UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





x  ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
fiscal year ended December 31, 2009





o  TRANSITION REPORT
UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from    to


COMMISSION
FILE NUMBER 0-27889





THE
AMACORE GROUP, INC.


(Exact
Name of registrant as specified in its charter)





Delaware
            59-3206480(State
      or Other Jurisdiction of
            (I.R.S.
      EmployerIncorporation
      or Organization)
            Identification
      No.)





Maitland
Promenade 1, 485 North Keller Road, Suite 450, Maitland, Florida
32751


(Address
of principal executive offices) (Zip Code)





Registrant’s
telephone number:(407)
805-8900





Securities
Registered Under Section 12(b) of the Exchange Act: None





Securities
Registered Pursuant to Section 12(g) of the Exchange Act: Class A common stock,
par value $0.001 per share.







Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.    Yes  o    No  x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.    Yes  o    No  x




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


Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files). Yes oNo o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.  o




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





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




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of
1934).    Yes  o    No  x




The
aggregate market value of the Registrant’s Common Stock held by non-affiliates
of the Registrant computed by reference to the price at which the common stock
was last sold as of the last business day of the Registrant’s most recently
completed second fiscal quarter was $0.05 * 134,022,346 =
$6,701,117.





The
number of shares outstanding of each of the issuer’s classes of common stock as
of March 31, 2010:


1,047,725,428
shares of Class A common stock, par value $0.001 and 200,000 shares of Class B
common stock, par value $0.001




DOCUMENTS
INCORPORATED BY REFERENCE




None.











AMACORE
GROUP, INC.





FORM
10-K


For
the Year Ended December 31, 2009





TABLE
OF CONTENTS





PART
      I
            
            PAGE
      NO.ITEM
      1.
            DESCRIPTION
      OF BUSINESS.
            1ITEM
      1A.
            RISK
      FACTORS.
            9ITEM
      1B.
            UNRESOLVED
      STAFF COMMENTS.
            15ITEM
      2.
            PROPERTIES.
            15ITEM
      3.
            LEGAL
      PROCEEDINGS.
            15ITEM
      4.
            RESERVED.
            16PART
      IIITEM
      5.
            MARKET
      FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES.
            17ITEM
      6.
            SELECTED
      FINANCIAL DATA.
            18ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
            18ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
            33ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA.
            34ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.
            72ITEM
      9A.
            CONTROLS
      AND PROCEDURES.
            72ITEM
      9B.
            OTHER
      INFORMATION.
            72PART
      IIIITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
            73ITEM
      11.
            EXECUTIVE
      COMPENSATION.
            75ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.
            79ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.
            81ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.
            82ITEM
      15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES.
            83SIGNATURES
            84








i





PART
I







Forward-Looking
Statements




This
Annual Report on Form 10-K may contain statements which constitute
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  Generally,  words such as
“may,” “will,” “should,” “could,” “would,”  “anticipate,” “expect,”
“anticipate,” “believe,” “goal,” “plan,” “intend,” “estimate” “continue” or the negative of or
other variation on theseand similar other expressions and variations
thereof, if used, are intended to specifically identify forward-looking
statements. Those statements appear in a number of places in this Form 10-K and
in other places, and include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to,
among other things, our future performance and operating results, our future
operating plans, our liquidity and capital resources and our legal
proceedings.We do
not undertake to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise.




Forward-looking
statements are based on current expectations and involve risks and uncertainties
and our future results could differ significantly from those expressed or
implied by our forward-looking statements.   Many factors,
including those listed in “Item 1A. - Risk Factors” below, could cause our
actual consolidated results to differ materially from those expressed in any of
our forward-looking statements.








ITEM
1. DESCRIPTION OF BUSINESS





Overview





The
Amacore Group, Inc. (the “Company,” “Amacore,”  “we,” “our,” and “us”
all refer to The Amacore Group, Inc. together with its consolidated
subsidiaries) is primarily a provider and marketer of healthcare-related
membership products such as limited and major medical insurance programs,
supplemental medical insurance and discount dental and vision programs for
individuals and families.  The Company distributes these products and
services through various distribution methods such as its agent network, inbound
call center, in-house sales representatives, network marketing and affinity
marketing partners as well as through third-party direct response marketers. To
generate leads for these distribution methods, the Company utilizes a variety of
means such as Direct Response TV, internet advertising, database mining, and
third-party leads as well as affiliate marketing partners’ lead
sources. The Company’s secondary line of business is to provide and market
lifestyle membership programs through these same marketing
channels.  These membership programs utilize the same back office and
systems creating marketing efficiencies to provide low cost ancillary products
such as identity theft protection, home warranty, travel protection, term life
insurance, involuntary unemployment insurance, accident insurance and pet
insurance.  The Company’s offers these secondary products not only to
new leads but also to existing members to increase member persistency and
lifetime membership value. The Company also markets its administrative services
such as billing, fulfillment, patient advocacy, claims administration and
servicing.





The
Company operates through five different business divisions:





·
            LifeGuard Benefit Services
      Division – This division generates revenue primarily from the sale
      of healthcare benefit membership plans and provides product fulfillment,
      customer support, membership billing, claims administration, provider
      membership network maintenance and information technology.  The
      Company operates this division through LifeGuard Benefit Services, Inc., a
      wholly owned subsidiary of the Company
  (“LifeGuard”).





·
            U.S. Health Benefits Group
      Division – This is an inbound lead generation telemarketing
      operation primarily marketing major and limited medical benefit
      plans.  The Company operates this division through US Health
      Benefits Group, Inc., US Healthcare Plans, Inc. and On the Phone, Inc.,
      each a wholly owned subsidiary of the Company  (collectively,
      “USHBG”).·
            Zurvita Holdings
      Inc.– This is a network marketing company that is a
      provider of products and benefits through the use of a multi-level
      marketing distribution channel which consist of independent business
      operators.  The products marketed include residential gas and
      electricity energy rate plans, discount healthcare benefits and discount
      benefits on various retail products and services, and online
      advertising.  Zurvita Holdings, Inc. (“Zurvita”) also markets
      numerous low cost ancillary lifestyle membership products such as home
      warranty, legal assistance and restoration services for identity theft and
      consumer credit. Zurvita is a variable interest entity, and the Company is
      the primary beneficiary of Zurvita.·
            JRM Benefits Consultants
      Division – This division historically marketed various
      financial services and healthcare products through its telemarketing
      center and agent distribution network to individuals, families and
      employer groups.  Effective March 1, 2010, the Company shut down
      operations of JRM.  The Senior Vice Presidents of JRM will focus
      on recruiting agents and other direct response marketers to sell the
      products of other reporting units.  The Company operates this
      division through JRM Benefits Consultants, LLC, a wholly owned subsidiary
      of the Company (“JRM”).





·
            Corporate and Other
      Division – This division provides management and financial support
      to the Company’s various divisions and is responsible for corporate
      governance and compliance. The Company operates this division through The
      Amacore Group, Inc.  Other legal entities such as Amacore Direct
      Marketing, Inc., LBI Inc. and LBS Acquisition Corp. which do not have any
      activity, or immaterial activity, are included within the other division
      segments.  These entities were originally created for specific
      transaction and/or operational
purposes.














Business
History





We
incorporated under the laws of Delaware on May 31, 1994 and merged with Eye Care
International, Inc., a Florida corporation, in March 1995.  In April
2005, we changed our name to The Amacore Group, Inc.





The
Company, when founded, began selling memberships in the Company’s discount
vision network to retail customers.  During 2007, the Company
strengthened its management team by hiring Mr. Jay Shafer as President, and Mr.
Guy Norberg, Senior Vice President of Sales and Marketing, who each had
significant experience with managing marketing companies, healthcare-related
product development, benefits administration and marketing partnerships, direct
response and affinity marketing.  With their hiring, the Company began
focusing its efforts on the development of a back office system for benefits
administration as well as the development of a greater array of products and
marketing partners.





The
Company has had significant acquisitions which have improved the Company’s
operational capabilities as well as provided additional channels to market
products and services.  For instance, on September 1, 2007, the
Company completed the acquisition of 100% ownership of JRM through a
stock-for-stock merger.  The acquisition allows the Company to market
its products throughJRM’s outbound
telemarketing call center with additional agent distribution channels available
to it; on October 9, 2007, the Company completed the acquisition of 100%
ownership of LifeGuard through a stock-for-stock merger between LifeGuard and
the Company’s wholly owned subsidiary, LBS Acquisition
Corporation.  The acquisition of LifeGuard strategically assists the
Company’s vertical integration plan within the health benefits program market,
provides new distribution channels, provides important back office benefits
administration capabilities and allows the Company to enhance existing product
offerings to the Company’s clients; and on April 1, 2008, the Company acquired
100% of the outstanding common stock of USHBG, an inbound lead generation
telemarketing company primarily marketing major and limited medical benefit
plans.





On July
30, 2009 (the “Closing Date”), Red Sun Minning Inc. (“Red Sun”), entered into a
Share Exchange Agreement (the “Share Exchange Agreement”) with Zurvita and
Amacore, pursuant to which, among other things, Amacore contributed all of its
securities of Zurvita to Red Sun in exchange for Red Sun’s issuance to them of
9.3 million shares of common stock of Red Sun (the “Share
Exchange”), which now represents 37.2 million shares following a one
(1) for four (4) forward stock split.  Prior to the consummation of
the Share Exchange Agreement, Zurvita was a wholly-owned subsidiary of Amacore,
and Red Sun was a public shell company.





Concurrent
with the closing of the Share Exchange, Zurvtia entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with an accredited investor and
closed a private placement offering pursuant to which it raised gross proceeds
of $1.75 million and, among other things, issued and sold convertible preferred
stock convertible into shares of Zurvita’s common stock at an initial conversion
price of $0.25, which was subsequently adjusted to $0.0625 following a one (1)
for four (4) forward stock split.





Concurrent
with the closing of the Share Exchange, Zurvita entered into an Advertising and
Marketing Agreement with OmniReliant Holdings, Inc. (“OmniReliant”), pursuant to
which Zurvita agreed to provide placement of advertising for OmniReliant on its
website and OmniReliant agreed to provide Zurvita with certain marketing
services (the “OmniReliant Agreement”). The marketing services to be provided by
OmniReliant include the production of infomercials, video production services,
management of call centers, buying and fulfillment services. In consideration
for such services, OmniReliant received an aggregate of 3.8 million shares of
Zurvita’s common stock which was subsequently adjusted to 15.2 million
shares following a one (1) for four (4) forward stock split.





Pursuant
to the terms of a repurchase agreement (the “Repurchase Agreement”), Red Sun
repurchased 2 million or 66% of the outstanding shares of Red Sun common stock
for a total price of $210 thousand.




As a
result of the Share Exchange and the consummation of the transactions pursuant
to the Repurchase Agreement, the Red Sun experienced a change in control and
ceased to be a shell company. Zurvita became a wholly-owned subsidiary of Red
Sun and Amacore became the owner of approximately 66 percent of Red Sun’s issued
and outstanding shares of common stock and 44 percent of the voting rights of
total equity securities outstanding (after giving effect to subsequent issuances
of common stock).  The combined entity elected to change its name from
Red Sun Mining, Inc. to Zurvita Holdings, Inc. and succeeded to the business of
Zurvita as its sole line of business.





