<SUBMISSION>
<ACCESSION-NUMBER>0000930413-08-002969
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20080331
<FILING-DATE>20080509
<DATE-OF-FILING-DATE-CHANGE>20080509
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>Assured Pharmacy, Inc.
<CIK>0001100592
<ASSIGNED-SIC>5912
<IRS-NUMBER>980233878
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-33165
<FILM-NUMBER>08817384
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>17935 SKY PARK CIRCLE
<STREET2>SUITE F
<CITY>IRVINE
<STATE>CA
<ZIP>92614
<PHONE>949-222-9971
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>17935 SKY PARK CIRCLE
<STREET2>SUITE F
<CITY>IRVINE
<STATE>CA
<ZIP>92614
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ERXSYS INC
<DATE-CHANGED>20030916
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>SURFORAMA COM INC
<DATE-CHANGED>20001128
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c53410_10q.htm
<TEXT>

<HTML>
<HEAD>
   <TITLE>c53410_10qsb.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing</TITLE>
</HEAD>

<BODY bgcolor="#ffffff">



<P align="center">
<B><FONT size=2 face="serif">U.S. SECURITIES AND EXCHANGE COMMISSION </FONT></B><br>
<FONT size=2 face="serif">Washington, D.C. 20549 <br>
FORM 10-Q </FONT></P>
<P align="justify">&nbsp;</P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="4%" valign="top"><FONT size=2 face="serif">[ X ] </FONT></td>
    <td colspan="2" valign="top"><FONT size=2 face="serif">QUARTERLY REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </FONT></td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top"><FONT size=2 face="serif">For the quarterly period ended </FONT></td>
    <td width="73%" valign="top" STYLE="border-bottom:1px solid #000000;"><div align="center"><FONT size=2 face="serif">March 31, 2008 </FONT></div></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td width="21%" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4" valign="top"><div align="center"><FONT size=2 face="serif">or </FONT></div></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><FONT size=2 face="serif">[&nbsp;&nbsp;&nbsp; ]</FONT></td>
    <td colspan="2" valign="top"><FONT size=2 face="serif"> TRANSITION REPORT
    PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </FONT></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="3" valign="top"><FONT size=2 face="serif">For the transition
    period ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;    to </FONT></td>
    <td>&nbsp;</td>
  </tr>
</table>
<P align="center" STYLE="border-bottom:1px solid #000000;"><FONT size=2 face="serif">Commission File Number: 000-33165   </FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td STYLE="border-bottom:1px solid #000000;"><div align="center"><FONT size=2 face="serif">ASSURED PHARMACY, INC</FONT></div></td>
  </tr>
  <tr>
    <td><div align="center"><FONT size=2 face="serif"> (Exact name of registrant as specified in
    its charter)</FONT></div></td>
  </tr>
</table>
<P align="center">&nbsp;</P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=31%></TD>
    <TD width=36%></TD>
  <TD width=33%></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">Nevada</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
    <div align="center"><FONT size=2 face="serif">98-0233878</FONT>&nbsp;  </div></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">(State or other jurisdiction of incorporation or organization)</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=center nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">(I.R.S. Employer Identification No.)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=3 bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">17935 Sky Park Circle Suite F, Irvine, CA</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">92614</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">(Address of principal executive offices)</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
    <div align="center"><FONT size=2 face="serif">(Zip Code)</FONT>&nbsp;  </div></TD>
</TR>
</TABLE><BR>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td STYLE="border-bottom:1px solid #000000;"><div align="center"><FONT size=2 face="serif">(949)
          222-9971 </FONT></div></td>
  </tr>
  <tr>
    <td><div align="center"><FONT size=2 face="serif">(Registrant&#146;s telephone
          number, including area code)</FONT></div></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="serif">(Former name, former address and former fiscal year, if changed since last report)</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>
<FONT size=2 face="serif">         Yes [x] No [&nbsp; ] </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#147;large accelerated filer&#148;,
&#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule 12b-2 of the Exchange Act. (Check one): </FONT></P>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="29%" valign="top"><FONT size=2 face="serif">Large accelerated filer</FONT></td>
    <td width="36%" valign="top"><FONT size=2 face="serif"> [&nbsp; ]</FONT></td>
    <td width="2%" valign="top">&nbsp;</td>
    <td width="26%" valign="top"><FONT size=2 face="serif">Accelerated filer </FONT></td>
    <td width="3%" valign="top"><FONT size=2 face="serif"> [&nbsp; ]</FONT></td>
  </tr>
  <tr>
    <td valign="top"><FONT size=2 face="serif">Non-accelerated filer</FONT></td>
    <td valign="top"><FONT size=2 face="serif">[&nbsp; ]</FONT><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Do
    not check if a smaller reporting company)</FONT></td>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="serif">Smaller reporting company </FONT></td>
    <td valign="top"><FONT size=2 face="serif">[x]</FONT></td>
  </tr>
</table>
<P align="justify"><FONT size=2 face="serif">Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).</FONT></P>
<P align="center">
<FONT size=2 face="serif">APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY<br>
PROCEEDINGS DURING THE PRECEDING FIVE YEARS: </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Yes [&nbsp; ] No [&nbsp; ] </FONT></P>
<P align="center">
<FONT size=2 face="serif">APPLICABLE ONLY TO CORPORATE ISSUERS:</FONT></P>
<P align="justify">
<FONT size=2 face="serif">Indicate the number of shares outstanding of the common stock, &#36;0.001
par value, as of May 2, 2008: 54,263,085<BR>
</FONT></P>

<HR noshade align="center" width="100%" size=4>



<p style="page-break-before:always"></p><PAGE>


<P align="center">
<B><FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES</FONT></B></P>
<P align="center">
<B><FONT size=2 face="serif">TABLE OF CONTENTS</FONT></B><FONT size=2 face="serif"> </FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=8%></TD>
     <TD width=2%></TD>
     <TD width=28%></TD>
     <TD width=2%></TD>
     <TD width=45%></TD>
     <TD width=2%></TD>
     <TD width=11%></TD></TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Page No.</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD colspan=5 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">PART I - FINANCIAL INFORMATION</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 1.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Condensed Consolidated Financial Statements</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Condensed Consolidated Balance Sheets as of March 31, 2008 (unaudited) and</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">December 31, 2007 (audited)</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Condensed Consolidated Statements of Operations for the three months</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">ended March 31, 2008 and March 31, 2007 (unaudited)</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">4</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Condensed Consolidated Statements of Cash Flows for the three months</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">ended March 31, 2008 and March 31, 2007 (unaudited)</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">5</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Notes to Condensed Consolidated Financial Statements</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">6</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 2.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Management&#146;s Discussion and Analysis of Financial</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Condition and Results of Operations</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">20</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 3.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Quantitative and Qualitative Disclosures</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">About Market Risk</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">26</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 4T.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Controls and Procedures</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">26</FONT></TD>
</TR>
<TR>
  <TD colspan=7 bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">PART II - OTHER INFORMATION</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 1.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Legal Proceedings</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 2.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Unregistered Sales of Securities and Use of Proceeds</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 3.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Defaults Upon Senior Securities</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 4.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Submission of Matters to a Vote of Security Holders</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 5.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Other Information</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">27</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Item 6.</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">Exhibits</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">28</FONT></TD>
</TR>
<TR valign="bottom">
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
  <TD bgcolor="#FFFFFF">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan=3 align=left nowrap bgcolor="#FFFFFF">
<FONT size=2 face="serif">SIGNATURES</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">28</FONT></TD>
</TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="serif">2</FONT></P>

<HR noshade align="center" width="100%" size=4>



<p style="page-break-before:always"></p><PAGE>


<P align="center">
<B><FONT size=2 face="serif">PART I &#150; FINANCIAL INFORMATION</FONT></B></P>
<P align="justify">
<B><FONT size=2 face="serif">Item 1. Financial Statements</FONT></B></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="center">
<p STYLE="border-bottom:2px solid #000000;">
<p align="center">
<B><FONT size=1 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES</FONT></B><BR>
<B><FONT size=1 face="serif">CONDENSED CONSOLIDATED BALANCE SHEETS</FONT></B></P>
 <p STYLE="border-bottom:1px solid #000000;">

