percent
Beneficial Owner		Beneficial Owner				of Class
CURRENT OFFICERS:
Marvin R. Richardson			2,820,526	(1)			1.74	%
Matthew R. Middendorf			292,917	(2)				*
Steven L. Zeller			283,500	(3)				*
John J. Brady			745,094	(4)				*
FORMER OFFICERS:
Michelle M. Molin			150,000	(5)				*
DIRECTORS:
Peter A. Brusca, M.D.			275,536	(6)				*
Daniel Eisenstadt			5,481,072	(7)			3.40	%
Russell T. Lund III			3,375,144	(8)			2.09	%
Joseph Mauriello			404,437	(9)				*
John T. Thornton			550,716	(10)				*
All directors and current Named Executive Officers, as a group			14,228,942	(11)			8.71	%
FIVE PERCENT OWNERS:
Vicis Capital, LLC			28,405,554	(12)			17.61	%
Tower 56, Suite 700, 126 E 56th Street, 7th Floor New York, NY 10022
JANA Master Fund, Ltd.			25,298,102	(13)			15.68	%
200 Park Ave., Ste. 3900 New York, NY 10166
SDS Capital Group SPC, Ltd.			9,316,859	(14)			5.78	%
53 Forest Ave., Suite 202 Old Greenwich, CT 06870

AUDIT COMMITTEE REPORT

As more fully described in its charter, the Audit Committee oversees the financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the system of internal controls.

The Committee has established a written charter outlining the practices it follows. The charter is available in the Investor section of the Company’s website found at www.ArcadiaHealthCare.com.

The Committee is directly responsible for the appointment and oversight of BDO Seidman, LLP (“BDO Seidman”), the Company’s independent registered public accounting firm. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the Annual Report with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.

The Audit Committee reviewed with BDO Seidman, who is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under accounting principles generally accepted in the United States. BDO Seidman reported to the Audit Committee:

•

All critical accounting policies and practices to be used;

•

All alternative treatments within accounting principles generally accepted in the United States for policies and practices related to material items that were discussed with management, including ramifications of the use of such alternative disclosures and treatments and the treatment preferred by BDO Seidman; and

•

Other material written communications between BDO Seidman and management.

In addition, the Committee has reviewed and discussed with BDO Seidman the matters required by Statement on Auditing Standards No. 114, “The Auditor’s Communication With Those Charged With Governance,” received the written disclosures and the letter from BDO Seidman required by PCAOB Rule 3526, Communication with Audit Committee as Concerning Independence, and discussed with BDO Seidman its independence from management and the Company.

The Audit Committee has determined that providing the services reflected in the table following the Audit Committee Report is compatible with the maintenance of BDO Seidman’s independence. In addition, the Audit Committee has adopted a policy under which it approves in advance recurring audit, audit-related and tax services rendered by BDO Seidman, subject to specific fee limits. If circumstances require hiring the independent auditors for services not previously pre-approved or that would exceed the fee limits previously set, the Audit Committee must pre-approve the new services and/or fee limits. The Audit Committee chair may approve specified services between regularly scheduled meetings of the Audit Committee, subject to review by the full Audit Committee at its next scheduled meeting. The fiscal year 2008 and Fiscal 2009 services and fees reflected in the table following the Audit Committee Report were pre-approved by the Audit Committee. Representatives of BDO are encouraged to be present at the Annual Meeting, and if such representatives are in attendance they will be available to respond to appropriate questions and will have the opportunity to make a statement if they desire to do so.

The Audit Committee met BDO Seidman, with and without management present, to discuss the results of its audit, its evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the Fiscal 2009 for filing with the SEC and for distribution to the stockholders with this Proxy Statement.

The information contained in this report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information or report be incorporated by reference into any future filing by us under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.

Respectfully Submitted,
The Audit Committee

John T. Thornton, Chair
Peter A. Brusca, M.D.
Daniel Eisenstadt
Joseph Mauriello

Independent Public Accountants and Change in Independent Public Accounting Firm

The accounting firm of BDO Seidman has acted as independent registered accountant to audit the financial statements of the Company and its consolidated subsidiaries since June 22, 2004 and of the predecessor entity as defined in our Annual Report as Arcadia Services, Inc. since April 26, 1999. The Company appointed BDO Seidman to perform quarterly reviews, tax return preparation and employee benefit plan audit services for Fiscal 2009. The Audit Committee has not yet appointed the firm of BDO Seidman to audit our books and records for our fiscal year ending March 31, 2010 and is in fee negotiations with the firm related to their potential appointment.

