mainbody.htm

·	the ability to integrate new pharmacies into our existing operations and leverage existing infrastructure; and
·	the ability to increase sales at new pharmacylocations.

A failure to manage new pharmacy openings in a timely and cost efficient manner would adversely affect our results of operations, financial condition and cash flows.

We will not be able to compete effectively if we are unable to attract, hire and retain qualified pharmacists.

There is a nationwide shortage of qualified pharmacists. We currently employ two pharmacists, one pharmacist at each operating pharmacy. Although we have not experienced any difficulty recruiting pharmacists in the past, we may experience difficulty attracting, hiring and retaining qualified pharmacists in the future. If we are unable to attract, hire and retain enough qualified pharmacists, our business, prospects, financial condition, and results of operations could be adversely affected.

The health of the economy in general and in the markets we serve could adversely affect our business and our financial results.

Our business is affected by the economy in general, including changes that could affect drug utilization trends, resulting in an adverse effect on our business and financial results. Although a recovery might be underway, it is possible that a worsening of the economic environment will cause decline in drug utilization, and dampen demand for pharmaceutical drugs. If this were to occur, our business and financial results could be adversely affected.

Risk Factors Relating to Our Common Stock

Our debenture holders and preferred stockholders would have priority in distributions over our common stockholders following a liquidation event affecting the company. As a result, in the event of a liquidation event, our common stockholders would receive distributions only after priority distributions are paid and may receive nothing in liquidation.

In the event of any Liquidation (as such term is defined in our Certificate of Designation of Series A, B, C and D Convertible Preferred Stock, as herein incorporated by reference), the holders of our outstanding Series A, Series B, Series C and Series D Convertible Preferred Stock (collectively, “Preferred Stock”) would be entitled to a liquidation preference payment in preference to any payment to holders of the Common Stock. The liquidation preference for our outstanding debentures ranks senior to our Preferred Stock and Common Stock. As such, holders of Common Stock might receive nothing in liquidation, or receive much less than they would if there were no Preferred Stock outstanding.

We intend to secure additional funding in the future through issuances of securities and such additional funding may be dilutive to stockholders or impose operational restrictions.

We intend to secure additional funding in the future to help establish pharmacies and fund our operations through sales of shares of our common or preferred stock or securities convertible into shares of our common stock, as well as issuances of debt. Such additional financing may be dilutive to our stockholders, and debt financing, if available, may involve restrictive covenants which may limit our operating flexibility. If additional capital is raised through the issuances of shares of our common or preferred stock or securities convertible into shares of our common stock, the percentage ownership of existing stockholders will be reduced. These stockholders may experience additional dilution in net book value per share and any additional equity securities may have rights, preferences and privileges senior to those of the holders of our common stock.

- 22 -

Holders of Common Stock

As of April 2, 2014 , there were approximately 164 record holders of our common stock. This number does not include stockholders whose shares are held in securities position listings.

Dividends

We have not paid or declared any dividends on our common stock and we do not anticipate paying dividends on our common stock in the foreseeable future.

Issuer Purchases of Equity Securities

None.

Recent Sales of Unregistered Securities

The following is a summary of recent sales of our securities that were not registered under the Securities Act.

Between February 4, 2013 and May 30, 2013, we entered into subscription agreements with eight investors pursuant to which we sold an aggregate of 1,323,093 shares of restricted common stock at $0.65 and warrants to purchase 1,323,093 common shares with an exercise price of $0.90. We received gross proceeds of $860,000, which were used to reduce our outstanding amount due to our primary wholesaler and general working capital purposes. The net cash proceeds from this private transaction were $814,190, net of closing fees of $45,810 which include $32,800 in placement agent fees paid to TriPoint Global Equities, LLC (“TriPoint”). In addition, TriPoint also received warrants to purchase a total of 100,924 common shares of which 50,462 warrants and 50,462 warrants have an exercise price of $0.65 and $0.90, respectively. The warrants were fully vested on the date of issuance and expire on May 30, 2018.

All of the common stock offerings and sales above were deemed to be exempt under Rule 506 of Regulation D and/or Section 4(a) 2 of the Securities Act of 1933. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, our business associates or existing security holders, and transfers of the securities were restricted by us in accordance with the requirements of the Securities Act. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, were capable of analyzing the merits and risks of their investment, and understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with business and financial information concerning our company.

For each of the following common stock and warrant issuances, these securities were issued upon the exemption from the registration provisions of the Securities Act of 1933 provided for by Section 4(a)2 and 3(a)(9). There were no underwriters or placement agents employed in connection with any of these transactions.

- 29 -

Financial condition, Liquidity and Capital Resources

Liquidity and Capital Resources

As of December 31, 2013, we had a cash balance of $2,856, a minimal decrease from a balance of $21,298 at December 31, 2012. At December 31, 2013, we had a working capital deficit of $1,746,832 a decrease from a working capital deficit of $6,312,121 as of December 31, 2012. The decrease in our working capital deficit was primarily attributable to an decrease in current liabilities attributable to the conversion of approximately $3,534,793 in vendor payables into a long term secured note, the conversion of an aggregate total of $1,662,107 in debt principal and an aggregate total of $557,259 in accrued interest into common stock at a conversion price of $0.60, which was partially offset by a decrease in assets in discontinued operations of $562,751 due to the closure of our Riverside and Gresham pharmacies in August 2013.

Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities and cash made available under certain credit facilities. In order for us to finance operations, continue our growth plan and service our existing debt, additional funding is required from external sources. We intend to fund operations through increased sales, lower operating expenses 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 is seeking financing and anticipates that its efforts will result in sufficient funds to finance our operations beyond the next twelve months. However, there can be no assurance that the additional financing necessary to finance our operations for the next twelve months will be available to us on acceptable terms, or at all.

Our current cash on hand is insufficient for us to operate our two existing pharmacies at the current level for the next twelve months. Our business plan calls for ongoing expenses in connection with salary expense and establishing additional pharmacies. These expenditures are anticipated to be approximately $2,400,000 for the next twelve months.

As of December 31, 2013, we have $300,000 in debt securities which were due in the year 2012 and $483,943 in debt securities which come due in the year 2014. We are attempting to extend the maturity date of certain of these debt securities, but can provide no assurance that the holders of such securities will agree to extend the maturity date on these securities on acceptable terms. If our debt holders choose not to convert certain of these securities into equity, we will need to repay such debt, or reach an agreement with the debt holders to extend the terms thereof. If we are forced to repay the debt, this need for funds would have a material adverse impact on our business operations, financial condition and prospects, including our ability to operate as a going concern. If we are forced to repay the debt, our current and forecasted levels of cash flows and available cash on hand will not be sufficient to fund our operations for the year 2014. Accordingly, we will be required to obtain additional financing in order to repay the debt, cover operating losses and fund working capital needs. We cannot provide any assurances of the availability of future financing or the terms on which it might be available. In the absence of such financing, we may be forced to scale back or cease operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.

In January 2014, the Company entered into a $200,000 promissory note with Pinewood Trading Fund, LP., a related party. The note bears an interest rate of 16.00% per annum payable in the Company’s common stock payable on July 1st and January 1st of each calendar year and matures on January 28, 2016.

In February and March 2014, the Company entered into five short term promissory notes with Pinewood Trading Fund, LP., a related party for an aggregate total of $240,000. The short term notes bear an interest rate of 12.0% per annum and mature on April 30, 2014.

In February 2014, the Company entered into an Amended and Restated 10% Senior Convertible Debenture due June 30, 2016 with Hillair Capital Investments, LP. in the amount of $1,150,000. The amendment relates to convertible debentures originally issued on May 16, 2011, August 22, 2011, November 30, 2011 and July 19, 2012 for an aggregate total of $1,000,000 in debentures. In addition to the extension of the maturity date, the interest rate was also reduced from 16.0% to 10.0% per annum and the conversion price was decreased from $0.90 to $0.75. As part of the agreement, the Company agreed to increase the principal amount of the debenture by $150,000 which represents eighteen months of interest at the stated rate of 10%. As a result, all interest accruable and payable between February 7, 2014 and August 8, 2015 is considered paid in full and satisfied. In addition, the Company issued 420,694 shares of common stock as payment of accrued interest of $252,417 at a rate of $0.60 per share. As part of the agreement, all interest accruable and payable between February 7, 2014 and August 7, 2015 has been added to this debenture at a rate of 10% per annum and is considered paid in full and satisfied. Further interest will not begin accruing until August 8, 2015. As part of the amendment, the exercise price of the related warrants was reduced from $0.90 to $0.75 resulting in the issuance of an additional 320,000 warrants per the warrant agreement terms.

