<SUBMISSION>
<ACCESSION-NUMBER>0000930413-08-004893
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20080630
<FILING-DATE>20080814
<DATE-OF-FILING-DATE-CHANGE>20080814
<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>081020651
</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>c54574_10q.htm
<TEXT>
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<title> </title>
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<div style='border:none;border-bottom:solid .05em;padding:0in 0in 1.0pt 0in'><div style='border:none;border-bottom:solid .25em;padding:0in 0in 1.0pt 0in'><p></p> </div> </div> <BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font STYLE='FONT-SIZE:16PT'>U.S. SECURITIES AND EXCHANGE COMMISSION</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font style='font-size:10pt'>Washington, D.C. 20549</font></b><br>
&nbsp;</p>
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<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font STYLE='FONT-SIZE:16PT'>FORM 10-Q</font></B><br>
&nbsp;</p>
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 <tr><td width="5.88%" nowrap="nowrap" valign="top"><p style=' margin-bottom:0pt; margin-top:12pt;'><b><font face=Wingdings>x</font></b></td><td valign="Top"><p style=' margin-bottom:0pt; margin-top:12pt;'><b><font style='font-size:10pt'>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </font></b></td></tr></table>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><b><font style='font-size:10pt'>For the quarterly period ended June 30, 2008</font></b></p>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><font style='font-size:10pt'>or</font></p>
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 <tr><td width="5.88%" nowrap="nowrap" valign="top"><p style=' margin-bottom:0pt; margin-top:12pt;'><b><font face=Wingdings>o</font></b></td><td valign="Top"><p style=' margin-bottom:0pt; margin-top:12pt;'><b><font style='font-size:10pt'>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></td></tr></table>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><b><font style='font-size:10pt'>For the transition period ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b><font style='font-size:10pt'>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><font style='font-size:10pt'>Commission File Number: 000-33165</font><br>
&nbsp;</p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><B><font STYLE='FONT-SIZE:18PT'>ASSURED PHARMACY, INC.</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font style='font-size:10pt'> (Exact name of registrant as specified in its charter)</font><br>
&nbsp;</p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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 <tr><td width="48">&nbsp;</td><td width="429" align=center valign=top nowrap><font style='font-size:10pt'><b>Nevada</b></font><br>
     <font style='font-size:8pt'>(State or other jurisdiction of incorporation or organization)</font><br></td>
<td align=center width="155" >&nbsp;</td><td width="276" align=center valign=top nowrap><font style='font-size:10pt'><b>98-0233878</b></font><br>  <font style='font-size:8pt'>(I.R.S. Employer Identification No.)</font></td>
<td width="49">&nbsp;</td>
 </tr></table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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 <tr><td width="50">&nbsp;</td><td width="428" align=center valign=top nowrap><font style='font-size:10pt'><b>17935 Sky Park Circle Suite F, Irvine, CA</b></font><br>
     <font style='font-size:8pt'>(Address of principal executive offices)</font><br></td>
<td align=center width="142" >&nbsp;</td><td width="285" align=center valign=top nowrap><font style='font-size:10pt'><b>92614</b></font><br>
  <font style='font-size:8pt'>(Zip Code) </font></td>
<td width="52">&nbsp;</td>
 </tr></table>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><font style='font-size:10pt'> <b>(949) 222-9971</b></font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font style='font-size:8pt'>(Registrant&#146;s telephone number, including area code)</font></p>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><font style='font-size:10pt'>(Former name, former address and former fiscal year, if changed since last report)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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.&nbsp;Yes </font><font face=Wingdings>x</font><font style='font-size:10pt'> No </font><font face=Wingdings>o</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Large accelerated filer </font><font face=Wingdings>o</font></p> </td>
        <td width="45%" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="29%" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Accelerated filer </font><font face=Wingdings>o</font></p> </td> </tr>
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        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;margin-right:0in;text-indent:-8.65pt;text-align:left;margin-top:8.0pt;margin-bottom: 0in;'><font style='font-size:10pt'>Non-accelerated filer </font><font face=Wingdings>o</font><font style='font-size:10pt'>&nbsp;&nbsp;(Do not check if a smaller reporting company)</font></p>
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                        <p style=' margin-left:8.65pt;margin-right:0in;text-indent:-8.65pt;text-align:left;margin-top:8.0pt;margin-bottom: 0in;'><font style='font-size:10pt'>Smaller reporting company </font><font face=Wingdings>x</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). </font><font STYLE='FONT-SIZE:10PT'>Yes </font><font face=Wingdings>o</font><font style='font-size:10pt'> No </font><font face=Wingdings>x</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><font STYLE='FONT-SIZE:10PT'>APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font STYLE='FONT-SIZE:10PT'>PROCEEDINGS DURING THE PRECEDING FIVE YEARS:</font>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><font STYLE='FONT-SIZE:10PT'>Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes </font><font face=Wingdings>o</font><font style='font-size:10pt'> No </font><font face=Wingdings>o</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><font STYLE='FONT-SIZE:10PT'>APPLICABLE ONLY TO CORPORATE ISSUERS:</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Indicate the number of shares outstanding of the common stock, $0.001 par value, as of August 11, 2008: 56,006,113</font></p>
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<p style=' margin-bottom:0pt; margin-top:16pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES </font></B></p>
<p style=' margin-bottom:0pt; margin-top:16pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>TABLE OF CONTENTS</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td colspan="3" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><b><font style='font-size:10pt'>Page No.</font></b></p> </td> </tr>
 <tr>
        <td colspan="3" valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td> </tr>
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        <td colspan="4" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>PART I - FINANCIAL INFORMATION  </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 1.</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Condensed Consolidated Financial Statements </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Condensed Consolidated Balance Sheets as of June 30 2008 (unaudited) and December 31, 2007 (audited)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>3</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Condensed Consolidated Statements of Operations for the three months ended June 30, 2008 and June 30, 2007 (unaudited)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>4</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2008 and June 30, 2007 (unaudited)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>5</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Notes to Condensed Consolidated Financial Statements</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>6</font></p> </td> </tr>
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        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 2.</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Management&#146;s Discussion and Analysis of Financial </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>19</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'> Condition and Results of Operations</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
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        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 3.</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Quantitative and Qualitative Disclosures </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>25</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>About Market Risk</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 4T. </font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Controls and Procedures</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>25</font></p> </td> </tr>
 <tr>
        <td colspan="4" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>PART II - OTHER INFORMATION</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>26</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 1.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Legal Proceedings</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>26</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 2.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Unregistered Sales of Securities and Use of Proceeds</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>26</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 3.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Defaults Upon Senior Securities</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>26</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 4.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Submission of Matters to a Vote of Security Holders</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>26</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 5.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Other Information</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>27</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Item 6.</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'> Exhibits</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>27</font></p> </td> </tr>
 <tr>
        <td colspan="4" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>SIGNATURES</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>28</font></p> </td> </tr>
 <tr>
        <td width="62" ></td>
                    <td width="1" ></td>
        <td width="19" ></td>
                    <td width="490" ></td>
        <td width="53" ></td> </tr> </table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:8pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><b><font style='font-size:10pt'>PART I &#150; FINANCIAL INFORMATION</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Item 1. Financial Statements</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 June 30, 2008 are not necessarily indicative of the results that can be expected for the full year. </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<!-- EEDocs PBStart--><P align="center"><font style='font-size:10pt'>2</font></P>
<hr NOSHADE="NOSHADE" ALIGN=CENTER WIDTH="100%" SIZE=4><P ALIGN=LEFT STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
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<TABLE width=100% border=0 cellpadding=0 cellspacing=0>
<TR>
     <TD width="64%"></TD>
     <TD width="6%"></TD>
     <TD width="1%"></TD>
     <TD width="10%"></TD>
     <TD width="1%"></TD>
     <TD width="5%"></TD>
     <TD width="1%"></TD>
     <TD width="10%"></TD>
     <TD width="2%"></TD>
</TR>
<TR valign="bottom">
  <TD colspan="5" align=center nowrap style="border-bottom:3px solid #000000;">&nbsp;</TD>
  <TD>&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 colspan="5" align=center nowrap>
<B><FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES</FONT></B>&nbsp;          </TD>
  <TD>&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 colspan="5" align=center nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">CONSOLIDATED BALANCE SHEET</FONT></B>&nbsp;          </div></TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=center nowrap>
    <div align="center"><B><FONT size=2 face="serif">June 30,</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD>  <div align="center"></div></TD>
  <TD align=right nowrap>  <div align="center"></div></TD>
  <TD align=center nowrap>
    <div align="center"><B><FONT size=2 face="serif">December 31,</FONT></B> </div></TD>
  <TD align=left nowrap>&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>
    <div align="center"><B><FONT size=2 face="serif">2008</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD>  <div align="center"></div></TD>
  <TD align=right nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap>
    <div align="center"><B><FONT size=2 face="serif">2007</FONT></B> </div></TD>
  <TD align=left nowrap>&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>
    <div align="center"><B><FONT size=2 face="serif">(UNAUDITED)</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD>  <div align="center"></div></TD>
  <TD align=right nowrap>  <div align="center"></div></TD>
  <TD align=center nowrap>
    <div align="center"><B><FONT size=2 face="serif">(AUDITED)</FONT></B> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=center nowrap>
<B><FONT size=2 face="serif">ASSETS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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>
<B><FONT size=2 face="serif">Current Assets</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" style='background:#EAF9E8;'>
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Cash</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">337,867</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">408,305</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Accounts receivable, net</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">1,869,015</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">2,167,969</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Inventories</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">858,917</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">440,354</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">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=2 face="serif">116,199</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD 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=2 face="serif">166,852</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">3,181,998</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">3,183,480</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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 align=left nowrap>&nbsp;  </TD>
  <TD>&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="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Accounts receivable - non-current, net</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">170,931</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">49,868</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 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=2 face="serif">392,855</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">373,961</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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=2 face="serif">607,816</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD 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=2 face="serif">607,816</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">4,353,600</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD style="border-bottom:3px double #000000;">&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=2 face="serif">4,215,125</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=center nowrap>
<B><FONT size=2 face="serif">LIABILITIES AND STOCKHOLDERS' DEFICIT</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Current Liabilities</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Accounts payable and accured expenses</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">2,406,121</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">2,306,415</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Unsecured convertible notes payable</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">4,218,500</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">3,833,500</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Payables 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=2 face="serif">2,497,508</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,136,630</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">9,122,129</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">7,276,545</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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=center nowrap>
<FONT size=2 face="serif">-</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">276,337</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Minority Interest</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">681,946</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">676,748</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 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 align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Stockholders' Deficit</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Preferred shares; par value &#36;0.001 per share;</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">authorized 5,000,000 shares; no preferred shares issued</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">or outstanding</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=center nowrap>
<FONT size=2 face="serif">-</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Common shares; par value &#36;0.001 per share;</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">150,000,000 shares authorized, 67,402,637 common shares issued and outstanding</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">67,402</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">65,659</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Treasury stock at cost, 10,858,658 shares</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(2,849,366</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(2,849,366</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Additional paid-in capital, net</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">22,241,022</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">21,777,397</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">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=2 face="serif">(24,909,534</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD 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=2 face="serif">(23,008,195</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Stockholders' 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=2 face="serif">(5,450,476</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD 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=2 face="serif">(4,014,505</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=9>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">4,353,600</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD style="border-bottom:3px double #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">&#36;</FONT>  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">4,215,125</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" style="border-top:3px solid #000000;">
  <TD colspan="5" align=left nowrap >&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="5" align=left style="border-top:2px solid #000000;"><p align="right"> <font size=2 face="serif">The
        accompanying notes are an integral part of the consolidated financial
    statements.</font></p></TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD>&nbsp;</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>
<A name="page_2"></A>

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<TR valign="bottom">
  <TD colspan="7" align=left nowrap style="border-top:2px solid #000000;"><div align="center"><b><font size=2 face="serif">ASSURED PHARMACY,
    INC AND SUBSIDIARIES </font></b><br>
        <b><font size=2 face="serif">CONSOLIDATED STATEMENTS OF OPERATIONS</font></b><br>
        <b><font size=2 face="serif">(UNAUDITED)</font></b></div></TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
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  <TD colspan="5">&nbsp;</TD>
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</TR>
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  <TD colspan="7" align=left nowrap>&nbsp;</TD>
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  <TD colspan="5">&nbsp;</TD>
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</TR>
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  <TD colspan="7" align=left nowrap>&nbsp;</TD>
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  <TD colspan="5">&nbsp;</TD>
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</TR>

<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap colspan=4 style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">Three Months Ended June 30,</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap colspan=4 style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">Six Months Ended June 30,</FONT></B> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">2008</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">2007</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">2008</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">2007</FONT></B> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">SALES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">3,573,793</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">3,305,891</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">7,736,413</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">6,039,574</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">COST OF SALES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">2,770,558</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">2,472,371</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">5,976,649</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">4,461,115</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">GROSS PROFIT</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">803,235</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">833,520</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,759,764</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,578,459</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">OPERATING EXPENSES</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Salaries and related expenses</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">683,818</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">615,218</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">1,449,506</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">1,294,117</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Consulting and other compensation</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">214,304</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">299,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">357,261</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">447,636</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Selling, general and administrative</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">620,647</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">495,285</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,189,228</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,042,281</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=center nowrap>
    <div align="left"><B><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;TOTAL OPERATING EXPENSES</FONT></B>&nbsp;  </div></TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,518,769</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">1,409,503</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">2,995,995</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">2,784,034</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">LOSS FROM OPERATIONS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(715,533</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(575,983</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(1,236,230</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(1,205,575</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">OTHER (EXPENSES) INCOME</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Interest expense</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(384,895</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(149,872</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(664,131</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(292,514</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Other income</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">165</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT  size=2 face="serif">-</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">4,294</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=center nowrap style="border-bottom:1px solid #000000;">
<FONT  size=2 face="serif">-</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=center nowrap>
    <div align="left"><B><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;TOTAL OTHER EXPENSES</FONT></B>&nbsp;  </div></TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(384,730</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(149,872</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(659,837</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(292,514</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">LOSS BEFORE MINORITY INTEREST</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(1,100,263</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(725,855</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(1,896,067</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(1,498,089</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">MINORITY INTEREST</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">460</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(7,571</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(5,272</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<FONT size=2 face="serif">(12,259</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">NET LOSS</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(1,099,804</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(733,426</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(1,901,340</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(1,510,348</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Basic and diluted loss per common share</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(0.02</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(0.01</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(0.03</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">(0.03</FONT>  </TD>
  <TD align=left valign="top" nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=14>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Basic and diluted weighted average number of common</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size=2 face="serif">shares outstanding</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">55,069,109</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">53,772,458</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">54,935,030</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">  <div align="left"></div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">53,524,876</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap style="border-top:2px double #000000;"><div align="right"><font size=2 face="serif">The accompanying
    notes are an integral part of the consolidated financial statements.</font></div></TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5">&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
</TABLE>
<BR>
<P align="left">&nbsp;</P><BR>
<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>
<A name="page_3"></A>