<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=55%></TD>
     <TD width=14%></TD>
     <TD width=1%></TD>
     <TD width=10%></TD>
     <TD width=6%></TD>
     <TD width=2%></TD>
     <TD width=10%></TD>
     <TD width=1%></TD></TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
  <TD bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
  <TD colspan="2" align=right nowrap bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
  <TD align=center nowrap bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-top:1px solid #000000;">&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="2" align=right nowrap bgcolor="#FFFFFF">
    <div align="center"><B><FONT size=1 face="serif">March 31,</FONT></B> </div></TD>
  <TD width="6%" align=center nowrap bgcolor="#FFFFFF">  <div align="center"></div></TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF">
    <div align="center"><B><FONT size=1 face="serif">December 31,</FONT></B> </div></TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="2" align=right nowrap bgcolor="#FFFFFF">
    <div align="center"><B><FONT size=1 face="serif">2008</FONT></B> </div></TD>
  <TD width="6%" align=center nowrap bgcolor="#FFFFFF">  <div align="center"></div></TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF">
    <div align="center"><B><FONT size=1 face="serif">2007</FONT></B> </div></TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="2" align=right nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=1 face="serif">(UNAUDITED)</FONT></B> </div></TD>
  <TD width="6%" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">  <div align="center">&nbsp;</div></TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=1 face="serif">(AUDITED)</FONT></B> </div></TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=center nowrap>
<B><FONT size=1 face="serif">ASSETS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Current Assets</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">253,436</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">408,305</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">1,349,464</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">2,167,969</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due from Factor</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">300,222</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">-</FONT></TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left><FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">643,627</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">440,354</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other assets</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">123,008</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">166,852</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">2,669,757</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">3,183,480</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Long Term Assets</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable - non-current, net</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">40,773</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">49,868</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Property and Equipment, net</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">387,866</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">373,961</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Goodwill</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">607,816</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">607,816</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">3,706,212</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">4,215,125</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=right nowrap>
    <div align="center"><B><FONT size=1 face="serif">LIABILITIES AND STOCKHOLDERS&#146; DEFICIT</FONT></B>&nbsp;  </div></TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Current Liabilities</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accured expenses</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">2,348,747</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">2,306,415</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unsecured convertible notes payable</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">4,083,500</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">3,833,500</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notes payable to related parties and stockholders</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">1,382,934</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">1,136,630</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">7,815,181</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">7,276,545</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Notes Payable to Related Party and Stockholders, net of current portion</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">-</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">276,337</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Minority Interest</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">682,406</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">676,748</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Commitments and Contingencies</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Stockholders&#146; Deficit</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred shares; par value &#36;0.001 per share;</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD width="6%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; authorized 5,000,000 shares; no preferred shares issued</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD width="6%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; or outstanding</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">-</FONT>  </TD>
  <TD width="6%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">-</FONT></TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD width="6%" align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD width="1%" align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#E5FFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common shares; par value &#36;0.001 per share;</FONT>&nbsp;  </TD>
  <TD bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD width="6%" align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD width="1%" align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#E5FFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 150,000,000 shares authorized, 65,659,609 common shares issued and outstanding</FONT>&nbsp;  </TD>
  <TD bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">
<FONT size=1 face="serif">65,659</FONT>  </TD>
  <TD width="6%" align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">
<FONT size=1 face="serif">65,659</FONT>  </TD>
  <TD width="1%" align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasury stock at cost, 10,858,658 shares</FONT>&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">(2,849,366</FONT>  </TD>
  <TD width="6%" align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">(2,849,366</FONT>  </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">21,802,062</FONT>  </TD>
  <TD width="6%" align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">21,777,397</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(23,809,730</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(23,008,195</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stockholders&#146; deficit</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(4,791,375</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(4,014,505</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">3,706,212</FONT>  </TD>
  <TD width="6%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=1 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">4,215,125</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8 STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=right nowrap colspan=8>
<FONT size=1 face="serif">The accompanying notes are an integral part of the consolidated financial statements.</FONT>          </TD>
  </TR>
</TABLE>
<BR>
<P align="center">
<FONT size=2 face="serif">3</FONT></P>

<HR noshade align="center" width="100%" size=4>



<p style="page-break-before:always"></p><PAGE>

<p STYLE="border-bottom:2px solid #000000;">

<P align="center">
<B><FONT size=1 face="serif">ASSURED PHARMACY, INC AND SUBSIDIARIES</FONT></B><BR>
<B><FONT size=1 face="serif">CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS </FONT></B><BR>
<B><FONT size=1 face="serif">(UNAUDITED) </FONT></B></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=40%></TD>
     <TD width=22%></TD>
     <TD width=1%></TD>
     <TD width=10%></TD>
     <TD width=1%></TD>
     <TD width=6%></TD>
     <TD width=2%></TD>
     <TD width=7%></TD>
     <TD width=1%></TD></TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="6" align=center nowrap bgcolor="#FFFFFF">
    <B><FONT size=1 face="serif">For The Three Months Ended</FONT></B>  </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="6" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">      <B><FONT size=1 face="serif">March
    31,</FONT></B>     </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD bgcolor="#FFFFFF">&nbsp;  </TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
    <B><FONT size=1 face="serif">2008</FONT></B>  </TD>
  <TD align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">
    <B><FONT size=1 face="serif">2007</FONT></B>  </TD>
  <TD width="1%" align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">SALES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=1 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">4,162,620</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap><FONT size=1 face="serif">&#36;</FONT></TD>
  <TD align=right nowrap><FONT size=1 face="serif">2,733,683</FONT> </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">COST OF SALES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(3,206,091</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(1,988,744</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">GROSS PROFIT</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">956,529</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">744,939</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">OPERATING EXPENSES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Salaries and related expenses</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">765,688</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">678,899</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Consulting and other compensation</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">142,957</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">148,636</FONT>  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Selling, general and administrative</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">568,581</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">546,996</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TOTAL OPERATING EXPENSES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">1,477,226</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">1,374,531</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">LOSS FROM OPERATIONS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(520,697</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(629,592</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">OTHER (EXPENSES) INCOME</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD width="1%" align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Interest expense</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">(279,236</FONT>  </TD>
  <TD align=left nowrap><FONT size=1 face="serif">)</FONT>&nbsp; </TD>
  <TD width="6%" align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">(142,642</FONT>  </TD>
  <TD width="1%" align=left nowrap>
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Other income</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">4,129</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">-</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TOTAL OTHER EXPENSES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(275,107</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(142,642</FONT> </TD>
  <TD width="1%" align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">LOSS BEFORE MINORITY INTEREST</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">(795,804</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=1 face="serif">(772,234</FONT>  </TD>
  <TD width="1%" align=left nowrap>
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">MINORITY INTEREST</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(5,732</FONT> </TD>
  <TD align=left nowrap STYLE="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">(4,688</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">NET LOSS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">&#36;</FONT> </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">(801,536</FONT> </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;"><FONT size=1 face="serif">&#36;</FONT></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;"><FONT size=1 face="serif">(776,922</FONT> </TD>
  <TD width="1%" align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">Basic and diluted loss per common share</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">&#36;</FONT> </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">(0.01</FONT> </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;"><FONT size=1 face="serif">&#36;</FONT></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;"><FONT size=1 face="serif">(0.01</FONT> </TD>
  <TD width="1%" align=left nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap bgcolor="#E5FFFF">
<B><FONT size=1 face="serif">Basic and diluted weighted average number of common</FONT></B>&nbsp;  </TD>
  <TD bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD width="6%" align=right nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
  <TD width="1%" align=left nowrap bgcolor="#E5FFFF">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<B><FONT size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares outstanding</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">54,800,951</FONT> </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD width="6%" align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=1 face="serif">53,474,060</FONT>  </TD>
  <TD width="1%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;  </TD>
</TR>

<TR valign="bottom" bgcolor="#E5FFFF">
  <TD colspan="9" align=left nowrap bgcolor="#FFFFFF" STYLE="border-bottom:1px solid #000000;">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD colspan="9" align=right nowrap bgcolor="#FFFFFF">
    <P align="right"> <FONT size=1 face="serif">The accompanying notes are an
    integral part of the consolidated financial statements.</FONT></P></TD>
  </TR>
</TABLE>
<P align="center">&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">4</FONT></P>