- 37 -

In March 2014, we entered into a Forbearance Agreement with H.D. Smith Wholesale Drug Co. in which the lender agreed to forbear from accelerating the outstanding balance of the Note and from instituting collection efforts from the date of the agreement through July 1, 2014. The forbearance was required due to our inability to make payments required under the agreement of $338,479 and our inability to meet the $500,000 minimum monthly purchase requirement due to the closure of our two pharmacy locations.

In March 2014, the Company entered into a $600,000 Nondisclosable Revolving Line of Credit Loan with Third Coast Bank SSB due on March 25, 2015. The loan is not subject to an interest rate, but is subject to service charges based on the amount of funds advanced. The loan is secured by the Company’s accounts receivable and is guaranteed by Pinewood Trading Fund, LP., a related party.

The table below lists our obligations under outstanding notes payable and unsecured convertible debentures, as of December 31, 2013:

	Related Party		Unrelated			Total

Secured Debt (1)		-		3,804,111			3,804,111
Revolving Credit facilities (2)		477,000		-			477,000
Other Notes and Debt (3)		-		52,408			52,408
Unsecured Convertible Debentures		-		1,500,000			1,500,000
		477,000		5,356,519			5,833,519
Less: current portion		-		(783,943	)		(783,943	)
	$	477,000	$	4,572,576		$	5,049,576

In February 2013, we received a one year loan of $3,828,527 from our primary wholesaler upon conversion of trade payables of $3,534,793 and cancellation of secured loan with a remaining balance of $293,734. The note bears an interest rate of 6.25% per annum, with interest payable monthly. Monthly payment requirements were $27,000 per month for the first four consecutive months, followed by four consecutive monthly principal reductions of $37,000, followed by three consecutive monthly principal reductions of $42,000, with remaining principal and interest due February 1, 2014. In July 2013, the secured loan was amended and the maturity date was extended to February 1, 2016 with monthly payment requirements of $42,000.

2)	As of December 31, 2013, revolving credit facilities consisted of an outstanding balance of $477,000 on a line of credit we entered into with Brockington Securities, Inc., a company under the control of our Chief Executive Officer.

3)	As of December 31, 2013, other notes and debt consisted of the outstanding principal balance of $52,408 due to TPG in connection with our acquisition of their ownership interest in API, which operated our discontinued pharmacy in Riverside, California.

Obligations and Commercial Commitments

Not required for smaller reporting companies

Outstanding Trade Balance. At December 31, 2013, we did not have an outstanding balance with our primary wholesaler.

Capital Expenditures. At March 27, 2014, we had no material commitments for capital expenditures.

- 38 -

Cash Flows

As of December 31, 2013, we had $2,856 in cash and total current assets in the amount of $830,281 and had current liabilities in the amount of $2,577,113, resulting in a working capital deficit of $1,746,832.

The following discussion focuses on information in more detail on the main elements of the $18,442 and $2,018 net decrease in cash during the years ended December 31, 2013 and 2012, respectively included in the accompanying Consolidated Statements of Cash Flows. The table below sets forth a summary of the significant sources and uses of cash for the years ended December 31:

	2013			2012

Cash used in operating activities	$	(1,876,728	)	$	(530,815	)
Cash used in investing activities		(53,838	)		(21,285	)
Cash provided by financing activities		1,912,124			550,082

Decrease in cash	$	(18,442	)	$	(2,018	)

Operating activities used $1,876,728 in cash for the year ended December 31, 2013 compared to $530,815 in cash used for the year ended December 31, 2012. For the year ended December 31, 2013, o ur net loss of $3,361,513 plus non-cash expenses of $92,467 was the primary reason for our negative operating cash flows which were partially offset by a $1,503,335 change in operating assets and liabilities. For the year ended December 31, 2012, o ur net loss of $4,005,506, less non-cash expenses of $1,316,348 was the primary reason for our negative operation cash flows which were partially offset by a $2,158,343 change in operation assets and liabilities. The table below summarizes the components of our cash used in operating activities for the year ended December 31, 2013 and 2012:

Net loss from operations including non-controlling interest	$	(3,361,513	)	$	(4,005,506	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		36,129			34,614
Amortization of debt issuance costs		36,131			121,963
Amortization of discount on debt		333,255			684,627
Stock based compensation		628,964			847,561
Issuance of common stock in lieu of debenture interest		45,467			-
(Gain) or Loss on extinguishment of debentures and notes		(1,548,915	)		30,610
Provision for accounts receivable doubtful accounts		16,683			(136,038	)
Recoveries of other receivable doubtful accounts		(100,708			-
Provision for obsolete inventory		24,006			-
Impairment of goodwill		697,766			90,205
Loss on sale of property and equipment		1,028			-
Gain on change in fair value of forward contract		(117,364	)		-
Loss on change in fair value of derivative		73,917
Gain on change in fair value of warrant liability		(144,909	)		(357,194	)
		(18,550	)		1,316,348

Changes in operating assets and liabilities:		1,503,335			2,158,343

Net cash used in operating activities	$	(1,876,728	)	$	(530,815	)

Operating assets and liabilities reduced the overall cash deficit in the years ended December 31, 213 and 2012 primarily due to our increases in our accounts payable and accrued expenses, decreases in our accounts receivable and our other receivables related to worker's compensation claims and decreases in our inventories.

Cash used in investing activities was $53,838 in the year ended December 31, 2013, compared to $21,285 in the year ended December 31, 2012. Investing activities in the year ended December 31, 2013 and 2012 consisted entirely of purchases and sales of property and equipment.

Cash provided by financing activities during the year ended December 31, 2013 was $1,912,124 compared to $550,082 in the year ended December 31, 2012. Over the last several years, our operations have been funded primarily through the sale of debt securities and advances from revolving credit facilities made available to us. During the year ended December 31, 2013 we received net proceeds from the issuance of preferred stock of $1,097,395, net proceeds from the issuance of common stock of $814,190 and net proceeds on revolving credit facilities of $30,000, which was partially offset by net principal repayments of $29,461 on notes payable. During the year ended December 31, 2012 we received net proceeds from the issuance of convertible debentures of $307,502 and net proceeds on revolving credit facilities of $288,680, which was partially offset by net principal repayments of $46,100 on notes payable.

- 39 -

Registration Statement

We filed an initial registration statement that was effective on November 14, 2012 for the offer and sale or other disposition of 2,292,067 shares of our common stock issuable on exercise of warrants by the selling shareholders.

Off Balance Sheet Arrangements

As of December 31, 2013, there were no off balance sheet arrangements.

Going Concern Assumption

The consolidated financial statements have been prepared assuming 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 December 31, 2013, we had an accumulated deficit of approximately $48.6 million, recurring losses from operations and negative cash flow from operating activities for the year ended December 31, 2013, of approximately $1,900,000. We also had negative working capital of approximately $1.7 million and debt with maturities within one year in the amount of approximately $800,000 as of December 31, 2013.

From January 1, 2014 through March 27, 2014, the Company has secured loans in the amount of $440,000 with Pinewood Trading Fund, LP, a related party, extended the maturity date of an aggregate total of $1,000,000 in convertible debentures from December 1, 2013 to June 30, 2016 and converted $252,417 in accrued interest into common stock at $0.60 per share and secured a Revolving Line of Credit for $600,000 from Third Coast Bank. The Company intends to fund operations through raising additional capital through debt financing and equity issuances, increased sales, increased collection activity on past due other receivable balances and reduced expenses, which may be insufficient to fund its capital expenditures, working capital or other cash requirements for the year ending December 31, 2014. The Company is in negotiations with current debt holders to restructure and extend payment terms of the existing short term debt. The Company is seeking additional funds to finance its immediate and long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

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

● We are seeking investment capital.

● We are aggressively targeting new physicians.

● We are aggressively seeking to renegotiate past due existing debentures.

Critical Accounting Policies and Estimates

Our analysis and discussion of our financial condition and results of operations is based upon our Consolidated Financial Statements that have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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, 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. GAAP provides the framework from which to make these estimates, assumptions and disclosures. We have chosen accounting policies within GAAP that we believe are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. We regularly assess these policies in light of current and forecasted economic conditions. Our accounting policies are stated in Note 2 to the Consolidated Financial Statements included elsewhere in this annual report on Form 10K. We believe the following accounting policies are critical to understanding our results of operations and the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

- 40 -

Revenue Recognition

We recognize revenue from prescriptions dispensed on an accrual basis when the product is delivered to or picked up by the customer. Payments are received directly from the customer at the point of sale, or the customers' insurance provider is billed electronically. For third party medical insurance and other claims, authorization to ensure payment is obtained from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customers' insurance provider.

Accounts Receivable and Allowances

Our accounts receivable consist of amounts due from third party medical insurance carriers, pharmacy benefit management companies, patients and credit card processors. Management periodically reviews the accounts receivable to assess collectability and estimate and potential doubtful accounts. Accounts receivable are written off after collection efforts have been completed in accordance with our policies. The doubtful accounts allowance reduces the carrying value of the account receivable.