<TABLE width=100% border=0 cellpadding=0 cellspacing=0>
<TR>
     <TD width="62%"></TD>
     <TD width="7%"></TD>
     <TD width="1%"></TD>
     <TD width="12%"></TD>
     <TD width="2%"></TD>
     <TD width="1%"></TD>
     <TD width="12%"></TD>
     <TD width="2%"></TD></TR>
<TR valign="bottom">
  <TD align=center nowrap colspan=7>
<B><FONT size=2 face="serif">ASSURED PHARMACY, INC. AND SUBSIDIARIES (formerly known as eRxsys, Inc.)</FONT></B>            </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=center nowrap colspan=7>
<B><FONT size=2 face="serif">CONSOLIDATED STATEMENT OF CASH FLOWS</FONT></B>            </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=center nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="serif">(UNAUDITED)</FONT></B>&nbsp;                  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&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 style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap colspan=4 style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">SIX MONTHS ENDED JUNE 30</FONT></B> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&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;">
    <div align="center"><B><FONT size=2 face="serif">2008</FONT></B> </div></TD>
  <TD align=left nowrap>  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">  <div align="center"></div></TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><B><FONT size=2 face="serif">2007</FONT></B> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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 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="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Net loss</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(1,901,340</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(1,510,348</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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 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=2 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=2 face="serif">113,387</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">85,102</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Amortization of debt discount</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">18,375</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">204,766</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Amortization of deferred consulting fees</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">126,897</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">271,039</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Issuance of common stock for debenture interest</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">217,797</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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=2 face="serif">5,200</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">12,259</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 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>
    <div align="center"><FONT size=1 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">120,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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>
    <div align="center"><FONT size=1 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(70,000</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap><font size="2">Beneficial conversion of debenture notes</font> </TD>
  <TD>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=right nowrap><font size="2">110,674</font> </TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=center nowrap>-</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Provision for doubtful accounts</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">72,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<I><FONT size=2 face="serif">Changes in operating assets and liabilities:</FONT></I>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&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>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Accounts receivable</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">105,891</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(601,226</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Inventories</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(418,562</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(499,042</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">Prepaid expenses and other current assets</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">32,277</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(23,152</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size=2 face="serif">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=2 face="serif">99,707</FONT>  </TD>
  <TD align=left nowrap>&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=2 face="serif">1,056,461</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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;">
<B><FONT size=2 face="serif">(1,417,697</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="serif">(954,141</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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 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=2 face="serif">Purchases of property and equipment</FONT>&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=2 face="serif">(132,283</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&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=2 face="serif">(40,770</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 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;">
<B><FONT size=2 face="serif">(132,283</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="serif">(40,770</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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 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="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Advances from factor</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">649,804</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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=2 face="serif">(649,804</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Proceeds from the issuance of 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=2 face="serif">1,154,500</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">193,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 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=2 face="serif">(69,958</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(29,721</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Proceeds from issuance of convertible debentures</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">400,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">600,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Principal repayments on debentures</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(15,000</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Issue of common stock on conversion of 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=2 face="serif">10,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
    <div align="center"><FONT  size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<B><FONT size=2 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;">
<B><FONT size=2 face="serif">1,479,542</FONT></B>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="serif">763,279</FONT></B>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Net decrease in cash</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<B><FONT size=2 face="serif">(70,438</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
<B><FONT size=2 face="serif">(231,631</FONT></B>  </TD>
  <TD align=left nowrap>
<B><FONT size=2 face="serif">)</FONT></B>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bordercolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 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=2 face="serif">408,305</FONT>  </TD>
  <TD 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=2 face="serif">466,404</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<B><FONT size=2 face="serif">Cash at end of period</FONT></B>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">337,867</FONT>  </TD>
  <TD align=left style="border-bottom:3px double #000000;">&nbsp;</TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
<FONT size=2 face="serif">234,773</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="serif">Supplemental disclosure of cash flow information-</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&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>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Cash paid during the period for:</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>&nbsp;  </TD>
  <TD align=left nowrap>&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>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Interest</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="right"><FONT size=2 face="serif">47,986</FONT> </div></TD>
  <TD align=left style="border-bottom:3px double #000000;">&nbsp;</TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left>
<FONT size=2 face="serif">Income taxes</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left style="border-bottom:3px double #000000;">&nbsp; </TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap style="border-bottom:3px double #000000;">
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=8>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">NON-CASH INVESTING AND FINANCING ACTIVITIES :</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>  <div align="left"></div></TD>
  <TD align=left nowrap>&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>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Issuance of common stock for services rendered</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">97,500</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">155,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Issuance of common stock in lieu of debenture note interest</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">217,798</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">90,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom" bgcolor="#EAF9E8">
  <TD align=left nowrap>
<FONT size=2 face="serif">Issue of common stock on conversion of debentures</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">10,000</FONT>  </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Return of common stock due to termination of contract</FONT>&nbsp;  </TD>
  <TD>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
    <div align="center"><FONT size=2 face="serif">-</FONT> </div></TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=right nowrap>
    <div align="left"><FONT size=2 face="serif">&#36;</FONT> </div></TD>
  <TD align=right nowrap>
<FONT size=2 face="serif">(70,000</FONT>  </TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">)</FONT>&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>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD height="24" align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&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>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=right nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
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  <TD colspan="4" align=left nowrap style="border-top:2px solid #000000;"><div align="right"><font size=2 face="serif">The accompanying
    notes are an integral part of the consolidated financial statements.</font></div></TD>
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<FONT size=2 face="serif">5</FONT></P>
<P align="left">&nbsp;</P>

