Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Business Description

We currently have five operating pharmacies. Our first pharmacy was opened on October 13, 2003 in Santa Ana, California. On June 10, 2004, we opened our second pharmacy in Riverside, California. These pharmacies were opened pursuant to a joint venture agreement entered into with TPG Partners, LLC and we have a 51% ownership interest in these pharmacies. We opened our third pharmacy in Kirkland, Washington on August 11, 2004. Our fourth pharmacy was opened in Portland, Oregon on September 21, 2004. On June 21, 2006, we opened our fifth pharmacy also located in Portland, Oregon. The pharmacies located in Kirkland and Portland were opened pursuant to a joint venture agreement with TAPG LLC in which we have a 94.8% ownership interest in these pharmacies.

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

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

Since the fiscal year ended 2004, we suspended the development of new pharmacies in order to evaluate and potentially improve the operations of our existing pharmacies. Following this period of evaluation, management entered into line of credit agreements to finance the purchases of inventory for our pharmacies. Establishing a line of credit to finance the purchases of inventory was critical in enabling us to replenish our inventory supply pending collections from health benefit plans or other third party payor.

During this period of evaluation, management cited our marketing practice as an area for improvement. Beginning in the first quarter of 2005, our management successfully implemented a new marketing strategy to dramatically expand our efforts to attract new business. Our new marketing strategy shifted the target of our marketing efforts from the physician directly to the patient. These marketing efforts included direct mailings, providing gift card to new customers and those that transferred prescriptions to our pharmacies, and creating brochures and posters that are available in physicians' waiting rooms to increase our name recognition. In an attempt to further expand our business and improve our marketing plan, we retained the marketing firm of Rainmaker & Sun Integrated Marketing, Inc. ("Rainmaker"). With the assistance of Rainmaker, we revised our marketing plan and launched a new marketing campaign in July 2005. Our new marketing campaign is targeted to consumers in the Seattle, Washington and Los Angeles, California test markets and is designed to further increase consumer awareness of our pharmacies and the services they provide. Our marketing campaign includes newspaper advertisements and inserts, billboards, bus shelter displays and direct mailing.

Our management has concluded this period of evaluation, restructuring, and marketing activities, has placed us in a position to once again commence the expansion of our business and establish additional pharmacies. On June 21, 2006, we opened our fifth pharmacy also located in Portland, Oregon. Our management is preparing to establish additional pharmacies before the end of the fiscal year.

The table set forth below summarizes the number of prescriptions filled by our four pharmacies during the three and six months ended June 30, 2006 and 2005. We did not include information in the table from our second pharmacy established in Portland, Oregon because it only commenced operations on June 21, 2006.

                           ended        ended      June 30, 2006    June 30, 2005
                          June 30,     June 30,
                            2006         2005
    Total Number of        12,461       6,897          23,413           11,725
     Prescriptions
 Average Prescriptions      959          531            901              451
       Per Week

The total number of prescriptions filled at our pharmacies for the three months ended June 30, 2006 was 12,461 which is an increase of approximately 81% from the 6,897 total prescriptions filled at our pharmacies for the three months ended June 30, 2005. The total number of prescriptions filled at our pharmacies for the six months ended June 30, 2006 was 23,413 which is an increase of approximately 100% from the 11,725 total prescriptions filled at our pharmacies for the six months ended June 30, 2005. Our management credits our successful marketing efforts directly to the patient and the expanded reach of our business beyond pain management for this increase in our business.