Inventories

Inventories are located at our pharmacy locations. Inventory consists solely of finished products (primarily prescription drugs) and is valued at the lower of first-in, first-out cost (FIFO) or market. Our inventories are maintained on a periodic basis through the performance of physical inventory counts. Our cost of sales is recorded based upon the actual results of the physical inventory counts, and is estimated when a physical inventory is not performed in a particular month. Historically, no significant adjustments have resulted from reconciliations with the physical inventories.

Inventories are comprised of brand and generic pharmaceutical drugs. Our pharmacies maintain a wide variety of different drug classes, known as Schedule II, Schedule III, and Schedule IV drugs, which vary in degrees of addictiveness. Schedule II drugs, considered narcotics by the DEA, are the most addictive; hence, they are highly regulated by the DEA and are required to be segregated and secured in a separate cabinet. Schedule III and Schedule IV drugs are less addictive and are not regulated. Because our business model focuses on servicing pain management doctors and chronic pain patients, we carry in inventory a larger amount of Schedule II drugs than most other pharmacies.

Stock-based Compensation

We issue options and restricted shares of common stock to employees and consultants. Stock option and restricted share awards are granted at the fair market value of our common stock on the date of grant.

The Company records all share-based payments at fair value. The total applicable compensation cost is amortized on a straight-line basis over the requisite service period, which is generally the vesting period.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

- 41 -

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND PLAN OF OPERATIONS

Organization

Assured Pharmacy, Inc. (“Assured Pharmacy” or the “Company”) was organized as a Nevada corporation on October 22, 1999, under the name Surforama.com, Inc. The Company is engaged in the business of providing pharmacy services to physicians and patients primarily in the treatment of chronic pain. The Company derives its revenue primarily from the sale of prescription drugs and primarily dispenses highly regulated pain medications and does not offer non-prescription drugs or health and beauty related products inventoried at traditional pharmacies. The majority of the Company's business is derived from repeat business from its customers.

The Company had two operating pharmacies as of the year ended December 31, 2013 and four operating pharmacies as of the year ended December 31, 2012. The pharmacies are located in Kirkland, Washington and Leawood, Kansas. In August 2013, as a result of our financial condition and inability to secure additional funding or significantly improve our liquidity position, management reevaluated its strategic plan. Management developed and implemented a plan to scale back operations as we could not continue to support the working capital needs of four pharmacies. As a result, management decided to close two pharmacies in order to reduce overall fixed pharmacy costs by 50% and concentrate our limited working capital to support the operations of the two remaining pharmacies we believe have the best prospects. Management considered several factors in determining which two pharmacies to close, including historical financial performance, regulatory costs, current sales prospects, geographic and physical location and strength of existing physician relationships. After consideration of these factors, management closed our Gresham and Riverside pharmacies on August 5, 2013 and August 8, 2013, respectively.

The Company’s common stock is traded on the OTC Market’s OTC QB quotation system under the ticker symbol APHY.

In June 2009, the Company filed a Certificate of Designation with the state of Nevada to designate 2,830 preferred shares as Series A Convertible Preferred Stock (“Series A Preferred”) and 7,745 shares as Series B Convertible Preferred Stock (“Series B Preferred”) from the 5,000,000 preferred shares authorized (see Note 5 for further details). In May 2010, the Company filed a Certificate of Designation with the state of Nevada to designate 813 preferred shares as Series C Convertible Preferred Stock (“Series C Preferred”). In November 2013, the Company filed a Certificate of Designation with the state of Nevada to designate 15,000 preferred shares as Series D Redeemable Convertible Preferred Stock.

In January 2010, the Company filed a Certificate of Amendment to Articles of Incorporation with the State of Nevada to increase the number of authorized common shares from 833,333 shares to 16,666,667 shares.

In May 2012, the Company’s Board of Directors (“the Board”) and a majority of the Company’s shareholders approved an Amended and Restated Articles of Incorporation effectuating an increase in the number of authorized common shares of the Company from 16,666,667 to 35,000,000. As required, a consent and waiver was obtained from the majority of the Series A and Series C Preferred holders in accordance with the certificate of designation.

In October 2013, we filed a Proxy Statement on Schedule 14A with the Securities and Exchange Commission.

F - 6

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Amend and restate the Articles of Incorporation of the Company to increase the authorized number of shares of Common stock available for issuance from 35,000,000 to 100,000,000.

2.	Create and designate a class of Preferred Stock called the “Series D Preferred Stock,” consisting of 15,000 shares of stock, par value $0.001 per share, and designate to such class of stock those rights as described in that certain Certificate of Designation.

The Board of Directors has submitted several actions to be taken by consent in lieu of a meeting in order to facilitate future financings.

In November 2013, the Board of Directors increased the Company’s authorized Common Stock from 35,000,000 to 100,000,000 to provide greater flexibility with respect to future transactions, including joint ventures, raising capital, acquisitions and other general corporate purposes. Each additional share of Common Stock authorized by the amendment to the Articles of Incorporation will have the same rights and privileges as each share of Common Stock currently authorized or outstanding. If this proposal is rejected, the Company may have insufficient authorized and unissued outstanding shares of Common Stock to take advantage of potential business opportunities.

The Company does not currently have any plans for the potential increase in the number of authorized shares available for issuance. The Series D Preferred Stock described below, designates that any one share of Series D Preferred Stock may, at the option of the holder, be converted at any time into 2,000 fully-paid and non-assessable shares of Common Stock.

The Board of Directors believes it to be in the best interest of the Company to create and designate a class of Preferred Stock called the “Series D Preferred Stock,” consisting of 15,000 shares of stock, par value $0.001 per share, and designate to such class of stock those rights and preferences as described in that certain Certificate of Designation, filed with the State of Nevada and in the Form 14A filed with the Securities and Exchange Commission on October 29, 2013 and is incorporated herein by reference.

The designation of the Series D Preferred Stock adversely alters and affects the rights of our Common Stockholders. Pursuant to the terms of the Series D Preferred Stock, the initial investor must approve certain corporate actions of the Company, regardless of the total Common Stock votes for or against such actions. Such actions include, but are not limited to: any increase or decrease in the authorized number of shares of Common Stock or Preferred Stock; the delisting of any of the Company’s securities from the OTCQB or any national securities exchange; any redemption or repurchase with respect to the Common Stock or Preferred Stock; any liquidation, dissolution or winding-up of the business and affairs of the Company; any material modification or deviation from the Company’s annual business plan and operating budget; any payment or declaration of a dividend or other distribution on any shares of Common Stock or Preferred Stock made by the Board of Directors; and any change in the principal business of the Company. In addition to the foregoing, holders of the Series D Preferred Stock have the right to elect one director of the Company so long as at least 35% of the Series D Preferred Stock is issued and outstanding.

Registration Statement

On November 13, 2012, we completed the registration of 2,292,067 shares of common stock, par value $0.001 per share, issuable upon exercise of warrants on Form S-1, as amended. We became a public company on November 14, 2012 and are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s common stock began trading on the OTC Market’s OTC:QB quotation system under the ticker symbol “APHY”.

Reverse Stock Split

In March 2011, the Company’s Board approved an amended and restated certificate of incorporation effecting a 1 for 180 reverse stock split of the Company’s issued and outstanding shares of common stock, effective as of April 15, 2011. As required, a consent and waiver was obtained from the majority of the Series A Preferred holders in accordance with the certificate of designation.

F - 7

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Going Concern Considerations

The accompanying 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 December 31, 2013, the Company had an accumulated deficit of approximately $48.6 million and, recurring losses from operations. The Company also had negative working capital of approximately $1.7 million and debt with maturities within one year in the amount of approximately $800,000 as of December 31, 2013.

From January 1, 2014 through March 27, 2014, the Company has secured loans in the amount of $440,000 from Pinewood Trading Fund, LP, a related party and extended the maturity date of an aggregate total of $1,000,000 in convertible debentures from December 1, 2013 to June 30, 2016 and converted $252,417 in accrued interest due to convertible debenture holders into common stock at $0.60 per share. The Company intends to fund operations through raising additional capital through debt financing and equity issuances, increased sales, increased collection activity on past due other receivable balances and reduced expenses, which may be insufficient to fund its capital expenditures, working capital or other cash requirements for the year ending December 31, 2014. The Company is in negotiations with current debt holders to restructure and extend payment terms of the existing short term debt. The Company is seeking additional funds to finance its immediate and long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

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

·	The Company is seeking to renegotiate existing debt.

·	The Company is seeking investment capital.

·	The Company is aggressively targeting new physicians.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.