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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>1. ORGANIZATION AND BASIS OF PRESENTATION </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>A. Organization:</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Assured
    Pharmacy, Inc. (&#147;Assured Pharmacy<sup>&#148;</sup>, the &#147;Company&#148;, &#147;we&#148; or &#147;us&#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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company currently has six operating pharmacies. Four of those pharmacies are wholly owned and the Company has a 94.8% ownership interest in the two other pharmacies. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company commenced operations at its Las Vegas, Nevada pharmacy during the first quarter of 2008. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In February 2008, the Company consolidated the operations of its two pharmacies in Portland, Oregon, into one location. This consolidation is expected to allow it to further leverage its existing infrastructure and is expected to result in a reduction of costs. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The
    Company anticipates opening one more pharmacy in Oak Lomita, California during
    2008. The Company has executed a lease agreement for the Oak Lomita pharmacy
and is awaiting the requisite licenses. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Agreement with TPG, L.L.C.</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On April 24, 2003, the Company entered into an agreement with TPG, L.L.C. (&#147;TPG<sup>&#148;</sup>) 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 it established. In exchange for contributing financing in the amount of $230,000 per pharmacy location, TPG acquired a 49% ownership interest in each pharmacy established under this agreement and the Company owned the remaining 51%. Under the terms of the agreement with TPG, the Company&#146;s contribution to establish pharmacies primarily consisted of the right to utilize its intellectual property rights and to provide sales and marketing services.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Assured Pharmacies, Inc. (&#147;API<sup>&#148;</sup>) 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, the Company owned 51% of API and TPG owned the remaining 49%.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Under
    this joint venture, the Company established its first pharmacy in Santa Ana,
    California and its second pharmacy in Riverside, California. On December
    15, 2006, the Company entered into a Purchase Agreement with TPG and acquired
    all of its right, title and interest in 49 shares of common stock of API
    for $460,000 and the issuance of 50,000 shares of its common stock. Of the
    $460,000, $15,000 was paid on December 15, 2006 and the balance is payable
    over the period ending February 15, 2009. (See Note 3)</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As a result of this acquisition, the Company increased its ownership interest in API to 100% making it a wholly-owned subsidiary and consequently resulting in the termination of its joint venture with TPG.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Agreement with TAPG, L.L.C.</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In February 2004, the Company entered into an agreement (the &#147;Agreement<sup>&#148;</sup>) 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
changed its name to Assured Pharmacies Northwest, Inc. (&#147;APN&#148;). The Company initially owned 75% of APN, while TAPG owned the remaining 25%.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Agreement provides that TAPG will contribute start-up costs in the amount of $335,000 per pharmacy location established not to exceed five pharmacies. The Company&#146;s contribution under the Agreement consists of granting the right to utilize its intellectual property rights and to provide sales and marketing services. Between March and October 2004, APN received from TAPG start-up funds in the amount of $854,213 as its capital contribution for three pharmacies. This capital contribution funded the opening of a pharmacy in Kirkland, Washington in August 2004 and another pharmacy in Portland, Oregon in September 2004. Included in these monies was a partial capital contribution in the amount of $190,000 for the establishment of its second pharmacy location in Portland, Oregon. TAPG remains obligated to contribute an additional $145,000 to satisfy their full contribution. The Company and APN
requested that TAPG provide the $150,787 balance of its full capital contribution. TAPG is also obligated to contribute their proportionate share of the start-up costs in excess of their initial capital contribution of $335,000 per pharmacy. The Agreement defines start-up costs as any costs associated with the opening of any open pharmacy location that accrue within one hundred eighty days following the opening of that particular pharmacy.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Following
    the start-up period, the Company 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,
    the Company increased its ownership interest in APN from 75% to 94.8%. TAPG
owns the remaining 5.2% interest.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>License Agreement with Network Technology, Inc. (&#147;RxNT&#148;)</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On March 15, 2004, the Company entered into a technology license agreement (&#147;Technology License<sup>&#148;</sup>) with Network Technology, Inc. (&#147;RxNT<sup>&#148;</sup>). The Technology License grants the Company the right to use RxNT&#146;s prescribing technology under the brand name &#147;Assured Script<sup>&#148;</sup> and enables the Company to accept prescriptions electronically transmitted to our pharmacies. Pursuant to the Technology License, the Company paid RxNT a licensing fee of $100,000 and is 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 the Company is in the business of owning and operating
pharmacies, management does not anticipate that it would make any sales of the &#147;Assured Script&#148; product resulting in a royalty payment to RxNT.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On March 17, 2007, the Company renewed this agreement for a period of three years and agreed to pay an annual license fee of $54,000.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Other Subsidiaries:</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During
    the third quarter of 2006, the Company  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 style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On August 9, 2007 the Company incorporated APHY Henderson Inc. as a wholly-owned subsidiary in anticipation of opening a new pharmacy in Henderson, Nevada. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Quotation on OTCBB</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company&#146;s common stock is quoted on the Over-the-Counter Bulletin Board (the &#147;OTCBB<sup>&#148;</sup>) under the symbol &#147;APHY.<sup>&#148;</sup> </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>B. Basis of Presentation</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company&#146;s management, without audit, prepared the condensed consolidated financial statements for the three and six months ended June 30, 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 and six months ended June 30, 2008 and 2007 are not necessarily indicative of the results of operations for the year ending
December 31, 2008. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Going Concern Considerations</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 June 30, 2008, the Company had
    an accumulated deficit of $24,909,534, recurring losses from operations and
    negative cash flow from operating activities for the six month period ended
    June 30, 2008 of $1,417,697. The Company also had a negative working capital
    of $5,940,131. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></p>
            <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>1. ORGANIZATION AND BASIS OF PRESENTATION (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In response to these problems, management has taken the following actions:</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Company is expanding its revenue base beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions.</font></p> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Company is aggressively signing up new physicians.</font></p> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Company is seeking investment capital. </font></p> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Company retained additional sales personnel to attract business.</font></p> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The
                            Company consolidated two pharmacies in Portland,
                            Oregon into a single operation. 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> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>In April 2008, the Company entered into a Credit Agreement for $2,000,000, which can be extended up to $3,000,000. (See Note 3)</font></p> </td> </tr></table>
</div>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>In July and August 2008, the Company raised $1,337,500 through the issuance of convertible notes. (See Note 11)</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Principles of Consolidation</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The consolidated financial statements for the quarter ended June 30, 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Use of Estimates</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Risks and Uncertainties</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></p>
            <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
</div>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During the six months ended June 30, 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 its inventory from other distributors at competitive prices and upon competitive payment terms if its relationship with its primary wholesale drug vendor was terminated, there can be no assurance that the termination of such relationship would not adversely affect the Company.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Governmental Regulations</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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; privacy of individually identifiable
    healthcare information; security and electronic signatures, as well 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Cash and Cash Equivalents</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Accounts Receivable, non-current </font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>At June 30, 2008, the Company had $335,244 of receivables which were primarily from Workmen&#146;s Compensation Board of State of California (&#147;CA Board&#148;). These receivables are due to disputes between the claimant and the employer, with the CA Board, known as &#147;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. As of June 30, 2008, management has provided $164,313 as an allowance for doubtful accounts against these non-current receivables.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font></p>
            <p style=' margin-left:0pt;margin-right:-1.2pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></p>
            <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:0pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr></table>
</div>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Allowance for Doubtful Accounts Receivable</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company&#146;s receivables are from 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 June 30, 2008, management has not increased the allowance for doubtful accounts. As of June 30, 2008 the allowance for doubtful accounts was $249, 597, of which $164, 313 pertain to the non current receivables. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Inventories</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Inventories are stated at the lower of cost (first-in, first-out method) or estimated market value, and consist primarily of pharmaceutical drugs. Market value 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 style='font-size:10pt'> </font></i><font style='font-size:10pt'>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 June 30, 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Long-Lived Assets:</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company adopted Statement of Financial Accounting Standard (&#147;SFAS&#148;) No. 144, &#147;</font><i><font style='font-size:10pt'>Accounting for the Impairment or Disposal of Long-Lived Assets&#148;, </font></i><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Property and Equipment</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 <font style='font-size:10pt'>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></font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Intangible Assets</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>SFAs
    No. 142, &#147;<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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Advertising</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The
    Company expenses the cost of advertising, including marketing and promotions,
    when incurred. Advertising costs for the three months ended June 30, 2008
    and 2007 were $8,423 and $0 respectively. When incurred, such expenses are
    included in selling, general and administrative expenses. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Revenue Recognition</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 customer&#146;s insurance provider.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Share-based Employee Compensation</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The
    Company accounts for share based compensation under the provisions of statement
of SFAS 123R, &#147;<i>Share-Based Payments</i>&#148;, which was a
revision of SFAS No. 123. SFAS 123 (R) requires all new share-based payments
to employees, including grants of employee stock options, to be recognized in
the financial statements based on their fair values. Pro forma disclosure of
the fair value of new share-based payments is no longer an alternative to financial
statement recognition. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Basic and Diluted Loss per Common Share</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company computes loss per common share using SFAS No. 128 &#147;</font><i><font style='font-size:10pt'>Earnings Per Share</font></i><font style='font-size:10pt'><sup>&#148;</sup></font><i><font style='font-size:10pt'>. </font></i><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Income Taxes</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company accounts for income taxes under the provisions of SFAS No. 109, </font><i><font style='font-size:10pt'>&#147;Accounting for Income Taxes&#148;. </font></i><font style='font-size:10pt'>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>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Fair Values of Financial Instruments</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 June 30, 2008 and 2007 due to their short-term nature.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Management also believes that the June 30, 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The fair values of related party transactions are not determinable due to their related party nature. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>3. PAYABLES TO RELATED PARTIES AND STOCKHOLDERS </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>TPG, L.L.C Agreement</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 and monthly installments of $15,000 were paid
    from December 2007 through June 2008. The balance of the amount is payable
    in monthly installments of $15,000, 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.
    The performance of obligations of the Company under the Purchase Agreement
    are secured by the Company&#146;s granting of a security interest in the
    49 shares of API common stock.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the outstanding balance was
$260,009 under the Purchase Agreement. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>TAPG Note</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In
    January 2005, the Company entered into  an agreement with TAPG where TAPG
    was to advance up to $270,000, payable in installments of $45,000 each, in
    connection with establishing  pharmacies in the Pacific Northwest of the
    United States (See Note 1). TAPG only advanced $40,000 under the agreement.
    The principal advanced accrues  interest at 7% per annum, payable in arrears
    quarterly. The loan is secured by the Company&#146;s assets exclusive of
    inventory and accounts receivable,  and is further secured by the Company&#146;s
    interest in APN. If the Company has obtained capital from third party sources
    in an amount  sufficient to meet its cash flow requirements and taken steps
    necessary to contain its operating costs, then TAPG may elect  to convert
    the principal due under the note at $0.60 per share. The loan matured in
    January 2006 and was not extended. As of January 30, 2008,  the Company paid
    $20,000 on this loan and intends to retire the remaining balance of $20,000
    plus accrued interest by the end of the year.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Convertible Loans</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>VVPH Inc. Loans </font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On January 21, 2006, the Company entered
into a loan agreement with VVPH Inc. (&#147;VVPH&#148;), a stockholder of the Company. Under the terms of the agreement, the
Company borrowed $400,000 for a 12 month term extendable for an additional twelve 12 month period by mutual consent. The
loan bears interest of 15% per annum to be paid in monthly installments. In January 2007, the parties entered into a
modification and extension agreement to extend the maturity date of this loan to January 2008 and modify the interest
rates on these loans to 12% per annum on a going forward basis. Subsequently, the maturity date was further extended to September 2008.</font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On March 8, 2006, the Company entered into a
 further loan agreement with VVPH. Under the terms of the agreement, the Company borrowed $200,000 for a 12 month term extendable
for an additional twelve 12 month period by mutual consent. The loan bears interest of 15% per annum to be paid in monthly installments.
In March 2007, the parties entered into a modification and extension agreement to extend the maturity date of this loan to March 2008
 and modify the interest rates on these loans to 12% per annum on a going forward basis. Subsequently, the maturity date was further
extended to September 2008.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    May 2, 2007, the Company entered into an additional loan agreement with VVPH.
    Under the terms of this loan agreement, the Company borrowed $75,000 for
    a 12 month term extendable for an additional 12 month period
    by mutual consent. The loan bears interest of 12% per annum which is
    to be paid in monthly installments. In May 2008, the maturity date was extended
to September 2008 at the same rate of interest. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    August 15, 2007, the Company entered into an additional loan agreement with
    VVPH. Under the terms of this loan agreement, the Company borrowed $50,000
    for a 12 month term extendable for an additional 12 month period by mutual consent.
The loan bears interest of 12% per annum which is to be paid in monthly installments. </font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
<hr noshade="noshade">
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>3. PAYABLES TO RELATED PARTIES AND STOCKHOLDERS (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    October 23, 2007, the Company entered into an additional loan agreement with
    VVPH. Under the terms of this loan agreement, the Company borrowed a 12
    month loan of $70,000 extendable for an additional 12 month period by
    mutual consent. The loan bears interest of 12% per annum to be paid
in monthly installments. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Pursuant
    to the terms of these agreements, VVPH has a continuing conversion right
    during the term to convert all or a portion of the then outstanding amount
    of the loan into a number of shares of the Company&#146;s common stock
    determined at a conversion price equal to the rolling 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 $0.40 or more than $0.80. The loan agreements
    also grant VVPH piggyback registration rights upon exercise of this conversion
right. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the Company repaid $175,000 on the above loans leaving an outstanding principal balance on these loans of $620,000 plus accrued interest of $111,764.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Brockington Securities, Inc. Loans</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    April 19, 2007, the Company entered into a loan agreement with Brockington
    Securities Inc. (&#147;Brockington&#148;). Brockington is a related party
    because its president is also an officer and director of the Company. Under
    the terms of the agreement the Company borrowed $93,000 for a 12
    month term extendable for an additional 12 month period
    by mutual consent. The loan bears interest of 12% per annum to be paid
    in monthly installments. This loan has been extended to September 30, 2008
    upon the same terms.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    August 1, 2007, the Company entered into an additional loan agreement with
    Brockington. Under the terms of this agreement the Company borrowed $50,000
    for a 12 month term extendable for an additional 12 month period by mutual consent.
The loan bears interest of 12% per annum to be paid in monthly installments. This loan has been extended
    to September 30, 2008 upon the same terms.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    November 19, 2007, the Company entered into an additional loan agreement
    with Brockington. Under the terms of this loan agreement, the Company borrowed
    $100,000 for a 12 month term 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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Pursuant
    to the terms of these agreements, Brockington has a continuing conversion
    right during the term to convert all or a portion of the then outstanding
    amount of the loan into a number of shares of the Company&#146;s common
    stock determined at a conversion price equal to the rolling 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 $0.40 or more than $0.80. The loan
    agreements also grant Brockington piggyback registration rights upon exercise
    of this conversion right. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In
    addition, on April 2, 2008, the Company entered into an additional loan agreement
    with Brockington. Under the terms of this loan agreement, the Company borrowed
    $30,000 for a 3 month term bearing interest of 10% per annum.</font><b><font face="Arial" style='font-size:10pt'> </font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As
    of June 30, 2008, the Company repaid $80,000 on the above Brockington loans
    leaving an outstanding principal balance of $193,000 plus accrued interest
    of $23,324. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Sheth Loan</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    May 25, 2007, the Company entered into a loan agreement with Mr.&nbsp;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 borrowed
    $25,000 for a 12 month term extendable for an additional
    12 month period by mutual consent. The loan bears interest of 12%
    per annum to be paid in monthly installments.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    August 1, 2007, the Company entered into another loan agreement with Mr.&nbsp;Sheth.
    Under the terms of this agreement, the Company borrowed $25,000 for a 12 month term extendable
for an additional 12 month period by mutual consent. The loan bears interest of 12% per annum to be paid in monthly installments.</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
<hr noshade="noshade">
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>3. PAYABLES TO RELATED PARTIES AND STOCKHOLDERS (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    October 23, 2007, the Company entered into another loan agreement with Mr.&nbsp;Sheth.
    Under the terms of this agreement, the Company borrowed $50,000 for a 12 month term extendable for an additional 12
month period by mutual consent. The loan bears interest of 12% per annum to be paid in monthly installments.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    November 17, 2007, the Company entered into another loan agreement with Mr.&nbsp;Sheth.
    Under the terms of this agreement, the Company borrowed $100,000 for a 12 month term extendable for an additional 12 month period by
    mutual consent. The loan bears interest of 12% per annum to be paid in monthly installments. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Pursuant
    to the terms of these agreements, Mr.&nbsp;Sheth has a continuing conversion
    right during the term to convert all or a portion of the then outstanding
    amount of the loan into a number of shares of the Company&#146;s common stock
    determined at a conversion price equal to the rolling 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 $0.40 or more than $0.80. The loan agreements
    also grant Mr. Sheth piggyback registration rights upon exercise of this
    conversion right. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the Company had repaid the principal on all these loans and owes $3,954 for accrued interest. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Woodfield Capital Services Inc.</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    July 10, 2007, the Company entered into a loan agreement with Woodfield Capital
    Services Inc. (&#147;Woodfield&#148;). Woodfield is a related
    party to this transaction, as its president is an officer and director of
    the Company. Under the terms of this agreement, the Company borrowed $150,000
    for a 12 month term at an interest rate of 12% per annum, with interest
    payable on a monthly basis. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Pursuant
    to the terms of this agreement, Woodfield 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 7 trading day weighted
average closing bid price for the common stock on the OTCBB (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 agreement
provides that the conversion price shall not be less than $0.40 or more than
$0.80. The loan agreement also grants Woodfield piggyback registration rights
upon exercise of this conversion right. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the outstanding principal of this loan is $150,000 plus accrued interest of $17,085. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Mosaic Financial Services LLC</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 $2,000,000
    (or up to $3,000,000 in certain circumstances) to the Borrowers. Amounts
    advanced under the Credit Agreement bear interest at the rate of 14% per
    annum and are due and payable on April 30, 2009. Each of the Borrowers has
    granted Mosaic a security interest in substantially all of its assets (including,
    in the case of the Company, the shares of common stock of each of the subsidiaries
    party to the Credit Agreement) as security for the repayment of the obligations
of the Borrowers under the Credit Agreement. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Mosaic is an affiliate of Mosaic Capital Advisors and the Mosaic Private Equity family of funds. The Managing Partner of Mosaic Capital Advisors and the Mosaic Private Equity family of funds is also a director of the Company. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the outstanding principal under the Credit Agreement is $650,000 plus accrued interest of $14,661. </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
<hr noshade="noshade">
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>3. PAYABLES TO RELATED PARTIES AND STOCKHOLDERS (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Weil Consulting </font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    August 14, 2007, the Company entered into a loan agreement with Weil Consulting
    (&#147;Weil&#148;), a beneficial owner of more than 5% of the Company&#146;s
    outstanding common stock. Under the terms of this agreement, the Company
    received a 3 month loan of $100,000 at an interest rate of 18% per annum,
    with interest payable on a monthly basis. The Company extended the loan to
    June 30, 2008 at an interest rate of 9% per annum, after adding accrued interest
    in the amount of $4,500 to the loan amount. In June 2008, the parties entered
    into a new extension agreement to further extend the maturity dates of this
    loan to September 2008 at the same rate of interest. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the outstanding principal was $104,500 plus accrued interest of $5,948. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Pinewood  Trading Fund LP</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    May 27, 2008, the Company entered into a loan agreement with Pinewood Trading
    Fund LP (&#147;Pinewood&#148;), a stockholder of the Company. Under the terms
    of this agreement, the Company received a 3 month loan of $500,000 at an
    interest rate of 13% per annum, with interest payable monthly. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, the outstanding principal was $500,000. </font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>To
    the extent that any of the above loan agreements provide that the interest
    is payable monthly, management has secured the agreement of the lenders that
    interest payments are to accrue and shall be payable together with principal.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>4. COMMON STOCK </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During the three months ended  June 30, 2008, the Company issued 500,000 shares of its common stock, valued at $97,500 (calculated based upon average closing price for the Company&#146;s common stock on the OTCBB for the five consecutive trading days preceding the issuance date) to Weil, a related party, in exchange for services rendered. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During
    the three months ended June 30, 2008, the Company converted debentures in
    the principal amount of $10,000 into 142,857 shares of its common stock and
    granted warrants to purchase 71,428 shares of its common stock, exercisable
    at $0.60 per share until May 30, 2009, and granted warrants to purchase 71,428
    shares of its common stock, exercisable at $0.80 per share until May 30,
    2010 .</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During three months ended June 30, 2008, the Company issued 1,100,171 shares of its common stock in lieu of accrued interest of $217,798, to holders of convertible debentures which includes 786,227 shares to related parties.  </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>5. UNSECURED CONVERTIBLE DEBENTURE NOTES</font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30,
2008, unsecured convertible debenture notes in the aggregate principal amount of $4,218,500 are
outstanding of which debentures in the aggregate principal amount of $2,533,500 are held by
related parties. </font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Other than as
discussed below, the unsecured convertible debentures bear interest at the rate of 18% per annum.
Interest is payable in the shares of common stock of the Company except in the case of unsecured
convertible debentures in the principal amount of $1,883,500 held by the Mosaic Private Equity
family of funds, a related party, where the interest is payable in cash. 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 1,099,052 shares of common stock as payment of interest on the
debentures issued in the quarter ended June 30, 2008.</font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In general,
the debenture holders have the right to convert their debentures into fully paid non-assessable shares
of common stock at the contracted rate and for every two shares converted receive one warrant to purchase
one (1) share of common stock at an exercise price of $0.60 exercisable for two (2) years after the
conversion date and one warrant to purchase one (1) share of common stock at an exercise price of
$0.80 exercisable for three (3) years after the conversion date. </font></p>


<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During
    the three  months ended June 30, 2008, the Company issued an unsecured convertible
    debenture in the principal  amount of $150,000 to one of the Mosaic Private
    Equity family of funds bringing the total  outstanding principal amount of
    unsecured convertible debentures held by the Mosaic Private Equity  family
    of funds to $1,883,500 as of June 30, 2008. Debentures in the principal amount
    of $1,733,500 held by the Mosaic Private Equity family of funds matured at
    various times during the quarter ended June 30, 2008 and were extended to
    August 31, 2008.</font></p>


<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Other
    debentures  in the principal amount of $440,000 which matured on or around
    December 2007 were extended to March 31,  2009. In connection with such extension,
    the conversion price of the debentures was reduced to $0.07 per  share and
    the interest rate on such debentures was reduced to 10% per annum on a going
    forward basis.  The change in conversion price has resulted in a beneficial
    conversion of &#36;110,674 which has been charged to interest expense at
    June 30, 2008. Debentures in the aggregate principal amount of $520,000 are
    currently past due.</font></p>



<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>During the three
months ended June 30, 2008, the Company repaid debentures in the amount of $5,000 and debentures in the
principal amount of $10,000 were converted into common stock of the Company at $0.07 per share together
with warrants to acquire the Company&#146;s common stock. (See Note 4)</font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Interest on the
outstanding debentures amounted to $342,990 and $222,765 for the six months ended June 30, 2008 and 2007,
respectively.</font></p>



<!-- EEDocs PBStart--><P align="center"><font style='font-size:10pt'>16</font></P>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="100%" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
<hr noshade="noshade">