<HR noshade align="center" width="100%" size=4>



<p style="page-break-before:always"></p><PAGE>


<P align="center" >
<B><FONT size=1 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES </FONT></B><BR>
<B><FONT size=1 face="serif">CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS </FONT></B><BR>
<B><FONT size=1 face="serif">(UNAUDITED) </FONT></B></P>
<table width=100% border=0 cellpadding=0 cellspacing=0>
  <tr>
    <td width=60%></td>
    <td width=12%></td>
    <td width=1%></td>
    <td width=8%></td>
    <td width=10%></td>
    <td width=2%></td>
    <td width=6%></td>
    <td width=1%></td>
  </tr>
  <tr valign="bottom">
    <td colspan="3" align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
    <td align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
    <td width="10%" align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
    <td align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
    <td align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
    <td align=left nowrap style="border-top:2px solid #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap bgcolor="#FFFFFF">&nbsp;</td>
    <td bgcolor="#FFFFFF">&nbsp;</td>
    <td colspan="5" align=center nowrap bgcolor="#FFFFFF"><b><font size=1 face="serif">FOR
          THE THREE MONTHS ENDED</font></b>&nbsp; </td>
    <td align=left nowrap bgcolor="#FFFFFF">&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap bgcolor="#FFFFFF">&nbsp;</td>
    <td bgcolor="#FFFFFF">&nbsp;</td>
    <td colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td width="10%" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;"><b><font size=1 face="serif">MARCH
          31,</font></b>&nbsp; </td>
    <td align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap bgcolor="#FFFFFF">&nbsp;</td>
    <td bgcolor="#FFFFFF">&nbsp;</td>
    <td colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;"><b><font size=1 face="serif">2008</font></b> </td>
    <td width="10%" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td colspan="2" align=center nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;"><b><font size=1 face="serif">2007</font></b> </td>
    <td align=left nowrap bgcolor="#FFFFFF" style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><b><font size=1 face="serif">CASH FLOWS FROM OPERATING
          ACTIVITIES:</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Net loss</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">(801,536</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">(776,922</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Adjustments to reconcile
        net loss to net cash used in operating activities:</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Depreciation and amortization
        of property and equipment</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">54,753</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">39,889</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Amortization of debt discount</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">11,250</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">110,633</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Share based consulting fees</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">24,665</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">135,399</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Minority interest in net
        income /(loss) of joint venture</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">5,658</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">4,688</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Issuance of common stock
        and options for director services</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">-</font></td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">120,000</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Return of common stock due
        to termination of contract</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">-</font></td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(70,000</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Provision for doubtful accounts</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">72,000</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">-</font></td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Changes in operating assets
        and liabilities:</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts
        receivable</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(56,754</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(180,065</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due
        from Factor</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">12,228</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">&nbsp;</font> </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">-</font></td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(203,273</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(283,274</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid
        expenses and other current assets</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">32,594</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(17,048</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts
        payable and accrued liabilities</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">46,832</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">141,322</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><b><font size=1 face="serif">Net cash used in operating
          activities</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(801,483</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font></td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(775,378</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">CASH FLOWS FROM INVESTING
        ACTIVITIES:</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Purchases of property and
        equipment</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(68,657</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(31,559</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><b><font size=1 face="serif">Net cash used in investing
          activities</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(68,657</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">(31,559</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">CASH FLOWS FROM FINANCING
        ACTIVITIES:</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Principal repayments on notes
        payable to related parties and shareholders</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(34,533</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(3,627</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Advances from factor
        </font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">649,804</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap bgcolor="#E5FFFF"><font size=1 face="serif">-</font></td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Repayment of advances from
        factor</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(150,000</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">-</font></td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Proceeds from issuance of
        convertible debentures</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">250,000</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">500,000</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><b><font size=1 face="serif">Net cash provided by financing
          activities</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">715,271</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">496,373</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><b><font size=1 face="serif">Net Increase (decrease)
          in cash</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(154,869</font> </td>
    <td width="10%" align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
    <td align=right nowrap>&nbsp;</td>
    <td align=right nowrap><font size=1 face="serif">(310,564</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><b><font size=1 face="serif">Cash at beginning of period</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">408,305</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
    <td align=right nowrap style="border-bottom:1px solid #000000;"><font size=1 face="serif">466,403</font> </td>
    <td align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><b><font size=1 face="serif">Cash at end of period</font></b>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">253,436</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">155,839</font> </td>
    <td align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Supplemental disclosure of
        cash flow information-</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Cash paid during the period
        for:</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Interest</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">14,967</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">-</font> </td>
    <td align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
  </tr>
  <tr>
    <td colspan=8>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Income taxes</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">-</font> </td>
    <td width="10%" align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
    <td align=left nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap style="border-bottom:3px double #000000;"><font size=1 face="serif">-</font> </td>
    <td align=left nowrap style="border-bottom:3px double #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">NON-CASH INVESTING AND FINANCING
        ACTIVITIES :</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Issuance of common stock
        for services rendered</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">-</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">155,000</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Issuance of common stock
        in lieu of debenture note interest</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">-</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">90,000</font> </td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#E5FFFF">
    <td align=left nowrap><font size=1 face="serif">Return of common stock due
        to termination of contract</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">-</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">(70,000</font> </td>
    <td align=left nowrap><font size=1 face="serif">)</font>&nbsp; </td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap><font size=1 face="serif">Transfer of interest due
        to related party to note payable</font>&nbsp; </td>
    <td>&nbsp;</td>
    <td align=left nowrap><font size=1 face="serif">&#36;</font> </td>
    <td align=right nowrap><font size=1 face="serif">4,500</font> </td>
    <td width="10%" align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align=left nowrap>&nbsp;</td>
    <td>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=right nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
    <td align=left nowrap>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="8" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="8" align=right nowrap><p align="right"> <font size=1 face="serif">The
          accompanying notes are an integral part of the consolidated financial
    statements.</font></p></td>
  </tr>
</table>
<P align="center">&nbsp;</P>
<P align="center">
<FONT size=2 face="serif">5</FONT></P>

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<p style="page-break-before:always"></p><PAGE>


<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">1. ORGANIZATION AND BASIS OF PRESENTATION</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">A. Organization:</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">Assured Pharmacy, Inc. (&#147;Assured Pharmacy&#148; or the &#147;Company&#148;) 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&#146;s business is derived
from repeat business from its customers. &#147;Walk-in&#148; prescriptions from physicians are limited.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Agreement with TPG, L.L.C.</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On April 24, 2003, we entered into an agreement with TPG, L.L.C. (&#147;TPG&#148;) 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 &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">Assured Pharmacies, Inc. (&#147;API&#148;) 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%.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;460,000 and the issuance of 50,000 shares of our common stock. The cash component of the purchase price is payable as follows: </FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
  <TD width="26" align=right valign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
  <TD width="34" align=right valign=top nowrap><p>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">i.</FONT></p></TD>
  <TD width="25" valign="top">&nbsp;</TD>
  <TD width="1137" valign="baseline">
<P align="justify"><FONT size=2 face="serif">&#36;15,000 was paid on or about December 15, 2006;</FONT></P></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD align=right valign=top>&nbsp;</TD>
  <TD valign=top align=right nowrap><p>&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">ii.</FONT></p></TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="baseline">
<P align="justify"><FONT size=2 face="serif">Eleven (11) consecutive monthly installments of &#36;5,000 payable on or before the 15th of each month commencing in January 2007 through November 2007;</FONT></P></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR><TR>
  <TD align=right valign=top>&nbsp;</TD>
  <TD valign=top align=right nowrap><p>&nbsp;&nbsp;
<FONT size=2 face="serif">iii.</FONT></p></TD>
  <TD valign="top">&nbsp;</TD>
  <TD valign="baseline">
<P align="justify"><FONT size=2 face="serif">Fourteen (14) consecutive monthly installments of &#36;15,000 payable on or before the 15th of each month commencing in December 2007 through January 2009; and</FONT></P></TD>
</TR>
<TR><TD colspan=4>&nbsp;</TD></TR></TABLE>
<P align="center">
<FONT size=2 face="serif">6</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD width="2%" align=right valign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="3%" align=right valign=top>&nbsp;</TD>
    <TD width="2%" align=right valign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
  </TR>
  <TR>
    <TD align=right valign=top>&nbsp;</TD>
    <TD width="3%" align=right valign=top nowrap><FONT size=2 face="serif">iv.</FONT></TD>
    <TD valign=top align=right nowrap><p>&nbsp;&nbsp;&nbsp;</p></TD>
    <TD valign="baseline"><P align="justify"><FONT size=2 face="serif">&#36;180,000 payable
          together with interest at the rate of prime plus 2% per annum commencing
          from the date of this Purchase Agreement </FONT><FONT size=2 face="serif">payable
          on or before February 15, 2009. Interest shall accrue as of December
          15, 2006, the effective date of this Agreement.</FONT></P></TD>
  </TR>
  <TR>
    <TD colspan=5>&nbsp;</TD>
  </TR>
</TABLE>
<P align="justify"><FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Agreement with TAPG, L.L.C.</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">In February 2004, we entered into an agreement (the &#147;Agreement&#148;) with TAPG, L.L.C. (&#147;TAPG&#148;), a Louisiana limited liability company, and formed
Safescript Northwest, Inc. (&#147;Safescript Northwest&#148;), 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. (&#147;APN&#148;). We initially owned 75% of APN, while TAPG owned the remaining 25%. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">The Agreement provides that TAPG will contribute start-up costs in the amount of &#36;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 &#36;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 &#36;190,000 for
the establishment of our second pharmacy location in Portland, Oregon. TAPG remains obligated to contribute an additional</FONT></P>
<P align="center">
<FONT size=2 face="serif">7</FONT></P>