Subsequent
to the Share Exchange, management determined Zurvita to be a variable interest
entity due to affiliated parties participating in the design of the entity and
insufficent equity investment at risk to permit Zurvita to finance its
activities without requiring additional subordinated financial
support.  Management also determined Amacore to be the primary
beneficiary and has included the accounts of Zurvita within its consolidated
financial statements.  Significant factors that led to this
determination were Amacore’s voting rights relative to other common and
preferred stockholders as well as how closely associated Amacore and Zurvita are
relative to other related party variable interest holders.





2





As a
result of the aforementioned transactions, Amacore’s ownership interest and
extent to direct the significant activities in Zurvita Holdings changed from
100% to 66%.





Business
Strategy





Amacore’s
overall business strategy is to utilize its proprietary technologies, marketing
expertise and methods, distribution capabilities, and strategic marketing
partnerships to not only generate new and sustained revenue but also to provide
genuine value and benefits to our members. Although we have primarily focused
our business development efforts on establishing healthcare-related products due
to the significant demand for lower cost alternatives to traditional healthcare
insurance and the high demand for products by the uninsured and/or uninsurable,
our broad capabilities and resources allow us to respond timely to other
opportunities arising from economic or social changes.  Below are some
immediate goals we are pursuing as a part of our overall strategy.




·
            Increase
      our Direct Response TV and affinity marketing
  partners




·
            Diversify
      our non-healthcare product
portfolio




·
            Grow
      our agent distribution network




·
            Strengthen
      our brand recognition




·
            Grow
      our internet direct to consumer marketing
  capabilities




·
            Reduce
      dependency on a small number of telemarketing
  companies




·
            Improve
      internal and external lead management to reduce customer acquisition
      costs




·
            Enhance
      our analytics and algorithms to identify and qualify potential
      customers




·
            Continue
      to emphasize high levels of marketing compliance and customer quality so
      as to effectively manage refund and chargeback
  risk




·
            Increase
      lifetime value of a member




Marketing





Amacore
uses various marketing methods and channels to sell our products and
services.  Below are the primary methods by which we sell our products
and services.





·
            Inbound Telemarketing
      – Amacore utilizes its corporate telemarketing resource and
      expertise as well as the capabilities of third parties to handle calls
      from prospective customers who are responding to direct response
      advertising (mail, infomercial, statement inserts, phone
      messaging).





·
            Online Marketing
      – Amacore utilizes corporate online marketing resources and expertise
      and partner with other online marketers to sell affiliated
      products. Amacore utilizes search engine optimization techniques
      to increase our online sales.





·
            Direct Mail
      – Amacore utilizes direct mail to cross sell our products through
      statement stuffers with our affinity marketing partners such as banks,
      credit unions and insurance
carriers.





·
            Agents –
      Amacore's insurance products are required to be sold by licensed
      agents.  Amacore utilizes in house and third-party licensed
      agents to sell our insurance
products.





·
            Wholesale – When
      companies have full or limited benefits administration capabilities and
      are seeking to offer or market a medical benefit product to their
      customers or members, Amacore can offer a wholesale product at lower
      cost.  Wholesale products are customized to consist of just a
      benefit or any particular mix of benefits administration services
      depending on the customer
requirements.





·
            Private Label – For
      companies who have great brand recognition and large customer bases but do
      not have product development capability or do not have a competitive
      product in a particular market segment, Amacore can design a customized
      and private label product for the company to
  sell.







3





Products
and Services





The
Company’s products consist of membership products and services, non-membership
products and services and insurance products.  Our products are
generally sold directly to consumers, but can also be sold wholesale or private
labeled.





Our
principal membership products include the following:





Product
                Description
                Key
      FeaturesHealth
      Options
                LifeGuard
      Health Options is comprehensive program that can be used by itself, or as
      a complement to any health plan. It can be carried by an individual or
      through an employer. This program  provides financial relief
      from medical and lifestyle expenses not covered by health insurance or can
      be used for expenses that fall below the deductible and co-insurance
      limits.
                Physician
      and hospital savings, prescription discounts, 24-hour nurseline, File MD,
      diagnostic imaging and lab, discount dental and vision, savings on
      chiropractic visits, alternative medicine, vitamin and nutritional
      supplement discounts, diabetic discounts, hearing savings and emergency
      travel assistanceSmartHealth
      Gold
                SmartHealth
      Gold is a medical and Lifestyle savings program developed based on key
      benefits known to assist a family with their healthcare
    needs.
                Prescription
      discounts, 24-hour nurseline, savings on chiropractic visits, alternative
      medicine, vitamin and nutritional supplemental discounts,  and
      counselingHealth
      Advance Silver
                HealthAdvance
      Silver is a medical and lifestyle discount program.
                Physician
      and hospital savings, dental and vision discounts, prescription savings,
      patient advocacy and NurseLineAmacore
      Dental
                The
      Amacore Dental plan allows members and their family significant savings on
      dental procedures when performed by a participating dental network
      dentist, which consists of thousands of credentialed
    dentists.
                Savings
      from 28% to 50% on routine dental services, such as cleaning, x-rays and
      fillings as well as crowns, root canals, dentures, oral surgery,
      orthodontics, periodontics and cosmetic dentistry.Amacore
      Vision
                The
      Amacore Vision program is a large vision network with thousands of eye
      care professionals. This is a network that includes ophthalmologists who
      discount all of their services on medical and surgical procedures,
      including cosmetic surgery and LASIK.
                1
      free eye exam, savings from 20% to 60% on eyeware; 10%-60% savings on
      sunglasses and contact lenses; 15%-25% savings on medical and surgical
      services.Amacore
      Protection
                Amacore
      Protection is a complete set of services that protects against common most
      legal issues and security concerns. Also included is piece of mind when
      traveling with a roadside service.
                Legal Care includes: Free and discounted
      legal care, identity theft solutions, and lost or stolen credit card
      assistance.
                  
                  Financial includes: Tax prep and advise,
      financial education and credit counseling, life events counseling, credit
      repair, debt relief, foreclosure assistance, bankruptcy and financial
      education counseling and roadside emergency services.Preferred
      Shopping
                Shop
      Now gets you discounted merchandise ,  including magazines,
      movie tickets, theme park discounts, and auto, when becoming a
      member.
                Discounts
      on magazines, theme parks, restaurants, movies, auto, and
      merchandise.Zurvita
      Protection
                Services
      that protects members against common legal issues and security
      concerns.
                Program
      offers legal assistance, tax preparation & counseling, distressed
      financial assistance, identity theft recovery services, credit repair
      services, roadside assistance and life event
counseling.Zurvita
      Health
                A
      discount medical program that combines benefits and services to help
      mitigate the cost of everyday healthcare needs.
                Program
      creates access to convenient and affordable discount medical programs.
      Services include access to a national network of board certified
      physicians providing telephone consultations to diagnose, recommend
      treatment and write short term non- narcotic prescriptions. Members
      further experience discounted medical services through network providers
      in vision, hearing, pharmacy, diagnostic, imaging and lab
      benefits.Zurvita
      Tech
                A
      membership plan that provides member discounted rates on computer and
      technology support needs.
                Program
      includes discounted prices on 24/7 remote technical support; nationwide
      onsite technical support and remote data backup and
  access.Zurvita
      Care Saver
                A
      membership program offering members cell phone concierge service and
      various retail shopping, dining, travel and recreational
      discounts.
                Program
      that includes restaurants, movie theatres, local retailers, daily
      services, personal care and pet care
providers.














4





Our
principal non-membership products and services include the
following:





Product
              Description
              Key
      FeaturesBenefit
      Administration
              Amacore
      Group offers a fully-functional administrative implementation process that
      comprises a list of features. We are steadfast in consistently expanding
      our administrative services and staff in an effort to support whatever
      administrative needs may arise.
              Turnkey
      solution that includes: fulfillment, billing, data and reporting,
      production, member services, claims and benefitsBilling
              Amacore
      Group can manage all aspects of billing, chargeback management,
      reconciliation, accounting, and reporting.
              Accounting,
      billing, reporting, reconciliation, and claims
reportingMember
      Service
              Member
      Services goal is to exceed our members' experience.  We ensure
      reps are trained and/or licensed to deal with member questions, issues
      and  enrollments. We ensure quality by using state-of-the-art
      phone systems that allow screening, monitoring and recording. The goal is
      to retain and grow member relationships.
              Answer
      questions, enrollments, cross-sells, member retentionFulfillment
              Our
      Operation's division houses production equipment for the development and
      distribution of product fulfillment kits.
              Creative
      design, printing, production and fulfillment of member
    kits.Zurvita
      Choice
              The
      deregulation of electric and natural gas industries in certain states
      gives consumers the option to choose where they may purchase their
      energy.
              Program
      offers utility services (electric & natural gas where available) in
      Texas, Georgia, New York, Ohio, Indiana and Michigan. Service provider is
      MXenergy who is the largest independent retail provider in North American
      and is available in 39 markets. Members can lock in annual rates and
      effectively eliminate the volatile prices that makes managing energy
      expenses difficult.ZurTel
              ZurTel
      offers its customers several products and services in the ever expanding
      telecommunications industry.
              Program
      offers Voice over Internet Protocol as one of the most rapidly growing
      segments within the telecommunications industry. Additionally, Virtual
      Office services are designed to meet even the most demanding
      communications needs. ZurTel offers members access to all the major
      wireless companies for cellular service.Zurvita
      Mobile
              Zurvita
      gives customer choices and the ability to choose from all the major
      carriers for cellular service.
              Zurvita
      Mobile, through association with our fulfillment partner, is a fully
      authorized dealer for all the major carriers including AT&T Alltel
      Wireless, Sprint-Nextel, T-Mobile and Verizon Wireless. Members have the
      flexibility to choose cell phones and providers from one convenient online
      location.LocalAdlink,
      Powered by Zurvita
              Online
      Search directory that actively pushes Ads to an internal local advertising
      network as well as popular 3rd
      party search engines.
              Premiere
      placement on national search directory LocalAdLink.com. Organic results on
      high traffic websites. Strategic placement on internal Ad network. 3rd
      party placement on popular search engines; Google, Ask, Bing, Yahoo. A low
      cost leader in Online
Advertising.











