U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

[ X ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended		March 31, 2008
or
[    ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ended                                              to

Commission File Number: 000-33165

ASSURED PHARMACY, INC

(Exact name of registrant as specified in its charter)

Nevada		98-0233878
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
17935 Sky Park Circle Suite F, Irvine, CA		92614
(Address of principal executive offices)		(Zip Code)

(949) 222-9971

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
                                    Yes [x] No [  ]

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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.                             Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of the common stock, $0.001 par value, as of May 2, 2008: 54,263,085

ASSURED PHARMACY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

						Page No.
PART I - FINANCIAL INFORMATION						3
Item 1.		Condensed Consolidated Financial Statements				3
		Condensed Consolidated Balance Sheets as of March 31, 2008 (unaudited) and
		December 31, 2007 (audited)				3
		Condensed Consolidated Statements of Operations for the three months
		ended March 31, 2008 and March 31, 2007 (unaudited)				4
		Condensed Consolidated Statements of Cash Flows for the three months
		ended March 31, 2008 and March 31, 2007 (unaudited)				5
		Notes to Condensed Consolidated Financial Statements				6
Item 2.		Management’s Discussion and Analysis of Financial
		Condition and Results of Operations				20
Item 3.		Quantitative and Qualitative Disclosures
		About Market Risk				26
Item 4T.		Controls and Procedures				26
PART II - OTHER INFORMATION						27
Item 1.		Legal Proceedings				27
Item 2.		Unregistered Sales of Securities and Use of Proceeds				27
Item 3.		Defaults Upon Senior Securities				27
Item 4.		Submission of Matters to a Vote of Security Holders				27
Item 5.		Other Information				27
Item 6.		Exhibits				28
SIGNATURES						28

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-QSB. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2008 are not necessarily indicative of the results that can be expected for the full year.

ASSURED PHARMACY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31,			December 31,
		2008			2007
		(UNAUDITED)			(AUDITED)
ASSETS
Current Assets
Cash		$	253,436		$	408,305
Accounts receivable, net			1,349,464			2,167,969
Due from Factor			300,222			-
Inventories			643,627			440,354
Prepaid expenses and other assets			123,008			166,852
			2,669,757			3,183,480
Long Term Assets
Accounts receivable - non-current, net			40,773			49,868
Property and Equipment, net			387,866			373,961
Goodwill			607,816			607,816
		$	3,706,212		$	4,215,125
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accured expenses		$	2,348,747		$	2,306,415
Unsecured convertible notes payable			4,083,500			3,833,500
Notes payable to related parties and stockholders			1,382,934			1,136,630
			7,815,181			7,276,545
Notes Payable to Related Party and Stockholders, net of current portion			-			276,337
Minority Interest			682,406			676,748
Commitments and Contingencies
Stockholders’ Deficit
Preferred shares; par value $0.001 per share;
authorized 5,000,000 shares; no preferred shares issued
or outstanding			-			-
Common shares; par value $0.001 per share;
150,000,000 shares authorized, 65,659,609 common shares issued and outstanding			65,659			65,659
Treasury stock at cost, 10,858,658 shares			(2,849,366	)		(2,849,366	)
Additional paid-in capital			21,802,062			21,777,397
Accumulated deficit			(23,809,730	)		(23,008,195	)
Stockholders’ deficit			(4,791,375	)		(4,014,505	)
		$	3,706,212		$	4,215,125
The accompanying notes are an integral part of the consolidated financial statements.

3

ASSURED PHARMACY, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		For The Three Months Ended
		March 31,
		2008				2007
SALES		$	4,162,620			$	2,733,683
COST OF SALES			(3,206,091	)			(1,988,744	)
GROSS PROFIT			956,529				744,939
OPERATING EXPENSES
Salaries and related expenses			765,688				678,899
Consulting and other compensation			142,957				148,636
Selling, general and administrative			568,581				546,996
TOTAL OPERATING EXPENSES			1,477,226				1,374,531
LOSS FROM OPERATIONS			(520,697	)			(629,592	)
OTHER (EXPENSES) INCOME
Interest expense			(279,236	)			(142,642	)
Other income			4,129				-
TOTAL OTHER EXPENSES			(275,107	)			(142,642	)
LOSS BEFORE MINORITY INTEREST			(795,804	)			(772,234	)
MINORITY INTEREST			(5,732	)			(4,688	)
NET LOSS		$	(801,536	)		$	(776,922	)
Basic and diluted loss per common share		$	(0.01	)		$	(0.01	)
Basic and diluted weighted average number of common
shares outstanding			54,800,951				53,474,060
The accompanying notes are an integral part of the consolidated financial statements.

4

ASSURED PHARMACY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

		FOR THE THREE MONTHS ENDED
				MARCH 31,
		2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(801,536	)	$	(776,922	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment			54,753			39,889
Amortization of debt discount			11,250			110,633
Share based consulting fees			24,665			135,399
Minority interest in net income /(loss) of joint venture			5,658			4,688
Issuance of common stock and options for director services			-			120,000
Return of common stock due to termination of contract			-			(70,000	)
Provision for doubtful accounts			72,000			-
Changes in operating assets and liabilities:
Accounts receivable			(56,754	)		(180,065	)
Due from Factor			12,228			-
Inventories			(203,273	)		(283,274	)
Prepaid expenses and other current assets			32,594			(17,048	)
Accounts payable and accrued liabilities			46,832			141,322
Net cash used in operating activities			(801,483	)		(775,378	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(68,657	)		(31,559	)
Net cash used in investing activities			(68,657	)		(31,559	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on notes payable to related parties and shareholders			(34,533	)		(3,627	)
Advances from factor			649,804			-
Repayment of advances from factor			(150,000	)		-
Proceeds from issuance of convertible debentures			250,000			500,000
Net cash provided by financing activities			715,271			496,373
Net Increase (decrease) in cash			(154,869	)		(310,564	)
Cash at beginning of period			408,305			466,403
Cash at end of period		$	253,436		$	155,839
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest		$	14,967		$	-
Income taxes		$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES :
Issuance of common stock for services rendered		$	-		$	155,000
Issuance of common stock in lieu of debenture note interest		$	-		$	90,000
Return of common stock due to termination of contract		$	-		$	(70,000	)
Transfer of interest due to related party to note payable		$	4,500
The accompanying notes are an integral part of the consolidated financial statements.

5

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

1. ORGANIZATION AND BASIS OF PRESENTATION

A. Organization:

Assured Pharmacy, Inc. (“Assured Pharmacy” or the “Company”) was organized as a Nevada corporation on October 22, 1999 under the name Surforama.com, Inc. and previously operated under the name eRXSYS, Inc. The Company is engaged in the business of operating specialty pharmacies that primarily dispense highly regulated pain medication. During 2006, the Company expanded its business beyond pain management to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions. The Company offers physicians the ability to electronically transmit prescriptions to its pharmacies. The Company derives its revenue primarily from the sale of prescription drugs and does not keep in inventory non-prescription drugs or health and beauty related products inventoried at traditional pharmacies. The majority of the Company’s business is derived from repeat business from its customers. “Walk-in” prescriptions from physicians are limited.

The Company currently has six operating pharmacies. Four of those pharmacies are jointly owned and the Company has a 94.8% ownership interest in two of the pharmacies.

In February 2008, the Company consolidated the operations of its two pharmacies in Portland, Oregon, into one location. This consolidation is expected to allow the Company to further leverage its existing infrastructure and is expected to result in a reduction of costs.

We anticipate opening one more pharmacy in Oak Lomita, California during the second quarter of 2008. We have executed a lease agreement for the Oak Lomita pharmacy.