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>6. ACCOUNTS RECEIVABLE PURCHASE AGREEMENT </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>On
    March 1, 2008, the Company entered into an Accounts Receivable Purchase Agreement
    (the &#147;Purchase Agreement&#148;) with Horizon International Investments
    LLC (the &#147;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 $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.  At June 30,
    2008, there was no outstanding balance due on any purchased accounts receivable.
    Interest and finance charges amounted to $47,986 for the six months ended
    June 30, 2008.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>7. COMMITMENTS AND CONTINGENCIES</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Operating Leases</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The Company occupies buildings and retail space under operating lease agreements expiring on various dates through January 2012 with monthly payments ranging from approximately $1,400 to $2,800.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Certain leases include future rental escalations and renewal options.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, future minimum payments under operating leases approximated the following:</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="30%" style=' border-collapse:collapse;'>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>For the year ending</font><br> <font style='font-size:10pt'>December 31, </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
   <td valign=bottom ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom >&nbsp;</td>
 </tr>
 <tr bgcolor="#EAF9E8">
        <td width="49%" valign=bottom >
      <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2008</font></p> </td>
        <td width="25%" valign=bottom >
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td width="17%" valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>210,638</font></p> </td>
        <td width="6%" valign=bottom >
    <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2009</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>159,954</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr bgcolor="#EAF9E8">
        <td valign=bottom >
      <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2010</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>100,752</font></p> </td>
        <td valign=bottom >
    <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2011</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>61,040</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr bgcolor="#EAF9E8">
        <td valign=bottom >
      <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2012</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>48,906</font></p> </td>
        <td valign=bottom >
    <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
   <td valign=bottom ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
   <td valign=bottom >&nbsp;</td>
 </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Total</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>581,290</font></p> </td>
        <td valign=bottom >
  <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom >&nbsp;</td>
   <td valign=bottom ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
   <td valign=bottom ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
   <td valign=bottom >&nbsp;</td>
 </tr>
</table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font>
<font style='font-size:10pt'>Total rent expense for the three months ended June 30, 2008 and 2007 was $165,485 and $112,061 respectively. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>8</font><i><font style='font-size:10pt'>. </font></i><font STYLE='FONT-SIZE:10PT'>LEGAL MATTERS</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 its insurance coverage, or that it will
    be able to maintain such coverage at acceptable costs and on favorable terms.</font></p><p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="100%" valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:center;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC. AND SUBSIDIARIES</font><br> <font style='font-size:10pt'>FORMERLY KNOWN AS eRXSYS, Inc.</font><br> <font STYLE='FONT-SIZE:10PT'>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font><br> <font STYLE='FONT-SIZE:10PT'>JUNE 30, 2008</font></p> </td> </tr>
 </table>
</div>
<hr noshade="noshade">
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>8. LEGAL MATTERS (continued)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>From
    time to time, the Company may be involved in various claims, lawsuits, disputes
    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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>9. LOSS PER COMMON SHARE</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>The following is a reconciliation of the numerators and denominators of the basic and diluted loss per common share computations for the three and six months ended June 30, 2008 and 2007.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>Three Months Ended </font><br> <font style='font-size:10pt'>June 30,</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>Six Months Ended </font><br> <font style='font-size:10pt'>June 30,&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2007</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2007</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Numerator for basic and diluted loss per common share:</font>                         </p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Net loss to common stockholders</font>                                                                             </p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($1,099,804</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($733,426</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($1,901,340</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($1,510,348</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td> </tr>
 <tr>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
 </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Denominator for basic and diluted loss per common share:</font>            </p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Weighted average number of shares outstanding</font>                         </p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>55,069,109</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>53,772,458</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>54,935,030</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>53,524,876</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
 </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Basic and diluted loss per common share</font>                                      </p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($0.02</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($0.01</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($0.03</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>($0.03</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>)</font></p> </td> </tr>
 <tr>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">
   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">
   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">
   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
   <td valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">
   </td>
   <td valign=top ><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p></td>
 </tr>
</table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>10. INCOME TAXES</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>Due to losses incurred for the three and six months ended June 30, 2008 there is no current provision for income taxes.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>11. SUBSEQUENT EVENTS</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In July and August, 2008, the Company issued to one of the Mosaic Private Equity family of funds, a related party, four unsecured convertible debentures in the aggregate principal amount of $1,337,500 accruing interest of 18% per annum.
With extensions, principal and accrued interest under these debentures becomes due August 31, 2008.  The debenture holders have the right prior to payment of the debentures to convert the outstanding principal into shares of the Company&#146;s common stock at a conversion price of $0.40, subject to adjustment in certain circumstances,
and warrants to acquire such number of shares of common stock equal to the number of conversion shares issued, half of which shall be exercisable at $0.60 per share, subject to adjustment in certain circumstances, for a one-year period and the other half of which shall be exercisable at $0.80 per share, subject to adjustment in certain circumstances, for a two-year period.
The debenture holders are also entitled to piggyback registration rights covering the shares issuable upon
conversion of the debentures and upon exercise of the warrants. If the Company conducts a certain private
placement, the outstanding principal amount of the debenture is exchangeable for the securities sold in
such private placement at the option of either the holder or the Company.</font></p>


<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>In addition, in July 2008, the Company repaid $5,000 to TAPG and in August 2008, the Company repaid $50,000 on the Brockington loans discussed in Note 3.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<!-- EEDocs PBStart--><P align="center"><font style='font-size:10pt'>18</font></P>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="8%" valign=top style='padding:12.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 2. </font></B></p> </td>
        <td valign=top style='padding:12.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><b><font style='font-size:10pt'>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></b></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>As used in this Quarterly Report, the terms &#147;</font><i><font style='font-size:10pt'>we</font></i><font style='font-size:10pt'>,&#148; &#147;</font><i><font style='font-size:10pt'>us</font></i><font style='font-size:10pt'>,&#148; &#147;</font><i><font style='font-size:10pt'>our</font></i><font style='font-size:10pt'>,&#148; and &#147;</font><i><font style='font-size:10pt'>Assured Pharmacy</font></i><font style='font-size:10pt'>&#148; mean Assured Pharmacy, Inc. and our subsidiaries unless otherwise indicated.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Business Description</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In an attempt to further expand our business and improve our marketing plans, our management decided to increase  our sales force because the efforts of our sales personnel have produced the greatest success in significantly increasing </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The table set forth below summarizes the number of prescriptions filled by our six operating pharmacies for the three  and six months ended June 30, 2008 and 2007.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table width="100%" border="0" cellpadding=0 cellspacing=0 style=' border-collapse:collapse;'>
 <tr>
        <td rowspan=3 valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>For three months ended</font><br> <font style='font-size:10pt'>June 30</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>For six months ended</font><br> <font style='font-size:10pt'>June 30</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="3" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2007</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2007</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=top >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top >
      <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td width="2%" valign=top >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top >
      <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td width="2%" valign=top >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top >
      <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td width="2%" valign=top >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top >
      <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td width="2%" valign=top >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:8.65pt;text-indent:-8.65pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Number of prescriptions</font>                                                                                                                                                         </p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:8pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>27,077</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:8pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>22,808</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:8pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>54,221</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:8pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>42,018</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
  <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:8pt'>&nbsp;</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Total
    number of prescriptions filled at all our pharmacies for the three and
    six months ended June 30, 2008 increased to 27,077 and 54,221 respectively
    which is approximately a 19% and 29% increase from the 22,808 and 42,018
    total prescriptions filled at all our pharmacies in the prior three and six
    months ended June 30, 2008. Our management primarily credits the increases
    in our business to the efforts of additional sales personnel added during
    the reporting period, the expanded reach of our business beyond pain management
    and the additional pharmacy that opened up in Las Vegas during the first
    quarter of 2008.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In
    January, 2006, we incorporated Assured Pharmacy Plus, Corp. (&#147;</font><i><font style='font-size:10pt'>Plus
    Corp</font></i><font style='font-size:10pt'>.&#148;) as a wholly-owned subsidiary
    to develop this opportunity. We entered into an arrangement with Affiliated
    Healthcare Administrators (&#147;</font><I><font STYLE='FONT-SIZE:10PT'>AHA</font></I><font style='font-size:10pt'>&#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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>On
    an ongoing basis, our management is evaluating our operations and seeking
    additional opportunities to expand our business. We have 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. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Also in January 2006, we incorporated Assured Pharmacy DME, Corp. (&#147;</font><I><font STYLE='FONT-SIZE:10PT'>DME</font></I><font style='font-size:10pt'>&#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 </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>&nbsp;</p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Our
    revenue generated from pharmaceutical compounding and from the operations
    of Plus Corp. and DME for the three and six months ended June 30, 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 may focus more on these opportunities during
    2008 or at such time that allocating resources to these opportunities is
    in our best interest. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Results of Consolidated Operations</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Three and Six Months Ended June 30, 2008 Compared to Three and Six Months Ended June 30, 2007</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Revenues</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Our total revenue reported for the three months ended June 30, 2008 was $3,573,793, an 8% increase from $3,305,891 for the three months ended June 30, 2007. Our total revenue reported for the six months ended June 30, 2008 was $7,736,413, a 28% increase from $6,039,574 for the six months ended June 30, 2007. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Our revenue for the three months ended June 30, 2008 and 2007 was generated almost exclusively from the sale of prescription drugs. 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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The table set forth below shows our total reported gross revenue generated for each completed quarterly period during fiscal 2007 and 2008: </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="70%" valign=bottom >
      <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
<td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2007 </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:center;margin-bottom:0pt;'><font style='font-size:10pt'>2008 </font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=top >&nbsp;</td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td colspan="2" valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Quarterly Period Ended March 31 </font>                                                                                                                                                                                                                                          </p> </td>
        <td width="10%" valign=bottom style='background:#EAF9E8;'>
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
<td width="1%" valign=bottom style='background:#EAF9E8;'>
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#EAF9E8; '>
      <p style=' margin-left:0in;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>2,733,683</font></p> </td>
        <td width="2%" valign=bottom style='background:#EAF9E8; '>
      <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#EAF9E8; '>
      <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
<td width="7%" valign=bottom style='background:#EAF9E8; '>
      <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>4,162,670</font></p> </td>
<td width="2%" valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Quarterly Period Ended June 30 </font>                                                                                                                                                                                                                                                    </p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>3,305,891</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>3,573,793</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Quarterly Period Ended September 30 </font>                                                                                                                                                                                                                     </p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8;'>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>3,676,798</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>N/A</font></p> </td>
        <td valign=bottom style='background:#EAF9E8; '>
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>Quarterly Period Ended December 31 </font>                                                                                                                                                                                                                        </p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>$</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>4,207,115</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;margin-right:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>N/A</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Management
    is of the opinion that the decline in revenue in the second quarter as compared
    to the first quarter of 2008 is due to irregular supplies of drugs because
    of relocation of wholesalers and also downturn in the economy. Management
    anticipates that our revenues will increase after normal supply conditions
    are restored and following concentrated sales efforts by sales personnel
    and the opening of our Oak Lomita pharmacy 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
    by the end of 2008. We anticipate the establishment of these additional pharmacies
will increase our revenues for the fiscal year ending December 31, 2008. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Cost of Sales</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The total cost of sales for the three months ended June 30, 2008 was $2,770,558, a 12% increase from $2,472,371 for the three months ended June 30, 2007. For the six months ended June 30, 2008, the total cost of sales increased 34% to $5,976,649 from $4,461,115&nbsp;for the six months ended June 30, 2007. The cost of sales consists primarily of the pharmaceuticals sold in the quarter ended June 30, 2008. The increase in the cost of sales is primarily attributable to the increased&nbsp;sales in the reporting period and also due to the change in the product mix sold. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Gross Profit.</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Gross profit marginally declined to $803,235, or approximately 22% of sales, for the three months ended June </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>30, 2008, as compared to a gross profit of $833,520, or approximately 25% of sales for the three months ended June 30, 2007. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Gross profit increased to $1,759,764 or approximately 23% of sales, for the six months ended June 30, 2008, as compared to gross profit of $1,578,459, or approximately 26% of sales for the six months ended June 30, 2007. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The decline in the dollar value of gross profit and as a percentage of sales is primarily due to a reduction in the workmen compensation reimbursements in California and also a change in the product mix sold. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Operating Expenses</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Operating expenses for the three months ended June 30, 2008 was $1,518,769, an 8% increase from $1,409,503 for the three months ended June 30, 2007. Our operating expenses for the three months ended June 30, 2008 consisted of salaries and related expenses of $683,818, consulting and other compensation of $214,304, and selling, general and administrative expenses of $620,647. Our operating expenses for the three months ended June 30, 2007 consisted of salaries and related expenses of $615,218, consulting and other compensation of $299,000, and selling, general and administrative expenses of $495,285. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Operating
    expenses for the six months ended June 30, 2008 was $2,995,995 an 8% increase
    from $2,784,034 for the six months ended June 30, 2007. Our operating expenses
    for the six months ended June 30, 2008 consisted of salaries and related
    expenses of $1,449,506, consulting and other compensation of $357,261 and
    selling, general and administrative expenses of $1,189,228. Our operating
    expenses for the six months ended June 30, 2007 consisted of salaries and
    related expenses of $1,294,117, consulting and other compensation of $447,636,
    and selling, general and administrative expenses of $1,042,281. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Salaries
    and related expenses were higher in the three and six months ended June 30,
    2008 when compared to the three and six months ended June 30, 2007 which
    was primarily due to our hiring of additional personnel to adequately staff
    our existing pharmacies and to staff our new pharmacy at Las Vegas. The decrease
    in consulting and other compensation for the three and six months ended June
    30, 2008, when compared to the three and six months ended June 30, 2007,
    was attributable to a reduction in the number of consultants retained&nbsp;during
    the reporting period. The increase in selling, general and administrative
    expenses for the three and six months ended June 30, 2008, as compared to
    the same reporting period in the prior year was primarily a result of&nbsp;increases
    in store rents, provision for doubtful receivables and increases in accounting
    and legal fees. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Other Income and Expense</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>During
    the three months ended June 30, 2008, we reported other expenses in the amount
    of $384,730, compared to $149,872 for the three months ended June 30, 2007. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>During
    the six months ended June 30, 2008, we reported other expenses in the amount
    of $659,837, compared to $292,514 for the six months ended June 30, 2007.
    Other expenses reported during the three and six months ended June 30, 2008
    and 2007 consisted of interest expense which was incurred in connection with
    our acquisition of 49% of the ownership interest in Assured Pharmacies Inc.,
    interest on borrowings and interest&nbsp;on convertible debentures. In addition,
    interest expense for the six months ended June 30, 2008 also included $110,674
    resulting from a charge for a beneficial conversion due to a change in the
    terms of certain unsecured convertible debentures. (See Note 5 of the Consolidated Financial Statements for the quarter ended June 30, 2008)</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Net Loss</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Net
    loss for the three months ended June 30, 2008 was $1,099,804, a 50% increase
    from the net loss of $733,426 for the three months ended June 30, 2007. Net
    loss for the six months ended June 30, 2008 was $1,901,340, a 26% increase
    from the net loss of $1,510,348 for the six months ended June 30, 2007. The
    increase in our net loss was primarily attributable to increased operating
    expenses and interest expenses during the reporting periods. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Our loss per common share for the three months ended June 30, 2008 was $0.02, compared to a loss per common shares of $0.01 for the three months ended June 30, 2007.
Our loss per common share for both the six months ended June 30, 2008 and 2007 was $0.03. </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Liquidity and Capital Resources </font></b></p>