Fees Paid to Independent Registered Public Accounting Firm

Fees billed by BDO Seidman for Fiscal 2009 and fiscal year 2008 for work performed for the Company are as follows:

		March 31, 2009				March 31, 2008
Audit Fees (1)		$	495,000			$	659,000
Audit-related Fees (2)			85,100				65,000
Tax Fees (3)			199,000				169,000
Other			—				—
Total		$	779,100			$	893,000

COMPENSATION AND DISCUSSION AND ANALYSIS

Summary

This section includes information regarding the overall philosophy and objectives of our compensation program and each element of compensation we provide. It also provides information regarding our compensation program for our current Named Executive Officers as well as certain components that are applicable to our other senior management team members and administrative employees.

The Company’s Compensation Committee, consists solely of independent directors. The Compensation Committee has responsibility for establishing, implementing and monitoring adherence with our compensation philosophy and objectives. The Compensation Committee ensures that the total compensation paid to our executive officers is fair, reasonable and competitive. The Compensation Committee makes all compensation decisions for our current Named Executive Officers and certain of our other senior officers, including all decisions regarding non-cash compensation. The conclusions and recommendations based on these reviews, including with respect to salary adjustments and annual incentive award amounts, are presented to the Board by the Compensation Committee. The Board can modify any recommended adjustments or awards to our Named Executive Officers. The Chief Executive Officer works with the Named Executive Officers annually to review the performance of the other Named Executive Officers and of our senior management team members and administrative employees.

While this Proxy Statement contains disclosures as of March 31, 2009, the last day of our Fiscal 2009, this Compensation Discussion and Analysis and the following narrative disclosures provide material information to our investors regarding the compensation of our Named Executive Officers both at the conclusion of Fiscal 2009 and as of the date of this Proxy Statement.

As a continuation of the executive management restructuring that began in prior years, during Fiscal 2009, the number of executive officers was further reduced from six (6) members to three (3) members. Each of the current Named Executive Officers had a significant increase in responsibilities and some had a change in title.

Compensation Philosophy and Objectives

At the end of Fiscal 2008, the Company’s executive management team and the Compensation Committee worked with the Company’s compensation consultant, Carlson Dettmann Consulting, to develop formalized and unified compensation philosophies and objectives for the Named Executive Officers and other senior managers, which was first generally applied in setting the annual compensation for the Named Executive Officers for fiscal year 2009. This section of the compensation discussion and analysis is focused on these policies and objectives employed in fiscal year 2009.

The Company’s compensation philosophy is to motivate and reward employees for performance that will result in superior financial results and create long-term value for our stockholders. The Company’s compensation programs are designed to:

•

Focus decision-making and behavior on goals that are consistent with the overall business strategy of the Company;

•

Reinforce a pay-for-performance culture through a balance of fixed and incentive pay opportunities; and

•

Allow the Company to attract and retain employees with the skills critical to its long-term success.

The executive management team and the Compensation Committee have established the following key compensation principles to guide the design and ongoing administration of the Company’s overall compensation program:

•

Clearly communicate the desired behavior and use incentive pay programs to reward the achievement of performance goals:

	•		Improve absolute level of returns on investments;
	•		Outperform peers; and
	•		Create stockholder value;

	•		Promote a “one company” perspective among all Company employees;
	•		Maintain total compensation at market competitive levels;
	•		Provide a broad range of payout opportunities based upon performance; and
	•		Design simple pay programs to control costs and ensure employee understanding.

The compensation program is comprised of several components, including:

	•		Base salary;
	•		Annual short-term incentives through performance based compensation plans;
	•		Long-term incentives; and
	•		Medical and welfare benefits.

The Company has not established any requirements for common stock ownership by the Named Executive Officers.

For options grants made during Fiscal 2009, the exercise price for the awards granted to an employee during trading hours was set at the closing price of the Company’s common stock on the NYSE Amex Exchange on the date immediately preceding the date of the grant and if made after trading hours, is set at the closing price on the date of the grant.

Determination of Compensation

The Company’s compensation principles are supported through several policies which have been adopted by the Company in determining the overall compensation for the Named Executive Officers and the members of our senior management team:

Total Compensation. To provide a competitive overall compensation and benefits package that is tied to creating stockholder value and which supports the execution of its business strategies, the Company uses a range of components. The combination of the components and the amount of each component is influenced by the role of the person in the Company, market surveys, the total value of all the compensation, benefits and perquisites available to the person and employment contracts with certain of the officers. The Compensation Committee reviews all compensation, benefits and perquisites provided to the Named Executive Officers in connection with its compensation decisions for these officers. In general, the Company positions itself at the median for each of the different components of total pay so that total compensation for each Named Executive Officer is comparable to similarly situated companies.

Performance Management. The Company’s policy is to provide rewards for the achievement of specific performance goals. The Company uses an annual performance management process for its employees to assess individual performance. In the performance management process, each employee establishes his or her performance goals at the beginning of the year in consultation with the employee’s manager. At various points during the year and at the end of the year, the employee’s performance is assessed against these goals. The performance management process results for an employee affects the employee’s salary increases, the performance based compensation pay-out and the long-term incentive grant level, if eligible.