5





Our
principal insurance products include the following:





Product
              Description
              Key
      FeaturesSmartHealth
      Diamond
              A
      comprehensive limited medical plan with discount benefits and services.
      There are ten plans with varying elements of discounts, services and
      insurance designed to meet members' needs and pocket-book.
              Discount
      benefits such as: physician and hospital Savings, Medical Network,
      Long-term care discounts, Dental and Vision discounts, Prescription
      Savings, Diagnostic Labs, Hearing savings, Chiropractic discounts,
      Alternative Medicine, Vitamin Discounts and TeleDoc. Services such as:
      Patient Advocacy, Travel Assistance, NurseLine, Contact 911, Alternative
      Medicine, Counseling,  Lifeguard Support and Global Mednet. Also
      includes insurance components such as: Accident Medical/Dental Expense
      Benefit, Accidental Death & Dismemberment Benefit, Accident
      Disability, Doctor Visits and Daily Hospital Confinement Benefit,
      Inpatient/Outpatient Surgery, Ambulance Benefit and Intensive Care Unit
      BenefitHealth
      Advance
              HealthAdvance
      is an affordable limited medical and Lifestyle discount program developed
      to help those who cannot afford traditional insurance or do not
      qualify.
              Along
      with discount benefits such as: Physician and Hospital Savings, Dental and
      Vision discounts, Prescription Savings, Patient Advocacy and NurseLine,
      Savings on Chiropractic visits, Alternative Medicine, Counseling, Global
      Med-Net, Contact 911 and Emergency Travel Assistance. Also includes
      insurance components such as: Accident Medical/Dental Expense Benefit,
      Accidental Death & Dismemberment Benefit, Accident Disability, Doctor
      Visits and Daily Hospital Confinement BenefitElite
      Dental
              Amacore
      Elite DentalTM is an insured dental solution layered with discount and
      lifestyle benefits with access to approximately 80,000
      dentists.
              Oral
      exam and teeth cleaning covered at 100% twice a year,  Bitewing
      x-rays covered at 100%, once a year, discount on full mouth x-rays,
      resin-based composit fillings-once a year (2 sets) covered at 100%.
      Discounts on additional fillings, root canals, surgical extractions,
      crowns, upper dentures and orthodontia. Other benefits include: Diabetic
      savings, labs, File MD, Savings on Hearing, Prescription discounts,
      grocery savings and Travel Assistance.Mortgage
      Protection Life
              Mortgage
      Protection Life offers the mortgage holder with valuable life and
      disability insurance  to help pay the mortgage in case of an
      untimely disability or death.
              Mortgage
      protection life program consists of life insurance to pay off the mortgage
      due to death. A disability insurance income benefit to pay some or all of
      the mortgage payment from a disability from an accident or due to
      sickness. The program also offers a guarantee of a full return of your
      money paid into the policy for all unused benefits from an enforce policy.
      These features offer a mortgage holder peace of mind that they and their
      loved ones are fully protected all in one package.Critical
      Illness Life
              An
      insurance program that protects you with cash payments due to a diagnosis
      of a  specified critical illness.
              Critical
      illness program offsets the cost of daily life in the form of a cash
      payment for wage loss, deductibles, and other expenses that have occurred
      due to a diagnosis or a cover illness. The program covers illness such as
      cancer, heart attack, stroke, heart bypass surgery, severe burns,
      angioplasty and many other illnesses.Final
      Expense Life
              Program
      that offers valuable whole life insurance to cover the cost of funeral and
      final expenses in the senior market.
              Program
      offers a  variety of options to cover  final expenses
      such as funeral costs, unpaid medical bills, that a family may face when a
      parent, spouse, or loved one dies.FlyShield
              Program
      that offers travel insurance, to help alleviate the cost of damage,
      cancellation, interruption, and burglary.
              Program
      that offers travel insurance, to help alleviate the cost of damage,
      cancellation, interruption, and burglary. Also includes discounts on
      shopping and travel services.





Product
Development and Brand Recognition





Our
product development and brand recognition efforts will be integral to the
long-term success of the Company as well as our ability to attract third-party
service providers or product manufactures seeking our marketing
services.





Technology





The
Company utilizes key proprietary software technology that integrates all facets
of benefits administration and member services and provides agents and partners
with real-time reporting, including commission information upon
demand.  Third-party telemarketing software is used within the Company
to perform and monitor in-house telemarketing activities such as
inbound/outbound calls and customer support.  We also use technology
to identify target consumers within our marketing database.




6





Employees





As of
December 31, 2009, the Company had eighty-nine (99) full time employees, The
divisional breakout of employees is as follows: LifeGuard, USHBG, Zurvita, JRM,
and Corporate had thirty-eight (38), seven (7), sixteen (16), nine (9), and
nineteen (19) employees, respectively.





Customers





Our
customers consist primarily of individual consumers whom we bill for purchasing
our products through our internal marketing efforts and capabilities as well as
the marketing efforts and those of third party marketers selling our products
and services on our behalf.  In addition, companies who purchase from
us wholesale or private label products designed to be marketed to their customer
or membership base and companies who contract with Amacore for certain benefit
administration services are considered customers.





Competition





The
Company competes in the highly competitive, rapidly evolving, highly fragmented
healthcare, multi-benefit, and direct response marketing industries.  
As a result, we expect our competition to continually change with the advent and
aggregation of new products and services that compete for our current and
prospective membership’s consumer spending dollars. In addition, we compete with
other direct marketing companies that provide other products and services that
compete for the same prospective customer’s dollars. Currently, our major
competition includes traditional healthcare insurance products and other limited
medical or discount benefit products as well as the companies who market
them.  In addition, any direct response marketer selling competing
products or competing for the same strategic partnership is considered a
competitor.  There are many competitors who have been in business
longer than Amacore and/or who have greater financial and non-financial
resources than we do.  The Company believes its chief competitors
include large insurers such as various BlueCross Blue Shield companies, direct
response companies such as Affinion Group, Inc., as well as competitors selling
products and services similar to those we sell such as limited medical benefit
plans and discount benefit plans.





The
Company believes that the experience of its management team, diversity of its
marketing methods and channels, flexibility in new product development,
end-to-end servicing capabilities, and its proprietary technology provides it
with distinct competitive advantages.





Government
Regulation





We are
subject to federal, state and local laws, regulations, guidelines and
determinations, common laws, codes of conduct and other similar parameters that
directly and indirectly impact our business and methods of
operation.





State Discount Health Program
RegulationsMany states have
enacted legislation concerning the operation and marketing of discount health
programs.  With respect to scope, some state health program
regulations apply to discounts on all health care products, while other states’
regulations apply only to certain types of discount programs or
services.  For example, some regulations apply only to prescription
discounts.  In addition, some states require licensing and
registration of entities that provide discount health
programs.  Additional states are expected to enact such regulations in
the future.  States with such regulations currently in place may amend
existing regulations or enact new regulations which may severely restrict or
prohibit the sale of our products.  The Company monitors developments
or changes in the regulations in the states in which we operate or plan to
operate to allow compliance with the laws and regulations within those
states.  We may decide not to sell our products in states with
regulations we believe to be too burdensome or where compliance is too
costly.  In addition, such regulations may limit the products and
programs we may market and sell and the manner in which we market and sell our
products and programs.





Insurance
Regulations.  Although the Company is not an insurance company,
it does market products and services owned by companies that are subject to
various federal and state insurance regulations.  We rely on the
insurance companies for which we market products and services to comply with
applicable insurance laws and regulations and to monitor state and federal
legislative and regulatory activity with regard to insurance
regulations.  These insurance companies may be required to change
services, products, structure or operations in order to comply with such
insurance regulations.  The manner in which we market and distribute
our programs may be limited because of such insurance regulations.





The
discount programs we market are not insurance products and do not subject us to
insurance regulations.  However, some states have regulations that are
specific to discount plans as discussed above.  We may also receive
inquires from insurance regulators in various states in which we operate
requesting that we supply them with information about our
programs.  To date, these agencies have concurred with our view that
our health programs are not a form of insurance.  We can provide no
assurance that insurance commissioners in such states will continue to concur
with our view that our products are not a form of insurance and therefore are
not subject to insurance regulations.  In the future, states may adopt
regulations or enact legislation pursuant to which our programs may be deemed a
form of insurance, in which case we may become subject to insurance regulations
in such states.  Legislation has been introduced from time to time in
the U.S. Congress that could result in the federal government assuming a more
direct role in regulating insurance companies.  Compliance with such
regulations and laws may be costly and difficult.  Such regulations
may also preclude us from marketing some or all of our products and
programs.





7





Additional
governmental regulation or future interpretation of existing regulations may
increase the cost of compliance or materially and adversely affect the insurance
and/or non-insurance products and services offered by us and, as a result, our
results of operations.





Telemarketing Regulations.Our call center seats and relationships are, or may become, subject to
federal and state “do not call” laws and requirements.  Generally,
under these regulations, we are prohibited from calling any consumer whose
telephone number is listed in the national “do not call” registry, subject to
certain exceptions.  Violation of these regulations may result in
fines of up to $11,000 per violation, plus other penalties.





Product Claims and
Advertising Regulations.  The Federal Trade Commission
(FTC) and certain states regulate advertising, product claims, and other
consumer matters.  The FTC and state regulators may institute
enforcement actions against companies for false and misleading advertising of
consumer products.  In addition, the FTC has increased its scrutiny of
the use of testimonials, similar to those used by us and the marketing
companies, brokers and agents marketing our membership programs. While we
have not been the target of any FTC or state regulatory enforcement actions, we
can provide no assurance that:





·
            the
      FTC or state regulators will not question our advertising or other
      operations in the future;





·
            a
      state will not interpret product claims presumptively valid under federal
      law as illegal under that state’s regulations;
  or





·
            future
      FTC or state regulations or decisions will not restrict the permissible
      scope of such claims.





We are
also subject to the risk of claims by brokers and agents and their respective
customers who may file actions on their own behalf, as a class or otherwise, and
may file complaints with the FTC or state or local consumer affairs
offices.  These agencies may take action on their own initiative
against us for alleged advertising or product claim violations, or on a referral
from brokers, agents, customers or others.  Remedies sought in these
actions may include consent decrees and the refund of amounts paid by the
complaining brokers, agents or consumer, refunds to an entire class of brokers,
agents or customers, client refunds, or other damages, as well as changes in our
methods of doing business.  A complaint based on the practice of one
broker or agent, whether or not we authorized the practice, could result in an
order affecting some or all of the brokers and agents that we use in a
particular state.  Also, an order in one state could influence courts
or government agencies in other states considering similar
matters.  Proceedings resulting from these complaints could result in
significant defense costs, settlement payments or judgments and could have a
material adverse effect on us.





Healthcare Regulation and Reform and
Legislative Developments.In addition to the foregoing,
ongoing legislative and regulatory reforms of the healthcare industry at the
state and federal levels may affect the manner in which we conduct our business
in the future.  Many states have enacted, or are considering, various
healthcare reform statutes.  These reforms relate to, among other
things, managed care practices, prompt pay payment practices, health insurer
liability and mandated benefits.  Proposals have included, among other
things, modifications to the existing employer-based insurance system, a
quasi-regulated system of “managed competition” among health insurers, and a
single-payer, public program.  Also, we are subject to patient
confidentiality laws that prohibit the disclosure of confidential
information.  As with all areas of legislation, the federal
regulations establish minimum standards and preempt conflicting state laws that
are less restrictive but will allow state laws that are more
restrictive.  We expect this trend of increased legislation to
continue. We are unable to predict what reforms or new legislation will be
proposed or enacted or how they would affect our business. Proposals, if
adopted, could have a material adverse effect on our business, financial
condition or results of operations.





Insurance




Management
believes the Company carries sufficient insurance coverage to protect against
material losses incurred by any of our operations.  The Company
significantly mitigates risk by contracting with insurance carriers who
ultimately provide the insurance benefits that are embedded within the products
we market.  The Company is not an insurance company, and we do not
retain any insurance risk associated with any of the products we
sell.




Corporate
Information




The
Company is a Delaware corporation formed in May of 1994.  Our
Corporate headquarters and principal executive offices are located at Maitland
Promenade One at 485 North Keller Road, Suite 450, Maitland, Florida
32751.