Agreement with TPG, L.L.C.

On April 24, 2003, we entered into an agreement with TPG, L.L.C. (“TPG”) for the purpose of funding the establishment and operations of pharmacies. Under this agreement, TPG held the right to fund on a joint venture basis fifty pharmacies that we established. In exchange for contributing financing in the amount of $230,000 per pharmacy location, TPG acquired a 49% ownership interest in each pharmacy established under this agreement and we owned the remaining 51%. Under the terms of the agreement with TPG, our contribution to establish pharmacies primarily consisted of the right to utilize our intellectual property rights and to provide sales and marketing services.

Assured Pharmacies, Inc. (“API”) was formed to establish and operate the pharmacies that would be operated under the agreement with TPG. In accordance with the terms of the agreement with TPG, we owned 51% of API and TPG owned the remaining 49%.

Under this joint venture, we established our first pharmacy in Santa Ana, California and our second pharmacy in Riverside, California. On December 15, 2006, we entered into a Purchase Agreement with TPG and acquired all of its right, title and interest in 49 shares of common stock of API for $460,000 and the issuance of 50,000 shares of our common stock. The cash component of the purchase price is payable as follows:

	i.		$15,000 was paid on or about December 15, 2006;
	ii.		Eleven (11) consecutive monthly installments of $5,000 payable on or before the 15th of each month commencing in January 2007 through November 2007;
	iii.		Fourteen (14) consecutive monthly installments of $15,000 payable on or before the 15th of each month commencing in December 2007 through January 2009; and

6

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

iv. $180,000 payable together with interest at the rate of prime plus 2% per annum commencing from the date of this Purchase Agreement payable on or before February 15, 2009. Interest shall accrue as of December 15, 2006, the effective date of this Agreement.

As a result of this acquisition, we increased our ownership interest in API to 100% making it a wholly-owned subsidiary and consequently resulting in the termination of our joint venture with TPG.

Agreement with TAPG, L.L.C.

In February 2004, we entered into an agreement (the “Agreement”) with TAPG, L.L.C. (“TAPG”), a Louisiana limited liability company, and formed Safescript Northwest, Inc. (“Safescript Northwest”), a Louisiana corporation. Safescript Northwest was formed to establish and operate up to five pharmacies. Effective August 19, 2004, Safescript Northwest filed amended articles of incorporation and changed its name to Assured Pharmacies Northwest, Inc. (“APN”). We initially owned 75% of APN, while TAPG owned the remaining 25%.

The Agreement provides that TAPG will contribute start-up costs in the amount of $335,000 per pharmacy location established not to exceed five pharmacies. Our contribution under the Agreement consists of granting the right to utilize our intellectual property rights and to provide sales and marketing services. Between March and October 2004, APN received from TAPG start-up funds in the amount of $854,213 as its capital contribution for three pharmacies. This capital contribution funded the opening of a pharmacy in Kirkland, Washington in August 2004 and another pharmacy in Portland, Oregon in September 2004. Included in these monies was a partial capital contribution in the amount of $190,000 for the establishment of our second pharmacy location in Portland, Oregon. TAPG remains obligated to contribute an additional

7

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

Agreement with TAPG, L.L.C. (continued)

$145,000 to satisfy their full contribution. We and APN requested that TAPG provide the $150,787 balance of its full capital contribution. TAPG is also obligated to contribute their proportionate share of the start-up costs in excess of their initial capital contribution of $335,000 per pharmacy. The Agreement defines start-up costs as any costs associated with the opening of any open pharmacy location that accrue within one hundred eighty days following the opening of that particular pharmacy.

Following the start-up period, we advanced interest-free loans to sustain operations at the pharmacies operated by APN. On March 6, 2006, these loans were converted into APN capital stock. Following the conversion of this debt into equity, we increased our ownership interest in APN from 75% to 94.8%. TAPG owns the remaining 5.2% interest.

License Agreement with Network Technology, Inc. (“RxNT”)

On March 15, 2004, we entered into a technology license agreement (“Technology License”) with Network Technology, Inc. (“RxNT”). The Technology License grants us the right to use RxNT’s prescribing technology under the brand name “Assured Script” and enables us to accept prescriptions electronically transmitted to our pharmacies. Pursuant to the Technology License, we paid RxNT a licensing fee of $100,000 and are also responsible for paying RxNT a royalty equal to twenty five percent (25%) of the gross profit from sales of the “Assured Script” product, which refers to the licensed products and technology set forth in the Technology License and not prescription drug sales. Given that we are in the business of owning and operating pharmacies, management does not anticipate that we would make any sales of the “Assured Script” product resulting in a royalty payment to RxNT.

On March 17, 2007, we renewed this agreement for a period of three years and agreed to pay an annual license fee of $54,000.

Other Subsidiaries:

The Company’s management determined that its business could be expanded through developing arrangements with third party health plan providers to accept traditional co-payments and fill prescriptions for their members who rely upon overnight courier for delivery of their prescription. The Company’s management believes that such arrangements will broaden its consumer base and enable it to access a particular niche of consumer that receives their prescriptions exclusively via courier as opposed to patronizing traditional retail pharmacy locations. On January 3, 2006, the Company incorporated Assured Pharmacy Plus, Corp. as a wholly-owned subsidiary to develop this opportunity.

Also on January 3, 2006, the Company incorporated Assured Pharmacy DME, Corp. as a wholly-owned subsidiary for the purpose of facilitating and making available specialized medical equipment to its consumers. The Company’s consumers who require treatment for chronic pain commonly require specialized medical equipment and/or rehabilitative equipment.

8

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

Other Subsidiaries (continued):

During the third quarter of 2006, the Company had incorporated three wholly-owned subsidiaries for the purpose of operating additional pharmacies. On July 21, 2006, the Company incorporated Assured Pharmacy Gresham, Inc. On August 11, 2006, the Company incorporated Assured Pharmacy Irvine, Inc., and on September 25, 2006, the Company incorporated Assured Pharmacy Los Angeles 1, Inc.

On June 19, 2007, the Company incorporated Assured Pharmacy Las Vegas Inc., as a wholly-owned subsidiary for the purpose of operating its new pharmacy in Las Vegas, Nevada.

Quotation on OTCBB

The Company’s common stock is quoted on the Over-the-Counter Bulletin Board (the “OTCBB”) under the symbol “APHY.”

B. Basis of Presentation

The Company’s management, without audit, prepared the condensed consolidated financial statements for the three months ended March 31, 2008 and 2007. The information furnished has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, consolidated or omitted. In the opinion of management, all adjustments considered necessary for the fair presentation of the Company’s financial position, results of operations and cash flows have been included and are only of a normal recurring nature. The results of operations for the three months ended March 31, 2008 and 2007 are not necessarily indicative of the results of operations for the year ending December 31, 2008.

The consolidated financial statements include the accounts of Assured Pharmacy, Inc., its wholly-owned subsidiaries, and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2007, which are included in the Company’s Annual Report on Form 10-KSB that was filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2008.

Going Concern Considerations

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of March 31, 2008, the Company had an accumulated deficit of $23,809,730, recurring losses from operations and negative cash flow from operating activities for the three month period ended March 31, 2008 of $306,179. The Company also had a negative working capital of $5,145,424.

The Company intends to fund operations through increased sales and debt and or equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital or other cash requirements for the year ending December 31, 2008. The Company is seeking additional funds to finance its immediate and long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

In response to these problems, management has taken the following actions:

• The Company is expanding its revenue base beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions.