Variable Pay at Risk. The percentage of an employee’s compensation opportunity that is fixed instead of variable is based primarily on the employee’s role in the Company. In general, employees with more ability to directly influence overall Company performance have a greater portion of their pay at risk through performance-based and long-term incentive programs. Executive officers with more responsibility for strategic and operating decisions have a greater percentage of their compensation opportunity allocated to long-term incentives.

Forms of Long-Term Incentive Compensation. The Company has historically used restricted stock grants as long-term compensation for its Named Executive Officers. The Company currently uses stock options for long-term incentive compensation for its executive officers and other key employees, including the Named Executive officers. See “Compensation Components—Long-Term Incentive Compensation” below for more specific features of this form of equity participation.

Market Positioning. The Company establishes competitive compensation levels based on market reviews and then designs its pay program to focus executive officers and senior management on meeting Company performance objectives. The Company’s strategy is to set total compensation and benefit levels at the median of market pay and benefit levels. Each component of total compensation and other benefits is intended to be consistent with market practices to help the Company attract and retain executives and managers with the skills needed in the Company’s businesses.

Competitive Market Assessments. The Company regularly reviews market compensation levels to determine whether total compensation for its employees remains in the targeted median pay range and makes adjustments when needed. This assessment includes evaluation of base salary, annual performance-based compensation opportunities and long-term incentives. In addition, rewards such as health and welfare benefits and perquisites are regularly assessed relative to the market. The Company also reviews the competitive performance of its peers to establish performance targets for incentive plans and to assess appropriate payout levels for performance.

Peer Groups. The Company has begun a process for the Compensation Committee to use peer groups for pay and performance benchmarking and assessments. The Company is currently working with its compensation consultant to determine the appropriate peer groups and criteria for comparison.

Tax Considerations. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) limits deductibility of compensation in excess of $1,000,000 paid to the Company’s Chief Executive Officer and to each of the four (4) highest paid executives unless the compensation qualifies as “performance-based”. The Company considers the effect of Section 162(m) of the Code in determining the compensation to be paid to each Named Executive Officer, and our compensation program has been designed to meet the deductibility requirements. The Company has determined the maximum amount of compensation payable to any of Named Executive Officers will not exceed $1,000,000 in any foreseeable fiscal year and as a result does not believe Section 162(m) of the Code will have any impact on our current compensation structure; however, the Company has structured its executive performance-based compensation bonus (the 2008 Executive Performance Based Compensation Plan) plan to be compatible with Section 162(m) of the Code other than having received the shareholder approval that may be required to qualify awards as “performance based compensation”. The executive performance based compensation plan provides that when determined by the Board to be necessary and appropriate, the plan shall be submitted for the approval of the Company’s stockholders at the next following annual meeting. In the event that the executive performance-based compensation plan is not so approved by stockholders after having been submitted for approval, the plan shall cease to be effective and no further awards will be made pursuant to the plan.

Overview of Executive Compensation Components and Decisions for Fiscal 2009

General. The compensation program for Fiscal 2009 had six (6) principal components: base salary, short-term bonuses, long-term incentive compensation, severance, perquisites and health and welfare benefits.

Base Salary. For Fiscal 2009, the base annual salaries of our current Named Executive Officers were reviewed and discussed by the Compensation Committee and recommended to the Board of Directors for approval. These salaries remained consistent with those salaries established through arms’-length negotiation with each person during the hiring process based upon each person’s respective responsibilities, years of experience, skills and knowledge at the time of hiring.

Short-Term Bonuses. For Fiscal 2009, the short-term bonus component of compensation for the Named Executive Officers was an opportunity for each Named Executive Officer to earn an award under the Arcadia Resources, Inc. 2008 Executive Performance Based Compensation Plan. Participants under the plan are eligible to earn awards based upon the annual financial performance of the Company, certain divisions of the Company or the individual participant as measured against performance-based goals. The Compensation Committee, as plan administrator, may assign weighting to each of the Company financial result areas, the division financial result areas and the individual result areas as it determines appropriate. The plan administrator will establish a target award for each participant for the applicable performance period. The plan administrator will establish a payout formula in order to determine the award payable to each participant. No participant will be eligible to receive payment of an award that is greater than 100% of such participant’s annual base salary for the applicable performance period. In order for any participant to receive payment of an award under the Plan, the participant must be employed on the last day of the performance period for which an award is to be made. In addition, the Compensation Committee retains discretion to, from time to time and upon the recommendation of a manager, grant spot bonuses (i) to recognize and acknowledge individual employee performance which contributes to the success of the Company and which is considered above and beyond that employee’s normal job responsibilities or (ii) for long-term retention value and/or recruitment purposes. These spot bonuses may be in the form of cash, restricted stock or options to purchase stock. In the final quarter of Fiscal 2009, the Board awarded Marvin Richardson a discretionary performance bonus of $50,000 for completion of criteria established by the Board in the 2^nd Quarter of Fiscal 2009. No other Named Executive Officers received a discretionary bonus during Fiscal 2009.