On an ongoing basis, our management is evaluating our operations and seeking additional opportunities to expand our business. During the fiscal quarter ended March 31, 2006, we established a working relationship with a specialty compounding pharmacy, which will enable physicians to prescribe custom compounded drugs and have those prescriptions filled at our pharmacies. Since this time, we have established relationships with other compound drug providers to increase our available inventory of compounded drugs. Pharmaceutical compounding is the combining, mixing, or altering of ingredients to create a customized medication for an individual patient in response to a licensed physician's prescription. Physicians often prescribe compounded medications for reasons that include situations where there is not presently a commercially available drug to treat the unique health condition of an individual patient or to combine several medications the patient is taking to increase compliance. Custom compounded drugs can offer additional means of treating chronic pain. We anticipate that our ability to fill prescriptions for custom compounded drugs will expand our business and enable us to better service patients who require treatment for chronic pain management. Following the initial stages of our business' expansion to fill prescriptions for custom compounded drugs, our management has determined that this area fits into our business plan and anticipates committing additional resources to expand this area of our business.

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

On January 3, 2006, we incorporated Assured Pharmacy Plus, Corp. ("Plus Corp.") as a wholly-owned subsidiary to develop this opportunity. During the reporting period, we entered into an arrangement with Affiliated Healthcare Administrators ("AHA"), a third party health plan administrator, to provide prescription service to their members. Under the arrangement with

AHA, our pharmacies will provide prescription service to AHA members upon receipt of a traditional co-payment. Thereafter, we will process the prescription claim with AHA and receive the remaining balances due for their member's prescription purchases. Plus Corp. will process claims relating to the prescription filled at our pharmacies for AHA members in exchange for an administration fee. Our management is contemplating expanding the operations of Plus Corp. by licensing the entity as a pharmacy that exclusively focuses on servicing the niche of consumers that are members of third party health plan administrators and receive their prescriptions exclusively via courier.

Also on January 3, 2006, we incorporated Assured Pharmacy DME, Corp. ("DME") as a wholly-owned subsidiary for the purpose of facilitating and making available specialized medical equipment to our consumers. During the reporting period, we established a relationship with a provider of specialized medical equipment to make these products available to our consumers. In July 2005, we began notifying our consumers of the availability of these products by disseminating a notification with each prescription filled at our pharmacies. We are now accepting and processing orders for specialized medical equipment. We will not maintain any inventory of specialized medical equipment at any of our pharmacies. All orders will be shipped directly to the consumer from a product wholesaler.

Results of Operations for the three and six ended June 30, 2006 and 2005

Revenues

Our total revenue reported for the three months ended June 30, 2006 was $1,894,976, a 140% increase from $789,404 for the three months ended June 30, 2005. We generated more revenue in the three months ended June 30, 2006 than in any other quarterly period since our inception. Our total revenue reported for the six months ended June 30, 2006 was $3,410,620, a 137% increase from $1,437,806 for the six months ended June 30, 2005. Our revenue for the three and six months ended June 30, 2006 and 2005 was generated almost exclusively from the sale of prescription drugs.

Our management attributes the significant increase in our revenue from the same reporting periods in the prior fiscal year to our successful marketing efforts and an expansion of our business beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions. Our management anticipates that our revenues generated will continue to increase based upon future marketing efforts and the establishment of additional pharmacies in the current year. After approximately a two year period without opening any additional pharmacy locations, we opened our fifth pharmacy located in Portland, Oregon on June 21, 2006. Although the operations at this new location had no material impact on our results of operations, we anticipate the establishment of this pharmacy and additional locations will increase our reported revenue.

Cost of Sales

The total cost of sales for the three months ended June 30, 2006 was $1,485,665, a 96% increased from $755,632 for the three months ended June 30, 2005. The total cost of sales

increased 102% to $2,591,639 for the six months ended June 30, 2006 from $1,281,528 for the six months ended June 30, 2005. The cost of sales consists primarily of the pharmaceuticals. The increase in cost of sales is primarily attributable to increased sales in the reporting period. During the fiscal year ended December 31, 2005, we negotiated cost reductions and more favorable credit terms with our primary drug supplier. As a result, we incurred lower costs of sales on a per unit basis during the three and six months ended June 30, 2006 when compared to the same reporting period in the prior fiscal year.