F - 8

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Forward contracts

As part of the 2013 private placement of common stock, the Company also agreed that the 38,462 shares of common stock included in the units is subject to increase and the $0.65 per share value is subject to decrease, in each case based on the level of the Company’s consolidated net revenues that are derived during our 2013 fiscal year (the “Make-Whole Adjustments”) (see Note 6 Common Stock for further details). The Company separately valued the forward contracts using Level 3 inputs. The fair value of the forward contracts of $115,767 was recorded as a liability and is included in accounts payable and accrued expenses on the Consolidated Balance Sheet as of December 31, 2013. The following table is a summary of the forward contract liability activity measured at fair value using Level 3 inputs:

	Forward Contract Liability


Balance at December 31, 2012	$	-

Granted		233,131
Cancelled, forfeited or expired
Change in fair value		(117,364	)

Balance at December 31, 2013	$	115,767

Derivative Liability

The derivative relates to the conversion feature into common stock at an initial rate of 2,000 common shares for each share of Series D Preferred stock, subject to adjustment for certain anti-dilution protection and provides exercise price adjustments in the event that any common stock or common stock equivalents are issued at an effective price per share that is less than the exercise price per share (see Note 5 Redeemable Preferred Stock for further details). Management analyzed the terms of the conversion option and concluded that the conversion feature was derivative since it met the definition of a derivative and did not qualify for any of the exceptions. The Company therefore separately valued the derivative contracts using Level 3 inputs. The fair value of the derivatives of $312,088 was recorded as a derivative liability on the Consolidated Balance Sheet as of December 31, 2013. The following table is a summary of the derivative liability activity measured at fair value using Level 3 inputs:

	Derivative Liability


Balance at December 31, 2012	$	-

Granted		238,171
Cancelled, forfeited or expired
Change in fair value		73,917

Balance at December 31, 2013	$	312,088

Recent Accounting Pronouncements

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exist , which is included in ASC Topic 740 (Income Taxes). ASU 2013-11 requires an entity to net its liability for unrecognized tax positions against a net operating loss carryforward, a similar tax loss or a tax credit carryforward when settlement in this manner is available under the tax law. The provisions of this new guidance are effective for reporting periods beginning after December 15, 2013. The guidance is not expected to have a material impact on our statement of operations, financial position, or cash flows.

3. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2013 and 2012:

	2013			2012

Furniture and equipment	$	18,167		$	18,167
Computer equipment and information systems		488,613			471,240
Leasehold improvements		136,536			84,294
		643,316			573,701

Less: accumulated depreciation and amortization		(565,222	)		(527,928	)
	$	78,094		$	45,753

F - 14

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Option #2: The issuance of amended and restated debentures (the “New Debentures”) which include the principal balance plus all accrued and unpaid interest as of September 30, 2013 of the Eligible Debentures with a reduction of the interest rate from sixteen percent (16%) to ten percent (10%), the extension of the maturity date for an additional three (3) years past the Eligible Debenture’s maturity date, reduction of the conversion price to $0.75 per share, and execution of a subordination agreement pursuant to which the Company will make no further payments to the debt holders until such time as the redemption of certain Series D Preferred Stock (to be designated) has been made in full (“Subordination Agreement”) and the issuance of New Warrants, the expiration date of which shall be 3 years past the expiration date set forth in the Eligible Warrants and a reduction of the conversion price to $0.75 per share.

The tender offer was submitted to holders of an aggregate of $2,465,784 in debentures. The tender offer expired on December 31, 2013 with an aggregate total of $965,784 of the original debentures tendered by the tender offer. As a result, an aggregate total of $965,784 in convertible debentures to eight holders was exchanged for 1,609,641 shares of the Company’s common stock. In addition, an aggregate total of $245,689 in accrued but unpaid interest was exchanged for 409,482 shares of the Company’s common stock. In addition, the Company granted an additional aggregate total of 772,625 warrants to the debenture holders that tendered. The warrants are subject to certain anti-dilution protection clauses which provide exercise price adjustments in the event that any common stock or common stock equivalents are issued at an effective price per share that is less than the exercise price per share. Accordingly, the fair value of the stock warrants is classified as a warrant liability on the accompanying consolidated balance sheets as of December 31, 2013 (see Note 6 Stock Warrants for further details).

Since the Company is experiencing financial difficulties and the debenture holders have granted a concession, the transaction met the requirement for troubled debt accounting treatment. The Company recorded the transactions by first allocating the fair value of the warrants to warrant liability (see Note 6 Stock Warrants for further details) with the remaining amount being applied to common stock and accrued interest. Management then compared the allocated value of the common stock to the fair value of the common stock resulting in a gain on extinguishment of debt of $747,591 or $0.12 per common share.

Convertible Debenture Exchange

In November 2013, Joseph McDevitt, a related party investor and holder of a $500,000 convertible debenture due in July 2013 exchanged a $500,000 debenture and $205,245 in accrued interest for a total of 1,175,408 common shares at a conversion rate of $0.60 per share. As consideration for the conversion, the Company issued 833,334 three year warrants to purchase common shares at an exercise price of $0.60 for the first twelve months following the closing date and $0.75 thereafter for the remainder of the new warrant term.

Since the Company is experiencing financial difficulties and the debenture holder has granted a concession, the transaction met the requirement for troubled debt accounting treatment. Management compared the value of the common stock and accrued interest to the fair value of the common stock resulting in a gain on extinguishment of debt of $526,676 or $0.09 per common share.

TPG, L.L.C. Amendment

In December 2013, the parties entered into a Fourth Amendment to the Share Agreement between Assured Pharmacy, Inc. (“Buyer”) and TPG, LLC (‘Seller”). The maturity date of the note was extended from July 2013 to September 1, 2015. We issued 200,000 shares of the Company’s common stock and agreed to pay the remaining outstanding balance of $60,000 together with accrued interest at the rate of prime plus 2% per annum commencing from December 19, 2013 , is as follows:

(a) Six (6) consecutive monthly installments of $2,000 on or before the 1st of each month commencing in December 2013 through May 2014.

(b) Sixteen (16) consecutive monthly installments of $3,000 on or before the 1st of each month commencing in June 2014 through September 2015.

Since the Company is experiencing financial difficulties and the debt holder has granted a concession, the transaction met the requirement for troubled debt accounting treatment. Management compared the value of the common stock and accrued interest to the fair value of the common stock resulting in a gain on extinguishment of debt of $274,648 or $0.04 per common share.

In total, the Company issued an aggregate total of 3,394,531 common shares in exchange for a total aggregate amount of debt and accrued interest of $2,219,366 as a result of the 2013 Debt Restructuring. In addition, management negotiated repayment extensions of an aggregate of $4,535,519 in principal outstanding during the year ended December 31, 2013. Subsequent to the reporting period, management also negotiated a repayment extension of an additional $1,000,000 in convertible debentures and exchanged 420,694 shares of common stock for payment of accrued interest of $252,417 on these debentures (See Note 14 HCI Debenture Extension for further details).

F - 16

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unsecured Convertible Debentures

The Company completed various sales through private placements of senior convertible debentures to accredited investors. The debentures were convertible into shares of the Company’s common stock at an initial conversion price of $1.26 per share on an as converted basis, subject to adjustment. A consent and waiver was obtained from the majority of the Series A and C Preferred holders and a waiver was obtained from a majority of the Series B Preferred holders as required in the certificate of designation. From September 2012 through February 2013, all of the investors in 2011 private placements consented to a partial anti-dilution adjustment in conversion price per share to $0.90 per share in the event of the minimum offering being achieved in a private placement of common stock and warrants. In February 2013, the minimum offering was achieved resulting in an adjusted conversion price of $0.90 per share for a total of 2,072,654 common shares on an as converted basis, subject to adjustment for stock dividends, stock splits and related distributions

As part of the private placements, the investors received warrants to purchase shares of the Company’s common stock. The warrants were initially exercisable for a period of three years from the date of issuance at an initial exercise price of $1.512, subject to adjustment (see Note 6 Stock Warrants for further details). The investor may exercise the warrant on a cashless basis if the shares of common stock underlying the warrant are not then registered pursuant to an effective registration statement. The outstanding warrants are subject to certain anti-dilution protection clauses which provide exercise price adjustments in the event that any common stock or common stock equivalents are issued at an effective price per share that is less than the exercise price per share. Accordingly, the fair value of the stock warrants is classified as a warrant liability on the accompanying consolidated balance sheets as of December 31, 2013 and 2012.

As of December 31, 2013, we have the following unsecured convertible debentures outstanding to the following:

	$		Maturity Date		Interest Rate		# of Warrants

HCI		1,000,000		June 30, 2016		16.0%		1,600,007
AQR		200,000		December 1, 2012		20.0%		576,002
CNH		100,000		December 1, 2012		20.0%		288,003
Coventry		200,000		April 1, 2016		16.0%		575,999
Total	$	1,500,000						3,040,011

HCI

The Company issued an aggregate total of $1,000,000 in senior convertible debentures to Hillair Capital Investment, Inc. (“HCI”) during the years ended December 31, 2012 and 2011. As of December 31, 2013, the debentures and related interest were past due. The Company and HCI subsequently agreed to a modification and extension of the maturity date to June 30, 2016 with HCI as described in further detail in Note 14 HCI Debenture Extension.