Long-Term Incentive Compensation. For Fiscal 2009, the Company sought to weight its long-term incentive compensation scheme toward option grants through its 2006 Equity Incentive Plan (“Equity Incentive Plan”) and through option grants outside of its Equity Incentive Plan. Because stock options only have value to the extent that the price of our common stock on the date of exercise exceeds the value of our common stock on the date of grant, the Compensation Committee determined that option grants were a more effective method of rewarding demonstrated performance and leadership, motivating future performance, aligning the interests of the executives with our stockholders and retaining the executives for the term of the awards. The goal of the Equity Incentive Plan is to engage all of the Company’s Named Executive Officers as partners in the Company’s success and help the Company realize the maximum gain from its strategies. During Fiscal 2009, the Compensation Committee administered the Equity Incentive Plan. Stock option grants made during Fiscal 2009 vest over time (generally over 2 years).

Pension or Retirement Benefits. The Company has a 401(k) defined contribution plan, which covers all eligible employees. The Company’s Named Executive Officers and administrative employees are covered by this plan. The Company had the discretion to make matching or additional contributions to the plan, to be determined annually by the Board, for the benefit of all participants. For Fiscal 2009, no discretionary employer contributions were made by the Company.

Severance, Change in Control and Other Post-Employment Payments. The Company has agreed to provide certain of the Named Executive Officers in their respective employment agreements with certain payments in connection with their severance from employment. These employment agreements were designed to provide a competitive compensation package to the Named Executive Officers. Severance payments would not be made in the event a Named Executive Officer is terminated for cause or if he or she resigns without good reason. Cause and good reason are defined in the individuals’ employment agreements. In the event of a change in control, the Board may in its discretion provide that the restrictions applicable to any restricted stock shall lapse, and such restricted stock shall become free of all restrictions and become fully vested and transferable. Change in control is defined in the Company’s Equity Incentive Plan to mean: any (i) reorganization, merger or consolidation in which the Company is not the surviving corporation; (ii) a sale of all or substantially all of the assets of the Company to another person; (iii) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of an aggregate of 25% or more of the voting power of the Company’s outstanding voting securities by any single person or group (as such term is used in Rule 13d-5 under the Exchange Act), unless such acquisition was approved by the Board prior to the consummation thereof; or (iv) the appointment of a trustee in a Chapter 11 bankruptcy proceeding involving the Company or the conversion of such a proceeding into a case under Chapter 7. Notwithstanding the foregoing, in the event that any awards granted under the Equity Incentive Plan are deemed to be deferred compensation subject to the provisions of Code Section 409A, then distributions related to such awards pursuant to a change of control may be permitted, in the Committee’s discretion, upon the occurrence of one (1) or more of the following events (as they are defined and interpreted under Code Section 409A and the Treasury Regulations thereunder): (A) a change in the ownership of the Company; (B) a change in effective control of the Company; or (C) a change in the ownership of a substantial portion of the assets of the Company.

Perquisites. Each Named Executive Officer received an automobile allowance as disclosed in the “All Other Compensation” column of the “Summary Compensation Table” for Named Executive Officers below. In addition, we have in prior years assisted certain Named Executive Officers with expenses they have incurred in connection with relocations or temporary living arrangements as disclosed in the “All Other Compensation” column of the “Summary Compensation Table” for Named Executive Officers below.

Health and Welfare Benefits. All salaried employees of the Company are eligible to participate in the Company’s health and welfare benefits program, including medical insurance, dental insurance, a vision plan, long term disability benefits and short term disability benefits. The employee’s portion of the benefit premiums are deducted from his or her bi-weekly paycheck, in such amounts applicable to the levels of benefits elected by such employee. The Named Executive Officers and the other administrative employees pay the same employee contribution for all health and welfare benefit programs. All salaried employees of the Company receive a term life insurance benefit of one (1) year’s annual base salary (to a maximum of $200,000) while employed by the Company.

Overview of Fiscal Year 2010 Compensation Components

In setting the compensation structure for fiscal year 2010, the Company has elected to maintain the compensation components from Fiscal 2009 substantially intact, with modifications to certain components to address the assessment performed by the compensation consultant as follows:

Annual Base Salary. For fiscal year 2010, the Compensation Committee has retained its approval of a 10% annual salary reduction originally volunteered by the Named Executive Officers as part of the Company’s overall cost reduction initiatives.