Gross Profit

Gross profit increased to $409,311, or approximately 22% of sales, for the three months ended June 30, 2006. This is an increase from a gross profit of $33,772, or approximately 4% of sales for the three months ended June 30, 2005. This quarter represents the sixth consecutive reporting period that we reported gross profits.

Gross profit increased to $818,981, or approximately 24% of sales, for the six months ended June 30, 2006. This is an increase from a gross profit of $156,278, or approximately 11% of sales for the six months ended June 30, 2005. The increase in gross profit for the three and six months ended June 30, 2006 when compared to the same reporting period in the prior fiscal year is attributable to increased sales of generic type drugs which have lower costs and higher gross margins. In addition, our increased gross profit in also attributable to negotiated cost reductions and more favorable credit terms from our primary pharmaceutical supplier during six months ended June 30, 2006.

Operating Expenses

Operating expenses for the three months ended June 30, 2006 was $1,711,101, a 77% increase from $965,717 for the three months ended June 30, 2005. Our operating expenses for the three months ended June 30, 2006 consisted of salaries and related expenses of $531,690, consulting and other compensation of $583,202, and selling, general and administrative expenses of $596,209. Our operating expenses for the three months ended June 30, 2005 consisted of salaries and related expenses of $425,224, consulting and other compensation of $256,940, and selling, general and administrative expenses of $283,553.

Operating expenses for the six months ended June 30, 2006 was $2,873,397, a 27% increase from $2,260,089 for the six months ended June 30, 2005. Our operating expenses for the six months ended June 30, 2006 consisted of salaries and related expenses of $1,080,464, consulting and other compensation of $823,700, and selling, general and administrative expenses of $966,233. Our operating expenses for the six months ended June 30, 2005 consisted of salaries and related expenses of $686,020, consulting and other compensation of $708,765, selling, general and administrative expenses of $671,423, and restructuring charges of $193,881.

The increase in salaries and related expenses was primarily a result of adding two additional employees in 2006 as well as retaining an additional executive officer in May 2006. The increase in consulting and other compensation paid is primarily attributable to the amortization resulting from the issuance of shares of restricted common stock to consultants over the life of

the consulting agreements. The increase in selling, general and administrative expenses paid is primarily attributable the expense associated with retaining Rainmaker to launch our new marketing plan.

Other Income and Expense

During the three months ended June 30, 2006, we reported other expenses in the amount of $53,315, compared to reporting other income in the amount of $902,509 for the same reporting period in the prior year.

During the six months ended June 30, 2006, we reported other expenses in the amount of $102,213, compared to reporting other income in the amount of $912,838 for the same reporting period in the prior year.

The other income reported during the three and six months ended June 30, 2005, is attributable to a gain on the forgiveness of debt in the amount of $1,011,522 in connection with a Settlement Agreement and Mutual Release (the "Settlement Agreement") between Safescript Pharmacies, Inc., a Texas corporation f/k/a RTIN Holdings, Inc. and Safe Med Systems, Inc., a Texas corporation (collectively, "Safescript"), and us. The Settlement Agreement contained a mutual release which resulted in the Safescript releasing us from of any liability with respect to a note payable due to the Safescript in the amount of approximately $1,013,000. In the absence of this gain on the forgiveness attributable to the settlement agreement, we would have reported other expenses of $109,013 for the three months ended June 2005 and $147,562 for the six months ended June 30, 2005. We incurred interest expense of $32,401 during the three months ended June 30, 2006 and $77,989 during the six months ended June 30, 2006 primarily as a result of the financing we received from a line of credit agreement with Mosaic Financial Services LLC.

Net Loss

Net loss for the three months ended June 30, 2006 was $1,338,007, compared to net income of $90,484 for the three months ended June 30, 2005. Net loss for the six months ended June 30, 2006 was $2,135,135, compared to a net loss of $1,013,413 for the six months ended June 30, 2005. The increase in our net loss was primarily attributable to the gain on the forgiveness of debt reported during the three months ended June 30, 2005 in the amount of $1,011,522 and increased costs relating to expansion including payroll and marketing.