AQR & CNH

In August 2011, the Company issued an aggregate total of $300,000 in senior convertible debentures to AQR Opportunistic Premium Offshore Fund, LP. (“AQR”) and CNH Diversified Opportunities Master Account, LP ("CNH"). Due to our current financial condition, we did not make the periodic redemption payments of $75,000 due on June 1, 2012 and September 1, 2012 and the final payment due of $150,000 on or before December 1, 2012 to two convertible debenture holders that did not extend. Upon default, amounts owed become immediately payable to the debenture holder upon issuance of a notice of default. The debenture holders have issued a notice of default relating to our failure to make the periodic redemption payments on June 1, 2012 or September 1, 2012 or the final payment of $150,000 due on December 1, 2012 under the debenture agreement. in August 2013, the two holders filed a lawsuit against the Company for payment of past due amounts (See Note 8 Legal Matters for furter details). In November 2013, the issuance of Series D preferred stock with an effective conversion price of $0.50 per share qualified as a dilutive issuance per the terms of the convertible debenture. No waivers were obtained from the two debenture holders that were holding an aggregate total of $300,000 debentures. The anti-dilution adjustment reduced the conversion price from $0.90 to $0.50 per share. The amounts due on the debentures are classified as current at December 31, 2013 and 2012.

F - 17

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Coventry

On December 6, 2013, the Company settled a lawsuit with Coventry Enterprises, LLC, (“Coventry”) a holder of $200,000 in convertible debentures issued in 2011. The terms of the settlement were before any application of any payments, we owe Coventry $280,679, which includes unpaid principal of $200,000, unpaid interest of $53,679 and unreimbursed attorney’s fees and costs of $27,000. The Company shall pay Coventry $280,679, plus interest at the rate of 16.0% per annum on the following schedule:

a)	$50,000 payable on or before December 6, 2013; and

b)	$10,000 payable on or before the first day of each month starting January 1, 2014 and continuing thereafter until the obligation is paid.

Based on the payment terms above, the obligation will be paid in full on Apri1 1, 2016. In November 2013, the issuance of Series D preferred stock with an effective conversion price of $0.50 per share qualified as a dilutive issuance per the terms of the convertible debenture. No waivers were obtained from Coventry debenture holders that were holding an aggregate total of $200,000 debentures. The anti-dilution adjustment reduced the conversion price on the debenture from $0.90 to $0.50 per share.

Interest expense related to the unsecured convertible debentures for the years ended December 31, 2013 and 2012 was $929,908 and $1,306,791, respectively. Interest expense for the years ended December 31, 2013 and 2012 included $560,522 and $500,781 at the stated rate, $333,255 and $684,627 in amortization of debt discount and $36,131 and $121,963 in amortization of deferred financing cost, respectively. The effective interest rate on convertible debentures was calculated as 32.0% and 46.2% for the years ending December 31, 2013 and 2012, respectively.

As of December 31, 2013, the outstanding balance on unsecured convertible debentures is $1,500,000 with $357,528 classified as current. The outstanding debentures are convertible into an aggregate total of 2,333,333 common shares.

Secured Debt

In February 2013, the Company entered into a secured loan agreement with our primary wholesaler. Under the terms of this agreement, the Company received a one (1) year loan of $3,828,527 with an interest rate of 6.25% per annum, with interest payable monthly. Monthly payment requirements are $27,000 per month for four consecutive months, followed by four consecutive monthly payments of $37,000, followed by three consecutive monthly payments of $42,000, with remaining principal and interest due February 1, 2014. The proceeds from the note were simultaneously exchanged for $3,534,793 in outstanding vendor invoices and $293,734 in a secured note payable with the same primary wholesaler. The note is secured by all of the assets of the Company and its subsidiaries through UCC-1 filings. As part of the agreement, the Company is required to purchase a minimum of $500,000 in monthly purchases each month. The secured loan was subsequently extended with monthly payment requirements of $42,000, with remaining principal and interest due February 1, 2016.

As of December 31, 2013, the outstanding principal balance on the note was $3,804,111. Due to our current financial condition, we have not made principal and interest payments in the amount of $228,940 as required by the agreement. In March 2014, we entered into a Forbearance Agreement with H.D. Smith Wholesale Drug Co. in which the lender agreed to forbear from accelerating the outstanding balance of the Note and from instituting collection efforts from the date of the agreement through July 1, 2014 provided certain conditions are met (See Note 14 H.D. Smith Forbearance for further details). Interest expense for the year ended December 31, 2013 on these notes were $219,050.

Revolving Credit Facilities

Brockington Securities, Inc. - Revolver

In March 2009, the Company entered into a Revolving Line of Credit Agreement with Brockington Securities Inc., a related party, for a credit limit of $300,000 with a term of one year bearing interest of 12.0% per annum. Under the terms of the agreement, the Company could request for advance from time to time, provided, however, any requested advance will not, when added to the outstanding principal advanced of all previous advances, exceed the credit limit. The Company could repay accrued interest and principal at any time, however no partial repayment would relieve the Company of the obligation of the entire unpaid principal together with any accrued interest and other unpaid charges. There are no financial covenants that the Company is required to maintain.

F - 18

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The agreement has been subsequently extended. In November 2012, the Modification Agreement to the Revolving Line of Credit Agreement dated March 10, 2009, in which the credit limit was modified and increased from $300,000 to $500,000. The latest extension occurred in December 23, 2013, pursuant to a Modification and Extension Agreement to the Revolving Line of Credit Agreement dated March 10, 2009, in which the term of the loan was modified and the maturity date of the loan was extended to August 30, 2016 by mutual consent. All additional terms of the loan remain unchanged and the Company was not in violation of any provisions of the loan agreement.

As of December 31, 2013, the outstanding balance on the revolver was $477,000 with remaining availability of $23,000.

Third Coast Bank – Revolver

In December 2013, the Company entered into a revolving Promissory Note with Third Coast Bank SSB, for a credit limit of $30,000 with a term of one year bearing a variable interest rate of prime plus .500 percentage points with an interest rate floor of 5.00% per annum. The Promissory Note was guaranteed by Pinewood Trading, Fund, LP., a related party.

As of December 31, 2013, the Company had not drawn on the facility.

5. REDEEMABLE CONVERTIBLE PREFERRED STOCK

On September 1, 2013, the Company entered into a Stock Purchase Agreement (“SPA”) with Pinewood Trading Fund, LP, (“initial investor”) an existing shareholder (related party) to purchase up to 3,000 shares of Series D Convertible Preferred Stock at $1,000 per share.

In November 2013, the Company designated 15,000 shares to Series D Preferred Stock. The Series D Preferred rank senior to the Series A Preferred, Series C and Series B Preferred which ranks senior to the Company’s common stock with respect to the payment of any dividends and amounts upon liquidation or dissolution.

The initial investor must approve certain corporate actions of the Company, regardless of the total Common Stock votes for or against such actions. Such actions include, but are not limited to: any increase or decrease in the authorized number of shares of Common Stock or Preferred Stock; the delisting of any of the Company’s securities from the OTCQB or any national securities exchange; any redemption or repurchase with respect to the Common Stock or Preferred Stock; any liquidation, dissolution or winding-up of the business and affairs of the Company; any material modification or deviation from the Company’s annual business plan and operating budget; any payment or declaration of a dividend or other distribution on any shares of Common Stock or Preferred Stock made by the Board of Directors; and any change in the principal business of the Company. In addition to the foregoing, holders of the Series D Preferred Stock have the right to elect one director of the Company so long as at least 35% of the Series D Preferred Stock are issued and outstanding. Each share of Series D Preferred Stock is convertible into 2,000 shares of the Company’s common stock.

In addition, Pinewood may, but is not obligated to, nominate one (1) Director to add to the Company’s existing Board currently comprised of four (4) people (for a total of five (5) directors). The Company is further restricted, precluded, and prohibited from increasing the number of directors beyond 4 (or 5 should Pinewood elect to nominate a director) without the consent of Pinewood. This gives Pinewood the ability without restriction or notice to install a board member at any time, subject to applicable law, at Pinewood's sole discretion.

F - 19

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock Private Placements

In November 2013, the Company issued 800 shares of Series D Preferred Stock to Pinewood Trading Fund, LP., a related party, for $1,000 per share for an aggregate purchase price of $800,000. For each share of Series D Preferred Stock purchased, two five-year warrants were issued as follows: (i) a Series A Warrant to purchase 2,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) and (ii) a Series B Warrant to purchase 2,000 shares of Common Stock.