Long-Term Incentive Compensation. In future fiscal years, we anticipate that our pay positioning strategy for long-term incentive compensation will vary based on performance of the Company. In setting future long-term incentive award guidelines, the Company anticipates that it will consider the Company’s total stockholder return and revenue growth relative to its peer groups. The Compensation Committee will also consider data from proprietary third-party surveys which provide data on the equity participation practices of similarly situated companies.

Overview of Fiscal 2010 Compensation Program

General

The Compensation Committee made all compensation decisions regarding the Chief Executive Officer’s compensation for fiscal year 2010, and the Chief Executive Officer did not make recommendations or otherwise have any role in the setting of his own compensation. The Compensation Committee met in executive session when discussing and deciding on the Chief Executive Officer’s compensation. The Chief Executive Officer presented to the Compensation Committee compensation recommendations for each of our other Named Executive Officers for fiscal year 2010. The Compensation Committee reviewed and discussed these recommendations with him, taking into account the factors noted elsewhere in this discussion and, exercising its discretion, made final compensation decisions with respect to the compensation of those Named Executive Officers.

Annual Base Salary

The Board, upon a recommendation of the Compensation Committee established the fiscal year 2010 annual base salaries of the current Named Executive Officers as follows: Chief Executive Officer — $405,000; Chief Financial Officer and Chief Operating Officer — $225,000; each of which reflects a 10% reduction from Fiscal 2009.

Short-Term Bonus / Performance Based Compensation

The Compensation Committee (as plan administrator) approved awards for each of the Named Executive Officers under the Arcadia Resources, Inc. 2008 Executive Performance Based Compensation Plan, by establishing performance-based plan goals and target goals for fiscal year 2010 weighted among the Company’s budgeted annual EBITDA, the Company’s budgeted annual revenue, certain divisional budgeted annual EBITDA and certain divisional budgeted annual revenue. The Compensation Committee believes that the performance goals established for each Named Executive Officer properly guide such person’s actions to achieve results that will be in the best interests of our stockholders and that the performance goals have been set at levels that will require significant effort from each of the Named Executive Officers in order to be achieved. The award opportunities for the Named Executive Officers for fiscal year 2010 are as follows:

		Percentage of Annual				Percentage of Annual
Named Executive Officer		Base Salary at Plan				Base Salary at Target
Chief Executive Officer			70	%			80	%
Chief Financial Officer			60	%			80	%
Chief Operating Officer			60	%			80	%

While the plan provides that awards may be paid in cash or equity at the plan administrator’s discretion at the time awards are paid, for fiscal year 2010 the Compensation Committee (after consultation with and agreement by the Named Executive Officers) has determined that awards payable for fiscal year 2010, if earned, will be paid in a form of equity (either restricted stock, options to purchase common stock or a combination of both). The Compensation Committee and the Named Executive Officers believe that payment of the fiscal year 2010 performance based awards in equity furthers the goal of increasing the alignment between the interests of the Named Executive Officers and stockholders.

Long-Term Incentive Compensation

For fiscal year 2010, the Compensation Committee has determined that long-term equity incentives will continue to be in the form of stock options to reward executives for potential long-term contributions, align their incentives with the long-term interests of our stockholders and provide a total compensation opportunity commensurate with our financial performance. For fiscal year 2010, the second year that options will be a part of the Company’s long-term incentive compensation program, options grants will be established in line with the Company’s needs to retain qualified management (much like the Company will do in the future for recruitment needs). The number of shares subject to these fiscal year 2010 options grants will be based upon a number of factors, including market data surveys, performance of the individual, job level, future potential contributions to the Company, competitive external levels of equity incentives and the retention value associated with each individual’s unvested equity.

COMPENSATION COMMITTEE REPORT

The Compensation Committee oversees the Company’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K of the Exchange Act with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Respectfully submitted,
The Compensation Committee

Peter A. Brusca, M.D. (Chair)
Russell T. Lund, III
Daniel Eisenstadt

COMPENSATION TABLES

Summary Compensation Table

The following table sets forth all compensation awarded to, earned by or paid to the Company’s Named Executive Officers for all services rendered to us during Fiscal 2009 and the fiscal years ended March 31, 2008 and March 31, 2007 (Excludes Stock Option awards subject to Shareholder Approval of Proposal Number 3):