8





Recent
Developments





On July
30, 2009 due to the aforementioned transactions, Zurvita became a variable
interest entity due to affiliated parties participating in the design of the
entity and insufficent equity investment at risk to permit Zurvita to finance
its activities without requiring additional subordinated financial
support.  Management also determined Amacore to be the primary
beneficiary and has included the accounts of Zurvita within its consolidated
financial statements.  Significant factors that led to this
determination were Amacore’s voting rights relative to other common and
preferred stockholders as well as how closely associated Amacore and Zurvita are
relative to other related party variable interest holders.   As a
result, Amacore’s ownership interest and extent to direct the significant
activities in Zurvita Holdings changed from 100% to 66%.





ITEM
1A. RISK FACTORS





You
should carefully consider the risk factors set forth below as well as the other
information contained in this Annual Report on Form 10-K before investing or
maintaining an investment in the Company.  The risks described below
are not the only risks facing the Company.  Additional risks and
uncertainties not currently known to us or those we currently deem to be
immaterial may also materially and adversely affect our business, financial
condition, cash flow, or results of operations and prospects.  The
following is a description of the most significant factors that might cause the
actual results of operations in future periods to differ significantly from
those currently desired or expected.  Any of the risks could
materially and adversely affect our business, financial condition or results of
operations and prospects.  As a result of the occurrence of any of
these risks, the trading price of our common stock could decline and you may
lose part or all of your investment.




Healthcare
reform measures could hinder or prevent our products’ commercial
success.
 
 The
healthcare industry is undergoing fundamental changes resulting from political,
economic and regulatory influences.  In the United States,
comprehensive programs have been proposed that seek to increase access to
healthcare for the uninsured, to control the escalation of healthcare
expenditures within the economy and to use healthcare reimbursement policies to
balance the federal budget.  On March 23, 2010, health reform
legislation was approved by Congress and has been signed into
law.  The reform legislation provides that most individuals must have
health insurance, will establish new regulations on health plans, create
insurance pooling mechanisms and other expanded public health care measures, and
impose new taxes on sales of medical devices and
pharmaceuticals.  Since this legislation is recently enacted and will
require the adoption of implementing regulations, we cannot predict the effect,
if any, that it will have on our business, but this legislation and similar
federal and state initiatives may have the effect of reducing medical procedure
volumes, increasing our taxes and otherwise adversely affect our business,
possibly materially.
 
 We expect
that Congress and state legislatures will continue to review and assess
healthcare proposals, and public debate of these issues will likely
continue.  We cannot predict which, if any, of such reform proposals
will be adopted and when they might be adopted.  Other countries also
are considering healthcare reform.  Significant changes in healthcare
systems could have a substantial impact on the manner in which we conduct our
business and could require us to revise our strategies.
 
 The
Company has a history of significant losses and may not be profitable in the
future and likely needs significant additional outside funding to continue
operating.





The
Company has a history of net losses and has an accumulated deficit of
approximately $140.8 million, from inception through December 31,
2009.  The Company has historically generated significant net
operating losses and negative operating cash flows.  The Company
believes that without significant equity and/or debt investment from outside
sources, the Company will not be able to sustain its planned operations for the
next 12 months.  Such additional capital may not be available to us on
acceptable terms or may not be available at all.  You should not rely
solely on the public market valuation of the Company and the views of securities
analysts and investors for assessing the operational, business and financial
success of the Company. Fluctuations in our quarterly operating results or our
inability to achieve profitability may cause volatility in the price of our
common stock in the public market.





The
Company’s business is difficult to evaluate because it has a limited operating
history.





The
Company has a limited operating history and participates in a relatively new and
rapidly evolving markets. The Company’s business has undergone significant
transformation during the past several years as a result of acquisitions,
changes in the services and products offered, changes in market conditions,
changes in our targeted membership, and is expected to continue to change for
similar reasons. We cannot assure you that our current business strategy will be
successful in the long term.  We have experienced significant losses
since inception and, even if demand from members exists, we cannot assure you
that our business will be successful.





The
Company is controlled by Vicis Capital Master Fund who will be able to make
important decisions about our business and capital structure.





Vicis
owns approximately 85% of our outstanding Class A common stock.  As a
result, Vicis controls us and has the power to elect a majority of the members
of our board of directors, appoint new management and approve any action
requiring stockholder approval.  Vicis’ interest in exercising control
over us and our business may conflict with the interests of our other
stockholders.  Vicis’ control may also discourage others from
acquiring us or from making a significant investment in us.





General
economic, financial market and political conditions may materially adversely
affect our results of operations and financial conditions.





General
economic, financial market and political conditions may have an adverse effect
on demand for our services and programs and on our results of operations and
financial condition.  Concerns over a prolonged recession, the
availability and cost of credit, the declining global mortgage and real estate
market, the loss of consumer confidence and reduction in consumer spending,
inflation, and other macroeconomic factors could influence demand for our
services and programs.  There could be a number of follow-on effects
from the credit crisis on our business, including insolvency of key partners,
inability of customers to obtain credit to finance purchases of our services and
programs, and/or customer insolvencies each of which could adversely affect our
results of operations and financial condition.




9





The
Company currently generates significant revenue through its marketing
partners.





The
Company derives a significant amount of revenue through its marketing
partners.  In the event any of our marketing partners stop selling our
programs to prospective members, or if prospective members do not purchase our
programs through these marketing partners, our business, financial condition and
results of operations could be materially and adversely affected.





The
Company may be unable to fund future growth.





The
Company’s business strategy calls for expansion through an increase in sales of
memberships by its internal sales force and its external marketing partners. The
Company will require significant funding for additional personnel, capital
expenditures as well as for working capital purposes. Financing may not be
available to the Company on favorable terms, if at all. If adequate funds are
not available on acceptable terms, then the Company may not be able to meet its
business objectives for expansion and profitability which could consequently
harm the Company’s business, results of operations and financial
condition.





In
addition, if the Company raises additional funds through the issuance of equity
or convertible debt securities, or a combination of both, then the stockholders
will suffer dilution, and any new securities may have rights, preferences and
privileges senior to those of our common stock and other series of Preferred
Stock. Furthermore, if the Company raises capital or acquires businesses by
incurring indebtedness, the Company will become subject to the risks associated
with indebtedness, including interest rate fluctuations and any financial or
other covenants that the Company’s lender may require. Moreover, if the
Company’s strategy to increase its sales and marketing resources in order to
grow revenues does not produce the desired result, then the Company may incur
significant, unrecoverable expenses.





The Company’s growth may be limited
if it is unable to attract and retain qualified
personnel.





The
Company’s business is largely dependent on the skills, experience and
performance of key members of the Company’s senior management team. The Company
plans to increase its sales and marketing personnel, as well as enter into
agreements with independent third parties to sell products and services in order
to grow revenue. The Company believes that its success depends largely on its
ability to attract and retain highly-skilled and qualified technical, managerial
and marketing personnel. The market for highly skilled sales, marketing and
support personnel is highly competitive as a result of the limited availability
of technically-qualified personnel with the requisite understanding of the
markets which the Company serves. The inability to hire or retain qualified
personnel may hinder the Company’s ability to implement its business strategy
and may harm its business.





We have acquired several businesses
in the past and may pursue strategic acquisitions of businesses in the future
which may not be completed or, if completed, may not be successfully integrated
into our existing business.





We have
pursued, and may continue to pursue, increased market penetration and growth
through strategic acquisitions. If we are unable to successfully complete
acquisitions or to effectively integrate acquired businesses, our ability to
grow our business or to operate our business effectively could be reduced, and
our business, financial condition and operating results could suffer. We also
cannot assure you that we will be able to integrate the operations of the
businesses we have acquired or any future completed strategic acquisitions
without encountering difficulty regarding different strategies with respect to
marketing, integration of personnel with disparate business backgrounds and
corporate cultures, integration of different distribution systems and other
technology and managing relationships with other business
partners.  The consummation and integration of any completed or future
acquisition involve many risks, including the risks of:





·
            diverting
      management’s attention from our ongoing business
      concerns;


·
            being
      unable to obtain financing on terms favorable to
      us;


·
            entering
      markets in which we have no direct prior
      experience;


·
            improperly
      evaluating new services, products and
  markets;


·
            being
      unable to maintain uniform standards, controls, procedures and
      policies;


·
            being
      unable to integrate new technologies or
    personnel;


·
            incurring
      the expenses of any undisclosed or potential
      liabilities;


·
            departure
      of key management and employees;


·
            loss
      in value of acquired intangibles;
and


·
            being
      unable to realize potential synergies and economies of
    scale.








10





Our continued
growth could strain our personnel and infrastructure resources, and if we are
unable to implement appropriate controls and procedures to manage our growth, we
may not be able to successfully implement our business plan.





We are
experiencing rapid growth in our operations which is placing, and will continue
to place, a significant strain on our management, administrative, operational
and financial infrastructure. Our future success will depend in part upon the
ability of our management to manage growth effectively. This may require us to
hire and train additional personnel to manage our expanding operations. In
addition, we will be required to continue to improve our operational, financial
and management controls and our reporting systems and procedures. If we fail to
successfully manage our growth, we may be unable to execute upon our business
plan and our business and operations may be adversely impacted.





Lengthy sales and
implementation cycles for the Company’s products and service make it
difficult to forecast revenues and, as a result, may have an adverse impact on
the Company’s business.





The
period from the Company’s initial contact with potential agents and customers to
the consummation of a sale is difficult to predict. These sales may be subject
to delays due to factors beyond the Company’s control. As a result, the Company
has limited ability to forecast the timing of revenue from new customers or
members. This, in turn, makes it more difficult to predict the Company’s
financial performance from quarter to quarter.  During the sales cycle
and the implementation period, the Company may expend substantial time, effort
and money preparing contract proposals and negotiating contracts without
receiving any related revenue. In addition, many of the expenses related to
providing the Company’s services are relatively fixed in the short term,
including personnel costs, fixed overhead, and technology and infrastructure
costs. As a result, the Company may be unable to adjust spending quickly enough
to offset any unexpected revenue shortfall or delay, in which case the Company’s
results of operations would suffer. In addition, in an attempt to enhance the
Company’s long-term competitive position, the Company may from time to time make
decisions regarding pricing, marketing, services and technology that could have
a near-term adverse effect on the Company’s operating results.





The Company faces significant
competition for its products and services.





While the
Company’s products and services are relatively new, the greater healthcare
markets in which the Company operates are intensely competitive, continually
evolving and, in some cases, subject to rapid change. The Company expects the
intensity of competition and the pace of change to be increased or at least be
maintained in the future. Many of the Company’s potential competitors have
greater financial, technical, product development, marketing and other resources
than the Company. These organizations may be better known than the Company and
may have more customers or members than the Company. The Company cannot provide
assurance that the Company will be able to compete successfully against these
organizations or any alliances they have formed or may
form.  Therefore, there can be no assurance that our competitors will
not:




·
            increase
      their emphasis on products and services similar to those we
      offer;


·
            provide
      products and services comparable or superior to those we provide at lower
      consumer cost; and


·
            adapt
      more quickly than we do to evolving industry trends or changing market
      requirements;








The success of
our business depends upon the continued growth and acceptance of health discount
membership programs as a suitable alternative or supplement to traditional
health insurance.