• The Company is aggressively signing up new physicians, which will result in new patients.

• The Company is seeking investment capital.

• The Company retained additional sales personnel to attract business.

• We consolidated our two pharmacies in Portland, Oregon into a single operation. This consolidation is expected to allow us to further leverage our existing infrastructure and is expected to result in a reduction of costs.

9

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

• In March 2008, we entered into an accounts receivable purchase agreement whereby we have agreed to sell certain accounts receivable for a price equal to 80% of the outstanding accounts receivable being purchased. We expect this additional source of working capital to help significantly with the daily operations. (See Note 5 for additional information)

• In April 2008, we entered into a Credit Agreement for $2,000,000 (and possibly up to $3,000,000). (See Note 10)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements.

Principles of Consolidation

The consolidated financial statements for the quarter ended March 31, 2008, include the accounts of the Company’s 94.8% ownership interest in APN and its wholly owned subsidiaries. In accordance with the joint venture agreement, the minority partner does not have participation rights that allow them to block decisions proposed by the Company. The minority joint venture has given the Company the ability to control all daily operations and management of the joint venture; therefore, the Company has consolidated the joint venture in its financial statements. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include revenue recognition, the allowance for doubtful accounts, the deferred tax asset valuation allowance, and the realization of inventories and long-lived assets. Actual results could materially differ from these estimates.

Risks and Uncertainties

The Company operates in a highly competitive industry that is subject to intense competition. The Company faces risks and uncertainties relating to its ability to successfully implement its business strategy. Among other things, these risks include the ability to develop and sustain revenue growth; managing and expanding operations; competition; attracting, retaining and motivating qualified personnel; maintaining and developing new strategic relationships; and the ability to anticipate and adapt to the changing markets and any changes in government regulations.

As a result, the Company may be subject to the risk of delays in obtaining (or failing to obtain) regulatory clearance and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the risk of business failure.

The Company’s leased pharmacies are subject to licensing and regulation by the health, sanitation, safety, building and fire agencies in the state or municipality where located. Difficulties or failures in obtaining or maintaining the required licensing and/or approvals could prevent the continued operation of such pharmacies. Management believes that the Company is operating in compliance with all applicable laws and regulations.

During the three months ended on March 31, 2008, the Company purchased 99% of its inventory of its prescription drugs from one wholesale vendor. Management believes that the wholesale pharmaceutical and non-pharmaceutical distribution industry is highly competitive because of consolidation in the industry and the practice of certain large pharmacy chains to purchase directly from product manufacturers. Although management believes it could obtain the majority of our inventory from other distributors at competitive prices and upon competitive payment terms if our relationship with our primary wholesale drug vendor was terminated, there can be no assurance that the termination of such relationship would not adversely affect us.

Governmental Regulations

The pharmacy business is subject to extensive and often changing federal, state and local regulations, and our pharmacies are required to be licensed in the states in which they are located or do business. While management continuously monitors the effects of regulatory activity on the Company’s operations and it currently has a pharmacy license for each pharmacy the Company operates, the failure to obtain or renew any regulatory approvals or licenses could adversely affect the continued operations of the Company’s business.

The Company is also subject to federal and state laws that prohibit certain types of direct and indirect payments between healthcare providers. These laws, commonly known as the fraud and abuse laws, prohibit payments intended to induce or encourage the referral of patients to, or the

10

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

recommendation of, a particular provider of products and/or services. Violation of these laws can result in a loss of licensure, civil and criminal penalties and exclusion from various federal and state healthcare programs. The Company expends considerable resources in connection with compliance efforts. Management believes that the Company is in compliance with federal and state regulations applicable to its business.

The Company is also impacted by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which mandates, among other things, the adoption of standards to enhance the efficiency and simplify the administration of the health care system. HIPAA requires the Department of Health and Human Services to adopt standards for electronic transactions and code sets for basic healthcare transactions such as payment and remittance advice (“transaction standards”); privacy of individually identifiable healthcare information (“privacy standards”); security and electronic signatures (“security standards”), as wells as unique identifiers for providers, employers, health plans and individuals; and enforcement. The Company is required to comply with these standards and is subject to significant civil and criminal penalties for failure to do so. Management believes the Company is in compliance with these standards. There can be no assurance, however, that future changes will not occur which the Company may not be, or may have to incur significant costs to be in compliance with new standards or regulations. Management anticipates that federal and state governments will continue to review and assess alternate healthcare delivery systems, payment methodologies and operational requirements for pharmacies. Given the continuous debate regarding the cost of healthcare services, management cannot predict with any degree of certainty what additional healthcare initiatives, if any, will be implemented or the effect any future legislation or regulation will have on the Company.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.

The financial instrument that potentially exposes the Company to a concentration of credit risk principally consists of cash. The Company deposits its cash with high credit financial institutions, and at times the balances may exceed the insurance limit of the Federal Deposit Insurance Corp. Management believes that there is little risk of loss due to this policy.

Accounts Receivable, non-current

At March 31, 2008, the Company had $40,773 of receivables which were over 180 days old. These receivables were primarily from Workmen’s Compensation Board of State of California (“CA Board”). These receivables are due to disputes between the claimant and the employer, with the CA Board, known as “Green Liens”. The settlement period for such Green Lien cases takes anywhere from 1 year to 5 years, and therefore Management has classified such receivables as long-term assets

Allowance for Doubtful Accounts Receivable

The Company’s receivables are from reputable insurance companies. However, management periodically reviews the collectability of accounts receivable and provides an allowance for doubtful accounts as management deems necessary. For the three months ended March 31, 2008, management has increased the allowance for doubtful Accounts by $72,000 resulting in a balance of $249,597 at March 31, 2008. For the three months ended March 31, 2007 no provision was made to the allowance for doubtful accounts which had a balance of $177,000.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or estimated market value, and consist primarily of pharmaceutical drugs. Market is determined by comparison with recent sales or net realizable value. Net realizable value is based on management’s forecast for sales of its products or services in the ensuing years and/or consideration and analysis of changes in customer base, product mix, third party insurance reimbursement levels or other issues that may impact the estimated net realizable value. Management regularly reviews inventory quantities on hand and records a reserve for shrinkage and slow-moving, damaged and expired inventory, which is measured as the difference between the inventory cost and the estimated market value based on management’s assumptions about market conditions and future demand for its products. No reserves were provided at March 31, 2008 or December 31, 2007. Should the demand for the Company’s products prove to be less than anticipated, the ultimate net realizable value of its inventories could be substantially less than reflected in the accompanying consolidated balance sheet.

Inventories are comprised of brand and generic pharmaceutical drugs. Brand drugs are purchased primarily from one wholesale vendor and generic drugs are purchased primarily from multiple wholesale vendors. The Company’s pharmacies maintain a wide variety of different drug classes, known as Schedule II, Schedule III, and Schedule IV drugs, which vary in degrees of addictiveness.

Schedule II drugs, considered narcotics by the DEA are the most addictive; hence, they are highly regulated by the DEA and are required to be segregated and secured in a separate cabinet. Schedule III and Schedule IV drugs are less addictive and are not regulated. Because the Company’s business model focuses on servicing pain management doctors and chronic pain patients, the Company carries in inventory a larger amount of Schedule II drugs than most other pharmacies. The cost in acquiring Schedule II drugs is higher than Schedule III and IV drugs.

11

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Long-Lived Assets:

The Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized.

Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. SFAS No. 144 also requires companies to separately report discontinued operations, and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment or in a distribution to owners) or is classified as held for sale. Assets to be disposed of are reported at the lower of the carrying amount or the estimated fair value less costs to sell.