																										Change in
																										Pension Value
																										and Non-
																		Stock								Qualified
														Stock				Option				Non-Equity				Deferred				All Other
						Salary				Bonus				Awards				Award(s)				Incentive Plan				Compensation				Compensation
Name and Principal Position		Year				($)				($)				($) (1)				($) (1)				Compensation				Earnings ($)				($)				Total ($)
CURRENT OFFICERS:
Marvin R. Richardson, President and Chief Executive Officer (2)			2007			$	38,368				—			$	34,894				—				—				—			$	1,500			$	74,762
			2008			$	276,667				—			$	209,362				—				—				—			$	19,362			$	505,391
			2009			$	443,277			$	50,000			$	209,362			$	240,000				—				—			$	9,000			$	951,639
Matthew R. Middendorf, Chief Financial Officer and Treasurer (3)			2008			$	29,810				—			$	7,063				—				—				—			$	135,855			$	172,727
			2009			$	250,016				—			$	42,375			$	81,972				—				—			$	7,946			$	382,309
Steven L. Zeller, Chief Operation Officer (4)			2008			$	96,154				—			$	21,620				—				—				—			$	3,231			$	121,004
			2009			$	226,456				—			$	28,614			$	60,000				—				—			$	6,991			$	322,061
John Brady, Executive Vice President, Pharmacy and Sales and Marketing (5)			2007			$	29,695				—				—				—				—				—			$	1,500			$	31,195
			2008			$	212,907				—			$	41,625				—				—				—			$	19,512			$	274,044
			2009			$	224,437				—			$	41,625			$	60,000				—				—			$	9,000			$	335,062
FORMER OFFICERS:
Michelle M. Molin, General Counsel, Executive Vice President and Corporate Secretary (6)			2008			$	88,855				—			$	16,563				—				—				—			$	2,925			$	108,342
			2009			$	210,179				—			$	142,438			$	55,556				—				—			$	22,847			$	431,020

Grants of Plan-Based Awards

The following table sets forth certain information regarding restricted stock and stock options granted to the Named Executive Officers during Fiscal 2009 (Excludes Stock Option awards subject to Shareholder Approval of Proposal Number 3):

						Estimated Future																												All Other Option
						Payments Under Non-												Estimated Future												All Other Stock				Awards: Number
						Equity Incentive Plan												Payouts Under Equity												Awards: Number				of Securities				Exercise or Base
		Grant				Awards												Incentive Plan Awards												of Shares of				Underlying				Price of Option
Name		Date				Threshold				Target				Maximum				Threshold				Target				Maximum				Stock (#)				Options (#)				Awards ($/Sh)
CURRENT OFFICERS:
Marvin R. Richardson			04/04/08				—				—				—				—				—				—				—				600,000	(1)			0.72
Matthew R. Middendorf			04/04/08				—				—				—				—				—				—				—				166,667	(1)			0.72
			06/11/08				—				—				—				—				—				—				—				50,000	(2)			0.71
Steven L. Zeller			04/04/08				—				—				—				—				—				—				—				150,000	(1)			0.72
John J. Brady			04/04/08				—				—				—				—				—				—				—				150,000	(1)			0.72
FORMER OFFICERS:
Michelle M. Molin			04/04/08				—				—				—				—				—				—				—				150,000	(1)(3)			0.72
			06/11/08				—				—				—				—				—				—				—				50,000	(2)(3)			0.71

Executive Officer Agreements

Marvin R. Richardson. On March 1, 2007, the Company and Marvin R. Richardson executed an employment agreement under which Mr. Richardson was appointed the Company’s Chief Operating Officer and the Chief Executive Officer of PrairieStone, which is a position he held prior to the Company’s acquisition of PrairieStone in February 2007, providing for an annual base salary of $275,000, subject to discretionary increase, expense reimbursement and eligibility to participate in benefit plans. On May 24, 2007, the Board named Mr. Richardson as President and Chief Executive Officer of the Company. On August 12, 2009, the Company and Mr. Richardson executed an amended and restated employment agreement. In summary, the changes made by the new agreement to compensation and benefits; (i) expressly document a voluntary 10% reduction in base pay of $450,000 for the period April 1, 2009 to March 31, 2010; (ii) eliminate payment of automobile allowances; and (iii) provide that upon termination of employment of Mr. Richardson by the Company without cause or by Mr. Richardson for good reason, (A) he will immediately receive the total amount of his base pay reduction referenced in (i) above in the form of a lump sum payment, (B) he will immediately receive 50% of the pro-rata amount of any incentive bonus plan target award likely to be achieved for the fiscal year in which termination occurs, with the remaining 50% payable within 60 days following the end of that fiscal year, (C) he will have one year, following termination to exercise previously vested stock options, and (D) any unvested stock options will immediately vest, instead of being forfeited, in the event that termination occurs within one year following a “change of control” of the Company as currently defined in the Company’s 2006 Equity Incentive Plan. Mr. Richardson’s employment continues until terminated. Mr. Richardson is subject to post-employment confidentiality provisions, non-solicitation and non-competition period as specified in his employment agreement.