Sales
growth will depend on the acceptance of membership programs as a suitable
alternative or supplement to traditional health insurance. Health discount
membership programs could lose their viability as an alternative to health
insurance due to changes in healthcare laws and regulations, an inadequate
number of healthcare providers participating in the programs, customer
dissatisfaction with the method of making payments and receiving discounts, and
new alternative healthcare solutions. If health discount membership programs do
not gain widespread market acceptance, the demand for our membership programs
could be significantly reduced, which could have a material adverse effect on
our business, financial condition and results of operations.





The
Company must replace the customers it loses in the ordinary course of business
and if we fail to do so our revenue may decline and our customer base will
decline.





We lose a
substantial number of our customers each year in the ordinary course of
business.  The loss of customers may occur due to numerous factors,
including:





·
            changing
      customer preferences;


·
            competitive
      price pressures;


·
            customer
      dissatisfaction;


·
            general
      economic conditions;


·
            discontinuance
      of third-party products and
services





The
Company depends on third-party vendors to supply certain of our products and
services that we market.  The failure of these vendors to provide
these products or services could result in customer dissatisfaction and harm our
business and financial condition.





11





The
Company depends on third-party vendors to supply certain products and services
that we market.  Many of our third-party vendors are independent
contractors.  As a result, the quality of service they provide is not
entirely within our control.  If any third-party vendor were to cease
operations, or terminate, breach or not renew its contract with us, or suffer
interruptions, delays or quality problems, we may not be able to substitute a
comparable third-party vendor on a timely basis or on terms favorable to
us.  With respect to our products that contain an insurance benefit,
we are dependent on the insurance carriers that underwrite the insurance to
obtain appropriate regulatory approvals.  If we are required to use an
alternative insurance carrier, it may materially increase the time required to
bring an insurance related product to market.  As we are generally
obligated to continue providing our products and services to our customers even
if we lose a third-party vendor, any disruption in our product offerings could
harm our reputation and result in customer dissatisfaction.  Replacing
existing third-party vendors with more expensive or less quality third-party
vendors could decrease our profitability and harm our reputation.





The Company must develop and maintain
relationships with insurance companies for the insurance benefits marketed in a
number of our products.





We
are not an insurance company.  The insurance benefits that we offer as
part of our programs are developed and offered by third-party insurance
companies.  The loss or termination of our strategic relationships
with insurance companies could adversely affect our revenues and operating
results and may also impair our ability to maintain and attract new insurance
brokers and agents to offer our programs to the public. Development and
maintenance of relationships with insurance companies may in part be based on
professional relationships and the reputation of our management and marketing
personnel.  Consequently, the relationships with insurance companies
may be adversely affected by events beyond our control, including departures of
key personnel and alterations in professional relationships.  Our
success and growth will depend in large part upon our ability to establish and
maintain these strategic relationships, contractual or otherwise, with various
insurance companies to market their products and services. In addition, the
insurance companies with whom we work could determine to stop selling the
insurance products or programs we offer.  This would negatively impact
our business.





The
Company’s profitability depends on customers continuing their relationship with
us.  Increased loss of customers could impair our revenue and
profitability.





During
the initial few months of a customer relationship for certain of the Company’s
products and services, the Company experiences negative cash flow as a result of
customer acquisition costs paid to various marketers of our products and
services which exceed the fee paid by the customer.  If we experience
a higher percentage of cancellations during the initial period as compared to
our pricing models, our revenue and profitability could be negatively
impacted.





The
Company significantly depends on one major credit card processor to obtain
payments.  If the Company’s credit card processing is interrupted in
any way it could result in delays in collecting payments and our ability to
generate sales.





In the
event our credit card processor ceases operations or terminates its agreement
with us, there can be no assurance a replacement credit card processor could be
retained on a timely basis, if at all.  Any service interruptions,
delays or quality problems could result in delays in collecting payments, which
could adversely affect our revenue and profitability.





The
Company is highly dependent on our existing benefits administration
technological system.  Any temporary or permanent loss of our system
could have a negative effect on our business, financial condition and results of
operations.





Our
business depends on our ability to protect our proprietary benefits
administration system against damage or system interruptions from natural
disasters, technical failures and other events beyond our
control.  Our technology may also be vulnerable to computer viruses,
hackers or other disruptions entering our system through external
portals.  Any damage to our technological systems could impede our
ability to market our programs and services and to provide customer service,
which could result in loss of customers and revenue.





The
Company significantly depends on postal and telephone services to market and
service our customers.  An interruption of, or an increase in the cost
of using such service could adversely affect our business.





An
interruption of, or an increase in the cost for postal and telephone services
could increase our expenses and reduce our profitability.  We market
and service our products and services by various means, including through mail
and via telephone.  We utilize a variety of parcel services and
various local and long distance telephone companies.  Any significant
interruption of such services, any limitations in their ability to provide us
with increased capacity, or any significant cost increase could impede our
ability to market our products and services, potentially resulting in a loss of
customers and a reduction of our revenue.





The
Company is exposed to the general condition of the healthcare
market.





The
Company’s business is subject to global economic conditions, and in particular,
market conditions in the healthcare industry.  If global economic
conditions worsen, or a prolonged slowdown in demand for our products or
services occurs, then the Company may experience adverse operating
results.





12





Government
regulation of healthcare and insurance creates risks and challenges with respect
to the Company’s compliance efforts and business
strategies.





The
healthcare and insurance industries are highly regulated and subject to changing
political, legislative, regulatory and other influences. Existing and new
federal and state laws and regulations could create unexpected liabilities for
the Company and cause the Company to incur additional costs and restrict the
Company’s operations. Many laws are complex and their application to specific
products and services may not be clear. Management’s failure to accurately
anticipate the application of these laws and regulations, or other failures to
comply, could create liability, result in adverse publicity and negatively
affect our businesses.  Failure to comply with current, as well as
newly enacted or adopted, state regulations could have a material adverse effect
upon our business, financial condition and results of operations in addition to
the following:





·
            non-compliance
      may cause us to become the subject of a variety of enforcement or private
      actions;


·
            compliance
      with changes in applicable regulations could materially increase the
      associated operating costs;


·
            non-compliance
      with any rules and regulations enforced by a federal or state consumer
      protection authority may subject us or our management personnel to fines
      or various forms of civil or criminal prosecution;
  and


·
            non-compliance
      or alleged non-compliance may result in negative publicity potentially
      damaging our reputation and the relationships we have with our members,
      provider networks and consumers in
general.





The
Company must comply with Federal and State telephone consumer protection
laws.





Federal
and State telephone consumer protection laws prohibit deceptive, unfair or
abusive practices in telemarketing sales.  Any new legislation further
regulating telemarketing practices could adversely affect or limit our
operations.





The
Company faces potential liability related to the privacy and security of
personal information it collects from consumers through its website and
telemarketing operations.





Internet
user privacy has become a major issue both in the United States and abroad. The
Company has privacy policies posted on its website that the Company believes
comply with applicable laws requiring notice to users about the Company’s
information collection, use and disclosure practices. However, whether and how
existing privacy and consumer protection laws in various jurisdictions apply to
the Internet is still uncertain and may take years to resolve. Any legislation
or regulation in the area of privacy of personal information could affect the
way the Company operates its website and could harm its business. Further, the
Company cannot assure you that the privacy policies and other statements on its
website or its practices will be found sufficient to protect the Company from
liability or adverse publicity relating to the privacy and security of personal
information.  Any unauthorized release or failure to adequately
protect private information could cast a negative public perception of the
Company which in turn could adversely affect our ability to attract and retain
customers.





We face litigation risks from
currently pending claims as well as claims which may arise in the future which
could adversely affect our profitability and
reputation.





In
addition to claims arising in the ordinary course of business, several claims
have been filed against us and certain of our subsidiaries.  See Part
I, Item 3, “Legal Proceedings” for a more detailed description of these
proceedings. We are, and may in the future be, subject to other litigation or
government investigations.  These proceedings may be time-consuming,
expensive and disruptive to normal business operations, and the outcome of any
such proceeding is difficult to predict. The defense of such lawsuits or
investigations could result in significant expense and the diversion of our
management's time and attention from the operation of our business, which could
impede our ability to achieve our business objectives. Some, or all, of the
amount we may be required to pay to defend or to satisfy a judgment or
settlement of any or all of these proceedings may not be covered by
insurance.




The
cancellation of the Company’s agreement with Direct Medical Solutions, Inc.
could have negative impacts on our results of operations.
 
 In
February 2010, the Company’s wholly-owned subsidiary, U.S. Health Benefits
Group, Inc. terminated its marketing agreement with Direct Medical Network
Solutions, Inc. (“Direct Med”).   Also, in February 2010, the
Company’s wholly-owned subsidiary, LifeGuard Benefits Services, Inc.
(“LifeGuard”), accepted the termination of the servicing agreement between
LifeGuard and DirectMed and Consumer Assistance Services Association.  The
Company generated significant revenues from the marketing and servicing of
DirectMed’s limited medical products.  For the year ended December 31,
2009, the Company’s revenue from the marketing and servicing of DirectMed
products was approximately 25% of the Company’s consolidated revenues.  The
recent marketing and servicing contract cancellations between DirectMed and the
Company may negatively impact the Company’s revenues and profitability as there
is no guarantee that the Company’s replacement product(s) will achieve the same
level of sales and profitability.


Risks
Related to Our Stock





We
do not intend to pay dividends on our capital
stock.





We have
never declared or paid any cash dividend on our capital stock. We currently
intend to retain any future earnings and do not expect to pay any dividends in
the foreseeable future, except as required by the terms of the preferred stock
we have issued.





The Company may raise additional
funds in the future through issuances of securities and such additional funding
may be dilutive to stockholders or impose operational
restrictions





We may
raise additional capital in the future to help fund acquisitions and our
operations through sales of shares of our common 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 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.





13





We
identified a material weakness in our internal control over financial reporting
during the initial assessment of our internal controls that we performed in
connection with the preparation of the financial statements included in this
report.





Rules
adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
require management to complete an annual assessment of our internal controls
over financial reporting.   During the preparation of our financial
statements, we identified control deficiencies that have been classified as
material weaknesses in our internal controls over financial
reporting.  A material weakness is a control deficiency that results
in a more than remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected on a timely basis
by employees in the normal course of their assigned functions.  Based
on the material weaknesses identified, management concluded that our internal
control over financial reporting was not effective as of December 31, 2009. The
identification of this material weakness may cause investors to lose confidence
in us and our stock may be negatively impacted.





The
standards that must be met for management to assess the internal control over
financial reporting are relatively new and complex, and require significant
documentation, testing and possible remediation to meet the detailed
standards.  We may encounter problems or delays in completing the
activities necessary to make future assessments of our internal control over
financial reporting and completing the implementation of any necessary
improvements.  Future assessments may require us to incur substantial
costs and may require a significant amount of time and attention of management,
which could seriously harm our business, financial condition and results of
operations.  If we are unable to assess our internal control over
financial reporting as effective in the future, investors may lose confidence in
us and our stock may be negatively impacted.