The Company’s long-lived assets consist of computers, software, office furniture and equipment, store fixtures and leasehold improvements on pharmacy build-outs. The Company assesses the impairment of these long-lived assets at least annually and makes adjustments accordingly.

Property and Equipment

Property and equipment are stated at cost, and are being depreciated using the straight-line method over the estimated useful lives of the related assets, which generally range between three and ten years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease terms. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. At the time of retirement, other disposition of property and equipment or termination of a lease, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in results of operations.

Intangible Assets

Statement of Financial Accounting standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”, addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for upon their acquisition and after they have been initially recognized in the financial statements. SFAS No. 142 requires that goodwill and identifiable intangible assets that have indefinite lives not be amortized but rather be tested at least annually for impairment, and intangible assets that have finite useful lives be amortized over their estimated useful lives.

12

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible Assets (continued)

SFAS No. 142 provides specific guidance for testing goodwill and intangible assets that will not be amortized for impairment. In addition, SFAS No. 142 expands the disclosure requirements about intangible assets in the years subsequent to their acquisition. Impairment losses for goodwill and indefinite-life intangible assets that arise due to the initial application of SFAS No. 142 are to be reported as a change in accounting principle.

Advertising

The Company expenses the cost of advertising, including marketing and promotions, when incurred. There were no advertising costs for the three months ended March 31, 2008 and 2007. When incurred, such expenses are included in selling, general and administrative expenses.

Revenue Recognition

The Company recognizes revenue on an accrual basis when the product is delivered to the customer. Payments are received directly from the customer at the point of sale, or the customer’s insurance provider is billed. Authorization, which assures payment, is obtained from the customer’s insurance provider before the medication is dispensed to the customer. Authorizations are obtained for the vast majority of these sales electronically and a corresponding authorization number is issued by the customers’ insurance provider.

Share-based Employee Compensation

The Company accounts for share based compensation under the provisions of statement of Financial Standards No. 123R, Share-Based Payments (“SFAS No. 123 (R)”), which was a revision of SFAS No. 123. SFAS 123 (R) requires all new share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Pro forma disclosure of the fair value of new share-based payments is no longer an alternative to financial statement recognition.

13

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic and Diluted Loss per Common Share

The Company computes loss per common share using SFAS No. 128 “Earnings Per Share”. Basic loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts, such as stock options and warrants to issue common stock, were exercised or converted into common stock. When there is a loss, diluted loss per share is not calculated, because to do so would be anti-dilutive.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes”. SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or income tax returns. Under this method deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse. Valuation reserves are provided based on management’s judgment of the future realization of the deferred tax assets.

14

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Values of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, consisting primarily of cash, accounts receivable, and accounts payable and accrued liabilities approximated their fair values at March 31, 2008 and 2007 due to their short-term nature.

Management also believes that the March 31, 2008 and 2007 interest rate associated with the notes payable approximates the market interest rate for this type of debt instrument and as such, the carrying amount of the notes payable approximates its fair value.

The fair values of related party transactions are not determinable due to their related party nature.

3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS

TPG, L.L.C. Agreement

On December 15, 2006, the Company entered into a Purchase Agreement with TPG pursuant to which the Company purchased 49 shares of common stock of API for 50,000 shares of common stock of the Company and $460,000, of which $15,000 was paid on December 15, 2006 and the balance is payable over the period ending February 15, 2009. Monthly installments of $5,000 were paid from January 2007 through November 2007. The balance of the amount is payable in monthly installments of $15,000, commencing December 2007 and ending in January 2009, with a final payment of $180,000, together with interest accrued from December 15, 2006 on the unpaid amount at the rate of prime plus 2%, due on February 15, 2009.

As of March 31, 2008, the Company owes $295,434 under the agreement.

TAPG Note

In January 2005, the Company entered into an agreement with TAPG where TAPG was to advance $270,000 in connection with establishing pharmacies in the Pacific Northwest of the United States (see Note 1). The note was to be funded by TAPG in monthly installments of $45,000 up to a maximum of $270,000. The note accrued interest at a fixed rate of 7% per annum. The note is secured by the assets of APN’s pharmacies, in which the Company holds a controlling interest. However, the Company received only $40,000 during 2005. The note matured in January 2006 and was not extended. As of September 30, 2007, the Company paid $20,000 payment on this note. The Company intends to retire the remaining balance due of $20,000.

Convertible Loans

VVPH Inc. Loans

On January 21, 2006, the Company entered into two (2) loan agreements with VVPH Inc. Under the terms of the agreements, the Company received $600,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has an interest rate of 15% per annum to be paid in monthly installments. In March 2007, the parties entered into a modification and extension agreement to further extend the maturity dates of these loan agreements to January 2008 and modify the interest rates on these loans to 12% per annum. In January 2008, the parties entered into an extension agreement to further extend the maturity dates of these loan agreements to June 2008 at the same rate of interest.

On May 2, 2007, the Company entered into additional loan agreement with VVPH Inc. Under the terms of this loan agreement, the Company received $75,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has an interest rate of 12% per annum which is to be paid in monthly installments.

On October 23, 2007, the Company entered into an additional loan agreement with VVPH Inc. Under the terms of this loan agreement, the Company received a twelve month loan of $70,000 extendable for an additional twelve month period by mutual consent. The loan has an interest rate of 12% per annum to be paid in monthly installments.

Pursuant to the terms of these agreements, VVPH Inc. has a continuing conversion right during the term to convert all or a portion of the then outstanding amount of the obligations into a number of shares of the Company’s common stock determined at a conversion price equal to the rolling seven (7) trading day weighted average closing bid price for the Common Stock on the OTC:BB (or such other equivalent market on which the Common Stock is quoted) calculated as of the trading day immediately preceding the date the Conversion Right is exercised. The Conversion Price shall not be less than $0.40 or more than $0.80. VVPH Inc shall be entitled to piggyback registration rights upon exercise of this conversion right.

As of March 31, 2008, the Company owes $620,000 on these notes plus interest in the amount of $93,164.

Brockington Securities, Inc. Loans

On April 19, 2007, the Company entered into a loan agreement with Brockington Securities Inc. (“Brockington”). Under the terms of the agreement the Company received $93,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has an interest rate of 12% per annum to be paid in monthly installments.

On August 1, 2007, the Company entered into an additional loan agreement with Brockington. Under the terms of this agreement the Company received $50,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has an interest rate of 12% per annum to be paid in monthly installments.

15

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS (continued)

On November 19, 2007, the Company entered into an additional loan agreement with Brockington. Under the terms of this loan agreement, the Company received a twelve month loan of $100,000 extendable for an additional twelve month period by mutual consent. The loan has an interest rate of 12% per annum to be paid in monthly installments.

Brockington is a related party because its President is also an officer and director of the Company.

Pursuant to the terms of this agreement, Brockington has a continuing conversion right during the term to convert all or a portion of the then outstanding amount of the obligations into a number of shares of the Company’s common stock determined at a conversion price equal to the rolling seven (7) trading day weighted average closing bid price for the Common Stock on the OTC:BB (or such other equivalent market on which the Common Stock is quoted) calculated as of the trading day immediately preceding the date the Conversion Right is exercised. The Conversion Price shall not be less than $0.40 or more than $0.80. Brockington shall be entitled to piggyback registration rights upon exercise of this conversion right.

As of March 31, 2008, the Company had repaid $50,000 and owes $193,000 on these notes, plus interest in the amount of $17,106.