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<p style="page-break-before:always"></p><PAGE>

<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Agreement with TAPG, L.L.C. (continued)</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">&#36;145,000 to satisfy their full contribution. We and APN requested that TAPG provide the &#36;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 &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">License Agreement with Network Technology, Inc. (&#147;RxNT&#148;)</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On March 15, 2004, we entered into a technology license agreement (&#147;Technology License&#148;) with Network Technology, Inc. (&#147;RxNT&#148;). The Technology License grants us
the right to use RxNT&#146;s prescribing technology under the brand name &#147;Assured
Script&#148; and enables us to accept prescriptions electronically transmitted to our pharmacies. Pursuant to the Technology License, we paid RxNT a licensing fee of
&#36;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 &#147;Assured Script&#148; 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 &#147;Assured Script&#148; product resulting in a royalty payment to RxNT.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">On March 17, 2007, we renewed this agreement for a period of three years and agreed to pay an annual license fee of &#36;54,000. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Other Subsidiaries:</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;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&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;s
consumers who require treatment for chronic pain commonly require specialized medical equipment and/or rehabilitative equipment. </FONT></P>
<P align="center">
<FONT size=2 face="serif">8</FONT></P>

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<p style="page-break-before:always"></p><PAGE>

<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Other Subsidiaries (continued):</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">Quotation on OTCBB</FONT></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;s common stock is quoted on the Over-the-Counter Bulletin Board (the &#147;OTCBB&#148;) under the symbol &#147;APHY.&#148;</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">B. Basis of Presentation</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;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
(&#147;GAAP&#148;) 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&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">These condensed consolidated financial statements should be read in conjunction with the Company&#146;s audited consolidated financial statements as of December 31, 2007, which are included in the Company&#146;s Annual Report on Form 10-KSB that was filed with the Securities and Exchange Commission (the &#147;SEC&#148;) on March 31, 2008.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Going Concern Considerations</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;23,809,730, recurring losses from operations and negative cash flow from operating activities for the three month period ended March
31, 2008 of &#36;306,179. The Company also had a negative working capital of &#36;5,145,424. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">These factors, among others, raise substantial doubt about the Company&#146;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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">In response to these problems, management has taken the following actions: </FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="serif">The Company is expanding its revenue base beyond the pain management sector to service customers that require</FONT> <FONT size=2 face="serif">prescriptions to treat cancer, psychiatric, and neurological
conditions.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">The Company is aggressively signing up new physicians, which will result in new patients.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">The Company is seeking investment capital.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">The Company retained additional sales personnel to attract business.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">We consolidated our two pharmacies in Portland, Oregon into a single operation. This consolidation is expected to allow</FONT> <FONT size=2 face="serif">us to further leverage our existing infrastructure and
is expected to result in a reduction of costs.</FONT></P></LI>
</UL>
<P align="center">
<FONT size=2 face="serif">9</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="serif">In March 2008, we entered into an accounts receivable purchase agreement whereby we have agreed to sell certain</FONT> <FONT size=2 face="serif">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)</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">In April 2008, we entered into a
    Credit Agreement for $2,000,000 (and possibly up to $3,000,000). (See Note
    10)</FONT></P>
</LI>
</UL>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</FONT></P>
<P align="justify">
<FONT size=2 face="serif">The summary of significant accounting policies presented below is designed to assist in understanding the Company&#146;s consolidated financial statements. Such financial statements and accompanying notes are the representations
of the Company&#146;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 (&#147;GAAP&#148;) in all material respects, and have been
consistently applied in preparing the accompanying consolidated financial statements. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Principles of Consolidation</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The consolidated financial statements for the quarter ended March 31, 2008, include the accounts of the Company&#146;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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Use of Estimates</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Risks and Uncertainties</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Governmental Regulations</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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&#146;s business.</FONT><I><FONT size=2 face="serif"> </FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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 </FONT></P>
<P align="center">
<FONT size=2 face="serif">10</FONT></P>
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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">The Company is also impacted by the Health Insurance Portability and Accountability Act of 1996 (&#147;HIPAA&#148;), 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 (&#147;transaction
standards&#148;); privacy of individually identifiable healthcare information (&#147;privacy standards&#148;); security and electronic signatures (&#147;security standards&#148;), 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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Cash and Cash Equivalents</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Accounts Receivable, non-current</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">At March 31, 2008, the Company had &#36;40,773 of receivables
which were over 180 days old. These receivables were primarily from Workmen&#146;s
Compensation Board of State of California (&ldquo;CA Board&#148;). These receivables
are due to disputes between the claimant and the employer, with the CA Board,
known as &ldquo;Green Liens&#148;.
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 </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Allowance for Doubtful Accounts Receivable</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;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 &#36;72,000 resulting in a balance of &#36;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 &#36;177,000.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Inventories</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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</FONT><I><FONT size=2 face="serif"> </FONT></I><FONT size=2 face="serif">is measured as the difference between the inventory cost and the estimated market value based on management&#146;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&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">11</FONT></P>