Matthew R. Middendorf. On February 1, 2008, the Company and Matthew R. Middendorf executed an employment agreement under which Mr. Middendorf was appointed Chief Financial Officer and Treasurer of the Company, providing for an annual base salary of $250,000, subject to discretionary increase, expense reimbursement and eligibility to participate in benefit plans. On August 12, 2009, the Company and Mr. Middendorf executed an amended and restated employment agreement. In summary, the changes made by the new agreement to compensation and benefits; (i) expressly document a voluntary 10% reduction in base pay of $250,000 for the period April 1, 2009 to March 31, 2010; (ii) eliminate payment of automobile allowances; and (iii) provide that upon termination of employment of Mr. Middendorf by the Company without cause or by Mr. Middendorf for good reason, (A) he will immediately receive the total amount of his base pay reduction referenced in (i) above in the form of a lump sum payment, (B) he will immediately receive 50% of the pro-rata amount of any incentive bonus plan target award likely to be achieved for the fiscal year in which termination occurs, with the remaining 50% payable within 60 days following the end of that fiscal year, (C) the continuation of base compensation payments to Mr. Middendorf will be extended from 6 months to one year, (D) he will have one year, instead of 90 days, following termination to exercise previously vested stock options, and (E) any unvested stock options will immediately vest, instead of being forfeited, in the event that termination occurs within one year following a “change of control” of the Company as currently defined in the Company’s 2006 Equity Incentive Plan. Mr. Middendorf’s employment continues until terminated. Mr. Middendorf is subject to post-employment confidentiality provisions, non-solicitation and non-competition period as specified in his employment agreement.

Steven L. Zeller. On September 24, 2007, the Company and Steven L. Zeller executed an employment agreement under which Mr. Zeller was appointed Executive Vice President, In Home Health Care and Staffing of the Company, providing for an annual base salary of $200,000, subject to discretionary increase, expense reimbursement and eligibility to participate in benefit plans. On February 9, 2009, the Board named Mr. Zeller as Chief Operating Officer. On August 12, 2009, the Company and Mr. Zeller executed an amended and restated employment agreement. In summary, the changes made by the new agreement to compensation and benefits; (i) expressly document a voluntary 10% reduction in base pay of $250,000 for the period April 1, 2009 to March 31, 2010; (ii) eliminate payment of automobile allowances; and (iii) provide that upon termination of employment of Mr. Zeller by the Company without cause or by Mr. Zeller for good reason, (A) he will immediately receive the total amount of his base pay reduction referenced in (i) above in the form of a lump sum payment, (B) he will immediately receive 50% of the pro-rata amount of any incentive bonus plan target award likely to be achieved for the fiscal year in which termination occurs, with the remaining 50% payable within 60 days following the end of that fiscal year, (C) the continuation of base compensation payments to Mr. Zeller will be extended from 6 months to one year, (D) all of Mr. Zeller’s currently unvested restricted stock awards will vest in accordance with their associated award agreement schedule as if employment had continued (previously, a portion would have vested immediately with others forfeited), (E) Mr. Zeller will have one year, instead of 90 days, following termination to exercise previously vested stock options, and (F) any unvested stock options will immediately vest, instead of being forfeited, in the event that termination occurs within one year following a “change of control” of the Company as currently defined in the Company’s 2006 Equity Incentive Plan. Mr. Zeller’s employment continues until terminated. Mr. Zeller is subject to post-employment confidentiality provisions, non-solicitation and non-competition period as specified in his employment agreement.

John J. Brady. On February 15, 2007, the Company and John J. Brady executed an employment agreement under which Mr. Brady was appointed President of PrairieStone, which is a position he held prior to the Company’s acquisition of PrairieStone, providing for an annual base salary of $180,000, subject to discretionary increase, expense reimbursement and eligibility to participate in benefit plans. On July 13, 2007, the Board of the Company named Mr. Brady Executive Vice President of Sales and Marketing, and awarded him 150,000 restricted shares, of which 9,375 shares vested on the grant date and 9,375 vest on a quarterly basis thereafter. If his employment is ended by the Company without cause or by him for good reason, his base salary and benefits continue until the later of February 15, 2010 or twelve (12) months after employment ends. Mr. Brady’s employment continues until terminated. Mr. Brady is subject to post-employment confidentiality provisions, non-solicitation and non-competition period as specified in his employment agreement.

Outstanding Equity Awards at Fiscal Year End

The following table sets for the equity awards outstanding at March 31, 2009 for each of the Named Executive Officers (Excludes Stock Option awards subject to Shareholder Approval of Proposal Number 3):