Sheth Loan

On May 25, 2007, the Company entered into a loan agreement with Mr. Haresh C. Sheth, the Company’s Chief Financial Officer and a member of its board of directors. Under the terms of this agreement, the Company received $25,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has an interest rate of 12% per annum to be paid in monthly installments.

On August 1, 2007, the Company entered into another loan agreement with Mr. Haresh C. Sheth, the Company’s Chief Financial Officer and a member of its board of directors. Under the terms of this agreement, the Company received $25,000 for a twelve (12) month term which can be extended for an additional twelve (12) month period by mutual consent. The loan has interest rate of 12% per annum to be paid in monthly installments.

On October 23, 2007, the Company entered into another loan agreement with Mr. Sheth. Under the terms of this agreement, the Company received a twelve (12) month loan of $50,000 extendable for an additional twelve (12) month period by mutual consent. The loan had an interest rate of 12% per annum to be paid in monthly installments.

Pursuant to the terms of these agreements, Mr. Sheth has a continuing conversion right during the term to convert all or a portion of the then outstanding amount of the obligations into a number of shares of the Company’s common stock determined at a conversion price equal to the rolling seven (7) trading day weighted average closing bid price for the Company’s common stock on the OTCBB (or such other equivalent market on which the Company’s common stock is quoted) calculated as of the trading day immediately preceding the date the conversion right is exercised. The agreements provide that the conversion price shall not be less than $0.40 or more than $0.80 and Mr. Sheth shall be entitled to piggyback registration rights upon exercise of this conversion right.

As of March 31, 2008, the Company had repaid the principal and owes $3,954 towards interest on these notes.

Woodfield Capital Services Inc.

On July 10, 2007, the Company entered into a loan agreement with Woodfield Capital Services Inc. Under the terms of this agreement, the Company received $150,000 for a twelve (12) month term at an interest rate of 12% per annum, with interest payable on a monthly basis. Woodfield Capital Services, Inc. is a related party to this transaction, as its President is an officer and director of the Company.

Pursuant to the terms of this agreement, Woodfield Capital Services Inc. has a continuing conversion right during the term to convert all or a portion of the then outstanding amount of the obligations into a number of shares of the Company’s common stock determined at a conversion price equal to the rolling seven (7) trading day weighted average closing bid price for the Common Stock on the OTC:BB (or such other equivalent market on which the Common Stock is quoted) calculated as of the trading day immediately preceding the date the Conversion Right is exercised. The Conversion Price shall not be less than $0.40 or more than $0.80. Woodfield Capital Services Inc. shall be entitled to piggyback registration rights upon exercise of this conversion right.

As of March 31, 2008, the Company owes $150,000 on this note plus interest in the amount of $13,084.

16

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS (continued)

Weil Consulting

On August 14, 2007, the Company entered into a loan agreement with Weil Consulting (“Weil”). Under the terms of this agreement, the Company received a three-month loan of $100,000 at an interest rate of 18% per annum, with interest payable on a monthly basis. The Company extended the loan to June 30, 2008 at an interest rate of 9% per annum, after adding accrued interest in the amount of $4,500 to the loan amount.

As of March 31, 2008, the Company owes $104,500 on this loan plus interest in the amount of $3, 597.

4. UNSECURED CONVERTIBLE DEBENTURE NOTES

During the three months ended March 31, 2008, the Company raised $250,000 by issuing unsecured convertible debentures carrying an interest rate of 18% per annum. In addition debentures worth $500,000 which expired at various times during the quarter ended March 31, 2008 were renewed for a term of one year. The debentures provide that interest is payable in the shares of common stock of the Company. The number of shares to be issued in payment of the interest is to be calculated based upon the average closing price for the Company’s common stock on the OTCBB for the five consecutive trading days preceding the issuance date. The Company is obligated to issue 45,441 shares of common stock as payment of interest on the new debentures issued in the quarter. The Debenture holders have the right to convert their Debenture into fully paid non- assessable shares of common stock at $0.40 and for every two shares converted receive one warrant to purchase one (1) share of common stock at an exercise price of $0.60 exercisable for two (2) years after the conversion date and one warrant to purchase one (1) share of common stock at an exercise price of $0.80 exercisable for three (3) years after the conversion date. The total amount of debentures outstanding was $4,083,500 and $3,833,500 at March 31, 2008 and December 31, 2007, respectively.

Interest on the outstanding debentures amounted to $180,268 and $110,633 for the three months ended March 31, 2008 and 2007, respectively.

5. ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

On March 1, 2008, the Company entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Horizon International Investments LLC (the “Purchaser”), pursuant to which the Company has agreed to sell certain of its accounts receivable to the purchaser on a weekly basis during the one-year term of the Purchase Agreement for a purchase price equal to eighty per cent (80%) of the outstanding balance of the accounts receivable purchased. The aggregate amount of the purchase prices paid for accounts receivable, less amounts collected by the purchaser, may not at any time exceed the sum of $650,000. Upon payment of a purchased account receivable, the purchaser will be reimbursed for the purchase price of the account receivable, together with a commission. The balance of any payments will be remitted to the Company. The commissions are equal to a percentage of the original outstanding balance of the relevant account receivable. The actual percentage is a function of the number of days elapsed from the date of the purchase of the account receivable to the date of payment. The percentages range from 1.65% for accounts receivable paid within 30 days after the date of purchase up to 4.95% for those paid more than 75, but less than 90, days after the date of purchase. If a purchased account receivable has not been paid within 90 days, an additional commission of 1% is added for each additional 15-day period until payment is made. If an account receivable has not been paid within 120 days after the date of purchase, the Company is required to repurchase that account receivable for a price equal to the sum of the purchase price originally paid by the purchaser, plus a commission in the amount of 6.95% of the original outstanding balance of the account receivable.

As of March 31, 2008, the Company owes $300,222 on this loan including interest in the amount of $12,228.

6. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company occupies buildings and retail space under operating lease agreements expiring on various dates through January 2012 with monthly payments ranging from approximately $1,400 to $2,800.

Certain leases include future rental escalations and renewal options.

17

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

6. COMMITMENTS AND CONTINGENCIES (continued)

As of March 31, 2008, future minimum payments under operating leases approximated the following:

For the year ending
December 31,
2008		$209,805
2009		$135,113
2010		$75,732
2011		$60,802
2012		$15,786
		$497,238

Total rent expense for the three months ended March 31, 2008 and 2007 was $80,993 and $50,143 respectively.

7. LEGAL MATTERS

Providing pharmacy services entails an inherent risk of medical and professional malpractice liability. The Company may be named as a defendant in such lawsuits and become subject to the attendant risk of substantial damage awards. The Company believes it possesses adequate professional and medical malpractice liability insurance coverage. There can be no assurance that the Company will not be sued, that any such lawsuit will not exceed our insurance coverage, or that it will be able to maintain such coverage at acceptable costs and on favorable terms.

From time to time, the Company may be involved in various claims, lawsuits, dispute with third parties, actions involving allegations of discrimination or breach of contract actions incidental to the normal operations of the business. In the opinion of management, the Company is not currently involved in any litigation which it believes could have a material adverse effect on the Company’s financial position or results of operations.

8. LOSS PER COMMON SHARE

The following is a reconciliation of the numerators and denominators of the basic and diluted loss per common share computations for the three months March 31, 2008 and 2007.

	Three Months Ended March
	31,
	2008			2007
Numerator for basic and diluted loss per
common share:
Net loss to common stockholders	($801,536	)		($776,922	)
Denominator for basic and diluted loss per
common share:
Weighted average number of shares
outstanding	54,800,951			53,474,060
Basic and diluted loss per common share	($0.01	)		($0.01	)

9. INCOME TAXES

Due to losses incurred for the three months ended March 31, 2008 there is no current provision for income taxes.