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<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Long-Lived Assets:</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company adopted Statement of Financial Accounting Standard (&ldquo;SFAS&#148;) No. 144, &ldquo;<I>Accounting for the Impairment or Disposal of Long-Lived
Assets&#148;, </I>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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">The Company&#146;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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Property and Equipment</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Intangible Assets</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">Statement of Financial Accounting standard (&ldquo;SFAS&#148;)
No. 142, &ldquo;<I>Goodwill and Other Intangible Assets</I>&#148;,
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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">12</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Intangible Assets (continued)</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Advertising</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Revenue Recognition</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;s insurance provider
is billed. Authorization, which assures payment, is obtained from the customer&#146;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&#146; insurance provider. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Share-based Employee Compensation</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company accounts for share based compensation under the provisions of statement of Financial Standards No. 123R, Share-Based Payments (&ldquo;SFAS No. 123 (R)&#148;), which was a revision of SFAS No. 123.</FONT><FONT face="serif"> </FONT><FONT size=2 face="serif"> 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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">13</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Basic and Diluted Loss per Common Share</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company computes loss per common share using SFAS
No. 128 &ldquo;<I>Earnings Per Share</I>&#148;. 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.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Income Taxes</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company accounts for income taxes under the provisions of SFAS No. 109, </FONT><I><FONT size=2 face="serif">&ldquo;Accounting for Income Taxes&#148;. </FONT></I><FONT size=2 face="serif">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&#146;s judgment of the
future realization of the deferred tax assets. </FONT></P>
<P align="center">
<FONT size=2 face="serif">14</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Fair Values of Financial Instruments</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">Management believes that the carrying amounts of the Company&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">The fair values of related party transactions are not determinable due to their related party nature.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">TPG, L.L.C. Agreement</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">
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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company owes $295,434 under the agreement.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">TAPG Note</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">In January 2005, the Company entered into an agreement with TAPG where TAPG was to advance &#36;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 &#36;45,000 up to a maximum of &#36;270,000. The note accrued interest at a fixed rate of 7% per annum. The note is secured by the assets of APN&#146;s pharmacies, in which the Company holds a controlling interest. However, the Company received only &#36;40,000 during 2005. The note matured in January 2006 and was not extended. As of September 30, 2007, the Company paid
&#36;20,000 payment on this note. The Company intends to retire the remaining balance due of &#36;20,000. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Convertible Loans</FONT></I><BR>
<BR>
<I><FONT size=2 face="serif">VVPH Inc. Loans </FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On January 21, 2006, the Company entered into two (2) loan agreements with VVPH Inc. Under the terms of the agreements, the Company received &#36;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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">On May 2, 2007, the Company entered into additional loan agreement with VVPH Inc. Under the terms of this loan agreement, the Company received &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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 &#36;0.40 or more than &#36;0.80. VVPH
Inc shall be entitled to piggyback registration rights upon exercise of this conversion right.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company owes &#36;620,000 on these notes plus interest in the amount of &#36;93,164. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Brockington Securities, Inc. Loans</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On April 19, 2007, the Company entered into a loan agreement with Brockington Securities Inc. (&#147;Brockington&#148;). Under the terms of the agreement the Company received &#36;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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">On August 1, 2007, the Company entered into an additional loan agreement with Brockington. Under the terms of this agreement the Company received &#36;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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">15</FONT></P>
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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS (continued)</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">Brockington is a related party because its President is also an officer and director of the Company.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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 &#36;0.40 or more than &#36;0.80.
Brockington shall be entitled to piggyback registration rights upon exercise of this conversion right.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company had repaid $50,000 and owes &#36;193,000  on these notes, plus interest
in the amount of &#36;17,106. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Sheth Loan</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On May 25, 2007, the Company entered into a loan agreement with Mr. Haresh C. Sheth, the Company&#146;s Chief Financial Officer and a member of its board of directors. Under the terms of this agreement, the Company received
&#36;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.</FONT><FONT face="serif"> </FONT></P>
<P align="justify">
<FONT size=2 face="serif">On August 1, 2007, the Company entered into another loan agreement with Mr. Haresh C. Sheth, the Company&#146;s Chief Financial Officer and a member of its board of directors. Under the terms of this agreement, the Company
received &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;s
common stock determined at a conversion price equal to the rolling seven (7) trading day weighted average closing bid price for the Company&#146;s common stock on the OTCBB (or such other equivalent market on which the Company&#146;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 &#36;0.40 or more than &#36;0.80 and Mr. Sheth shall be entitled to
piggyback registration rights upon exercise of this conversion right. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company had repaid the principal and owes &#36;3,954 towards interest on these notes. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Woodfield Capital Services Inc.</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;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 &#36;0.40 or more than
&#36;0.80. Woodfield Capital Services Inc. shall be entitled to piggyback registration rights upon exercise of this conversion right.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company owes &#36;150,000
on this note plus interest in the amount of &#36;13,084. </FONT></P>
<P align="justify">
<P align="center">
<FONT size=2 face="serif">16</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">3. NOTES PAYABLE TO RELATED PARTIES AND STOCKHOLDERS (continued)</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Weil Consulting</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">On August 14, 2007, the Company entered into a loan agreement with Weil Consulting (&#147;Weil&#148;). Under the terms of this agreement, the Company received a three-month loan of &#36;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 &#36;4,500 to the loan amount. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company owes &#36;104,500
on this loan plus interest in the amount of &#36;3, 597.</FONT><FONT face="serif"> </FONT></P>
<P align="justify">
<FONT size=2 face="serif">4. UNSECURED CONVERTIBLE DEBENTURE NOTES</FONT></P>
<P align="justify">
<FONT size=2 face="serif">During the three months ended March 31, 2008, the Company
raised &#36;250,000 by issuing unsecured convertible debentures carrying an interest
rate of 18% per annum. In addition debentures worth &#36;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&#146;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 &#36;0.40 and for every two shares
converted receive one warrant to  purchase one (1) share of common stock at an
exercise price of &#36;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 &#36;0.80 exercisable for three (3)
years after the conversion date. The total amount of debentures outstanding was
$4,083,500 and &#36;3,833,500 at March 31, 2008 and December 31, 2007, respectively.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">Interest on the outstanding debentures amounted to &#36;180,268 and &#36;110,633 for the three months ended March 31, 2008 and 2007, respectively.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">5. ACCOUNTS RECEIVABLE PURCHASE AGREEMENT</FONT></P>
<P align="justify">
<FONT size=2 face="serif">On March 1, 2008, the Company entered into an Accounts Receivable Purchase Agreement (the &#147;Purchase Agreement&#148;) with Horizon International Investments LLC (the &ldquo;Purchaser&#148;), 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 &#36;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.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, the Company owes &#36;300,222
on this loan including interest in the amount of &#36;12,228. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">6. COMMITMENTS AND CONTINGENCIES</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Operating Leases</FONT></I></P>
<P align="justify">
<FONT size=2 face="serif">The Company occupies buildings and retail space under operating lease agreements expiring on various dates through January 2012 with monthly payments ranging from approximately &#36;1,400 to &#36;2,800. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">Certain leases include future rental escalations and renewal options. </FONT></P>
<P align="center">
<FONT size=2 face="serif">17</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">6. COMMITMENTS AND CONTINGENCIES (continued)</FONT></P>
<P align="justify">
<FONT size=2 face="serif">As of March 31, 2008, future minimum payments under operating leases approximated the following: </FONT></P>
<div align="center">
  <TABLE width=40% border=0 cellpadding=0 cellspacing=0>
    <TR>
      <TD width="62%"></TD>
      <TD width="24%"></TD>
      <TD width="14%"></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
        <FONT size=2 face="serif">For the year ending</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=left nowrap>&nbsp;      </TD>
    </TR>
    <TR valign="bottom" bgcolor="#FFFFFF">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
        <FONT size=2 face="serif">December 31,</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=left nowrap>&nbsp;      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
        <FONT size=2 face="serif">2008</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap>
        <FONT size=2 face="serif">&#36;209,805</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom" bgcolor="#E5FFFF">
      <TD align=left nowrap>
        <FONT size=2 face="serif">2009</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap>
        <FONT size=2 face="serif">&#36;135,113</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
        <FONT size=2 face="serif">2010</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap>
        <FONT size=2 face="serif">&#36;75,732</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom" bgcolor="#E5FFFF">
      <TD align=left nowrap>
        <FONT size=2 face="serif">2011</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap>
        <FONT size=2 face="serif">&#36;60,802</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
        <FONT size=2 face="serif">2012</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
        <FONT size=2 face="serif"><font size=2 face="serif">&#36;</font>15,786</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom" bgcolor="#E5FFFF">
      <TD align=left nowrap>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=right nowrap style="border-bottom:2px double #000000;">
        <FONT size=2 face="serif"><font size=2 face="serif">&#36;</font>497,238</FONT>&nbsp;      </TD>
    </TR>
  </TABLE>
  <BR>
</div>
<P align="justify">
<FONT size=2 face="serif">Total rent expense for the three months ended March
31, 2008 and 2007 was &#36;80,993 and &#36;50,143 respectively.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">7. </FONT></I><FONT size=2 face="serif">LEGAL MATTERS</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">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&#146;s financial position or results of operations. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">8. LOSS PER COMMON SHARE</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<TABLE width=50% border=0 cellpadding=0 cellspacing=0>
<TR>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>