If
our independent registered public accounting firm is unable to provide an
unqualified attestation report on our assessment of our internal control over
financial reporting, investors may lose confidence in us and our stock may be
negatively impacted.





Rules
adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
will require our independent registered public accounting firm to complete an
attestation report on our assessment of our internal control over financial
reporting.  The first attestation report of our assessment that our
independent registered public accounting firm must complete will be required in
connection with the preparation of our annual report for our fiscal year ending
December 31, 2010, unless extended by the SEC.  The attestation
process that must be performed by our independent registered public accounting
firm is also new and complex.  We may encounter problems or delays in
receiving an unqualified attestation of our assessment by our independent
registered public accountants.  Compliance with these new rules could
require us to incur substantial costs and may require a significant amount of
time and attention of management, which could seriously harm our business,
financial condition and results of operations.  If our independent
registered public accounting firm is unable to provide an unqualified
attestation report on our assessment, investors may lose confidence in us and
our stock may be negatively impacted.





We
are not subject to certain of the corporate governance provisions of the
Sarbanes-Oxley Act of 2002 and, without voluntary compliance with such
provisions, neither you nor the Company will receive the benefits and
protections they were enacted to provide.





Since our
common stock is not listed for trading on a national securities exchange, we are
not subject to certain of the corporate governance rules established by the
national securities exchanges pursuant to the Sarbanes-Oxley Act of
2002.  These rules relate to independent director standards, director
nomination procedures, audit and compensation committees standards, the presence
of an audit committee financial expert and the adoption of a code of
ethics.





While we
intend to file an application to have our securities listed for trading on a
national securities exchange in the future which would require us to fully
comply with those obligations, we cannot assure you that we will file such an
application, that we will be able to satisfy applicable listing standards, or,
if we do satisfy such standards, that we will be successful in receiving
approval of our application by the governing body of the applicable national
securities exchange.





Applicable
SEC rules governing the trading of “penny stocks” may limit the trading and
liquidity of our common stock which may affect the trading price of our common
stock.





Our
common stock is a “penny stock” as defined under Rule 3a51-1 of the Exchange Act
and is accordingly subject to SEC rules and regulations that impose limitations
upon the manner in which our common stock may be publicly
traded.  These regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the associated risks.  Under these regulations,
certain brokers who recommend such securities to persons other than established
customers or certain accredited investors must make a special written
suitability determination regarding such a purchaser and receive such
purchaser’s written agreement to a transaction prior to sale.  These
regulations may have the effect of limiting the trading activity of our common
stock and reducing the liquidity of an investment in our common
stock.





14





Our
common share price may subject us to securities
litigation.





The
market for our common stock is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
In addition, since December 2008, our trading price has dropped approximately
75%.  In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the
market price of its securities. We may, in the future, be the target of similar
litigation. Securities litigation could result in substantial costs and
liabilities and could divert management's attention and resources.





Our
stock price may be volatile, which may result in losses to our
stockholders.





The stock
markets have experienced significant price and trading volume fluctuations, and
the market prices of companies listed on the OTC Bulletin Board® (OTCBB) have
been volatile in the past and have experienced sharp share price and trading
volume changes. The trading price of our common stock is likely to be volatile
and could fluctuate widely in response to many of the following factors, some of
which are beyond our control:





·
            variations
      in our operating results;


·
            changes
      in expectations of our future financial performance, including financial
      estimates by securities analysts and
investors;


·
            changes
      in operating and stock price performance of other companies in our
      industry;


·
            additions
      or departures of key personnel; and


·
            future
      sales of our common stock.





Domestic
and international stock markets often experience significant price and volume
fluctuations. These fluctuations, as well as general economic and political
conditions unrelated to our performance, may adversely affect the price of our
common stock.





ITEM
1B. UNRESOLVED STAFF COMMENTS





None.





ITEM
2. PROPERTIES





During
the year, the Company moved their executive offices from Tampa, Florida to
Maitland, Florida, and the Tampa office was closed.  Amacore’s
executive and sales offices are now located at Maitland Promenade 1, 485 North
Keller Road, Suite 450, Maitland, FL 32751.  The office phone number
is (407) 805-8900.  Management entered into a new lease agreement
starting on March 1, 2009 and expiring on February 29,
2016.   The office consists of approximately 5.0 thousand square
feet.





JRM’s
sales and administrative office are located 901 Route 168, Turnersville, NJ
08012, Suite 104. This lease expires on March 31, 2010, and the office phone
number is (813) 289-5553.





LifeGuard’s
management offices, customer service center and fulfillment center are located
at 4929 W. Royal Lane, Irving, Texas 76063.  The office telephone number is
(972) 915-4800.  These facilities are leased and consist of approximately
30.0 thousand square feet.  The lease expires on September 30,
2011.





Zurvita’s
management offices are located at 800 Gessner, Houston, TX 77024.  These
facilities are leased and consist of approximately 4.0 thousand square
feet.  The lease expires on July 31, 2012.





USHBG’s
management offices are located at 555 South Andrews Avenue, Pompano Beach, FL
33069.   These facilities are leased and consist of approximately 4.5
thousand square feet.  The lease expires on May 31, 2010.





ITEM
3. LEGAL PROCEEDINGS





Ty Bruggemann, Paul Johnson, Thomas
Welch, Rocky Williams, Richard Burton, and Kim Fleischer v. The Amacore Group,
Inc., Jay Shafer, Shad Stastney, Chris Phillips, Clark A. Marcus, Giuseppe
Crisafi, Guy Norberg, Jerry Katzman, Vicis Capital, LLC, and John Doe
1-100; In the United States District Court, District of New Jersey; Case
No. 2:09-cv-02776-JAG-MCA (the “New Jersey Litigation”). In September 2009,
despite knowledge of the pending Florida Litigation, the above named plaintiffs
initiated the New Jersey Litigation against Amacore and other named individuals
and companies for allegations arising from the same transaction or occurrence
giving rise to the Florida Litigation described below. Plaintiffs asserted
claims against the defendants for fraud in the inducement, common law fraud,
breach of fiduciary duties, breach of contract, unjust enrichment, breach of
covenant of good faith and fair dealing, New Jersey consumer fraud statute,
conversion, declaratory judgment, and sought to pierce the corporate veil, all
arising from disputes between the parties regarding the Agreement of Plan and
Merger between Amacore Group, Inc., LBS Acquisition Corp., and Lifeguard Benefit
Services, Inc. dated on or about October 12, 2007. Amacore and the individually
named defendants who are or were officers or directors of Amacore responded by
filing a motion to dismiss based upon jurisdictional and other
grounds.  On December 16, 2009 the District Court of New Jersey
granted Amacore’s motion to transfer the case to the District Court of the
Middle District of Florida. In response to a motion to consolidate, the District
Court of the Middle District of Florida designated this case as the surviving
case.  Amacore and numerous individual defendants have pending motions
to dismiss which have not yet been ruled upon.   Discovery has
not yet begun in this matter.  Amacore was granted leave to assert its
counterclaim in the below referenced matter to preserve its
claims.  Amacore will vigorously defend against all of the allegations
and will assert a counterclaim against Plaintiffs.





15





The Amacore Group, Inc. v. Ty
Bruggemann, Thomas Welch, Paul Johnson, Lifeguard Benefit Services, Inc.,
Consumer Assistance Services Association, Direct Medical Network Solutions,
Inc.; In the United States District Court, Middle District of Florida,
Tampa Division; Case No. 8:09-cv-00748-JSM-TGW (the “Florida Litigation”). In
April, 2009, Amacore initiated the Florida Litigation against the named
individuals and companies asserting fraud in the inducement with respect to an
October 12, 2007, Agreement of Plan and Merger between Amacore Group, Inc.
(“Amacore”), LBS Acquisition Corp., and Lifeguard Benefit Services, Inc.
(“Lifeguard”) (“Agreement”). Alternatively, Amacore initiated this litigation to
dispute or modify certain adjustments that were to be made on or about April 12,
2009, pursuant to the terms of the Agreement. Amacore asserted causes of action
against the defendants including fraud in the inducement, negligent
misrepresentation, conspiracy to commit fraud, breach of contract, theft and
conversion, unjust enrichment, and a demand for an accounting. Defendants
responded by filing a motion to dismiss based upon jurisdictional and other
grounds. As a result of the transfer of the New Jersey Litigation to Florida,
the Florida Litigation was stricken by the Court on March 4, 2010, because the
matter described below was substantially similar to the transferred New Jersey
Litigation and pending in the same court. Amacore was granted leave to assert
its counterclaim in the below referenced matter to preserve its
claims.  (See summary of the New Jersey  Litigation
above).





Caroline McDonald
v. The Amacore Group, Inc.,Superior Court of New Jersey, Union
County, Case No. UNN-L-790-09; United States District Court, District of New
Jersey, Case. No. 2:09-cv-01608-SDW-MCA;on March 10, 2009, Caroline
McDonald, a former employee, filed a Civil Action alleging that Amacore had
breached her Employment Agreement by wrongfully terminating her shortly after
she commenced her employment in May, 2007.  Subsequently, the Court
transferred the Civil Action to the District Court.  Liability in this
matter is disputed.  Amacore filed a Motion to Dismiss based upon lack
of personal, general, or specific jurisdiction as to Shafer, Katzman, Marcus and
Amacore.  Amacore also argued the Court should enforce the agreement’s
forum selection clause.  The Motion to Dismiss is currently pending
and all Memoranda in Support are filed.  The parties await a
determination on disputed jurisdictional issues. Discovery has not yet begun.
Amacore will vigorously defend against all of the allegations and may assert a
counterclaim against Plaintiff once the motions to dismiss have been decided
upon.





As of
December 31, 2009, Amacore was involved in various additional lawsuits, legal
proceedings, claims or disputes arising in the normal course of business. 
The outcome of such claims cannot be determined at this time.  Management
does not believe that the ultimate outcome of these matters will have a material
impact on the Company’s operations or cash flows.





ITEM
4. RESERVED











16








PART
II





ITEM
5. MARKET FOR THE REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.





Market
Information





Our Class
A common stock is quoted on the OTCBB under the symbol "ACGI."  There
is no established public trading market for our Class B common
stock.  The Class B common stock is convertible on a one (1) for four
(4) share basis into Class A common stock at the option of the
holder.  Set forth below are the high and low bid prices for our Class
A common stock on the OTCBB for each quarter of the years ending December 31,
2009 and 2008. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not represent actual
transactions.





2009
              High
              LowMarch
      31, 2009
              0.13
              0.02June
      30, 2009
              0.08
              0.03September
      30, 2009
              0.04
              0.02December
      31, 2009
              0.03
              0.022008March
      31, 2008
              0.60
              0.36June
      30, 2008
              0.47
              0.30September
      30, 2008
              0.39
              0.15December
      31, 2008
              0.22
              0.05





Holders





As of
March 31, 2010, 1,047,725,428  shares of our Class A common stock are
issued and outstanding and there were one thousand one hundred sixty-two (1,162)
stockholders of record. There was one stockholder of record holding 200,000
shares of Class B common stock.





Dividends





The
payment of dividends is within the discretion of our Board of Directors and
depends in part upon our earnings, capital requirements and financial
condition. We have never paid any cash dividends on our common stock and we
do not anticipate paying such dividends in the foreseeable future. We currently
intend to retain earnings, if any, to finance our growth.