10. SUBSEQUENT EVENTS:

On April 2, 2008, the Company entered into an additional loan agreement with Brockington. Under the terms of this loan agreement, the Company received a three month loan of $30,000 extendable by mutual consent. The loan has an interest rate of 10% per annum.

18

ASSURED PHARMACY, INC. AND SUBSIDIARIES
FORMERLY KNOWN AS eRXSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008

10. SUBSEQUENT EVENTS (continued)

On April 29, 2008, the Company and certain of its subsidiaries, as joint and several borrowers (collectively, the “Borrowers”), entered into a Credit Agreement (the “Credit Agreement”) with Mosaic Financial Services, LLC (“Mosaic”). Pursuant to the Credit Agreement, Mosaic has agreed to advance up to $2,000,000 (or up to $3,000,000 in certain circumstances) to the Borrowers. Amounts advanced under the Credit Agreement bear interest at the rate of 14% per annum and are due and payable on April 30, 2009. Each of the Borrowers has granted Mosaic a security interest in substantially all of its assets (including, in the case of the Company, the shares of common stock of each of the subsidiaries party to the Credit Agreement) as security for the repayment of the obligations of the Borrowers under the Credit Agreement. As of May 1, 2008, Mosaic has advanced the sum of $550,000 to the Borrowers under the Credit Agreement. Mosaic is an affiliate of Mosaic Capital Advisors and the Mosaic Private Equity family of funds. On February 22, 2008, the Board of Directors appointed Ameet Shah to fill a vacancy on the Board. Mr. Shah, is the Managing Partner of Mosaic Capital Advisors and the Mosaic Private Equity family of funds. The Mosaic funds hold 18% convertible debentures in the aggregate principal amount of $1,733,500. These debentures are convertible into an aggregate of 4,333,750 shares of common stock of the Company. In addition, these funds hold 5,993,731 outstanding shares of common stock and warrants to purchase an aggregate of 5,958,750 shares of common stock of the Company.

19

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

      The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 and the Unaudited Consolidated Financial Statements and related Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

      We have included in this Quarterly Report certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our business, operations and financial condition. “Forward-looking statements” consist of all non-historical information, and the analysis of historical information, including the references in this Quarterly Report to future revenue growth, future expense growth, future credit exposure, earnings before interest, taxes, depreciation and amortization, future profitability, anticipated cash resources, anticipated capital expenditures, capital requirements, and our plans for future periods. In addition, the words “could”, “expects”, “anticipates”, “objective”, “plan”, “may affect”, “may depend”, “believes”, “estimates”, “projects” and similar words and phrases are also intended to identify such forward-looking statements.

      Actual results could differ materially from those projected in our forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, generally accepted accounting principles, the inherent uncertainty of financial estimates and projections, the uncertainties involved in certain legal proceedings, instabilities arising from terrorist actions and responses thereto, and other considerations described as “Risk Factors” in other filings by us with the SEC including our Annual Report on Form 10-KSB. Such factors may also cause substantial volatility in the market price of our Common Stock. All such forward-looking statements are current only as of the date on which such statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

      As used in this Quarterly Report, the terms “we,” “us,” “our,” and “Assured Pharmacy” mean Assured Pharmacy, Inc. and our subsidiaries unless otherwise indicated.

Business Description

      We currently have six operating pharmacies. As a result of the growth in our business and improvement in our operations, our management is seeking to expand our business by establishing additional pharmacies which are wholly-owned. Opening new pharmacies, however, will require additional funding from external sources. In August 2007, we executed a lease for our seventh pharmacy in Lomita, California. We anticipate that operations at the Lomita location will commence prior to the end of the second quarter of 2008. We are currently considering future locations within or in close proximity to medical facilities located in major metropolitan areas in Arizona, California, Nevada, Oregon, Texas, and Washington.

     Our pharmacies have principally specialized in dispensing highly regulated pain medication for acute chronic pain management. During 2006, we expanded the reach of our business beyond pain management to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions. Our management attributes the recent growth in our business in part to our being able to fill prescriptions that can accommodate a broader range of customers.

     Typical retail pharmacies either do not keep in inventory or maintain limited amounts of highly regulated medications. As a result, the time it takes for a traditional retail pharmacy to fill these prescriptions is prolonged. Our specialty pharmacies maintain an inventory of highly regulated medication that is specifically tailored to the needs of our recurring customers. This practice frequently enables our pharmacies to fill customers’ prescriptions from its existing inventory and decreases the wait time required to fill these prescriptions. Our focus and familiarity with dispensing highly regulated medications better positions our pharmacists to understand the needs of our customers.

     In an attempt to further expand our business and improve our marketing plan, we retained the marketing firm of Rainmaker & Sun Integrated Marketing, Inc. (“Rainmaker”). With the assistance of Rainmaker, we launched a new

20

marketing campaign in July 2006 which consisted primarily of print advertisements in newspaper inserts, on billboards, bus shelter displays and in direct mailings targeted to consumers in the Seattle, Washington and Los Angeles, California test markets. These marketing efforts did not reach the level of success anticipated by management. Our management decided to discontinue these marketing efforts in favor of increasing our sales force because the efforts of our sales personnel have produced the greatest success in significantly increasing our business. Based upon the success of our sales personnel, our management has committed to staffing each pharmacy with its own sales person who will be exclusively responsible for generating sales. Our management anticipates that this staffing model will continue to have a positive material impact on our operations.

     The table set forth below summarizes the number of prescriptions filled by our six operating pharmacies for the three months ended March 31, 2008 and 2007.

		Three months ended		Three months ended
		March 31, 2008		March 31, 2007
Total Number of Prescriptions		27,144		19,210

     Total number of prescriptions filled at our all pharmacies for the three months ended March 31, 2008 increased to 27,144 which is approximately a 41% increase from the 19,210 total prescriptions filled at all our pharmacies in the prior three months ended March 31, 2007. Our management primarily credits the increases in our business to the efforts of additional sales personnel added during the reporting period and the expanded reach of our business beyond pain management.

      We have a monthly call program where our pharmacies contact each recurring patient directly on a monthly basis to ensure that the patient has experienced no complications with the prescribed medication and to inquire into whether the patient needs the prescription refilled. At the time of each monthly call, our pharmacies also inquire into whether other members of the household also need a prescription refilled. Our management believes that the monthly call program has enhanced consumer loyalty and will continue to increase the total number of prescriptions filled at our pharmacies.

      On an ongoing basis, our management is evaluating our operations and seeking additional opportunities to expand our business. During the fiscal quarter ended March 31, 2006, we established a working relationship with a specialty compounding pharmacy, which enabled our pharmacies to fill prescriptions for custom compounded drugs. Since this time, we established a relationship with another compound drug provider to increase our available inventory of compounded drugs. Pharmaceutical compounding is the combining, mixing, or altering of ingredients to create a customized medication for an individual patient in response to a licensed physician’s prescription. Physicians often prescribe compounded medications for reasons that include situations where there is not presently a commercially available drug to treat the unique health condition of an individual patient or to combine several medications the patient is taking to increase compliance. Custom compounded drugs can offer additional means of treating chronic pain. We anticipate that our ability to fill prescriptions for custom compounded drugs will expand our business and enable us to better service patients who require treatment for chronic pain management. During the three months ended March 31, 2008, we generated $10,209 in revenue for compounded drugs. The gross profit margin on these prescriptions was approximately 36%.