<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="4" align=left nowrap><div align="center"><font size=2 face="serif">Three
    Months Ended March</font> </div></TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD colspan="4" align=left nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><FONT size=2 face="serif">31,</FONT> </div></TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><FONT size=2 face="serif">2008</FONT> </div></TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">  <div align="center"></div></TD>
  <TD>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><FONT size=2 face="serif">2007</FONT> </div></TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>
<FONT size=2 face="serif">Numerator for basic and diluted loss per</FONT>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">common share:</FONT>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=2 face="serif">Net loss to common stockholders</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<font size=2 face="serif">(&#36;801,536</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<font size=2 face="serif">(&#36;776,922</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=6>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Denominator for basic and diluted loss per</FONT>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>
<FONT size=2 face="serif">common share:</FONT>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=2 face="serif">Weighted average number of shares</FONT>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#E5FFFF">
  <TD align=left nowrap>
<FONT size=2 face="serif">outstanding</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">54,800,951</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">53,474,060</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=6>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Basic and diluted loss per common share</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<font size=2 face="serif">(&#36;0.01</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<font size=2 face="serif">(&#36;0.01</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
</TABLE>
<P align="justify">
<FONT size=2 face="serif">9. INCOME TAXES</FONT>
<BR>
<P align="justify">
<FONT size=2 face="serif">Due to losses incurred for the three months ended March 31, 2008 there is no current provision for income taxes.</FONT></P>
<P align="justify">
<FONT size=2 face="serif">10. SUBSEQUENT EVENTS:</FONT></P>
<P align="justify">
<FONT size=2 face="serif">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 &#36;30,000 extendable by mutual consent.
The loan  has an interest rate of 10% per annum.</FONT></P>
<P align="center">
<FONT size=2 face="serif">18</FONT></P>

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<p style="page-break-before:always"></p><PAGE>
<P align="center" STYLE="border-bottom:2px solid #000000;">
<FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES<br>
FORMERLY KNOWN AS eRXSYS, INC.<br>
</FONT>
<FONT size=2 face="serif">NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS <br>
MARCH 31, 2008 </FONT></P>
<P align="justify">
<FONT size=2 face="serif">10. SUBSEQUENT EVENTS  (continued)</FONT></P>
<P align="justify">
<FONT size=2 face="serif">On April 29, 2008, the Company and certain of its subsidiaries, as joint and several borrowers (collectively, the &#147;Borrowers&#148;), entered into a Credit Agreement (the &#147;Credit Agreement&#148;) with Mosaic
Financial Services, LLC (&#147;Mosaic&#148;). Pursuant to the Credit Agreement, Mosaic has agreed to advance up to &#36;2,000,000 (or up to &#36;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 &#36;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 &#36;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.</FONT></P>


<P align="center">&nbsp;</P>
<P align="center"><FONT size=2 face="serif">19</FONT></P>
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<p style="page-break-before:always"></p><PAGE>

<P align="justify">
<B><FONT size=2 face="serif">ITEM 2. &nbsp;&nbsp;&nbsp;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL   CONDITION AND RESULTS OF OPERATIONS </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations included in the Company&#146;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. </FONT></P>
<P align="justify">
<FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We have included in this Quarterly Report certain &#147;forward-looking statements&#148; within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our business, operations and financial
condition. &#147;Forward-looking statements&#148; 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
&#147;could&#148;, &#147;expects&#148;, &#147;anticipates&#148;, &#147;objective&#148;, &#147;plan&#148;, &#147;may affect&#148;, &#147;may depend&#148;, &#147;believes&#148;, &#147;estimates&#148;, &#147;projects&#148; and similar words and phrases
are also intended to identify such forward-looking statements. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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 &#147;Risk Factors&#148; 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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> As used in this Quarterly Report, the terms &#147;</FONT><I><FONT size=2 face="serif">we</FONT></I><FONT size=2 face="serif">,&#148; &#147;</FONT><I><FONT size=2 face="serif">us</FONT></I><FONT size=2 face="serif">,&#148;
&#147;</FONT><I><FONT size=2 face="serif">our</FONT></I><FONT size=2 face="serif">,&#148; and &#147;</FONT><I><FONT size=2 face="serif">Assured Pharmacy</FONT></I><FONT size=2 face="serif">&#148; mean Assured Pharmacy, Inc. and our subsidiaries
unless otherwise indicated. </FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">Business Description</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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&#146; 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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In an attempt to further expand our business and improve our marketing plan, we retained the marketing firm of Rainmaker &amp; Sun Integrated Marketing, Inc. (&#147;</FONT><I><FONT size=2 face="serif">Rainmaker</FONT></I><FONT size=2 face="serif">&#148;). With the assistance of Rainmaker, we launched a new
</FONT></P>
<P align="center">
<FONT size=2 face="serif">20</FONT></P>

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<P align="justify">
<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<div align="center">
  <TABLE width=90% border=0 cellpadding=0 cellspacing=0>
    <TR>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
      <TD></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=center nowrap>
        <FONT size=2 face="serif">Three months ended</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=center nowrap>
        <FONT size=2 face="serif">Three months ended</FONT>&nbsp;      </TD>
    </TR>
    <TR valign="bottom" bgcolor="#FFFFFF">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
      <TD>&nbsp;  </TD>
      <TD align=center nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">March 31, 2008</FONT>&nbsp;  </TD>
      <TD>&nbsp;  </TD>
      <TD align=center nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">March 31, 2007</FONT>&nbsp;  </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
        <FONT size=2 face="serif">Total Number of Prescriptions</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=center nowrap style="border-bottom:1px solid #000000;">
        <FONT size=2 face="serif">27,144</FONT>&nbsp;      </TD>
      <TD>&nbsp;      </TD>
      <TD align=center nowrap style="border-bottom:1px solid #000000;">
        <FONT size=2 face="serif">19,210</FONT>&nbsp;      </TD>
    </TR>
  </TABLE>
  </div>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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. </FONT><B><FONT size=2 face="serif"> </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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&#146;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 &#36;10,209 in revenue
for compounded drugs. The gross profit margin on these prescriptions was approximately
36%.</FONT><B><FONT size=2 face="serif"> </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> On January 3, 2006, we incorporated Assured Pharmacy Plus, Corp. (&#147;</FONT><I><FONT size=2 face="serif">Plus Corp</FONT></I><FONT size=2 face="serif">.&#148;) as a
wholly-owned subsidiary to develop this opportunity. We entered into an arrangement with Affiliated Healthcare Administrators (&#147;</FONT><I><FONT size=2 face="serif">AHA</FONT></I><FONT size=2 face="serif">&#148;),
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&#146;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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">21</FONT></P>

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<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> Also on January 3, 2006, we incorporated Assured Pharmacy DME, Corp. (&#147;</FONT><I><FONT size=2 face="serif">DME</FONT></I><FONT size=2 face="serif">&#148;) 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&#146; 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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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.</FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">Results of Consolidated Operations</FONT></B></P>
<P align="justify">
<B><FONT size=2 face="serif">Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007</FONT></B></P>
<P align="justify">
<I><FONT size=2 face="serif">Revenues</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Our total revenue reported for the three months ended March 31, 2008 was &#36;4,162,670, a 52% increase from &#36;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 &#36;153 and &#36;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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The table set forth below shows our total reported gross revenue generated for each completed quarterly period during fiscal 2006, 2007 and 2008:</FONT></P>
<div align="center">
  <TABLE width=90% border=0 cellpadding=0 cellspacing=0>
    <TR>
      <TD></TD>
       <TD></TD>
       <TD></TD>
       <TD></TD>
       <TD></TD>
       <TD></TD>
       <TD></TD></TR>
    <TR valign="bottom">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
      <TD colspan="2" align=right nowrap style="border-bottom:1px solid #000000;">
        <div align="center"><FONT size=2 face="serif">2006</FONT>&nbsp;  </div></TD>
      <TD colspan="2" align=right nowrap style="border-bottom:1px solid #000000;">
        <div align="center"><FONT size=2 face="serif">2007</FONT>&nbsp;  </div></TD>
      <TD colspan="2" align=right nowrap style="border-bottom:1px solid #000000;">
        <div align="center"><FONT size=2 face="serif">2008</FONT>&nbsp;  </div></TD>
    </TR>
    <TR valign="bottom" bgcolor="#E5FFFF">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">Quarterly Period Ended March 31</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">1,515,645</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">2,733,683</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">4,162,670</FONT>&nbsp;  </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">Quarterly Period Ended June 30</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">1,894,976</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">3,305,891</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">N/A</FONT>&nbsp;  </TD>
    </TR>
    <TR valign="bottom" bgcolor="#E5FFFF">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">Quarterly Period Ended September 30</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">2,310,248</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">3,676,798</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">N/A</FONT>&nbsp;  </TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">Quarterly Period Ended December 31</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">2,176,249</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">&#36;</FONT>  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">4,207,115</FONT>&nbsp;  </TD>
      <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
      <TD align=left nowrap style="border-bottom:1px solid #000000;">
      <FONT size=2 face="serif">N/A</FONT>&nbsp;  </TD>
    </TR>
  </TABLE>
</div>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Cost of Sales</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The total cost of sales
for the three months ended March 31, 2008 was &#36;3,206,091 a 61% increase from &#36;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. </FONT></P>
<P align="center">
<FONT size=2 face="serif">22</FONT></P>