Our loss per common share for the three months ended June 30, 2006 was $0.03, compared to a loss per common share of $0.00 for the three months ended June 30, 2005. Our loss per common share for the six months ended June 30, 2006 was $0.05, compared to a loss per common share of $0.03 for the six months ended June 30, 2005.

Liquidity and Capital Resources

As of June 30, 2006, we had $172,521 in cash which primarily resulted from funds raised in the private offering of common stock. As of June 30, 2006, we had current assets in the amount of $1,768,287 and had current liabilities in the amount of $1,886,302 resulting in a working capital

deficit of $118,013. As of June 30, 2006, we had access to an available line of credit enabling us to draw a maximum of $1,000,000 to purchase inventory.

Operating activities used $2,141,830 in cash for the six months ended June 30, 2006. Our net loss of $2,135,133 was the primary component of our negative operating cash flow. Investing activities during the six months ended June 30, 2006 used $22,290 for the purchase of property and equipment. Net cash flows provided by financing activities during the six months ended June 30, 2006 was $1,980,000. We received $609,708 as proceeds from the issuance of notes payable to related parties and shareholder and $1,705,292 as proceeds from the issuance of common stock and warrants during the six months ended June 30, 2006.

In order for us to finance operations and continue our growth plan, additional funding will be required from external sources. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements for the year ending December 31, 2006. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all. During the reporting period, we have raised $1,300,000 in a private equity offering, repaid the line of credit of $200,000 and $135,000 of notes to related parties.

Off Balance Sheet Arrangements

As of June 30, 2006, there were no off balance sheet arrangements.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of June 30, 2006, we had an accumulated deficit of $17,368,671, recurring losses from operations and negative cash flow from operating activities for the six month period ended June 30, 2006 of $2,141,830. We also had a negative working capital of $118,013 as of June 30, 2006.

We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund capital expenditures, working capital or other cash requirements for the year ending December 31, 2006. We are seeking additional funds to finance our 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, we will have sufficient funds to execute our intended business plan or generate positive operating results.

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

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

· We are expanding business beyond the pain management sector to service customers that require prescriptions to treat cancer, psychiatric, and neurological conditions.

· We are aggressively signing up new physicians.

· We are seeking investment capital through the public markets.

· We retained a marketing firm to implement a new marketing strategy to attract business.

Critical Accounting Policies

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

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or estimated market, and consist primarily of pharmaceutical drugs. Market is determined by comparison with recent sales or net realizable value. Net realizable value is based on management's forecast for sales of our products or services in the ensuing years and/or consideration and analysis of changes in customer base, product mix, payor mix, third party insurance reimbursement levels or other issues that may impact the estimated net realizable value. Management regularly reviews inventory quantities on hand and records a reserve for shrinkage and slow-moving, damaged and expired inventory, which is measured as the difference between the inventory cost and the estimated market value based on management's assumptions about market conditions and future demand for our products. Such reserve was insignificant to the accompanying consolidated financial statements. Should the demand for our products prove to be less than anticipated, the ultimate net realizable value of our inventories could be substantially less than reflected in the accompanying consolidated balance sheet.

Inventories are comprised of brand and generic pharmaceutical drugs. Brand drugs are purchased primarily from one wholesale vendor and generic drugs are purchased primarily from another wholesale vendor. 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 our inventory a larger amount of Schedule II drugs than most other pharmacies. The cost

in acquiring Schedule II drugs is higher than Schedule III and IV drugs.

Long-Lived Assets

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. SFAS No. 144 also requires companies to separately report discontinued operations, and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment or in a distribution to owners) or is classified as held for sale. Assets to be disposed of are reported at the lower of the carrying amount or the estimated fair value less costs to sell.

Our long-lived assets consist of computers, software, office furniture and . . .