<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, we had $337,867 in cash. As of June 30, 2008, we had current assets in the amount of $3,181,998 and current liabilities in the amount of $9,122,129 resulting in a working capital deficit of $5,940,131. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Operating
    activities used $1,417,697 in cash for the six months ended June 30, 2008,
    as compared to $954,141 for the same period last year. Our net loss of $1,901,340
    reduced by non&#150;cash
    expenses of $664,331 was the primary reason for our negative operating cash
    flow. In addition, our inventories increased by $418,562 primarily due to
    the fact that our supplier was relocating to a new location and in order
    to minimize disruption in our ability to acquire inventory, we purchased
    quantities that we felt were necessary to allow us to continue to supply
    our stores during this period of relocation. In addition, inventory was required
    for our new store openings during the six months ended June 30, 2008. Investing
    activities during the six months ended June 30, 2008 used $132,283 for the
    purchase of property and equipment. Net cash flows provided by financing
    activities during the six months ended June 30, 2008 was $1,479,542 primarily
    due to the $400,000 we received as proceeds from the issuance of convertible
    notes and $1,154,500 notes issued to related parties during the reporting
period. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In
    order for us to finance operations, continue our growth plan and service
    our existing debt (including the repayment of the loans and convertible debentures),
    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
    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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Off Balance Sheet Arrangements</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>As of June 30, 2008, there were no off balance sheet arrangements. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Going Concern </font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 June 30, 2008, we had an accumulated
    deficit of $24,909,534, recurring losses from operations and negative cash
    flow from operating activities for the six month period ended June 30, 2008
    of $1,417,697. We also had a negative working capital of $5,940,131 as of
    June 30, 2008.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In response to these problems, management has taken the following actions:</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>We are aggressively signing up new physicians.</font></p> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>We are seeking investment capital.</font></p> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>We retained additional sales personnel to attract business.</font></p> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>In April 2008, we entered into a Credit Agreement for $2,000,000 (and possibly up to $3,000,000).</font></p> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:4.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font size=3><b>&#149;</b></font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>In July and August 2008, we raised $1,337,500 through the issuance of convertible notes. </font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><b><font style='font-size:10pt'>Critical Accounting Policies </font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Inventories</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Inventories are stated at the lower of cost (first-in, first-out method) or estimated market, and consist primarily of pharmaceutical drugs. Market value 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 style='font-size:10pt'> </font></i><font style='font-size:10pt'>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 June 30, 2008. 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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Long-Lived Assets</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>We adopted Statement of Financial Accounting Standard (&#147;</font><I><font STYLE='FONT-SIZE:10PT'>SFAS</font></I><font style='font-size:10pt'>&#148;) No. 144, &#147;</font><i><font style='font-size:10pt'>Accounting for the Impairment or Disposal of Long-Lived Assets</font></i><font style='font-size:10pt'>,&#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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 adjustments
    accordingly.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Intangible Assets</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>SFAS
    No. 142, &#147;</font><i><font style='font-size:10pt'>Goodwill and Other
    Intangible Assets</font></i><font style='font-size:10pt'>,&#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 style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><i><font style='font-size:10pt'>Revenue Recognition</font></i></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="8%" valign=top style='padding:12.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 3.</font></B></p> </td>
        <td width="94%" valign=top style='padding:12.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><B><font STYLE='FONT-SIZE:10PT'>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</font></B></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>&nbsp;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>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="8%" valign=top style='padding:12.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 4.</font></B></p> </td>
        <td width="94%" valign=top style='padding:12.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><B><font STYLE='FONT-SIZE:10PT'>CONTROLS AND PROCEDURES</font></B></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>There was no change in our  internal controls over financial reporting that occurred during the fiscal quarter ended June 30, 2008 that materially affected or is reasonably likely to materially affect the Company&#146;s internal controls over financial reporting.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p><P align="center"><font style='font-size:10pt'>25</font></P>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>PART II. OTHER INFORMATION</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 1. LEGAL PROCEEDINGS</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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 party which
    may be adverse to us or have a material interest adverse to us. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>During
    the three months ended June 30, 2008, we issued unregistered securities to
    the persons, as described below. We believe that each transaction was exempt
    from the registration requirements of the Securities Act of 1933, as amended,
    by virtue of Section 4(2) thereof and/or Rule 506 of Regulation D promulgated
    thereunder.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>On
    June 17, 2008, we issued 500,000 shares of our common stock to Weil Consulting
    Corporation, a beneficial owner of more than 5% of our outstanding common
    stock, in exchange for services rendered. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>On June 17, 2008, we converted debentures in an amount of $10,000 into 142,857 shares of our common stock and granted warrants to purchase 71,428 shares of our common stock, exercisable at $0.60 per share until May 30, 2009, and granted warrants to purchase 71,428 shares of our common stock, exercisable at $0.80 per share until May 30, 2010. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>On
    June 17, 2008, we issued 1,100,171 shares of our common stock in lieu of
    accrued interest of $217,798, due to holders of convertible debentures which
    includes 786,227 shares of common stock to related parties. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>During the three months ended June 30, 2008, we raised $150,000 by issuing unsecured convertible debentures expiring on July 31, 2008, carrying an interest rate of 18% per annum payable in cash. </font></p>

<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 3. DEFAULTS UPON SENIOR SECURITIES</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>At June 30, 2008, convertible debentures borrowed by the Company in the aggregate principal amount of $520,000 were past due. We are in the process of negotiating the extension of these debentures.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</font></B> </p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended June 30, 2008. </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 5. OTHER INFORMATION</font></B> </p>



<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The
    following disclosure would have otherwise been filed on Form 8-K under the
    heading &#147;Item 1.01 - Entry into a Material Definitive Agreement&#148;, &#147;Item
    2.03 - Creation of Direct Financial Obligation&#148; and &#147;Item 3.02
    - Unregistered Sales of Equity Securities.&#148;</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In
    July and August, 2008, we issued to one of the Mosaic Private Equity family
    of funds four unsecured convertible debentures in the aggregate principal
    amount of $1,337,500 accruing interest of 18% per annum. With extensions,
    principal and accrued interest under these debentures becomes due August
    31, 2008. The debenture holders have the right prior to payment of the debentures
    to convert the outstanding principal into shares of our common stock at a
    conversion price of $0.40, subject to adjustment in certain circumstances,
    and warrants to acquire such number of shares of common stock equal to the
    number of conversion shares issued, half of which shall be exercisable at
    $0.60 per share, subject to adjustment in certain circumstances, for a one-year
    period and the other half of which shall be exercisable at $0.80 per share,
    subject to adjustment in certain circumstances, for a two-year period. The
    debenture holders are also entitled to piggyback registration rights covering
    the shares issuable upon conversion of the debentures and upon exercise of
    the warrants.  If we conduct a certain private placement, the outstanding principal amount of the
debenture is exchangeable for the securities sold in such private placement at the holder&#8217;s
or our option. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>Ameet Shah, the managing partner of the Mosaic Private Equity family of funds serves on our board of directors.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The
    foregoing description is qualified in its entirety by the form of unsecured
    convertible debenture attached as Exhibit 10.1 hereto.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The
    securities were offered and sold in reliance upon exemptions from registration
    pursuant to Section 4(2) under the Securities Act of 1933, as amended and
    Rule 506 of Regulation D promulgated thereunder.

</font></p>




<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><B><font STYLE='FONT-SIZE:10PT'>ITEM 6. EXHIBITS</font></B> </p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>The
    following exhibits listed below are filed as part of
    this report.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="14%" valign=bottom style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:8pt'>Exhibit</font></p>
            <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:8pt'>Number</font></p> </td>
        <td valign=bottom style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
        <td valign=bottom style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:8pt'>Description</font></p> </td> </tr>
 <tr>
   <td colspan="1" valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1">      </td>
	  <td></td>
	  <td colspan="1" valign=top ><hr noshade="noshade" width="100%"  color="gray" size="1"></td>
 </tr>
 <tr>
   <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'><font style='font-size:10pt'>10.1</font></td>
   <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
   <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'><font style='font-size:10pt'>Form of 18% Unsecured Convertible Debenture.</font></td>
 </tr>
 <tr>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>31.1</font></p> </td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p> </td> </tr>
 <tr>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>31.2</font></p> </td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p> </td> </tr>
 <tr>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>32.1</font></p> </td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></p> </td> </tr>
 <tr>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt;'><font style='font-size:10pt'>32.2</font></p> </td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>&nbsp;</td>
        <td valign=top style='padding:0in 5.4pt 0in 5.4pt;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>&nbsp;</p>
<!-- EEDocs PBStart--><P align="center"><font style='font-size:10pt'>27</font></P>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>SIGNATURES</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>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>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td width="49%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="44%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font STYLE='FONT-SIZE:10PT'>ASSURED PHARMACY, INC.</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><br>
                        <font style='font-size:10pt'>Date: August 14, 2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Robert DelVelcchio</font> </p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Robert DelVelcchio</font><br> <font style='font-size:10pt'>Chief Executive Officer</font><br> <font style='font-size:10pt'>(Principal Executive Officer)</font></p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
 <tr>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><br>
                        <font style='font-size:10pt'>Date: August 14, 2008</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Haresh Sheth</font> </p> </td> </tr>
 <tr>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Haresh Sheth</font><br> <font style='font-size:10pt'>Chief Financial Officer</font><br> <font style='font-size:10pt'>(Principal Financial and Accounting Officer)</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>

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<TYPE>EX-10.1
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<P align="right"><b><font size="2">Exhibit 10.1</font></b></P>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;ACT&#148;) OR ANY STATE SECURITIES LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font SIZE=2>IS AVAILABLE.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ASSURED PHARMACY, INC.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>18% Unsecured Convertible Debenture</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="100%">
    <tr >
        <td width="50%" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$_________</font></p> </td>
        <td width="50%" nowrap valign=top >
            <p align="right"><font size=2>_________, 2008</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>This Unsecured Convertible Debenture (the &#147;Debenture&#148;) is issued by Assured Pharmacy, Inc., a Nevada Corporation (the &#147;Company&#148;) this ___th day of ______, 2008 (the &#147;Issuance Date&#148;) to ___________ pursuant to exemptions from registration under the Securities Act of 1933, as amended.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ARTICLE I.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>PRINCIPAL AND INTEREST</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 1.1. For value received, the Company promises to pay to Holder, or its registered assigns, the principal sum of ______ on or before _________, 2008 (the &#147;Maturity Date&#148;), and to pay interest to the Holder on the principal amount of this Debenture (the &#147;Principal Amount&#148;) at the rate of 18.0% per annum, with interest for the period from the Issuance Date to the Maturity Date payable in full on the Maturity Date. All interest due under this Debenture shall be paid by the Company solely in cash unless otherwise agreed to by both parties in writing. All payments of principal and interest shall be made to the Holder at the address set forth above or such other address as the Holder shall notify the Company in writing ten (10) days prior to the due date of any payment of this Debenture as provided herein.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 1.2. Unsecured Nature of Debenture. This Debenture is unsecured.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ARTICLE II.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>CONVERSION RIGHTS; CONVERSION PRICE</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.1. Voluntary Conversion by Holder. The Holder shall have the right prior to the date on which this Debenture is paid in full, to convert at any time, or from time to time, any part of the outstanding Principal Amount of this Debenture into fully paid and non-assessable shares of Common Stock and Common Stock Purchase Warrants (&#147;Conversion Warrants&#148;) of the Company (the &#147;Conversion Units&#148;) at the Conversion Price (as defined below) determined as provided herein. Promptly after the surrender of this Debenture, accompanied by a Notice of Conversion of Convertible Debenture in the form attached hereto as Exhibit 1, properly completed and duly executed by the Holder (a &#147;Conversion Notice&#148;), the Company shall issue and deliver to or upon the order of the Holder that number of shares of Common Stock and Conversion Warrants in the form attached hereto as Exhibit 2 and Exhibit 3
for the balance of this Debenture converted as shall be determined in accordance herewith. The Conversion Warrants evidenced by Exhibit 2 to be issued following receipt of the Conversion Notice are exercisable for shares of the Company&#146;s Common Stock at an exercise price of $0.60 per share for a period of one year (the &#147;$0.60 Warrants&#148;). The Conversion Warrants evidenced by Exhibit 3 to be issued following receipt of the Conversion Notice are exercisable for shares of the Company&#146;s Common Stock at an exercise price of $0.80 per share for a period of two years ((the &#147;$0.80 Warrants&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Section 2.2. The number of shares of Common Stock to be issued upon each conversion
of this Debenture shall be determined by dividing (i) the amount of Principal to be converted by (ii) the Conversion Price. The number of Conversion Warrants to be issued to Holder upon conversion of this Debenture shall be equal to the number of shares of Common Stock issued upon conversion of this Debenture, with such number of Conversion Warrants to be divided equally between $0.60 Warrants and $0.80 Warrants.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.3. Conversion Price. Upon any conversion of this Debenture, the conversion price shall be $0.40, subject to adjustment from time to time upon the happening of certain events (the &#147;Conversion Price&#148;) as set forth below.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(a) </font><u><font size=2>Stock Splits, etc</font></u><font size=2>.   In case the Company shall: (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Conversion Units issuable upon conversion of this Debenture immediately prior thereto shall be adjusted so that the holder of this Debenture shall be entitled to receive the kind
and number of Conversion Units which he would have owned or have been entitled to

receive had such Debenture been converted in advance thereof. Upon each such adjustment of the kind and number of Conversion Units the holder of this Debenture shall</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>thereafter be entitled to purchase the number of Conversion Units resulting from such adjustment at a Conversion Price per Conversion Unit obtained by multiplying the

Conversion Price in effect immediately prior to such adjustment by the number of

Conversion Units issuable pursuant hereto immediately prior to such adjustment and

dividing by the number of Conversion Units of the Company resulting from such

adjustment. An adjustment made pursuant to this paragraph shall become effective

immediately after the effective date of such event retroactive to the record date, if any,

for such event.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) <u>Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.</u> In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such

reorganization, reclassification, merger, consolidation or disposition of assets, shares of

common stock of the successor or acquiring corporation, or any cash, shares of stock or

other securities or property of any nature whatsoever (including warrants or other

subscription or purchase rights) in addition to or in lieu of common stock of the successor

or acquiring corporation (&#147;Other Property&#148;), are to be received by or distributed to the

holders of Common Stock of the Company, then Holder shall have the right thereafter to

receive, upon conversion of this Debenture, Conversion Units for the number of shares of

common stock, and warrants to purchase common stock, of the successor or acquiring

corporation or of the Company, if it is the surviving corporation, and Other Property

receivable upon or as a result of such reorganization, reclassification, merger,

consolidation or disposition of assets by a holder of the number of Conversion Units into

which this Debenture is convertible immediately prior to such event. In case of any such

reorganization, reclassification, merger, consolidation or disposition of assets, the

successor or acquiring corporation (if other than the Company) shall expressly assume

the due and punctual observance and performance of each and every covenant and

condition of this Debenture to be performed and observed by the Company and all the

obligations and liabilities hereunder, subject to such modifications as may be deemed

appropriate (as determined in good faith by resolution of the Board of Directors of the

Company) in order to provide for adjustments of Conversion Units into which this

Debenture is convertible which shall be as nearly equivalent as practicable to the

adjustments provided for in this Section 2.3(b). For purposes of this Section 2.3(b),

&#147;common stock of the successor or acquiring corporation&#148; shall include stock of such

corporation of any class which is not preferred as to dividends or assets over any other

class of stock of such corporation and which is not subject to redemption and shall also

include any evidences of indebtedness, shares of stock or other securities which are

convertible into or exchangeable for any such stock, either immediately or upon the

arrival of a specified date or the happening of a specified event and any warrants or other

rights to subscribe for or purchase any such stock. The foregoing provisions of this

Section 2.3(b) shall similarly apply to successive reorganizations, reclassifications,

mergers, consolidations or disposition of assets.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(c) </font><u><font size=2>Notice of Adjustment</font></u><font size=2>. Whenever the number of Conversion Units or number or kind of securities or other property issuable upon the conversion of this Debenture or the Conversion Price is adjusted, as herein provided, the Company shall promptly mail by

registered or certified mail, return receipt requested, to the holder of this Debenture
notice of such adjustment or adjustments setting forth the number of Conversion Units

(and other securities or property) issuable upon the conversion of this Debenture and the

Conversion Price of such Conversion Units (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. Such notice, in the absence of manifest error, shall be conclusive evidence of the correctness of such adjustment.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.4. Notice of Corporate Action. If at any time:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least 30 days&#146; prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days&#146; prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (x) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such
dividend, distribution or right, and the amount and character thereof, and (y) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such

disposition, dissolution, liquidation or winding up. Each such written notice shall be

sufficiently given if addressed to Holder at the last address of Holder appearing on the

books of the Company and delivered in accordance with Section 5.1.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.5.
Method of Conversion. Except as otherwise provided in this Debenture or

agreed to by the Holder, this Debenture may be converted by the Holder pursuant to its

conversion rights set forth in Section 2.1 in whole at any time or in part (provided each

such partial conversion is at least $10,000) by submitting to the Company a Conversion

Notice (by facsimile dispatched on the Conversion Date and confirmed by U.S. mail or

overnight mail service sent within two business days thereafter) and surrendering this

Debenture with the mailed confirmation of the Conversion Notice at the office of the

Company as provided in Section 5.1. Upon a partial conversion of this Debenture, a new

debenture containing the same date and provisions as this Debenture shall be issued by

the Company to the Holder for the balance due hereunder which shall not have been

converted.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.6. Restrictions on Securities. This Debenture has been issued by the Company pursuant to the exemption from registration under the Securities Act of 1933, as amended

(the &#147;Act&#148;). None of this Debenture, the shares of Common Stock and Conversion

Warrants issuable upon conversion of this Debenture, or the shares of Common Stock of

the Company issuable upon exercise of the Conversion Warrants (the &#147;Warrant Shares&#148;)

may be offered, sold or otherwise transferred unless (i) they first shall have been

registered under the Act and applicable state securities laws or (ii) the Company shall

have been furnished with an opinion of legal counsel (in form, substance and scope

reasonably acceptable to Company) to the effect that such sale or transfer is exempt from

the registration requirements of the Act. Each certificate for shares of Common Stock and

Conversion Warrants issuable upon conversion of this Debenture and Warrant Shares

issuable upon exercise of the Conversion Warrants that have not been so registered and

that have not been sold pursuant to an exemption that permits removal of the applicable

legend, shall bear a legend substantially in the following form, as appropriate:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE &#147;ACT&#148;). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Upon the request of a holder of a certificate representing any shares of Common Stock
issuable upon conversion of this Debenture, the Company shall remove the foregoing

legend from the certificate or issue to such Holder a new certificate free of any transfer

legend, if (a) with such request, the Company shall have received an opinion of counsel,

reasonably satisfactory to the Company in form, substance and scope, to the effect that

any such legend may be removed from such certificate or (b) a registration statement under the Act covering such securities is in effect.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.7. Registration Rights. If at any time the Company proposes to register any of</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>its common stock under the Act, whether as a result of an offering for its own account or

the account of others, excluding any registrations to be effected on Forms S-4 or S-8 or

other applicable successor Forms, the Company shall, at such time, promptly give Holder

written notice of such proposed registration and offer Holder the opportunity to include

the shares of common stock issued as interest, the shares of Common Stock issuable upon

conversion of this Debenture and the Warrant Shares issuable upon exercise of the

Conversion Warrants in such registration statement (each, a &#147;Piggy Back Registration&#148;).