     Our management also determined that we could expand our business through developing arrangements with third party health plan providers to accept traditional co-payments and fill prescriptions for their members who rely upon overnight courier for delivery of their prescription. Our management believes that such arrangements will broaden our consumer base and enable us to access a particular niche of consumer that receives their prescriptions exclusively via courier as opposed to patronizing traditional retail pharmacy locations.

      On January 3, 2006, we incorporated Assured Pharmacy Plus, Corp. (“Plus Corp.”) as a wholly-owned subsidiary to develop this opportunity. We entered into an arrangement with Affiliated Healthcare Administrators (“AHA”), a third party health plan administrator, to provide prescription service to their members. Under the arrangement with AHA, our pharmacies provide prescription service to AHA members upon receipt of a traditional co-payment. Thereafter, we process the prescription claim with AHA and receive the remaining balances due for their member’s prescription purchases. Plus Corp. processes claims relating to the prescription filled at our pharmacies for AHA members in exchange for an administration fee. Our management is contemplating expanding the operations of Plus Corp. by licensing the entity as a pharmacy that exclusively focuses on servicing the niche of consumers that are members of third party health plan administrators and receive their prescriptions exclusively via courier.

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      Also on January 3, 2006, we incorporated Assured Pharmacy DME, Corp. (“DME”) as a wholly-owned subsidiary for the purpose of facilitating and making available specialized medical equipment to our consumers. We established a relationship with a provider of specialized medical equipment to make these products available to our consumers. In July 2006, we began notifying our consumers of the availability of these products by disseminating a notification with each prescription filled at our pharmacies. We accept and process orders for specialized medical equipment. We will not maintain any inventory of specialized medical equipment at any of our pharmacies. All orders will be shipped directly to the consumer from a product wholesaler. Our management was encouraged by our consumers’ early response to our offering of specialized medical equipment, but has not committed any significant resources to expanding this area because it is presently allocating our resources towards developing future locations and increasing our sales of custom compounded drugs.

      Our revenue generated from the operations of Plus Corp. and DME for the three months ended March 31, 2008 and 2007 has been relatively insignificant to our business. To date, our management has not advanced these opportunities because our resources are currently being devoted to expanding the sales of compounded drugs, focusing on the establishment of additional pharmacies, and growth within our existing pharmacy locations. Our management anticipates focusing more on these opportunities during 2008 or at such time that allocating resources to these opportunities is in our best interest.

Results of Consolidated Operations

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

Revenues

     Our total revenue reported for the three months ended March 31, 2008 was $4,162,670, a 52% increase from $2,733,683 for the three months ended March 31, 2007. Our revenue for the three months ended March 31, 2008 and 2007 was generated almost exclusively from the sale of prescription drugs. The average revenue generated per prescription for three months ended on March 31 2008 and 2007 was $153 and $142 respectively. The increase in revenues is attributable to increased sales volume of existing stores due to hiring sales personnel to recruit more physicians and an increase in average revenue generated per prescription.

     The table set forth below shows our total reported gross revenue generated for each completed quarterly period during fiscal 2006, 2007 and 2008:

	2006		2007		2008
Quarterly Period Ended March 31	$	1,515,645	$	2,733,683	$	4,162,670
Quarterly Period Ended June 30	$	1,894,976	$	3,305,891		N/A
Quarterly Period Ended September 30	$	2,310,248	$	3,676,798		N/A
Quarterly Period Ended December 31	$	2,176,249	$	4,207,115		N/A

     Management anticipates that our revenues will continue to increase based upon the efforts of additional sales personnel and the establishment of additional pharmacies in the current year. In 2008, we consolidated the operations of two of our pharmacies and opened a new pharmacy in Las Vegas. We plan to open another pharmacy in Oak Lomita, California in the second quarter of 2008. We anticipate the establishment of these additional pharmacies will increase our revenues for the fiscal year ended December 31, 2008.

Cost of Sales

     The total cost of sales for the three months ended March 31, 2008 was $3,206,091 a 61% increase from $1,988,744 for the three months ended March 31, 2007. The increase in cost of sales is primarily attributable to increased sales in the reporting period.

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Gross Profit.

     Gross profit increased to $956,529, or approximately 23% of sales, for the three months ended March 31, 2008. This is an increase from a gross profit of $744,939, or approximately 27% sales, for the three months ended March 31, 2007. The primary reason for the increase in the gross profit was the increase in the the revenues. The decline in the gross profit as a percentage of sales is primarily due to a reduction in the workmens compensation reimbursements in California.

Operating Expenses

     Operating expenses for the three months ended March 31, 2008 were $1,477,226, a 7% increase from $1,374,531 for the three months ended March 31, 2007. Our operating expenses for the three months ended March 31, 2008 consisted of salaries and related expenses of $765,688, consulting and other compensation of $142,957, and selling, general and administrative expenses of $568,581. Our operating expenses for the three months ended March 31, 2007 consisted of salaries and related expenses of $678,899, consulting and other compensation of $148,636, selling, general and administrative expenses of $546,996.

     Salaries and related expenses were higher in the three months ended March 31, 2008 when compared to the comparable quarter in the prior year primarily as a result of increased sales personnel and the staffing of new pharmacies. The decrease in consulting and other compensation is primarily attributable to less consulting services utilized in the three months ended March 31, 2008.

Other Income and Expense

     During the three months ended March 31, 2008, we reported other expenses in the amount of $275,107, compared to $142,642 for the three months ended March 31, 2007. We incurred interest expense of $279,236 during the three months ended March 31, 2008 as compared to $142,642 during the three months ended March 31, 2007. Interest expense for the three months ended March 31, 2008 was incurred on financing from related parties and convertible debentures issued during the reporting period.

Net Loss

     Net loss for the three months ended March 31, 2008 was $801,536, compared to net loss of $776,922 for the three months ended March 31, 2007. The increase in our net loss was primarily attributable to increases in operating expenses and increased interest costs offset by the increase in the gross profit as discussed above.

     Our loss per common share for the three months ended March 31, 2008 was $0.01, compared to a loss per common share of $0.01 for the three months ended March 31, 2007.

Liquidity and Capital Resources

As of March 31, 2008, we had $253,436 in cash which primarily resulted from funds raised in the private offering of unsecured convertible debentures. As of March 31, 2008, we had current assets of $2,669,757 and current liabilities of $7,815,181 resulting in a working capital deficit of $5,145,424.

     Operating activities used $801483 in cash for the three months ended March 31, 2008. Our net loss of $801,536 less non-cash expenses of $168,326 was the primary reason for our negative operating cash flow. Investing activities during the three months ended March 31, 2008 used $68,657 for the purchase of property and equipment. Net cash flows provided by financing activities during the three months ended March 31, 2008 was $715,291. We received $250,000 as proceeds from the issuance of debentures and $649,804 in advances under the new factoring agreement which was offset by principal payments on notes payable in the amount of $34,533 and repayment of $150,000 of the factor advances.

     In order for us to finance operations, continue our growth plan and service our existing debt (including the repayment of the convertible notes), additional funding will be required from external sources. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements for the next twelve months. Our management anticipates

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that its financing efforts will result in sufficient funds to finance our operations beyond the next twelve months, but there can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

Off Balance Sheet Arrangements

     As of March 31, 2008, there were no off balance sheet arrangements.

Going Concern

      The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of March 31, 2008, we had an accumulated deficit of $23,809,730, recurring losses from operations of prior years and negative cash flow from operating activities for the three month period ended March 31, 2008 of $306,179. We also had a negative working capital of $5,145,424 as of March 31, 2008.