Shares
Authorized for Issuance Under Equity Compensation Plans





In May
1997, our Board of Directors adopted, and our stockholders approved, the 1997
Stock Option Plan (the Plan). The Plan may be administered by the Board of
Directors or a committee of the Board. The Plan authorizes the issuance of
incentive stock options (ISOs), as defined in the Internal Revenue Code of 1986,
as amended, non-qualified stock options (NQSOs) and stock appreciation rights
(SARs).  Consultants and directors who are not also employees of the
Company are eligible for grants of only NQSOs and SARs. The exercise price of
each ISO may not be less than 100% of the fair market value of the common stock
at the time of grant, except that in the case of a grant to an employee who owns
10% or more of the outstanding stock of the Company or any subsidiary of the
Company, the exercise price may not be less than 110% of the fair market value
on the date of grant. The exercise price of each NQSO or SAR may not be less
than 85% of the fair market value of the common stock at the time of grant.
Generally, options shall be exercisable at 20%, per year, and shall be
outstanding for ten years. As of December 31, 2009 no options have been granted
under the Plan.





At
December 31, 2009, warrants to acquire an aggregate of approximately 438.3
million shares of Class A common stock at exercise prices ranging from $0.01 to
$1.50 were outstanding.  Warrants to acquire an aggregate of
approximately 8 million shares of Class B common stock at exercise prices
ranging from $0.01 to $0.99 are also outstanding.  The warrants were
issued outside of the Plan pursuant to individual compensation arrangements with
members of our board of directors, officers, employees and
consultants.  At December 31, 2009, approximately 436.9 million and 8
million of Class A and B warrants, respectively, are exercisable.





The
following is a summary of our stock option plans and outstanding warrants issued
pursuant to compensatory equity arrangements as of December 31,
2009:


17








Equity
Compensation Plan Information





Plan
      Category
              Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights (a)
              Weighted-average
      exercise price of outstanding options, warrants and rights
    (b)
              Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities  reflected in column
      (a))Equity
      compensation plans approved by security holders
              0
              0
              750,000Equity
      compensation plans not approved by security holders
              446,283,217
              $0.38
              n/aTotal
              446,283,217
              $0.38
              750,000





The
Company currently does not have sufficient authorized common stock for issuance
under the equity compensation plans noted above.  The Company is in the
process of increasing its authorized common stock.





ITEM 6. SELECT FINANCIAL
DATA





Not
applicable.





ITEM 7.MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





Introduction





Management’s
discussion and analysis of results of operations and financial condition
(“MD&A”) is provided as a supplement to and should be read in conjunction
with our audited consolidated financial statements and the related notes thereto
included elsewhere herein to help provide an understanding of our financial
condition and results of our operations.  The MD&A is organized as
follows:





·
            Overview– This section
      provides a general description of our business and operating
      segments.





·
            Results of operations –This section provides an analysis of our results of operations
      comparing the year ended December 31, 2009 to 2008.  This
      analysis is provided on a consolidated and operating segment
      basis.





·
            Liquidity and capital
      resources– This section provides an analysis of our cash flows for
      the years ended December 31, 2009 and 2008 as well as a discussion of our
      liquidity and capital resources.





·
            Critical accounting policies
      – This section discusses certain significant accounting policies
      considered to be important to our financial condition and results of
      operations and which require significant judgment and estimates on the
      part of management in their application.  In addition, all of
      our significant accounting policies, including our critical accounting
      policies, are summarized in Note 2 – Basis of Presentation
      and Significant Accounting Policiesto our audited consolidated
      financial statements included within Item 8 of Part II of this 2009 Annual
      Report Form 10-K.





Overview





Description
of Business





The
Company is primarily a provider and marketer of healthcare-related membership
products such as limited and major medical insurance programs, supplemental
medical insurance and discount dental and vision programs for individuals and
families.  The Company distributes these products and services through
various distribution methods such as its agent network, inbound call center,
in-house sales representatives, network marketing and affinity marketing
partners as well as through third-party direct response marketers. To generate
leads for these distribution methods, the Company utilizes a variety of means
such as Direct Response TV, internet advertising, database mining, and
third-party leads as well as affiliate marketing partners’ lead
sources. The Company’s secondary line of business is to provide and market
lifestyle membership programs through these same marketing
channels.  These membership programs utilize the same back office and
systems creating marketing efficiencies to provide low cost ancillary products
such as identity theft protection, home warranty, travel protection, term life
insurance, involuntary unemployment insurance, accident insurance and pet
insurance.  The Company’s offers these secondary products not only to
new leads but also to existing members to increase member persistency and
lifetime membership value. The Company also markets its administrative services
such as billing, fulfillment, patient advocacy, claims administration and
servicing.





18





The
Company operates through five different business divisions:





·
            LifeGuard Benefit Services
      Division – This division generates revenue primarily from the sale
      of healthcare benefit membership plans and provides for product
      fulfillment, customer support, membership billing, claims administration,
      provider membership network maintenance and information technology. The
      Company operates this division through LifeGuard Benefit Services, Inc., a
      wholly owned subsidiary of the Company
  (“LifeGuard”).





·
            U.S. Health Benefits Group
      Division – This is an outbound telemarketing operation primarily
      marketing major and limited medical benefit plans.  The Company
      operates this division through US Health Benefits Group, Inc., US
      Healthcare Plans, Inc. and On the Phone, Inc., each a wholly owned
      subsidiary of the Company  (collectively,
    “USHBG”).·
            Zurvita
      Marketing Division – This is a network marketing company that is a
      provider of products and benefits through the use of a multi-level
      marketing distribution channel which consist of independent business
      operators.  The products marketed include residential gas and
      electricity energy rate plans, discount healthcare benefits and discount
      benefits on various retail products and services, and online
      advertising.  Zurvita Holdings, Inc. (“Zurvita”) also markets
      numerous low cost ancillary lifestyle membership products such as home
      warranty, legal assistance and restoration services for identity theft and
      consumer credit. Zurvita is a variable interest entity, and the Company is
      the primary beneficiary of Zurvita.





·
            JRM Benefits Consultants
      Division – This division historically marketed various
      financial services and healthcare products through its telemarketing
      center and agent distribution network to individuals, families and
      employer groups.  Effective March 1, 2010, the Company shut down
      operations of JRM.  The Senior Vice Presidents of JRM will focus
      on recruiting agents and other direct response marketers to sell the
      products of other reporting units.  The Company operates this
      division through JRM Benefits Consultants, LLC, a wholly owned subsidiary
      of the Company (“JRM”).





·
            Corporate and Other
      Division – This division provides management and financial support
      to the Company’s various divisions as well as performs corporate
      governance and compliance.  Additionally, the Company recognizes
      residual revenue from the initial launch of market campaigns prior to the
      acquisition of LifeGuard.  The Company operates this division
      through The Amacore Group, Inc. and its wholly owned subsidiary Amacore
      Direct Marketing, Inc.  Other legal entities such as LBI Inc.
      and LBS Acquisition Corp. which do not have any activity are included
      within the other division segments.  These entities were
      originally created for strategic transaction purposes.





Business
History





The
Company was founded in 1994 and began selling memberships in the Company’s
discount vision network to retail customers.  During 2007, the Company
enhanced its management team by hiring Mr. Jay Shafer and Mr. Guy Norberg, who
each had significant experience with managing marketing companies,
healthcare-related product development, benefits administration and marketing
partnerships.  With their hiring, the Company began focusing its
efforts the development of a back office system for benefits administration as
well as the development of a greater array of products and marketing
partners.





The
Company has had significant acquisitions which have improved the Company’s
operational capabilities as well as provided additional channels to market
products and services.  For instance, on September 1, 2007, the
Company completed the acquisition of 100% ownership of JRM through a
stock-for-stock merger.  The acquisition allows the Company to market
its products throughJRM’s outbound
telemarketing call center with additional agent distribution channels available
to it; on October 9, 2007, the Company completed the acquisition of 100%
ownership of LifeGuard through a stock-for-stock merger between LifeGuard and
the Company’s wholly owned subsidiary, LBS Acquisition
Corporation.  The acquisition of LifeGuard strategically assists the
Company’s vertical integration plan within the health benefits program market,
provides new distribution capabilities, provides important back office benefits
administration capabilities and allows the Company to enhance existing product
offerings to the Company’s clients; and on April 1, 2008, the Company acquired
100% of the outstanding common stock of USHBG, an inbound lead generation
telemarketing company primarily marketing major and limited medical benefit
plans.





On July
30, 2009 (the “Closing Date”), Red Sun Minning Inc. (“Red Sun”), entered into a
Share Exchange Agreement (the “Share Exchange Agreement”) with Zurvita and
Amacore, pursuant to which, among other things, Amacore contributed all of their
securities of Zurvita to Red Sun in exchange for Red Sun’s issuance to them of
9.3 million shares of common stock of Red Sun (the “Share Exchange”), which now
represents 37.2 million shares following a one (1) for four (4) forward
stock split.  Prior to the consummation of the Share Exchange
Agreement, Zurvita was a wholly-owned subsidiary of Amacore, and Red Sun was a
public shell company.





19





Concurrent
with the closing of the Share Exchange, Zurvtia entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with an accredited investor and
closed a private placement offering pursuant to which it raised gross proceeds
of $1.75 million and, among other things, issued and sold convertible preferred
stock convertible into shares of Zurvita’s common stock at an initial conversion
price of $0.25, which was subsequently adjusted to $0.0625 following a one
(1) for four (4) forward stock split.





Concurrent
with the closing of the Share Exchange, Zurvita entered into an Advertising and
Marketing Agreement with OmniReliant Holdings, Inc. (“OmniReliant”), pursuant to
which Zurvita agreed to provide placement of advertising for OmniReliant on its
website and OmniReliant agreed to provide Zurvita with certain marketing
services (the “OmniReliant Agreement”). The marketing services to be provided by
OmniReliant include the production of infomercials, video production services,
management of call centers, buying and fulfillment services. In consideration
for such services, OmniReliant received an aggregate of 3.8 million shares of
Zurvita’s common stock which subsequently was adjusted to 15.2 million
shares following a one (1) for four (4) forward stock split.





Pursuant
to the terms of a repurchase agreement (the “Repurchase Agreement”), Red Sun
repurchased 2 million or 66% of the outstanding shares of Red Sun common stock
for a total price of $210 thousand.




As a
result of the Share Exchange and the consummation of the transactions pursuant
to the Repurchase Agreement, the Red Sun experienced a change in control and
ceased to be a shell company. Zurvita became a wholly-owned subsidiary of Red
Sun and Amacore became the owner of approximately 66 percent of Red Sun’s issued
and outstanding shares of common stock and 44 percent of the voting rights of
total equity securities outstanding (after giving effect to subsequent issuances
of common and preferred stock).  The combined entity elected to change
its name from Red Sun Mining, Inc. to Zurvita Holdings, Inc. and succeeded to
the business of Zurvita as its sole line of business.