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<P align="justify">
<I><FONT size=2 face="serif">Gross Profit.</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Gross profit increased
to &#36;956,529, or approximately 23% of sales, for the three months ended March
31, 2008. This is an increase from a gross profit of &#36;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.</FONT><B><FONT size=2 face="serif"> </FONT></B></P>
<P align="justify">
<I><FONT size=2 face="serif">Operating Expenses</FONT></I></P>

<P align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Operating
    expenses for the three months ended March 31, 2008 were &#36;1,477,226, a
    7% increase from &#36;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 &#36;765,688, consulting and other compensation
    of &#36;142,957,
and selling, general and administrative expenses of &#36;568,581. Our operating
expenses for the  three months ended March 31, 2007 consisted of salaries and
related expenses of &#36;678,899, consulting and other compensation of &#36;148,636,
selling, general and administrative expenses of &#36;546,996.</FONT></P>

<P align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.
</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Other Income and Expense</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">During the three months
ended March 31, 2008, we reported other expenses in the amount of &#36;275,107,
compared to &#36;142,642 for the three months ended March 31, 2007. We incurred
interest  expense of &#36;279,236 during the three months ended March 31, 2008
as compared to &#36;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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Net Loss</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Net loss for the three months ended March 31, 2008 was &#36;801,536, compared to net loss of &#36;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.</FONT><FONT color="#ff0000" size=2 face="serif"> </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Our loss per common share for the three months ended March 31, 2008 was &#36;0.01, compared to a loss per common share of &#36;0.01 for the three months ended March 31, 2007. </FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">Liquidity and Capital Resources</FONT></B></P>
<P align="justify">
<FONT size=2 face="serif"> As of March 31, 2008, we had &#36;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 &#36;2,669,757 and
current liabilities of &#36;7,815,181 resulting in a working capital deficit of &#36;5,145,424. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Operating activities
used &#36;801483 in cash for the three months ended March 31, 2008. Our net loss
of &#36;801,536 less non-cash expenses of &#36;168,326 was the primary reason
for our  negative operating cash flow. Investing activities during the three
months ended March 31, 2008 used &#36;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 &#36;715,291. We received &#36;250,000 as proceeds
from the issuance of debentures and &#36;649,804 in advances under the new factoring
agreement which was offset by principal payments on notes payable in the amount
of &#36;34,533 and
repayment of &#36;150,000 of the factor advances.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 </FONT></P>
<P align="center">
<FONT size=2 face="serif">23</FONT></P>

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<P align="justify">
<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">Off Balance Sheet Arrangements</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As of March 31, 2008, there were no off balance sheet arrangements.</FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">Going Concern</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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 &#36;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 &#36;306,179. We also had
a negative working capital of &#36;5,145,424 as of March 31, 2008. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In response to these problems, management has taken the following actions: </FONT></P>
<UL>
<LI>
<P align="justify">
<FONT size=2 face="serif">We are expanding our revenue base beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions. </FONT></P>
<LI>
<P align="justify"><FONT size=2 face="serif">We are aggressively signing up new physicians.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">We are seeking investment capital.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">We retained additional sales personnel to attract business.</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="serif">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. </FONT></P>
</LI>
<LI><P align="justify"><FONT size=2 face="serif">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. </FONT></P>
<LI>
<P align="justify"><FONT size=2 face="serif">In April 2008, we entered into a Credit Agreement
for $2,000,000 (and possibly up to $3,000,000). (See Note 10)</FONT></P></LI>
</UL>
<P align="justify">
<B><FONT size=2 face="serif">Critical Accounting Policies</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In December 2001, the SEC requested that all registrants list their most &#147;critical accounting polices&#148; in the Management Discussion and Analysis. The SEC indicated that a
&#147;critical accounting policy&#148; is one which is both important to the portrayal of a company&#146;s financial condition and results, and requires management&#146;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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Inventories</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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&#146;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</FONT><I><FONT size=2 face="serif"> </FONT></I><FONT size=2 face="serif">is
 measured as the difference between the inventory cost and the estimated market
 value based on management&#146;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. </FONT></P>
<P align="center">
<FONT size=2 face="serif">24</FONT></P>

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<p style="page-break-before:always"></p><PAGE>

<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Long-Lived Assets</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We adopted Statement of Financial Accounting Standard (&#147;</FONT><I><FONT size=2 face="serif">SFAS</FONT></I><FONT size=2 face="serif">&#148;) No. 144, &#147;</FONT><I><FONT size=2 face="serif">Accounting for the Impairment or Disposal of Long-Lived Assets</FONT></I><FONT size=2 face="serif">,&#148; 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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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. </FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Intangible Assets</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Statement of Financial Accounting standard (&#147;</FONT><I><FONT size=2 face="serif">SFAS</FONT></I><FONT size=2 face="serif">&#148;) No. 142, &#147;</FONT><I><FONT size=2 face="serif">Goodwill
and Other Intangible Assets</FONT></I><FONT size=2 face="serif">,&#148; 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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.
</FONT></P>
<P align="justify">
<I><FONT size=2 face="serif">Revenue Recognition</FONT></I></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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&#146; insurance
provider is billed. Authorization, which assures payment, is obtained from the customers&#146; 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&#146; insurance provider. </FONT></P>
<P align="center">
<FONT size=2 face="serif">25</FONT></P>

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<P align="justify">
<B><FONT size=2 face="serif">ITEM 3.&nbsp;&nbsp;&nbsp; QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </FONT></B></P>
<P align="justify">
<FONT size=2 face="serif">  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. </FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM&nbsp;&nbsp;&nbsp; 4T.&nbsp;&nbsp;&nbsp; CONTROLS AND PROCEDURES</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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&#146;s rules and forms. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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&#146;s internal controls over financial reporting. </FONT></P>
<P align="center">
<FONT size=2 face="serif">26</FONT></P>

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<P align="justify">
<B><FONT size=2 face="serif">PART II.&nbsp;&nbsp;&nbsp;OTHER INFORMATION</FONT></B></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM 1. &nbsp;&nbsp;&nbsp;LEGAL PROCEEDINGS</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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.</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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. </FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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.</FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM 2.&nbsp;&nbsp;&nbsp; UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">During the three months ended March 31, 2008, the Company raised &#36;50,000 and &#36; 200,000 by issuing unsecured convertible debentures (&ldquo;Debentures&#148;) 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&#146;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&#146;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 &#36;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 &#36;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 &#36;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.</FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM 3.&nbsp;&nbsp;&nbsp;DEFAULTS UPON SENIOR SECURITIES </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">At March 31, 2008, 15%
of total convertible debentures borrowed by the Company in the aggregate principal
amount of &#36;625,000 were past due. </FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM 4.&nbsp;&nbsp;&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS </FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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. </FONT></P>
<P align="justify">
<B><FONT size=2 face="serif">ITEM 5. OTHER INFORMATION</FONT></B><BR>
<BR>
<FONT size=2 face="serif"> Appointment of Director on Board</FONT></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 &#36;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.</FONT></P>
<P align="center">
<FONT size=2 face="serif">27</FONT></P>