The Company shall include in any such registration statement all or part of the underlying

common stock that Holder requests to be registered. In a Piggyback Registration, the

Company will pay the registration expenses and the reasonable fees.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.8. Reservation of Common Stock.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(a) The Company covenants that during the period the
Debenture is outstanding, it

will reserve from its authorized and unissued Common Stock a sufficient number of

shares to provide for the issuance of Common Stock of the Company upon the

Conversion of the Debenture. The Company further covenants that its issuance of this

Debenture shall constitute full authority to its officers who are charged with the duty of

executing stock certificates and warrants to execute and issue the necessary certificates

for shares of Common Stock of the Company, and the Conversion Warrants, issuable

upon the conversion of this Debenture. The Company will take all such reasonable

action as may be necessary to assure that such Conversion Units may be issued as

provided herein without violation of any applicable law or regulation, or of any

requirements of the FINRA OTCBB (or such other principal market upon which the

Common Stock of the Company may be listed).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) The Company shall not by any action, including,
without limitation, amending its

certificate of incorporation or through any reorganization, transfer of assets,

consolidation, merger, dissolution, issue or sale of securities or any other voluntary

action, with the purpose to avoid or seek to avoid the observance or performance of any

of the terms of this Debenture, but will at all times in good faith assist in the carrying out

of all such terms and in the taking of all such actions as may be necessary or appropriate

to protect the rights of Holder against impairment. Without limiting the generality of the

foregoing, the Company will (a) not increase the par value of any shares of Common

Stock issuable upon the conversion of this Debenture above the amount payable therefor

upon such conversion immediately prior to such increase in par value, (b) take all such

action as may be necessary or appropriate in order that the Company may validly and

legally issue fully paid and nonassessable shares of Common Stock and Conversion

Warrants upon the conversion of this Debenture, and (c) use its best efforts to obtain all

such authorizations, exemptions or consents from any public regulatory body having

jurisdiction thereof as may be necessary to enable the Company to perform its obligations

under this Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(c) Upon the request of Holder, the Company will at any time during the period this Debenture is outstanding acknowledge in writing the continuing validity of this Debenture and the obligations of the Company hereunder.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(d) Before taking any action which would cause an adjustment
reducing the current

Conversion Price below the then par value, if any, of the shares of Common Stock

issuable upon conversion of the Debentures, the Company shall take any corporate action

which may be necessary in order that the Company may validly and legally issue fully

paid and non-assessable shares of such Common Stock at such adjusted Conversion Price.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(e) Before taking any action which would result in an adjustment in the number of Conversion Units into which this Debenture is convertible or in the Conversion Price, the

Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(f) If at any time the Company does not have a sufficient number of authorized and

available shares of Common Stock for issuance upon conversion of the Debenture, then

the Company shall call and hold a special meeting of its stockholders within forty-five

(45) days of that time for the sole purpose of increasing the number of authorized

shares of Common Stock.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.9. Paying Agent and Registrar. Initially, the
Company will act as paying agent

and registrar. The Company may change any paying agent, registrar, or Company registrar

by giving the Holder not less than ten (10) business days&#146; written notice of its

election to do so, specifying the name, address, telephone number and facsimile number

of the paying agent or registrar.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 2.10. Anything in this Debenture to the contrary notwithstanding, in no event

shall there be any adjustment to the interest due under this Debenture or the total number

of shares of Common Stock of the Company issued as interest hereunder, including,

without limitation, upon, in connection with or as a result of any conversion of this Debenture; and, (ii) in no event shall Holder be obligated to return, refund, rebate or transfer any such interest or shares of Common Stock of the Company issued as interest hereunder including, without limitation, upon, in connection with or as a result of any conversion of this Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ARTICLE III.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>REPRESENTATIONS AND WARRANTIES OF HOLDER</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 3.1. The Holder represents and warrants to the Company:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(a)
    The Holder of this Debenture, by acceptance hereof, agrees that this Debenture
  is being acquired for investment and that such Holder will not offer, sell or
otherwise dispose of this Debenture or the Common Stock or Conversion Warrants issuable upon conversion hereof or Warrant Shares issuable upon exercise of the Conversion
Warrants</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>except under circumstances that will not result in a violation of the Act or any application

state securities laws or similar laws relating to the sale of securities;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) That Holder understands that none of this Debenture or the Common Stock or Conversion Warrants issuable upon conversion hereof or Warrant Shares issuable upon

exercise of the Conversion Warrants have been registered under the Securities Act of

1933, as amended (the &#147;Act&#148;), in reliance upon the exemptions from the registration

provisions of the Act and any continued reliance on such exemption is predicated on the

representations of the Holder set forth herein;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(c) Holder (i) has adequate means of providing for his current needs and possible

contingencies, (ii) has no need for liquidity in this investment, (iii) is able to bear the
substantial economic risks of an investment in this Debenture for an indefinite period,

(iv) at the present time, can afford a complete loss of such investment, and (v) does not

have an overall commitment to investments which are not readily marketable that is

disproportionate to Holder&#146;s net worth, and Holder&#146;s investment in this Debenture will

not cause such overall commitment to become excessive;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(d) Holder is an &#147;accredited investor&#148; (as defined in Regulation D promulgated

under the Act) and the Holder&#146;s total investment in this Debenture does not exceed 10%

of the Holder&#146;s net worth; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(e) Holder recognizes that an investment in the Company involves significant risks

and only investors who can afford the loss of their entire investment should consider

investing in the Company and this Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ARTICLE IV.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>EVENTS OF DEFAULT</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 4.1 Default. In case one or more of the following events (&#147;Events of Default&#148;)

(whatever the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or

order of any court or any order, rule or regulation of any administrative or governmental

body) shall have occurred and be continuing:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(a) default in the due and punctual payment of all or any part of the Principal Amount

as and when such amount or such part thereof shall become due and payable hereunder;

or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) failure on the part of the Company duly to observe or perform in all material
respects any of the covenants or agreements on the part of the Company contained herein

(other than those covered by clause (a) above) for a period of 10 business days after the

date on which written notice specifying such failure, stating that such notice is a &#147;Notice

of Default&#148; hereunder and demanding that the Company remedy the same, shall have

been given by the Holder by registered or certified mail, return receipt requested, to the</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Company; or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(c) any of the following actions by the Company pursuant to or within the meaning

title 11, U.S. Code or any similar federal or state law for the relief of debtors

(collectively, the &#147;Bankruptcy Law&#148;): (A) commencement of a voluntary case or

proceeding, (B) consent to the entry of an order for relief against it in an involuntary case

or proceeding, (C) consents to the appointment of a receiver, trustee, assignee, liquidator

or similar official under any Bankruptcy Law (each, a &#147;Custodian&#148;), of it or for all or

substantially all of its property, (D) a general assignment for the benefit of its creditors,

or (E) admission in writing its inability to pay its debts as the same become due; or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(d) entry by a court of competent jurisdiction of an order or decree under any

Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B)

appoints a Custodian of the Company or for all or substantially all of the property of the

Company, or (C) orders the liquidation of the Company, and such order or decree

remains unstayed and in effect for 60 days; then, in each case where an Event of Default specified in Section 4.1(b) occurs, the Holder, by notice in writing to the Company (the &#147;Acceleration Notice&#148;), may declare the outstanding Principal Amount (in whole or in part) to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable; provided, however, that if an Event of Default specified in Section 4.1(a), (c) or (d) occurs, the outstanding Principal Amount shall become and be immediately due and payable without any declaration or other act on the part of the Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 4.2. Payment of Costs. The Company shall reimburse the Holder, on demand,

for any and all reasonable costs and expenses, including reasonable attorneys&#146; fees and

disbursement and court costs, incurred by the Holder in collecting or otherwise enforcing

this Note or in attempting to collect or enforce this Note.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 4.3. Powers and Remedies Cumulative; Delay or Omission Not Waiver of

Default. No right or remedy herein conferred upon or reserved to the Holder is intended

to be exclusive of any other right or remedy available to Holder under applicable law, and

every such right and remedy shall, to the extent permitted by law, be cumulative and in

addition to every other right and remedy given hereunder or now or hereafter existing at

law or in equity or otherwise. The assertion or employment of any right or remedy

hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any

other appropriate right or remedy. No delay or omission of the Holder to exercise any

right or power accruing upon any Default occurring and continuing as aforesaid shall

impair any such right or power or shall be construed to be a waiver of any such Default or an acquiescence therein; and every power and remedy given by this Note or by law may

be exercised from time to time, and as often as shall be deemed expedient, by the Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 4.4. Waiver of Past Defaults. The Holder may waive any past default or Event

of Default hereunder and its consequences but no such waiver shall extend to any

subsequent or other default or Event of Default or impair any right consequent thereon.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 4.5. Waiver of Presentment etc. The Company hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Debenture, except as specifically provided herein.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ARTICLE V.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>MISCELLANEOUS</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.1. Notices. Any notice herein required or permitted to be given shall be in

writing and may be personally served or delivered by courier or sent by United States

mail and shall be deemed to have been given upon receipt if personally served (which

shall include telephone line facsimile transmission) or sent by courier or three (3) days

after being deposited in the United States mail, certified, with postage pre-paid and

properly addressed, if sent by mail. For the purposes hereof, the address of the Holder

shall be as shown on the records of the Company; and the address of the Company shall

be 17935 Sky Park Circle, Suite F, Irvine, California 92614. Both the Holder and the

Company may change the address for service by delivery of written notice to the other as

herein provided.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.2. Entire Agreement and Amendment Provision. This Debenture represents the

entire agreement between the parties hereto with respect to the subject matter hereof and

there are no representations, warranties or commitments, except as set forth herein. This

Debenture and any provision hereof may be amended only by an instrument in writing

signed by the Company and the Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.3. Assignability. This Debenture shall be binding upon the Company and its

successors and assigns and shall inure to be the benefit of the Holder and its successors

and assigns; provided, however, that so long as no Event of Default has occurred, this

Debenture shall only be transferable in whole subject to the restrictions contained in the

restrictive legend on the first page of this Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.4. Governing Law. This Debenture shall be governed by the internal laws of

the State of Nevada, without regard to conflicts of laws principles. The parties hereto

hereby submit to the exclusive jurisdiction and venue of the state or federal courts sited in

Clark County, Nevada with respect to any dispute arising under this Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.5. Replacement of Debenture. The Company covenants that upon receipt by

the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or

mutilation of this Debenture, and in case of loss, theft or destruction, of indemnity or

security reasonably satisfactory to it (which may not include the posting of any bond),

and upon surrender and cancellation of such Debenture, if mutilated, the Company will

make and deliver a new Debenture of like tenor.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.6. This Debenture shall not entitle the Holder to any of the rights of a

stockholder of the Company, including without limitation, the right to vote, to receive</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>dividends and other distributions, or to receive any notice of, or to attend, meetings of

stockholder or any other proceedings of the Company, unless and to the extent converted

into shares of Common Stock in accordance with the terms hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.7. Severability. In case any provision of this Debenture is held by a court of

competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,

such provision shall be adjusted rather than voided, if possible, so that it is enforceable to

the maximum extent possible, and the validity and enforceability of the remaining

provisions of this Debenture will not in any way be affected or impaired thereby.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.8. Headings. The headings of the sections of this Debenture are inserted for

convenience only and do not affect the meaning of such section.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.9. Counterparts. This Debenture may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute on instrument.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Section 5.10.  Exchange.  (a) Notwithstanding any other provision of this Debenture, the Holder hereby agrees and acknowledges that, in the event the Company proceeds with a private placement of Units, each Unit consisting of (i) 25,000 shares of Series A 10% Convertible Preferred Stock, having a stated value of $1.00 per share (the &#147;Stated Value&#148;) and which shall be convertible into the number of shares of Common Stock determined by dividing the Stated Value by the conversion price (which shall initially be $0.25 per share), (ii) 50,000 Class A Warrants to purchase an aggregate of 50,000 shares of Common Stock at an exercise price of $0.40 per share, exercisable for three (3) years following the date of issuance and (iii) 50,000 Class B Warrants to purchase an aggregate of 50,000 shares of Common Stock at an exercise price of $0.50 per share, exercisable for three (3) years following the date of
issuance, at a price of $25,000 per Unit, the Company shall provide notice to Holder of such private placement at least ten (10) business days prior to commencing such private placement (the &#147;Placement Notice&#148;).  Once Holder has received the Placement Notice, the Company may, at its option, issue to the Holder, or the Holder may, at its option, elect to exchange this Debenture and receive from the Company, in full payment of this Debenture, that number of Units determined by dividing the Principal Amount by the purchase price for each Unit.  The Company or the Holder, as the case may be, shall give written notice to the other not less than thirty (30) days nor more than sixty (60) days prior to the effective date of any such exchange (the &#147;Effective Date&#148;), setting forth the number of Units to be issued, and, in the case of notice from the Company, including instructions for presentation of the Debentures for cancellation, and in the case of notice from the Holder,
including the original Debenture for cancellation. Upon notice of any exchange, the Company covenants and agrees that upon presentation of the Debentures, it will issue on the Effective Date the Units and the share of Common Stock as interest as specified in such notice. The foregoing notwithstanding, upon receipt of a notice of exchange from the Company, in lieu of such exchange, the Holders may convert their Debenture pursuant to Article II hereof during the period from the date of notice of exchange until 5:00 p.m. Eastern Time on the business day immediately prior to the Effective Date.  If the Holder shall send a notice of exchange to the Company, the </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>holder may revoke such notice and exchange at any time up to the date the Company issues Units to the Holder in exchange therefor.  The $0.25 per share conversion price and the number and price of Units set forth herein shall be subject to adjustment as provided in Section 2.3 which shall apply to this Section 5.10 </font><i><font size=2>mutatis mutandis</font></i><font size=2>.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(b) If, on or before the Effective Date, the Company issues the Units to the Holder as provided in Section 5.10(a), together with accrued and unpaid interest, then, on and after said Effective Date, notwithstanding that this Debenture shall not have been surrendered for exchange, the obligation evidenced by the Debenture shall be deemed no longer outstanding, and all rights with respect thereto shall forthwith cease and terminate.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company as</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>executed this Debenture as of the date first written above.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
      <td  nowrap colspan="2" valign=top ><font size=2>Holder:  </font></td>
      <td  nowrap colspan="2" valign=top ><font size=2>Assured Pharmacy, Inc.</font></td>
    </tr>
    <tr >
      <td  nowrap colspan="2" valign=top >&nbsp;</td>
      <td  nowrap colspan="2" valign=top >&nbsp;</td>
    </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>___________________________</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Name: Haresh Sheth</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>___________________________</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Title:
      Chief Financial Officer</font></p> </td> </tr>
    <tr>
        <td width="33%" ></td>