In December 2013, the Company issued 200 shares of Series D Preferred Stock to Pinewood Trading Fund, LP., a related party for $1,000 per share for an aggregate purchase price of $200,000. For each share of Series D Preferred Stock purchased, two five-year warrants were issued as follows: (i) a Series A Warrant to purchase 2,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) and (ii) a Series B Warrant to purchase 2,000 shares of Common Stock.

In December 2013, the Company issued 20 shares of Series D Preferred Stock to Craig Eagle, a director of the Company, for $1,000 per share for an aggregate purchase price of $20,000. For each share of Series D Preferred Stock purchased, two five-year warrants were issued as follows: (i) a Series A Warrant to purchase 2,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) and (ii) a Series B Warrant to purchase 2,000 shares of Common Stock.

In December 2013, the Company issued 50 shares of Series D Preferred Stock to an existing investor for $1,000 per share for an aggregate purchase price of $500,000. For each share of Series D Preferred Stock purchased, two five-year warrants were issued as follows: (i) a Series A Warrant to purchase 2,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) and (ii) a Series B Warrant to purchase 2,000 shares of Common Stock.

As part of the private placements, the investors received warrants to purchase an aggregate of 4,280,000 shares of the Company’s common stock. The warrants are exercisable for a period of five years from the date of issuance at an initial exercise price of $0.50, subject to adjustment. The investor may exercise the warrant on a cashless basis if the shares of common stock underlying the warrant are not then registered pursuant to an effective registration statement. The outstanding warrants are subject to certain anti-dilution protection clauses which provide exercise price adjustments in the event that any common stock or common stock equivalents are issued at an effective price per share that is less than the exercise price per share. Accordingly, the stock warrants are classified as a warrant liability on the accompanying consolidated balance sheet as of December 31, 2013.

The Securities Purchase Agreement (“SPA”) contains a Milestone Adjustment provision. The Company believed that it could achieve this goal by March 1, 2014. If by March 1, 2014, the Company’s income, on a Special Adjustment Basis ("SAB") for the period beginning on January 1, 2014 and ending on February 28, 2014 (the “Measurement Period”) is not positive, on a SAB, then the Company will immediately issue (after the cash-flow on SAB calculation is final) to Investors, pro rata based on their ownership of Series D Preferred Stock, an aggregate additional (i) 2,400 shares of Series D Preferred Stock and (ii) for each share of Series D Preferred Stock issued above, one Series A Warrant and one Series B Warrant; and the exercise price of all warrants then held by the Investors (including the Warrants and any previously issued warrants of the Company then held by Investors) shall be reduced to $0.40 (forty cents), which number shall be subject to adjustment for issuances or circumstances following the Closing Date that would otherwise result in an adjustment to the exercise price of any such warrant In addition, if the milestone adjustment is required, the Initial Investor shall be entitled thereafter to elect a majority of the Board of Directors, to be accomplished in any manner that the Initial Investor deems most expedient and in compliance with applicable laws and the Company’s charter documents. The SAB shall be based on the trailing two month net income of the Company, excluding stock based compensation and non-cash other (non-operating) expenses. The milestone adjustment feature is not free standing from the Series D preferred stock and will not be separately classified from the preferred security. The fair value of the milestone adjustment will be recorded if the milestone adjustment is required.

The SPA also contains a Mandatory Redemption provision. If, as of January 1, 2016, (1) the Common Stock shall have traded on the 20 trading days prior to January 1, 2016 at an average closing price of less than $1.00; or (2) the Common Stock shall have had during the 30 trading days prior to January 1, 2016 an average daily trading volume of less than 70,000 shares, then the Company shall immediately, to the extent it may lawfully do so, redeem all outstanding shares of Series D Preferred Stock at a purchase price of $2,000 per share, plus a cumulative preference of 8% per annum compounded annually. Such redemption shall have preference over redemption of any other class of shares.

If the mandatory redemption does not occur within 10 business days, then payments to the Convertible Debt holders shall be subordinated, pursuant to that certain Subordination Agreement executed by the Convertible Debt holders, until the shares of Series D Preferred Stock are redeemed. If the mandatory redemption does not occur within 60 business days, the Initial Investor shall have the right to elect a majority of the Company’s Board of Directors, and may seek a sale of the Company, subject to the determination of the Board of Directors.

F - 20

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Failure to immediately redeem the Series D preferred shares will, at the Initial Investor’s election, result in the Company immediately issuing to the Initial Investor an additional (i) 2,400 shares of Series D preferred stock and (ii) for each share of Series D Preferred Stock issued above, one Series A Warrant and one Series B Warrant, and the exercise price of all warrants then held by the Initial Investor (including the Warrants and any previously issued warrants of the Company then held by Investor) shall be reduced to $0.10 (ten cents) (which number shall be subject to adjustment for issuances of circumstances following the Closing that would otherwise result in an adjustment to the exercise price of any such warrant).

The mandatory redemption feature is not freestanding from the Series D preferred stock and will not be separately classified from the preferred security. Since the mandatory redemption is conditioned upon the Company’s stock price and volume which are note solely within the control of the issuer and the price and date are fixed, the Series D Preferred are classified as temporary equity on the consolidated balance sheets as of December 31, 2013. Management analyzed the terms of the mandatory redemption feature and evaluated whether it was probable that the instruments will become redeemable and concluded that it was probable that the instruments will become redeemable. Management elected to recognize changes in the redemption value immediately as they occur and adjusted the redemption value as if it were also the redemption date for the instrument. As a result, management increased the carrying value of the preferred instrument by $2,192,588 for the redemption feature on preferred stock in the year ended December 31, 2013. The redemption feature on preferred stock is a deemed dividend distribution for accounting purposes.

The Series D Preferred stock includes a conversion feature in which each share of Series D Preferred Stock is initially convertible into 2,000 shares of the Company’s common stock. Management analyzed the terms of the conversion option and concluded that the conversion feature was derivative since it met the definition of a derivative and did not qualify for any of the exceptions. The initial aggregate fair value of the derivatives was determined to be $238,171 which was recorded as a derivative liability on the Consolidated Balance Sheet as of December 31, 2013 (See Derivative Liability Note 2 for further details).

The Company allocated the proceeds of these preferred issuances, by first allocating the proceeds to warrant liability and derivative liability based on fair value and then allocated the remaining residual proceeds, net of closing costs to the preferred stock security.

As of December 31, 2013, an aggregate total of 1,070 Series D Shares had been issued for a total purchase price of $1,070,000, which is convertible into 2,140,000 shares of common stock.

Subsequent to the reporting period, the Company did not meet the requirements of the Milestone Provision of the Series D Preferred of reaching positive net income on a SAB for the trailing two months ending February 2014 (See Note 14 Series D Preferred – Milestone Provision for further details).

6. EQUITY TRANSACTIONS

Convertible Preferred Stock Series – A, B & C

The Company has authorized 5,000,000 shares of preferred stock, with 2,830 shares designated to Series A Preferred and 7,745 shares designated to Series B Preferred and 813 shares designated to Series C Preferred.

The Series A Preferred and Series C Preferred rank senior to the Series B Preferred which ranks senior to the Company’s common stock with respect to the payment of any dividends and amounts upon liquidation or dissolution. Except as required by law, the shares of preferred stock shall be voted together with the shares of common stock and not as a separate class. In addition, so long as 35% of the aggregate amount of the shares of Series A Preferred and Series C Preferred are outstanding, the holders of the outstanding shares voting together as a separate class are entitled to elect up to four directors to the Board and separately vote on a number of defined material actions typically requiring Board approval. Respectively, holders of shares of Series A, B and C Preferred have anti-dilution protections for sale of stock below conversion rate and stock splits and other similar pro rata events.

F - 21

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Series A and Series B

In June 2009, in a private placement pursuant to the Purchase Agreement dated February 9, 2009, with Mosaic, a related party (see Note 9 for further details), the Company agreed to sell 1,330 shares of its Series A Preferred and common stock purchase warrants to purchase an aggregate of 1,083,334 shares of its common stock for an aggregate purchase price of $1.3 million, of which $750,000 was paid by the cancellation of secured indebtedness of the Company owed to MFS, with the remaining $580,000 to be paid in cash. As a condition of closing of this transaction, the outstanding principal balance related to Short Term Notes and Unsecured Debentures of $7.7 million was exchanged for 7,720 shares of Series B Preferred.

In February and March 2013, the Company issued a total of 60 shares of Series A Preferred at $1,000 per share for a total of $60,000 to Mosaic under the existing 2009 Securities Purchase agreement. The net proceeds of the sales were used for general working capital purposes.