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<P align="justify">
<B><FONT size=2 face="serif">ITEM 6. &nbsp;&nbsp;&nbsp;EXHIBITS</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> The exhibits listed in the accompanying below are filed as part of this report.</FONT></P>
<P align="justify">&nbsp;</P>
<P align="justify">&nbsp;</P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
  <TD nowrap valign=top><font size=2 face="serif">Exhibit </font></TD>
  <TD nowrap valign=top>&nbsp;&nbsp;&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD nowrap valign=top><div style="border-bottom:1px solid #000000"><font size=2 face="serif">Number</font> </div></TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD><div style="border-bottom:1px solid #000000"><font size=2 face="serif">Description</font> </div></TD>
</TR>
<TR>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">31.1</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD>
<P align="justify"><FONT size=2 face="serif">Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</FONT></P>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">31.2</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD>
<P align="justify"><FONT size=2 face="serif">Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</FONT></P>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">32.1</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD>
<P align="justify"><FONT size=2 face="serif">Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></P>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">32.2</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD nowrap valign=top>&nbsp;</TD>
  <TD>
<P align="justify"><FONT size=2 face="serif">Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></P>  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR>
<TR>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD><font size=2 face="serif">[WE MAY ADD THE MOSAIC CREDIT AGREEMENT IF THE
    10-Q IS FILED PRIOR TO THE DUE DATE FOR THE 8-K] </font></TD>
</TR>
</TABLE>
<P align="center">&nbsp;</P>
<P align="center">
<B><FONT size=2 face="serif">SIGNATURES</FONT></B></P>
<P align="justify">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> 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. </FONT></P>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="33%">&nbsp;</td>
    <td width="11%">&nbsp;</td>
    <td width="56%"><FONT size=2 face="serif">ASSURED PHARMACY, INC.</FONT></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Date: May 9, 2008</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><p><font size=2 face="serif"><u>/s/ Robert DelVelcchio&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><br>

        <font size=2 face="serif">Robert DelVelcchio </font><br>
        <font size=2 face="serif">Chief Executive Officer </font><br>
      <font size=2 face="serif"> (Principal Executive Officer) </font></p></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font size=2 face="serif">Date: May 9, 2008</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size=2 face="serif"><u>/s/ Haresh Sheth&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><br>
      <font size=2 face="serif">Haresh Sheth </font><br>
      <font size=2 face="serif">Chief Financial Officer </font><br>
      <font size=2 face="serif">(Principal Financial and Accounting Officer)</font></td>
  </tr>
</table>
<P align="center"><FONT size=2 face="serif">28</FONT></P>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>c53410_ex31-1.htm
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<P align="center">
<B><FONT size=2 face="serif">Exhibit 31.1 </FONT></B><BR>
<B><FONT size=2 face="serif">CERTIFICATION</FONT></B></P>
<P align="left">
<FONT size=2 face="serif">I, Robert DelVecchio, certify that:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">1.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 of Assured Pharmacy, Inc. (the &#147;registrant&#148;);</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">2.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">3.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">4.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(a)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(b)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(c)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(d)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting.</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">5.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(a)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to
record, process, summarize and report financial information; and</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(b)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR></TABLE>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=47%></TD>
     <TD width=2%></TD>
     <TD width=50%></TD></TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Date: May 9, 2008</FONT>&nbsp;  </TD>
  <TD>&nbsp;
  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">/s/

    <FONT size=2 face="serif">Robert DelVecchio</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Robert DelVecchio</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;

  </TD>
  <TD>&nbsp;
  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Chief Executive Officer</FONT>&nbsp;
  </TD>
</TR>
</TABLE><BR>

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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>c53410_ex31-2.htm
<TEXT>

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<P align="center">
<B><FONT size=2 face="serif">Exhibit 31.2 </FONT></B><BR>
<B><FONT size=2 face="serif">CERTIFICATION</FONT></B></P>
<P align="left">
<FONT size=2 face="serif">I, Haresh Sheth, certify that:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">1.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 of Assured Pharmacy, Inc. (the &#147;registrant&#148;);</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">2.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">3.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">4.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(a)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(b)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(b)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(c)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting.</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
  <TD nowrap valign=top>
<FONT size=2 face="serif">5.</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100% colspan=2>
<P align="left"><FONT size=2 face="serif">The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(a)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to
record, process, summarize and report financial information; and</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>  <TD nowrap valign=top>
<FONT size=2 face="serif">(b)</FONT>&nbsp; &nbsp; &nbsp;   </TD>
  <TD width=100%>
<P align="left"><FONT size=2 face="serif">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</FONT></P>
  </TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR></TABLE>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=48%></TD>
     <TD width=2%></TD>
     <TD width=49%></TD></TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Date: May 9, 2008</FONT>&nbsp;  </TD>
  <TD>&nbsp;
  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">/s/ <FONT size=2 face="serif">Haresh
      Sheth</FONT>  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Haresh Sheth</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;

  </TD>
  <TD>&nbsp;
  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Chief Financial Officer</FONT>&nbsp;
  </TD>
</TR>
</TABLE><BR>

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<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>c53410_ex32-1.htm
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<P align="center">
<B><FONT size=2 face="serif">Exhibit 32.1</FONT></B></P>
<P align="center">
<B><FONT size=2 face="serif">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO <br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 </FONT></B></P>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif"> In connection with the Quarterly Report of Assured Pharmacy, Inc. (the &#147;Company&#148;) on Form 10-Q for the quarter ended March 31, 2008 filed with the Securities and Exchange Commission (the &#147;Report&#148;), I,
Robert DelVecchio, Chief Executive Officer of the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>
<div style="margin-left:20px"><P align="left">
<FONT size=2 face="serif">(1)</FONT><FONT size=2 face="sans-serif"> </FONT><FONT size=2 face="serif">The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and </FONT></P>
<P align="left">
<FONT size=2 face="serif">(2)</FONT><FONT size=2 face="sans-serif"> </FONT><FONT size=2 face="serif">The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the
dates presented and the consolidated result of operations of the Company for the periods presented. </FONT></P>
</div><TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=8%></TD>
     <TD width=38%></TD>
     <TD width=2%></TD>
     <TD width=48%></TD></TR>
<TR valign="bottom">
  <TD colspan="2" align=left nowrap>
<FONT size=2 face="serif">Date:&nbsp;&nbsp;&nbsp;May 9, 2008</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">/s/   <FONT size=2 face="serif">Robert
    DelVecchio</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Robert DelVecchio</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Chief Executive Officer of</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Assured Pharmacy, Inc.</FONT>&nbsp;  </TD>
</TR>
</TABLE>
<BR>
<P align="left">
<FONT size=2 face="serif">This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</FONT></P>
<P align="left">
<FONT size=2 face="serif">A signed original of this written statement required by Section 906 has been provided to Assured Pharmacy, Inc. and will be retained by Assured Pharmacy, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request. </FONT></P>

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<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>c53410_ex32-2.htm
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<P align="center">
<B><FONT size=2 face="serif">Exhibit 32.2</FONT></B></P>
<P align="center">
<B><FONT size=2 face="serif">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO <br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 </FONT></B></P>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif"> In connection with the Quarterly Report of Elite Pharmaceuticals, Inc. (the &#147;Company&#148;) on Form 10-Q for the quarter ended March 31, 2008 filed with the Securities and Exchange Commission (the &#147;Report&#148;),
I, Haresh Sheth, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>
<div style="margin-left:20px"><P align="left">
<FONT size=2 face="serif">(1)</FONT><FONT size=2 face="sans-serif"> </FONT><FONT size=2 face="serif">The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and </FONT></P>
<P align="left">
<FONT size=2 face="serif">(2)</FONT><FONT size=2 face="sans-serif"> </FONT><FONT size=2 face="serif">The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the
dates presented and the consolidated result of operations of the Company for the periods presented. </FONT></P>
</div><TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR>
     <TD width=2%></TD>
    <TD width=43%></TD>
    <TD width=2%></TD>
     <TD width=51%></TD></TR>
<TR valign="bottom">
  <TD width="2%" align=left nowrap>
<FONT size=2 face="serif">Date:</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">May 9, 2008</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;">/s/ <FONT size=2 face="serif">Robert
    DelVecchio</FONT> </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD width="2%" align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap><FONT size=2 face="serif">Robert DelVecchio</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD width="2%" align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Chief Financial Officer of</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#FFFFFF">
  <TD width="2%" align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Assured Pharmacy, Inc.</FONT>&nbsp;  </TD>
</TR>
</TABLE>
<BR>
<P align="left">
<FONT size=2 face="serif">This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. </FONT></P>
<P align="left">
<FONT size=2 face="serif">A signed original of this written statement required by Section 906 has been provided to Assured Pharmacy, Inc. and will be retained by Assured Pharmacy, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request. </FONT></P>

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