        <td width="128" ></td>

        <td width="128" ></td>

        <td width="33%" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Name:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Tax Identification No:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<P align="left" style="page-break-before:always"></P><PAGE>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<font size=2>EXHIBIT &#147;1&#148;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>CONVERSION NOTICE</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>________________________________________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(To be executed by the Holder in order to Convert the Debenture)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2>TO:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The undersigned hereby irrevocably elects to convert US$__________ of the Principal Amount of the above Debenture into Shares of Common Stock of Assured

Pharmacy, Inc., according to the conditions stated therein, as of the Conversion Date

written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and delivering herewith such certificates and opinions as reasonably requested by the

Company in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Conversion Date: ___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Applicable Conversion Price: $0.40</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Signature: ___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Name: ___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Address: ___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Tax I.D. or Soc. Sec. No: ___________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Principal Amount to be converted:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2>US$________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Amount of Debenture unconverted:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2>US$________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Number of shares of Common Stock to be issued: ________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<br>
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<P align="center">
<FONT size=2 face="serif">EXHIBIT 2</FONT></P>
<P align="left">
<FONT size=2 face="serif">NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.</FONT></P>
<P align="center">
<B><FONT size=2 face="serif">COMMON STOCK PURCHASE WARRANT</FONT></B></P>
<P align="center">
<FONT size=2 face="serif">To Purchase _____________ Shares of Common Stock of</FONT></P>
<P align="center">
<FONT size=2 face="serif">Assured Pharmacy, Inc.</FONT></P>
<P align="left">
<FONT size=2 face="serif">THIS CERTIFIES that, for value received, ____________________
(the &#147;Holder&#148;), shall have the right to purchase from Assured Pharmacy,
Inc., a Nevada  corporation (the &#8220;Corporation&#8221;), __________ fully
paid and nonassessable shares of the Corporation&#8217;s Common Stock (the &#8220;Common
Stock&#8221;) at an exercise price of $0.60 US per share (the &#8220;Exercise
 Price&#8221;), subject to further adjustment as set forth in Section 3 hereof,
 at any time until 5:00 P.M., Pacific time, on the end of _________ __, 200__
which is 12 months from the date of issuance (the &#8220;Termination Date&#8221;).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Title to Warrant</FONT></U><FONT size=2 face="serif">. Prior to the Termination Date and subject to compliance with
applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Authorization of Shares</FONT></U><FONT size=2 face="serif">. The Company covenants that all shares of Common Stock
which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Exercise of Warrant</FONT></U><FONT size=2 face="serif">. Exercise of the purchase rights represented by this
Warrant may be made at any time or times on or after the closing of the offering, and before the close of business on the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office
of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="left">
<FONT size=2 face="serif">at the address of such holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank, the holder of
this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the holder hereof within twenty (20) Trading Days after the date on
which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by Holder, if any, pursuant to Section
4 prior to the issuance of such shares, have been paid.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Charges, Taxes and Expenses</FONT></U><FONT size=2 face="serif">. Issuance of certificates for shares of Common
Stock upon the exercise of this Warrant shall be made without charge to the holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, and such certificates shall be issued in the name of
the holder of this Warrant or in such name or names as may be directed by the holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the holder hereof; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Closing of Books</FONT></U><FONT size=2 face="serif">. The Company will not close its shareholder books or records
in any manner which prevents the timely exercise of this Warrant.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Transfer, Division and Combination</FONT></U><FONT size=2 face="serif">. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued.</FONT></P>
<P align="left">
&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants
are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 6(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.</FONT></P>

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<P align="left">
&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 size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 6. </FONT></P>
<P align="left">
&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 size=2 face="serif">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">No Rights as Shareholder until Exercise</FONT></U><FONT size=2 face="serif">. This Warrant does not entitle the
holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Loss, Theft, Destruction or Mutilation of Warrant</FONT></U><FONT size=2 face="serif">. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Saturdays. Sundays, Holidays, etc</FONT></U><FONT size=2 face="serif">. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Adjustments
of Exercise Price and Number of Warrant Shares</FONT></U><FONT size=2 face="serif">.
(a)
</FONT><U><FONT size=2 face="serif">Stock Splits, etc</FONT></U><FONT size=2 face="serif">.
The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time upon
 the happening of any of the following. In case the Company shall: (i) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of  Common Stock into a greater number of shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue any shares of its capital stock in a reclassification
of the Common  Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the holder
of this Warrant shall be entitled to receive the kind and number of Warrant Shares
or other securities  of the Company which he would have owned or have been entitled
to receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable  hereunder, the holder of this Warrant shall thereafter
be entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the  Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto immediately
prior to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company resulting  from such adjustment. An adjustment</FONT></P>

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<P align="left">
<FONT size=2 face="serif">made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.</FONT></P>
<P align="left">
&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 size=2 face="serif">(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets</FONT></U><FONT size=2 face="serif">.  In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder
of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 10. For purposes of this Section 10, "common stock of the successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.
The foregoing provisions of this Section 10 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.</FONT></P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Notice
of Adjustment</FONT></U><FONT size=2 face="serif">. Whenever the number of Warrant
Shares or number or kind  of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this  Warrant notice of such adjustment or adjustments
setting forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or  property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in the absence
of manifest error, shall be conclusive evidence  of the correctness of such adjustment.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="serif">Notice
of Corporate Action. If at any time:</FONT></P>
<P align="left">
&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 size=2 face="serif">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or</FONT></P>
<P align="left">
&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the Company to, another corporation or,</FONT></P>
<P align="left">
&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 size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;</FONT></P>
<P align="left">
<FONT size=2 face="serif">then, in any one or more of such cases, the Company shall give to Holder (i) at least 3 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 3 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to
Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 14(d).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Authorized
Shares</FONT></U><FONT size=2 face="serif">. The Company covenants that during
the period the Warrant is  outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="left">
<FONT size=2 face="serif">of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Principal Market upon which the Common Stock maybe listed.</FONT></P>
<P align="left">
&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 size=2 face="serif">The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.</FONT></P>
<P align="left">
&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 size=2 face="serif">Upon the request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.</FONT></P>
<P align="left">
&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 size=2 face="serif">Before taking any action which would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take
any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price.</FONT></P>
<P align="left">
&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 size=2 face="serif">Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="serif">Miscellaneous. </FONT></P>
<P align="left">
&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 size=2 face="serif">(a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Jurisdiction</FONT></U><FONT size=2 face="serif">. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the
laws of Nevada without regard to its conflict of law, principles or rules, and be subject to arbitration pursuant to the terms set forth in the Purchase Agreement.</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="left">
&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 size=2 face="serif">(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Restrictions</FONT></U><FONT size=2 face="serif">. The holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws. </FONT></P>
<P align="left">
&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 size=2 face="serif">(c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Non-waiver and Expenses</FONT></U><FONT size=2 face="serif">. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.</FONT></P>
<P align="left">
&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 size=2 face="serif">(d) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Notices</FONT></U><FONT size=2 face="serif">.
Any notice, request or other document required or permitted to be given or delivered
to the holder hereof by the Company shall be  delivered in accordance with the
notice provisions of the Purchase Agreement.</FONT></P>
<P align="left">
&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 size=2 face="serif">(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Limitation of Liability</FONT></U><FONT size=2 face="serif">. No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by
creditors of the Company.</FONT></P>
<P align="left">
&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 size=2 face="serif">(f) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Remedies</FONT></U><FONT size=2 face="serif">. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be adequate.</FONT></P>
<P align="left">
&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 size=2 face="serif">(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Successors and Assigns.</FONT></U><FONT size=2 face="serif"> Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.</FONT></P>
<P align="left">
&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 size=2 face="serif">(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Indemnification</FONT></U><FONT size=2 face="serif">. The Company agrees to indemnify and hold harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against Holder in any manner relating to or arising out of any failure by the Company to
perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from Holder's negligence, bad faith or willful misconduct in
its capacity as a stockholder or warrant holder of the Company.</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="left">
&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 size=2 face="serif">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Amendment</FONT></U><FONT size=2 face="serif">. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the
Holder.</FONT></P>
<P align="left">
&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 size=2 face="serif">(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Severability</FONT></U><FONT size=2 face="serif">. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.</FONT></P>
<P align="left">
&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 size=2 face="serif">(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Headings</FONT></U><FONT size=2 face="serif">. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.</FONT></P>
<P align="left">
<FONT size=2 face="serif">Dated:_____________ __200__</FONT> </P>
<div style="margin-left:40%">
  <table border=0 cellspacing=0 cellpadding=0>
    <tr>
      <td></td>
      <td></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
      <td align=left nowrap>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
      <td align=left nowrap>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
      <td align=left nowrap><font size=2 face="serif">Assured Pharmacy, Inc.</font> </td>
    </tr>
    <tr>
      <td colspan=2>&nbsp;</td>
    </tr>
    <tr>
      <td colspan=2>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap style="border-bottom:1px solid #FFFFFF;"><font size=2 face="serif">By:</font> </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=left nowrap><font size=2 face="serif">Robert DelVecchio, Chief
          Executive Officer</font> </td>
    </tr>
  </table>
  <p>&nbsp;</p>
</div>
<BR>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="center">
<FONT size=2 face="serif">NOTICE OF EXERCISE </FONT></P>
<P align="left">
<FONT size=2 face="serif">To:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assured Pharmacy, Inc. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The undersigned hereby elects to purchase shares of Common Stock (the "Common Stock"), of Assured Pharmacy, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: </FONT></P>
<div align="center">
  <TABLE border=0 cellspacing=0 cellpadding=0>
    <TR>
      <TD width=194></TD>
       <TD width=24></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
      <FONT size=2 face="serif">(Name)</FONT>  </TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>&nbsp;</TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
      <FONT size=2 face="serif">(Address)</FONT>  </TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>&nbsp;</TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    </TR>

    <TR valign="bottom">
      <TD colspan="2" align=left nowrap>
      <FONT size=2 face="serif">Social Security or Tax Identification Number</FONT>  </TD>
    </TR>
  </TABLE>
  <BR>
</div>
<P align="left">
<FONT size=2 face="serif">Dated:_________________________</FONT><U><FONT size=2 face="serif">  </FONT></U><FONT size=2 face="serif"> </FONT></P>
<div style="margin-left:50%">
  <table border=0 cellspacing=0 cellpadding=0>
    <tr>
      <td></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><font size=2 face="serif">Signature</font> </td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><font size=2 face="serif">Print Name</font>&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; </td>
    </tr>
  </table>
</div>
<BR>

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<P STYLE="page-break-before:always"></P><PAGE>
<P align="center">
<FONT size=2 face="serif">ASSIGNMENT FORM </FONT></P>
<P align="center">
<FONT size=2 face="serif">(To assign the foregoing warrant, execute<BR>
this form and supply required information.<BR>
Do not use this form to exercise the warrant.)</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
  <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
</TR>
<TR valign="bottom">
  <TD colspan="3" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;    </TD>
  <TD colspan="3" align=left nowrap>
<FONT size=2 face="serif">&nbsp;whose address is</FONT>    </TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD colspan="6" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
  <TD align=left nowrap><div align="right"><FONT face="serif">.</FONT></div></TD>
</TR>
<TR>
  <TD colspan=7>&nbsp;  </TD>
</TR>
<TR>
  <TD colspan=7><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
</TR>
<TR>
  <TD colspan=7>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=7>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=7>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=7>&nbsp;  </TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&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; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
  <TD align=left nowrap>&nbsp;  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #FFFFFF;">
<FONT size=2 face="serif">Dated:</FONT>  </TD>
  <TD align=left nowrap style="border-bottom:1px solid #000000;"><div align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </div></TD>
  <TD align=left nowrap><FONT face="serif">,</FONT></TD>
  <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </div></TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Holder's Signature:&nbsp;</FONT></TD>
  <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>
<FONT size=2 face="serif">Holder's Address:</FONT>  </TD>
  <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;      </TD>
  </TR>
<TR valign="bottom">
  <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
  <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<p><BR>
</p>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD></TD>
     <TD></TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>
<FONT size=2 face="serif">Signature Guaranteed:</FONT>  </TD>
  <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &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;&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; </div></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<p><BR>
</p>
<P align="left">
<FONT size=2 face="serif">NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="center">
<FONT size=2 face="serif">EXHIBIT 3 </FONT></P>
<P align="left">
<FONT size=2 face="serif">NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED,
TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES
ACT.</FONT></P>
<P align="center">
<B><FONT size=2 face="serif">COMMON STOCK PURCHASE WARRANT</FONT></B></P>
<P align="center">
<FONT size=2 face="serif">To Purchase________________Shares
of Common Stock of </FONT></P>
<P align="center">
<FONT size=2 face="serif">Assured Pharmacy, Inc. </FONT></P>
<P align="left">
<FONT size=2 face="serif">THIS CERTIFIES that, for value received, _________________________(the "Holder"),
shall have the right to purchase from Assured Pharmacy, Inc., a Nevada corporation
(the "Corporation"), fully paid and nonassessable shares
of the Corporation's Common Stock (the </FONT><FONT size=2 face="serif">"Common
Stock") at an exercise price of $0.80 US per share (the "Exercise
Price"), subject to further adjustment as set forth in Section 3 hereof, at any
time until 5:00 P.M., Pacific time, on the end of_______ __,200__which
is 24 months from the date of issuance (the "Termination Date").</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Title
to Warrant</U>. Prior to the Termination
Date and subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto properly
endorsed.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Authorization of Shares</FONT></U><FONT size=2 face="serif">. The Company covenants that all shares of Common Stock
which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise of
Warrant</U>. Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the closing of the offering, and before the close of business on the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at
the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof </FONT></P>