      We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund capital expenditures, working capital or other cash requirements for the year ending December 31, 2008. We intend to seek additional funds to finance our long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

     These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount or classification of liabilities that might result should we be unable to continue as a going concern.

     In response to these problems, management has taken the following actions:

• We are expanding our revenue base beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions.

• We are aggressively signing up new physicians.

• We are seeking investment capital.

• We retained additional sales personnel to attract business.

• We consolidated our two pharmacies in Portland, Oregon into a single operation. This consolidation is expected to allow us to further leverage our existing infrastructure and is expected to result in a reduction of costs.

• In March 2008, we entered into an accounts receivable purchase agreement whereby we have agreed to sell certain accounts receivable for a price equal to 80% of the outstanding accounts receivable being purchased. We expect this additional source of working capital to help significantly with the daily operations.

• In April 2008, we entered into a Credit Agreement for $2,000,000 (and possibly up to $3,000,000). (See Note 10)

Critical Accounting Policies

     In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition.

Inventories

     Inventories are stated at the lower of cost (first-in, first-out method) or estimated market, and consist primarily of pharmaceutical drugs. Market is determined by comparison with recent sales or net realizable value. Net realizable value is based on management’s forecast for sales of its products or services in the ensuing years and/or consideration and analysis of changes in customer base, product mix, payor mix, third party insurance reimbursement levels or other issues that may impact the estimated net realizable value. Management regularly reviews inventory quantities on hand and records a reserve for shrinkage and slow-moving, damaged and expired inventory, which is measured as the difference between the inventory cost and the estimated market value based on management’s assumptions about market conditions and future demand for its products. No reserves were provided at March 31, 2008 or December 31, 2007. Should the demand for the our products prove to be less than anticipated, the ultimate net realizable value of our inventories could be substantially less than reflected in the accompanying consolidated balance sheet.

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     Inventories are comprised of brand and generic pharmaceutical drugs. Brand drugs are purchased primarily from one wholesale vendor and generic drugs are purchased primarily from multiple wholesale vendors. Our pharmacies maintain a wide variety of different drug classes, known as Schedule II, Schedule III, and Schedule IV drugs, which vary in degrees of addictiveness.

     Schedule II drugs, considered narcotics by the DEA are the most addictive; hence, they are highly regulated by the DEA and are required to be segregated and secured in a separate cabinet. Schedule III and Schedule IV drugs are less addictive and are not regulated. Because our business model focuses on servicing pain management doctors and chronic pain patients, we carry in inventory a larger amount of Schedule II drugs than most other pharmacies. The cost in acquiring Schedule II drugs is higher than Schedule III and IV drugs.

Long-Lived Assets

     We adopted Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized.

     Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. SFAS No. 144 also requires companies to separately report discontinued operations, and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment or in a distribution to owners) or is classified as held for sale. Assets to be disposed of are reported at the lower of the carrying amount or the estimated fair value less costs to sell.

     Our long-lived assets consist of computers, software, office furniture and equipment, store fixtures and leasehold improvements on pharmacy build-outs. We assess the impairment of these long-lived assets at least annually and make adjustment accordingly.

Intangible Assets

     Statement of Financial Accounting standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for upon their acquisition and after they have been initially recognized in the financial statements. SFAS No. 142 requires that goodwill and identifiable intangible assets that have indefinite lives not be amortized but rather be tested at least annually for impairment, and intangible assets that have finite useful lives be amortized over their estimated useful lives.

     SFAS No. 142 provides specific guidance for testing goodwill and intangible assets that will not be amortized for impairment. In addition, SFAS No. 142 expands the disclosure requirements about intangible assets in the years subsequent to their acquisition. Impairment losses for goodwill and indefinite-life intangible assets that arise due to the initial application of SFAS No. 142 are to be reported as a change in accounting principle.

Revenue Recognition

     We recognize revenue on an accrual basis when the product is delivered to the customer. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed. Authorization, which assures payment, is obtained from the customers’ insurance provider before the medication is dispensed to the customer. Authorization is obtained for the vast majority of these sales electronically and a corresponding authorization number is issued by the customers’ insurance provider.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM    4T.    CONTROLS AND PROCEDURES

     As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), our Chief Executive and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the applicable time periods specified by the SEC’s rules and forms.

     There was no change in our internal controls over financial reporting that occurred during the fiscal quarter ended March 31, 2008 that materially affected or is reasonably likely to materially affect the Company’s internal controls over financial reporting.

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PART II.   OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

      From time to time, we may be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination or breach of contract actions incidental to the normal operations of the business.

      Providing pharmacy services entails an inherent risk of medical and professional malpractice liability. We may be named as a defendant in such lawsuits and thus become subject to the attendant risk of substantial damage awards. We believe that we have adequate professional and medical malpractice liability insurance coverage. There can be no assurance, however, that we will not be sued, that any such lawsuit will not exceed our insurance coverage, or that we will be able to maintain such coverage at acceptable costs and on favorable terms.

      We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

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

     During the three months ended March 31, 2008, the Company raised $50,000 and $ 200,000 by issuing unsecured convertible debentures (“Debentures”) expiring on March 31, 2008, carrying an interest rate of 18% per annum. The Debentures provide that all the interest is payable solely in the shares of the Company’s common stock on the issuance date. The number of shares to be issued in payment of the interest is to be calculated based upon average closing price for the Company’s common stock on NASD OTCBB for the five (5) consecutive trading days preceding the issuance date. Shares for the interest on new debentures are yet to be issued. As of March 31, 2008, we are obligated to issue 45,440 shares of common stock as payment of total interest on the Debentures. The Debenture holders have the right to convert their Debentures into fully paid non-assessable shares of our common stock at $0.40. Upon any conversion of the Debentures, the Debenture holders will also be issued Common Stock Purchase Class A Warrants to purchase one (1) share of restricted common stock at an exercise price of $0.60 exercisable for two (2) years after the conversion date and Common Stock Purchase Class B Warrants to purchase one (1) share of restricted common stock at an exercise price of $0.80 exercisable for three (3) years. One Class A Warrant and one Class B Warrant will be issued for each two shares of common stock issued upon conversion of the Debentures.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     At March 31, 2008, 15% of total convertible debentures borrowed by the Company in the aggregate principal amount of $625,000 were past due.

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

      No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended March 31, 2008.

ITEM 5. OTHER INFORMATION

Appointment of Director on Board

     On February 22, 2008, the Board of Directors appointed Ameet Shah to fill a vacancy on the Board. Mr. Shah, is the Managing Partner of Mosaic Capital Advisors and the Mosaic Private Equity family of funds. The Mosaic funds hold 18% convertible debentures in the aggregate principal amount of $1,733,500. These debentures are convertible into an aggregate of 4,333,750 shares of common stock of the Company. In addition, these funds hold 5,993,731 outstanding shares of common stock and warrants to purchase an aggregate of 5,958,750 shares of common stock of the Company.

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ITEM 6.    EXHIBITS

      The exhibits listed in the accompanying below are filed as part of this report.

Exhibit
Number		Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		[WE MAY ADD THE MOSAIC CREDIT AGREEMENT IF THE 10-Q IS FILED PRIOR TO THE DUE DATE FOR THE 8-K]

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ASSURED PHARMACY, INC.

Date: May 9, 2008

/s/ Robert DelVelcchio          
Robert DelVelcchio
Chief Executive Officer
(Principal Executive Officer)

Date: May 9, 2008

/s/ Haresh Sheth                
Haresh Sheth
Chief Financial Officer
(Principal Financial and Accounting Officer)

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