As of December 31, 2013, the Company issued a total of 559 shares of Series A Preferred for $558,500 to Mosaic under this Purchase agreement. Each share of Series A Preferred is convertible into 695 shares of common stock. As of December 31, 2013, no shares of Series A Preferred issued to Mosaic have been converted into common stock.

During the year ended December 31, 2012, 150 Series A Preferred shares were converted into 104,250 shares of common stock. During the year ended December 31, 2013 and 2012, 260 and 25 Series B Preferred shares were converted into 288,890 and 13,889 shares of common stock.

Series C

In May 2010, we filed a Certificate of Designation to designate 813 shares of the Company’s preferred stock in Series C Preferred. The rights of the Series C Preferred are identical to Series A Preferred. A consent and waiver was obtained from the majority of the Series A Preferred holders and the majority of the Series B Preferred holders as required in the certificate of designation. Subsequently, the Company issued 813 shares of the Company’s Series C Preferred at a price of $1,000 per share to an existing vendor in exchange for extinguishment of $300,000 in vendor’s secured payable and additional consideration in the form of a modification in vendor terms that are favorable to the Company and additional debt financing at terms that are significantly below market for the Company.

In September 2012, the holders of the majority of Series A, B and C Preferred stock consented to a partial anti-dilution adjustment in conversion price per share to $0.90 per share in the event of the minimum offering being achieved in a private placement of common stock and warrants. In February 2013, the minimum offering was achieved resulting in an adjusted conversion price of $0.90 per share for the Series A, B and C Preferred holders.

In August 2013, the holders of the majority of Series A, B and C Preferred stock consented to the Certificate of Designation of Series D preferred stock, the Series D Preferred Stock agreement with Pinewood Trading Fund, LP, and the increase in authorized common shares from 35,000,000 to 100,000,000.

The table below summarizes the Company’s outstanding convertible preferred stock as of December 31, 2013 and 2012:

	December 31, 2013							December 31, 2012

Convertible Preferred Stock		Number of Preferred Shares		Number of Common Shares if Converted		Weighted Average Conversion Price		Number of Preferred Shares		Number of Common Shares if Converted		Weighted Average Conversion Price

Series A Preferred			1,466		1,629,006	$	0.90		1,406		1,292,492	$	1.09
Series B Preferred			5,124		5,693,344	$	0.90		5,384		2,993,504	$	1.80
Series C Preferred			813		902,778	$	0.90		813		451,750	$	1.80
Total			7,403		8,225,128	$	0.90		7,603		4,737,746	$	1.60

F - 22

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Common Stock

In January 2010, the Company increased the number of authorized shares of its common stock to 16,666,667 in order to meet the reserve requirements of the convertible and other dilutive securities issued, as well as additional capacity for future equity transactions.

In March 2011, the Company’s Board approved an amended and restated certificate of incorporation affecting a 1 for 180 reverse stock split of the Company’s issued and outstanding shares of common stock, effective as of April 15, 2011, (see Note 1 – Reverse Stock Split for further details).

In May 2012, the Company’s Board and a majority of the Company’s shareholders approved an amended and restated articles of incorporation effectuating an increase in the number of authorized common shares of the Company from 16,666,667 to 35,000,000. As required, a consent and waiver was obtained from the majority of the Series A and Series C Preferred holders in accordance with the certificate of designation.

In January 2013, we initiated a securities offering through a private placement for a minimum of 10 units of securities for a minimum of $250,000 and a maximum of 80 units for a maximum of $2,000,000 (subject to increase as much as 100 units for $2,500,000 to cover over-allotments, if any). Each unit consists of (a) 38,462 shares of common stock, valued at $0.65 for $25,000 and (b) 38,462 warrants with an initial exercise price of $0.90 per share. If the maximum offering of 80 units is sold, Assured would have issued an aggregate of 3,076,960 shares of common stock and 3,076,960 warrants in such units. The Company shall have paid the placement agent cash commissions equal to 10% of the gross proceeds received by the Company in this offering and three year warrants to purchase that number of shares of common stock equal to 10% of the aggregate number of shares of common stock and warrant shares included in the units sold in the offering (615,392 shares if all 80 units are sold and 769,240 shares if the over-allotment is exercised in full). The outstanding common stock related to the private placement is subject to certain anti-dilution protection clauses which provide exercise price adjustments in the event that any common stock or common stock equivalents are issued at an effective price per share that is less than the exercise price per share. The Company also agreed that the 38,462 shares of common stock and the 38,462 warrants included in the units are subject to increase, and the $0.65 per share value and the $0.90 warrant exercise prices are subject to decrease, in each case based on the level of the Company’s consolidated net revenues that are derived during our 2013 fiscal year (the “Make-Whole Adjustments”). Such Make-Whole Adjustments are as follows:

Share Price	Warrant Exercise Price	Adjusted Shares per Unit	Adjusted Warrants per Unit	Consolidated 2013 Revenues
$0.65	$0.90	None	None	$21,850,000 or above
$0.60	$0.85	41,667	41,667	From $20,700,000 to $21,849,999
$0.55	$0.80	45,455	45,455	From $19,550,000 to $20,699,999
$0.50	$0.75	50,000	50,000	From $18,400,000 to $19,549,999
$0.45	$0.70	55,556	55,556	From $17,250,000 to $18,399,999
$0.40	$0.65	62,500	62,500	Less than $17,250,000

Each warrant has a term of three years and may be exercised at an initial exercise price of $0.90 per warrant share; which exercise price is, in addition to the potential Make-Whole Adjustment, subject to certain weighted average and other anti-dilution adjustments as provided in the form of warrant. Accordingly, the stock warrants are classified as a warrant liability on the accompanying consolidated balance sheet as of December 31, 2013.

The warrants may only be exercised for cash. However, as provided in the Registration Rights Agreement, after a date which shall be 180 days following the Final Closing Date, there will be a cashless exercise option available to the warrant holders at any time during which a registration statement providing for the resale of the warrant shares is not effective, unless the warrant shares may then be freely tradable without limitation pursuant to an exemption from the registration requirements under the Securities Act.

A consent and waiver was obtained from the majority of the Series A and C preferred holders and a waiver was obtained from a majority of the Series B preferred holders as required in the certificate of designation and a waiver was obtained from all convertible debenture holders that were required. As part of the waiver, the Series A, B, and C preferred holders and 100 percent of the applicable convertible debenture holders agreed to waive anti-dilution adjustments which the consenting holder may be entitled under their respective agreements and accept a partial ratchet anti-dilution adjustment with a decrease in the conversion price of $0.90 per share of the Company securities for this private placement if the minimum unit threshold is met.

F - 23

ASSURED PHARMACY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company occupies buildings and retail space under operating lease agreements expiring on various dates through March 31, 2020, with monthly payments ranging from approximately $1,300 to $3,700. Certain leases include future rental escalations and renewal options. The Company recognizes rent expense on a straight-line basis for leases with rental escalation clauses.

For the years ending December 31,

2014	$	222,428
2015		136,724
2016		85,024
2017		68,177
2018 and thereafter		65,214

	$	577,567

Total rent expense for the years ended December 31, 2013 and 2012, was $205,177 and $125,667 respectively, and was included in selling, general and administrative expenses in the consolidated statement of operations.

Legal Matters

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

From time to time, the Company may be involved in various claims, lawsuits, 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's financial position or results of operations.

On May 9, 2013, a lawsuit was filed by Coventry Enterprises, LLC (“Coventry”) in the United States District Court Southern District of York. The lawsuit arises from allegations that Assured Pharmacy breached its obligations under the $200,000 16% Senior Convertible Debenture due December 1, 2013 with Coventry Enterprises, LLC. Due to the Company’s financial condition, we have been unable to repay the $200,000 in principal and accrued interest due under the agreement. In November 2013, the parties entered into a Settlement Agreement and General Release which included a forbearance re stipulated judgment. The parties agree that as of December 6, 2013, before any application of any payments, we owe Coventry $280,679, which includes unpaid principal of $200,000, unpaid interest of $53,679 and unreimbursed attorney’s fees and costs of $27,000. The Company shall pay Coventry $280,679, plus interest at the rate of 16.0% per annum on the following schedule:

a)	$50,000 payable on or before December 6, 2013; and

b)	$10,000 payable on or before the first day of each month starting January 1, 2014 and continuing thereafter until the obligation is paid.

On August 23, 2013, AQR Opportunistic Premium Offshore Fund, L.P. and CNH Diversified Opportunities Master Account, L.P. filed a lawsuit against Assured Pharmacy in the Supreme Court of the State of New York. Plaintiffs submitted a Motion for Summary Judgment in Lieu of Complaint against defendants to recover money allegedly owed by Assured Pharmacy, Inc. under two 16% Convertible Debentures totaling $300,000 issued in and around 2011 in a private placement. Assured removed the action to the Southern District of New York. Assured plans to vigorously defend the claim.