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<FONT size=2 face="serif">at the address of such holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank, the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the holder
hereof within twenty (20) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by Holder, if any, pursuant to Section 4 prior to the issuance of such shares, have been paid.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Charges, Taxes and Expenses</FONT></U><FONT size=2 face="serif">. Issuance of certificates for shares of Common
Stock upon the exercise of this Warrant shall be made without charge to the holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, and such certificates shall be issued in the name of
the holder of this Warrant or in such name or names as may be directed by the holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the holder hereof; and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Closing of Books</FONT></U><FONT size=2 face="serif">. The Company will not close its shareholder books or records
in any manner which prevents the timely exercise of this Warrant.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Transfer, Division and Combination</FONT></U><FONT size=2 face="serif">. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of shares of Common Stock without having a new Warrant issued. </FONT></P>
<P align="left">
&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 6(a), as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.</FONT></P>

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&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 size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 6.</FONT></P>
<P align="left">
&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 size=2 face="serif">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">No Rights as Shareholder until Exercise</FONT></U><FONT size=2 face="serif">. This Warrant does not entitle the
holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="sans-serif"> </FONT><U><FONT size=2 face="serif">Loss, Theft, Destruction or Mutilation of Warrant</FONT></U><FONT size=2 face="serif">. The Company covenants that upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Saturdays, Sundays, Holidays etc</FONT></U><FONT size=2 face="serif">. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Adjustments
of Exercise Price and Number of Warrant Shares</FONT></U><FONT size=2 face="serif">.
(a)</FONT><U><FONT size=2 face="serif">Stock Splits, etc.</FONT></U><FONT size=2 face="serif"> The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of  any of the following. In case the Company shall: (i) pay a dividend
in shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding  shares
of Common Stock into a greater number of shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of its capital  stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise
of this Warrant immediately prior thereto shall be adjusted so that the holder
of this Warrant shall be entitled to receive the kind and  number of Warrant
Shares or other securities of the Company which he would have owned or have been
entitled to receive had such Warrant been exercised in advance thereof. Upon
each such adjustment of the kind and number of Warrant Shares or other securities
of the Company which are purchasable hereunder, the holder of this Warrant shall
thereafter be entitled to purchase the number of Warrant Shares or other securities
resulting from such adjustment at an Exercise Price per Warrant Share or other
security obtained by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior  to such adjustment and dividing by the number of Warrant Shares
or other securities of the Company resulting from such adjustment. An adjustment</FONT></P>

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<FONT size=2 face="serif">made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.</FONT></P>
<P align="left">
&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets</u></FONT><FONT size=2 face="serif">. In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any
such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every
covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board
of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 10. For purposes of
this Section 10, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 10 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of assets.</FONT></P>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Notice
of Adjustment</FONT></U><FONT size=2 face="serif">. Whenever the number of Warrant
Shares or number or kind  of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this  Warrant notice of such adjustment or adjustments
setting forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or  property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in the absence
of manifest error, shall be conclusive evidence  of the correctness of such adjustment.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="serif">Notice
of Corporate Action. If at any time: </FONT></P>
<P align="left">
&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 size=2 face="serif">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or </FONT></P>
<P align="left">
&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or
any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or, </FONT></P>
<P align="left">&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 size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  there shall be a voluntary or involuntary
  dissolution, liquidation or winding up of the Company; </FONT></P>
<P align="left">
<FONT size=2 face="serif">then, in any one or more of such cases, the Company shall give to Holder (i) at least 3 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 3 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i)
the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such
dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 14(d).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Authorized
Shares</FONT></U><FONT size=2 face="serif">. The Company covenants that during
the period the Warrant is  outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise</FONT></P>

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<FONT size=2 face="serif">of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of executing stock certificates
to  execute and issue the necessary certificates for the Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company will take
all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as  provided herein without violation of any applicable law or
regulation, or of any requirements of the Principal Market upon which the Common
Stock may be listed.</FONT></P>
<P align="left">
&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 size=2 face="serif">The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.</FONT></P>
<P align="left">
&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 size=2 face="serif">Upon the request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.</FONT></P>
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&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 size=2 face="serif">Before taking any action which would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take
any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price.</FONT></P>
<P align="left">
&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 size=2 face="serif">Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.</FONT></P>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size=2 face="serif">Miscellaneous. </FONT></P>
<P align="left">
&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 size=2 face="serif">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Jurisdiction</FONT></U><FONT size=2 face="serif">. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the
laws of Nevada without regard to its conflict of law, principles or rules, and be subject to arbitration pursuant to the terms set forth in the Purchase Agreement.</FONT></P>

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&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 size=2 face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Restrictions</FONT></U><FONT size=2 face="serif">. The holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws. </FONT></P>
<P align="left">
&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 size=2 face="serif">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Non-waiver and Expenses</FONT></U><FONT size=2 face="serif">. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.</FONT></P>
<P align="left">
&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 size=2 face="serif">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Notices</FONT></U><FONT size=2 face="serif">. Any notice, request or other document required or permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.</FONT></P>
<P align="left">
&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 size=2 face="serif">(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Limitation of Liability</FONT></U><FONT size=2 face="serif">. No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and
no enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by
creditors of the Company.</FONT></P>
<P align="left">
&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 size=2 face="serif">(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Remedies</FONT></U><FONT size=2 face="serif">. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.</FONT></P>
<P align="left">
&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 size=2 face="serif">(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Successors and Assigns</FONT></U><FONT size=2 face="serif">. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.</FONT></P>
<P align="left">
&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 size=2 face="serif">(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT size=2 face="serif">Indemnification</FONT></U><FONT size=2 face="serif">. The Company agrees to indemnify and hold </FONT><FONT size=2 face="serif">harmless Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant;</FONT><U><FONT size=2 face="serif"> provided</FONT></U><FONT size=2 face="serif">,</FONT><U><FONT size=2 face="serif"> however</FONT></U><FONT size=2 face="serif">, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from Holder's negligence, bad faith or willful misconduct in its capacity as a stockholder or warrant holder of the Company.</FONT></P>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="left">
&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 size=2 face="serif">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Amendment</FONT></U><FONT size=2 face="serif">. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
</FONT></P>
<P align="left">
&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 size=2 face="serif">(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Severability</FONT></U><FONT size=2 face="serif">.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any  provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision </FONT><FONT size=2 face="serif">shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
 provisions or the remaining provisions of this Warrant.</FONT></P>
<P align="left">
&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 size=2 face="serif">(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><U><FONT size=2 face="serif">Headings</FONT></U><FONT size=2 face="serif">. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.</FONT></P>
<P align="left">&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 size=2 face="serif"> IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.</FONT></P>
<P align="left">
<FONT size=2 face="serif">Dated:________________ __, 200__ </FONT></P>
<div style="margin-left:50%">
  <table border=0 cellspacing=0 cellpadding=0>
    <tr>
      <td></td>
      <td></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
      <td align=left nowrap><font size=2 face="serif">Assured Pharmacy, Inc.</font> </td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap style="border-bottom:1px solid #FFFFFF;"><font size=2 face="serif">By:</font></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=left nowrap><font size=2 face="serif">Robert DelVecchio, Chief
          Executive Officer</font> </td>
    </tr>
  </table>
</div>
<BR>

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<P STYLE="page-break-before:always"></P><PAGE>


<P align="center">
<FONT size=2 face="serif">NOTICE OF EXERCISE </FONT></P>
<P align="center">&nbsp;</P>
<P align="left">
<FONT size=2 face="serif">To: Assured Pharmacy, Inc. </FONT></P>
<P align="left"><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  (1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  The undersigned hereby elects to
  purchase shares of Common Stock (the "Common Stock"), of Assured Pharmacy,
    Inc. pursuant to the terms of the attached Warrant, and tenders herewith
    payment of the exercise price in full, together with all applicable transfer
    taxes, if any. </FONT></P>
<P align="left"> <FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  (2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  Please
    issue a certificate or certificates representing said shares of Common
  Stock in the name of the undersigned or in such other name as is specified
  below: </FONT></P>
<P align="left">&nbsp;</P>

  <div align="center">
  <TABLE border=0 cellspacing=0 cellpadding=0>
    <TR>
      <TD width=194></TD>
       <TD width=24></TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
      <FONT size=2 face="serif">(Name)</FONT>  </TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>&nbsp;</TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>
      <FONT size=2 face="serif">(Address)</FONT>  </TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap>&nbsp;</TD>
      <TD align=left nowrap>&nbsp;</TD>
    </TR>
    <TR valign="bottom">
      <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
      <TD align=left nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    </TR>

    <TR valign="bottom">
      <TD colspan="2" align=left nowrap>
      <FONT size=2 face="serif">Social Security or Tax Identification Number</FONT>  </TD>
    </TR>
  </TABLE>
<BR>
</div>
<P align="left"> <FONT size=2 face="serif">Dated:_________________________</FONT><U><FONT size=2 face="serif"> </FONT></U><FONT size=2 face="serif"> </FONT></P>
<div style="margin-left:50%">
  <table border=0 cellspacing=0 cellpadding=0>
    <tr>
      <td></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><font size=2 face="serif">Signature</font> </td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;</div></td>
    </tr>
    <tr valign="bottom">
      <td align=left nowrap><font size=2 face="serif">Print Name</font>&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; </td>
    </tr>
  </table>
</div>
<P align="left">&nbsp;</P>
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<P STYLE="page-break-before:always"></P><PAGE>


<P align="center">
<FONT size=2 face="serif">ASSIGNMENT FORM </FONT></P>
<P align="center">
<FONT size=2 face="serif">(To assign the foregoing warrant, execute<BR>
this form and supply required information.<BR>
Do not use this form to exercise the warrant.)</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="3" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
    <TD colspan="3" align=left nowrap><FONT size=2 face="serif">&nbsp;whose address
        is</FONT> </TD>
    <TD align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="6" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
    <TD align=left nowrap><div align="right"><FONT face="serif">.</FONT></div></TD>
  </TR>
  <TR>
    <TD colspan=7>&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan=7><div style="border-bottom:1px solid #000000"> &nbsp;</div></TD>
  </TR>
  <TR>
    <TD colspan=7>&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan=7>&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan=7>&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan=7>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left nowrap>&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; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD align=left nowrap>&nbsp;</TD>
    <TD align=left nowrap style="border-bottom:1px solid #FFFFFF;"><FONT size=2 face="serif">Dated:</FONT> </TD>
    <TD align=left nowrap style="border-bottom:1px solid #000000;"><div align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </div></TD>
    <TD align=left nowrap><FONT face="serif">,</FONT></TD>
    <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </div></TD>
    <TD align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left nowrap>&nbsp;</TD>
    <TD align=left nowrap><FONT size=2 face="serif">Holder's Signature:&nbsp;</FONT></TD>
    <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left nowrap>&nbsp;</TD>
    <TD align=left nowrap><FONT size=2 face="serif">Holder's Address:</FONT> </TD>
    <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="7" align=left nowrap>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left nowrap>&nbsp;</TD>
    <TD align=left nowrap>&nbsp;</TD>
    <TD colspan="5" align=left nowrap style="border-bottom:1px solid #000000;">&nbsp;</TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<p><BR>
</p>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD></TD>
    <TD></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left nowrap><FONT size=2 face="serif">Signature Guaranteed:</FONT> </TD>
    <TD align=left nowrap><div style="border-bottom:1px solid #000000"> &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;&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; </div></TD>
  </TR>
</TABLE>
<P align="left">&nbsp;</P>
<P align="left">
<FONT size=2 face="serif">NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.</FONT></P>

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</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>c54574_ex31-1.htm
<TEXT>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:right;'><b><font style='font-size:10pt'>Exhibit 31.1</font></b></p>
<p align="right" style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'>&nbsp;</p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>CERTIFICATION</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>I, Robert DelVecchio, certify that:</font></p>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>1.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Assured Pharmacy, Inc. (the &#147;registrant&#148;);</font></p> </td> </tr></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>2.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>3.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>4.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(a)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(b)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(c)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(d)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'><p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>5.</font></p>
                        </td>
        <td width="95%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
 <tr>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
<td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(a)</font></p> </td>
<td width="90%" valign=top style='padding:6.0pt 0in 0in 0in;'>
    <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
</div>
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      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(b)</font></p> </td>
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    <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><br>
                        <font style='font-size:10pt'>Date: August 14, 2008</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Robert DelVecchio</font> </p> </td> </tr>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Robert DelVecchio</font><br> <font style='font-size:10pt'>Chief Executive Officer</font></p> </td> </tr></table>
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<TYPE>EX-31.2
<SEQUENCE>4
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:right;'><b><font style='font-size:10pt'>Exhibit 31.2</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'>&nbsp;</p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>CERTIFICATION</font></B></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>I, Haresh Sheth, certify that:</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>1.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Assured Pharmacy, Inc. (the &#147;registrant&#148;);</font></p> </td> </tr></table>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>2.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>3.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>4.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(a)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(b)</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(c)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(d)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>5.</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(a)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(b)</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><br>
                        <font style='font-size:10pt'>Date: August 14, 2008</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Haresh Sheth</font> </p> </td> </tr>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Haresh Sheth</font><br> <font style='font-size:10pt'>Chief Financial Officer</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>

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<TYPE>EX-32.1
<SEQUENCE>5
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:right;'><b><font style='font-size:10pt'>Exhibit 32.1</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION </font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font style='font-size:10pt'>906 OF THE SARBANES-OXLEY ACT OF 2002</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In connection with the Quarterly Report of Assured Pharmacy, Inc. (the &#147;Company&#148;) on Form 10-Q for the quarter ended June 30, 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>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(1)</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and</font></p> </td> </tr></table>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(2)</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Date:
                            August 14, 2008</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'>  </p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Robert DelVecchio</font> </p> </td> </tr>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td> </tr>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Robert DelVecchio&nbsp;</font><br> <font style='font-size:10pt'>Chief Executive Officer of</font><br> <font style='font-size:10pt'>Assured Pharmacy, Inc.</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. </font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>c54574_ex32-2.htm
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<p style=' margin-bottom:0pt; margin-top:8pt;text-align:right;'><b><font style='font-size:10pt'>Exhibit 32.2</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:center;'><B><font STYLE='FONT-SIZE:10PT'>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION </font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font style='font-size:10pt'>906 OF THE SARBANES-OXLEY ACT OF 2002</font></b></p>
<p style=' margin-bottom:0pt; margin-top:8pt; text-indent:5%;text-align:left;'><font style='font-size:10pt'>In
    connection with the Quarterly Report of Assured Pharmacy, Inc. (the &#147;Company&#148;)
    on Form 10-Q for the quarter ended June 30, 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>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(1)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and</font></p> </td> </tr></table>
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<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse;'>
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        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6pt;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=top style='padding:6.0pt 0in 0in 0in;'>
      <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>(2)</font></p> </td>
        <td valign=top style='padding:6.0pt 0in 0in 0in;'>
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt;'><font style='font-size:10pt'>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> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Date:
                            August 14, 2008</font></p> </td>
        <td width="2%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="5%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td width="44%" valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td> </tr>
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        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'>  </p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=bottom >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>/s/
                            Haresh Sheth</font> </p> </td> </tr>
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        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <hr noshade="noshade" width="100%"  color="gray" size="1"> </td> </tr>
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        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>&nbsp;</font></p> </td>
        <td valign=top >
                        <p style=' margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt;'><font style='font-size:10pt'>Haresh Sheth</font><br> <font style='font-size:10pt'>Chief Financial Officer of</font><br> <font style='font-size:10pt'>Assured Pharmacy, Inc.</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></p>
<p style=' margin-bottom:0pt; margin-top:8pt;text-align:left;'><font style='font-size:10pt'>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>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font style='font-size:10pt'>&nbsp;</font></p>
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