		OPTION AWARDS																				STOCK AWARDS
																																		Equity
																																		Incentive
																																		Plan
																														Equity				Awards:
																														Incentive				Market
																										Market				Plan				Or
										Equity																Value				Awards:				Payout
										Incentive																Of				Number of				Value
										Plan																Shares				Unearned				Of
										Awards:												Number				Or				Shares,				Unearned
										Number												Of				Units				Units or				Shares,
										of												Shares				Of				Other				Units or
										Securities												or Units				Stock				Rights				Other
		Number				Number				Underlying												of Stock				That				That				Rights
		of Securities				of Securities				Unexercised				Option								That				Have				Have				That
		Underlying				Underlying				Unearned				Exercise				Option				Have				Not				Not				Have Not
		Unexercised				Unexercised				Options				Price				Expiration				Not				Vested				Vested				Vested
Name		Options (#)				Options (#)				(#)				($)				Date				Vested (#)				($)				(#) (1)				($) (2)
		Exercisable				Unexercisable
CURRENT OFFICERS:
Marvin R. Richardson			600,000				—				—			$	0.72				4/3/2015				—				—				175,000			$	75,355
Matthew R. Middendorf			—				—				—				—				—				—				—				103,125			$	44,406
Matthew R. Middendorf			166,667				—				—			$	0.72				4/3/2015				—				—				—				—
Matthew R. Middendorf			50,000				—				—			$	0.71				6/10/2015				—				—				—				—
Steven L. Zeller			150,000				—				—			$	0.72				4/3/2015				—				—				84,375			$	36,332
John J. Brady			150,000				—				—			$	0.72				4/3/2015				—				—				75,000			$	32,295
FORMER OFFICERS:
Michelle M. Molin			—				—				—				—				—				—				—				-0-				-0-

Option Exercises and Stock Vested

The following table sets forth the options exercised and stock awards vested during Fiscal 2009 for the Named Executive Officers:

		Option Awards								Stock Awards
		Number								Number
		of								Of
		Shares				Value				Shares				Value
		Acquired				Realized				Acquired				Realized
		On				On				On				On
		Exercise				Exercise				Vesting				Vesting
Name		(#)				($)				(#)				($)
CURRENT OFFICERS:
Marvin R. Richardson			—				—				100,000			$	39,515
Matthew R. Middendorf			—				—				37,500			$	14,818
Steven L. Zeller			—				—				37,500			$	14,818
John J. Brady			—				—				37,500			$	14,818
FORMER OFFICERS:
Michelle M. Molin			—				—				131,250			$	45,844

Payments Upon Termination or Change in Control

The tables below reflect the amount of compensation to be paid to each of our Named Executive Officers pursuant to his or her employment agreement in effect as of August 12, 2009, in the event of any termination of such executive’s employment or a change in control of the Company. The amount of compensation payable to each Named Executive Officer upon termination without cause or for resignation for good reason and upon termination following a change of control is discussed below. The potential amounts shown assume that such termination was effective March 31, 2009. The actual amounts to be paid out can only be determined at the time of such Named Executive Officer’s separation from the Company.

Payments Upon Termination

						Release
		Base				Of				Healthcare				Restricted				Stock
Name		Salary				Claims				Benefits				Stock				Options				Total
POTENTIAL:
Marvin R. Richardson (1)		$	450,000			$	—			$	14,642			$	63,000			$	—			$	527,642
Matthew R. Middendorf (2)		$	250,000			$	—			$	14,642			$	39,375			$	—			$	334,017
Steven L. Zeller (3)		$	250,000			$	—			$	14,642			$	31,500			$	—			$	296,142
John J. Brady (4)		$	210,000			$	—			$	14,642			$	—			$	—			$	224,642

Potential Payments Upon a Change in Control

In the event of a change in control of the Company and if Mr. Richardson, Mr. Middendorf or Mr. Zeller’s employment is terminated by the Company without cause or by him for good reason within one year following the change of control, in addition to the “Payments Upon Termination” discussed above, any unvested stock options will immediately vest. Upon shareholder approval of Proposal 3 and only if shareholder approval, the estimated value of unvested stock options is $552,000 for Mr. Richardson, $153,334 for Mr. Middendorf and $138,000 for Mr. Zeller.

DIRECTOR COMPENSATION

Our directors who are officers or employees of the Company are not compensated for service on the Board or any committee thereof. The following table sets forth compensation information for the Company’s non-employee directors for Fiscal 2009:

																		Change in
		Fees																Pension Value
		Earned																and Non-
		Or												Non-Equity				Qualified
		Paid in				Stock				Option				Incentive Plan				Deferred				All Other
		Cash				Awards				Awards				Compensation				Compensation				Compensation				Total
Name		($)				($) (1)(2)				($)(1)(3)				($)				Earnings				($)				($)
Peter A. Brusca, MD		$	—			$	18,750			$	43,750			$	—			$	—			$	—			$	62,500
Daniel Eisenstadt (4)		$	—			$	15,750			$	36,750			$	—			$	—			$	—			$	52,500
Russell T. Lund, III (5)		$	—			$	12,450			$	29,050			$	—			$	—			$	—			$	41,500
Joseph Mauriello		$	—			$	18,750			$	43,750			$	—			$	—			$	—			$	62,500
John T. Thornton		$	—			$	20,250			$	47,250			$	—			$	—			$	—			$	67,500