On October 25, 2013, a lawsuit was filed by Westlake Gresham North, LLC in the Circuit Court of the State of Oregon. The lawsuit arises from allegations that Assured Pharmacy Gresham, Inc. and Assured Pharmacy, Inc. are in breach of contract of its lease agreement and is claiming $123,234 in damages. In December 2013, the parties entered into a Release and Settlement Agreement which included a Stipulated General Judgment with Money Award in the amount of $99,174. As part of the settlement, the Company is required to make monthly rent payments of $3,065 beginning with December 2013 rent and continuing until the lease expires or another tenant leases that space. The Company is also required to make a lump sum payment of $21,239 for past due rent by April 1, 2014.

F - 34

Code of Ethics

Our Board of Directors has adopted a Code of Ethics and Conduct that is applicable to all of employees, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions. Our Code of Ethics and Conduct is intended to ensure that our employees act in accordance with the highest ethical standards. The Code of Ethics and Conduct is filed as an exhibit hereto.

Audit Committee

Not applicable

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation

The following summary compensation table reflects cash and non-cash compensation for the 2013 and 2012 fiscal years awarded to or earned by (i) each individual serving as our principal executive officer during the fiscal year ended December 31, 2013; (ii) each individual that served as an executive officer at the end of the fiscal year ended December 31, 2013 and who received in excess of $100,000 in total compensation during such fiscal year; and (iii) up to two additional individuals who received in excess of $100,000 in total compensation during such fiscal year but was not serving as an executive officer during the fiscal year. We refer to these individuals as our “named executive officers.”

Summary Compensation Table

As of December 31, 2013

Name and Principal Position	Year	Salary ($)	Deferred Salary ($)	Bonus ($)	Stock Awards ($) (1)	Option Awards ($) (1)	All Other Compensation ($)(2)	Total ($)

Robert DelVecchio Chief Executive Officer	2013 2012	201,923 247,115	48,077 -	- -	- -	- 72,796	3,080 3,080	253,080 322,991

Mike Schneidereit Chief Operating Officer	2013 2012	191,539 175,000	33,461 32,258	- -	- -	- 72,796	- -	225,000 280,054

Brett Cormier Chief Financial Officer	2013 2012	186,539 175,000	38,461 32,258	- -	- -	- 72,796	3,080 3,080	228,080 283,134

(1)	The amounts in the table reflect the grant date fair value of options and stock awards to the named executive officer in accordance with Accounting Standards Codification Topic 718. The ultimate values of the options and stock awards to the executives generally will depend on the future market price of our common stock, which cannot be forecasted with reasonable accuracy. The actual value, if any, that an optionee will realize upon exercise of an option will depend on the excess of the market value of the common stock over the exercise price on the date the option is exercised. Refer to the assumptions used in applying the Black-Scholes option pricing model to determine the fair value of awards granted in Note 7, “Stock Based Compensation” to financial statements for years ended December 31, 2013 and 2012.

(2)	The amounts in the table reflect health insurance premiums paid by the Company.

- 46 -

Table of Contents

Outstanding Equity Awards

Fiscal Year-Ended December 31, 2013

The following table presents information concerning the outstanding equity awards for the Named Executive Officers as of December 31, 2013:

Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date

Robert DelVecchio Chief Executive Officer	500,000 175,000	- -	- -	$0.68 $0.60	04/01/2021 05/08/2022

Mike Schneidereit Chief Operating Officer	277,778 175,000	- -	- -	$0.68 $0.60	04/01/2021 05/08/2022

Brett Cormier Chief Financial Officer	277,778 175,000	- -	- -	$0.68 $0.60	04/01/2021 05/08/2022

Stock Option Plan

Historically, our board of directors granted stock options to management primarily as part of the hiring and recruitment process. The issuance of these stock options is intended to provide incentives that will attract and retain the best available employees. These purposes may be achieved through the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, performance stock awards and phantom stock awards.

Awards may vest, in time, upon the occurrence of one or more events or by the satisfaction of performance criteria, or any combination. To the extent that awards are performance based, they may be based on one or more criteria, including (without limitation) earnings, cash flow, revenues, operating income, capital reissues, or other quantifiable company, customer satisfaction or market data, or any combination.

An aggregate total of 1,305,556 stock options were issued on April 11, 2011, 777,778 stock options vested immediately and the remaining 527,778 vested over an eighteen month period. An aggregate total of 527,778 stock options were issued on May 8, 2012, all of the stock options vested immediately.

2012 Incentive Compensation Plan

In May 2012, we adopted the Assured Pharmacy, Inc. 2012 Incentive Compensation Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan is intended to provide incentives that will attract and retain the best available directors, employees and appropriate third parties who can provide us with valuable services. These purposes may be achieved through the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, performance stock awards and phantom stock awards.

- 48 -

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on April 11, 2014.

Assured Pharmacy, Inc., a Nevada corporation



By:	/s/ Robert DelVecchio
Name:	Robert DelVecchio
Title:	Chief Executive Officer and Director

Power of Attorney

Pursuant to the requirements of the Securities Exchange Act of 1934, this registration statement was signed by the following persons in the capacities and on the date stated:

Signature and Title		Date



/s/ Robert DelVecchio		April 11, 2014
Robert DelVecchio, President, Chief Executive Officer (Principal Executive Officer) and Director



*		April 11, 2014
Mike Schneidereit, Chief Operating Officer



/s/ Brett Cormier		April 11, 2014
Brett Cormier, Chief Financial Officer (Principal Financial Officer) and Principal Accounting Officer



*		April 10, 2014
Thomas Bilodeau III, Director



*		April 11, 2014
Craig Eagle, Director



*		April 11, 2014
Darshan Sheth, Director



* By /s/ Robert DelVecchio		April 11, 2014
Attorney-in-fact

- 3 -

Nevada	98-0233878
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

Class		Outstanding at April 2, 2014

Common Stock, $0.001 par value		10,476,387

Exhibit No.		Title

3.1		Amended and Restated Articles of Incorporation of Assured Pharmacy, Inc. including preferred stock designations, effective November 19, 2013 (1)
3.2		Amended Bylaws (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form SB-2 of Assured Pharmacy, Inc. filed dated December 15, 2004)
10.1		Promissory Note with Pinewood Trading Fund, L.P., dated August 6, 2013 (2)
10.2		Amendment to Promissory Note Agreement with H.D Smith Wholesale Drug Co., dated July 1, 2013 (2)
10.3		Promissory Note with Pinewood Trading Fund, L.P., dated August 27, 2013 (3)
10.4		Fourth Amendment to Purchase Agreement for Ownership Interests in Assured Pharmacies, Inc., a Louisiana corporation, dated as of December, by and between TPG LLC and Assured Pharmacy, Inc. dated December 19, 2013 (6)
10.5		Amendment to Revolving Line of Credit Agreement dated December 23, 2013 by and between Brockington Securities, Inc. and Assured Pharmacy, Inc. (6)
10.6		Letter Agreement – Debenture Modification with Joseph McDevitt*dated August 22, 2013 (6)
10.7		Amended and Restated Convertible Debenture with Hillair Capital Investments, Inc. dated February 6, 2014 (6)
10.8		Forbearance Agreement with HD Smith Wholesale Drug Co. dated March 26, 2014 (6)
10.9		Form of 10% Promissory Note with Pinewood Trading Fund, LP – 2014 (6)
10.10		Promissory Note with Pinewood Trading Fund, LP dated January 28, 2014 (6)
10.11		Promissory Note Agreement dated February 1, 2013 by and between Assured Pharmacy, Inc. and H.D. Smith Wholesale Drug Co. (5)
10.12		Form of Subscription Agreement for common stock (5)
10.13		Form of Securities Purchase Agreement for common stock (5)
10.14		Form of Common Stock Purchase Warrant (5)
10.15		Form of Registration Rights Agreement (5)

21.1		Subsidiaries of Assured Pharmacy, Inc. (5)
24.1		Power of Attorney (4)
31.1		Sarbanes-Oxley Act Section 302 Certification of Robert J. DelVecchio (6)
31.2		Sarbanes-Oxley Act Section 302 Certification of Brett P. Cormier (6)
32.2		Sarbanes-Oxley Act Section 906 Certification of Robert J. DelVecchio and Brett P. Cormier (6)


101.INS †		XBRL Instance Document **
101.SCH †		XBRL Taxonomy Extension Schema Document **
101.CAL †		XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF †		XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB †		XBRL Extension Labels Linkbase Document **
101.PRE †		XBRL Taxonomy Extension Presentation Linkbase Document **

(5)	Previously filed as Exhibit to the Company’s Annual Report on Form 10-K filed on April 1, 2013 and incorporated by reference herein.

(6)	Previously filed as Exhibit to the Company’s Annual Report on Form 10-K filed on March 31, 2014 and incorporated by reference herein.