Subsequent
to the Share Exchange, management determined Zurvita to be a variable interest
entity due to affiliated parties participating in the design of the entity and
insufficent equity investment at risk to permit Zurvita to finance its
activities without requiring additional subordinated financial
support.  Management also determined Amacore to be the primary
beneficiary and has included the accounts of Zurvita within its consolidated
financial statements.  Significant factors that led to this
determination were Amacore’s voting rights relative to other common and
preferred stockholders as well as how closely associated Amacore and Zurvita are
relative to other related party variable interest holders.





As a
result of the aforementioned transactions, Amacore’s ownership interest and
extent to direct the significant activities in Zurvita Holdings changed from
100% to 66%.





20


Consolidated
Results of Operations
 
 For
      the Year Ended December 31,Increase2009
                
                
                2008
                
                
                (Decrease)Revenues
                
                $
                28,829,852
                
                
                $
                29,461,822
                
                
                $
                (631,970
                )Cost
      of Sales
                
                
                19,432,232
                
                
                
                20,806,246
                
                
                
                (1,374,014
                )Gross
      Profit
                
                
                9,397,620
                
                
                
                8,655,576
                
                
                
                742,044Operating
      Expenses
                
                
                35,238,527
                
                
                
                46,511,037
                
                
                
                (11,272,510
                )Operating
      Loss
                
                
                (25,840,907
                )
                
                
                (37,855,461
                )
                
                
                (12,014,554
                )Other
      Income
                
                
                12,840,461
                
                
                
                3,927,100
                
                
                
                8,913,361Net
      loss before income taxes
                
                
                (13,000,446
                )
                
                
                (33,928,361
                )
                
                
                (20,927,915
                )Income
      taxes
                
                
                53,089
                
                
                
                -
                
                
                
                53,089Net
      loss
                
                
                (13,053,535
                )
                
                
                (33,928,361
                )
                
                
                (20,874,826
                )Less:  Net
      loss attributed to non-controlling interest in Zurvita Holdings,
      Inc.
                
                
                2,318,511
                
                
                
                -
                
                
                
                2,318,511Net
      loss attributed to The Amacore Group, Inc.
                
                
                (10,735,024
                )
                
                
                (33,928,361
                )
                
                
                (23,193,337
                )Preferred
      Stock Dividend and Accretion
                
                
                (10,501,346
                )
                
                
                (8,054,985
                )
                
                
                2,446,361Net
      Loss Available to Common Stockholders
                
                $
                (21,236,370
                )
                
                $
                (41,983,346
                )
                
                $
                (20,746,976
                )Basic
      and Diluted Loss Per Share
                
                $
                (0.02
                )
                
                $
                (0.28
                )





Revenue:





For the
year ended December 31, 2009, revenue was approximately $28.8 million, as
compared to $29.5 million for the year ended December 31, 2008,a decrease of
approximately $632 thousand.  The Company’s decrease in revenue for
the year ended December 31, 2009 is mainly attributable to the cancellation of a
significant contract with a third-party direct response marketer who was
marketing a lifestyle benefit product of the LifeGuard division in
2008.  The contract was cancelled by the Company due certain
unfavorable contractual terms that resulted in significant customer acquisition
costs and selling and marketing costs. During the year ended December 31, 2009,
the Company added multiple new direct response marketing partnerships that have
lowered customer acquisition costs but have yet to achieve the same transaction
volume of the prior year contract.  The Company is focusing on the
addition of marketing partnerships that support the Company’s efforts on
lowering customer acquisition costs and reducing refunds and chargeback risk as
well as increasing member persistency





Cost
of Sales:





For the
fiscal year ended December 31, 2009, cost of sales was approximately $19.4
million, a decrease of approximately $1.4 million from total cost of sales of
approximately $20.8 million for the respective period in 2008.  Cost
of sales represented approximately 67% and 71% of total revenue for the year
ended December 31, 2009 and 2008, respectively.  The decrease in cost
of sales as a percentage of total revenue for the year is partially attributable
to consolidating a full year of USHBG activity as the Company acquired the
operations of USHBG on April 1, 2008. This strategic acquisition allows for the
intercompany elimination of commission expense incurred by LifeGuard as a result
of certain USHBG sales.  In addition, the new marketing partnerships
entered into during 2009 to replace the Company’s main direct response marketer
that was cancelled in 2008 have lowered customer acquisiton costs thereby
improving profitability.





Gross
Profit:





The
Company’s gross profit was approximately $9.4 million or 33% of revenue for the
year ended December 31, 2009, as compared to approximately $8.7 million or 29%
of revenue for the year ended December 31, 2008.  The improvement in gross
profit is a direct result of consolidating a full year of USHBG activity and the
improvement in Zurvita’s gross profit to $1.1 million for the year ended
December 31, 2009 as compared to a gross loss of $576 thousand for the year
ended December 31, 2008.





Operating
Expenses:





Our
operating expenses for the years ended December 31, 2009 and 2008 were
approximately $35.2 million and $46.5 million, respectively.





21





The table
below sets forth components of our operating expenses for the years ended
December 31, 2009 and 2008:





2009
              
              
              2008
              
              
              Increase
      (Decrease)Amortization
              
              $
              878,626
              
              
              $
              3,057,904
              
              
              $
              (2,179,278
              )Depreciation
              
              
              444,910
              
              
              
              335,346
              
              
              
              109,564Impairment
      loss on goodwilland
      other intangible assets
              
              
              8,483,361
              
              
              
              15,308,944
              
              
              
              (6,825,583
              )Office
      related expenses
              
              
              2,542,200
              
              
              
              2,198,772
              
              
              
              343,428Payroll
      and benefits
              
              
              8,701,736
              
              
              
              8,771,271
              
              
              
              (69,535
              )Professional
      fees andaccrued
      loss contingency
              
              
              7,117,046
              
              
              
              5,052,320
              
              
              
              2,064,726Selling
      and marketing
              
              
              6,588,375
              
              
              
              10,462,421
              
              
              
              (3,874,046
              )Travel
              
              
              482,273
              
              
              
              1,324,059
              
              
              
              (841,786
              )Total
      operating expenses
              
              $
              35,238,527
              
              
              $
              46,511,037
              
              
              $
              (11,272,510
              )





Depreciation
and amortization expense, which is computed on a straight-line method over
the assets’ estimated lives, for the years ended December 31, 2009 and 2008, was
approximately $1.3 million and $3.4 million, respectively, a decrease of
approximately $2.1 million over the same prior year period   This
decrease is attributable to lower carrying balances of finite-lived intangible
assets between the years as a result of an impairment loss taken for the year
ended December 31, 2008.





Impairment
loss on goodwill and other intangible assets was based on the Company’s
impairment analyses and consideration of the current and expected future market
conditions.  The Company determined that goodwill and certain
intangible assets related to the JRM, LifeGuard and USHBG reporting units were
impaired. The Company recorded non-cash, pre-tax total impairment charges of
approximately $167 thousand, $4.3 million and $4 million for the JRM, LifeGuard
and USHBG reporting units, respectively, for the year ended December 31,
2009.  The Company recognized an aggregate impairment loss on goodwill and
other intangible assets in the amount of $8.5 million and $15.3 million for the
years ended December 31, 2009 and 2008, respectively.





Office
related expenses include rent, insurance, utilities and office
maintenance. For the year ended December 31, 2009, these expenses were
approximately $607 thousand, $221 thousand, $829 thousand and $885 thousand,
respectively as compared to approximately $545 thousand, $89 thousand, $606
thousand and $959 thousand, respectively for the same period in
2008.   The overall increase is as a result of growth in Zurvita’s
operations as well as consolidating a full year of USHBG activity.





Professional
fees consist of consulting, accounting fees, contract labor and legal costs and
litigation accruals. For the year ended December 31, 2009, these costs were
approximately $1.7 million, $1.1 million, $287 thousand and $4 million,
respectively as compared to approximately $3.5 million, $953 thousand, $519
thousand and $60 thousand, respectively for the same period in
2008.  The overall increase of $2.1 million for the year ended
December 31, 2009 is attributed to legal fees and settling an outstanding legal
dispute for $1.8 million. Excluding the effects of the litigation settlement in
the second quarter, professional fees increased by $200 thousand for the year
ended period is a result of defending the Company in various legal proceedings
and additional audit costs incurred by Zurvita with respect to becoming a public
reporting entity.





Payroll
and benefits-related expenses for the year ended December 31, 2009 were
approximately $8.7 million, a decrease of $70 thousand over the same prior year
period.  The decrease is a result of the Company’s cost reduction and
containment measures employed over the past year.





Selling
and marketing expenses for the year ended December 31, 2009 were approximately
$6.6 million, a decrease of approximately $3.9 million from the same prior year
period.  The overall decrease is mainly attributable to the
cancellation of a significant contract with a third-party direct response
marketer who was marketing a lifestyle benefit product of the LifeGuard division
in 2008.  The contract was cancelled due certain unfavorable
contractual terms that resulted in significant selling and marketing
costs.  To prevent this cost from occurring again, subsequent
marketing contracts with direct response marketers now contain trial periods and
commission payment structures that pay on leads that produce billable
sales.





Travel
expenses for the year ended December 31, 2009 were approximately $482 thousand,
a decrease of approximately $842 thousand over the same prior year period. 
The decrease in travel expenses is a result of the Company’s efforts to reduce
non-essential costs.





22





Loss
from operations before other income and expense:





Loss from
operations was approximately $25.8 million for the year ended December 31, 2009,
as compared to approximately $37.9 million for the year ended December 31, 2008,
respectively.  Excluding amortization, depreciation and impairment
loss on goodwill and other intangible assets which are significant non-cash
expenses, the loss from operations was $16 million for the year ended December
31, 2009, respectively, as compared to approximately $19.2 million for the year
ended December 31, 2008.  The decrease of approximately $3.2 million
for the year ended is a result of the Company’s cost reduction and containment
measures employed over the past year.





Other
Income (Expense)





Gain
on change in fair value of warrants





Certain
of the Company’s warrants are recorded at fair value with changes in their fair
value reflected in the Company’s consolidated Statement of
Operations.  For the year ended December 31, 2009, the gain on change
in fair value of warrants was $13.3 million while a $4 million gain was incurred
during the year ended December 31, 2008.  Excluding a $4 million loss
recognized from the change in fair value of Zurvita’s issued warrants for the
year ended December 31, 2009, a gain of approximately $17.3 million resulted
from the change in fair value of Amacore’s issued warrants for the year ended
December 31, 2009.  The gain on Amacore’s warrants is attributable to
the market price used in fair valuing the warrants decreasing to $0.03 from
$0.12 as of December 31, 2009 and December 31, 2008,
respectively.  The $4 million unrealized loss on Zurvita’s warrants is
a result of a one (1) for four (4) forward stock split that occurred
on August 11, 2009 that had the effect of increasing the number of outstanding
Zurvita warrants by 21.42 million and the increase in market price used in fair
valuing the Zurvita warrants from $0.17 at time of issuance to $0.25 as of
December 31, 2009. These gains and losses are a non-cash item not impacting
operating cash flows or results of operations.  See Note 12 – Assets and Liabilities
Measured at Fair Value to the financial statements contained elsewhere in
this report for additional information with respect to the calculation of change
in fair value of warrants for the year ended December 31, 2009.





Gain
on change in fair value of embedded share conversion feature





An
embedded share conversion feature exists within a convertible note payable that
Zurvita issued on October 9, 2009.  The Company has determined the
conversion feature to be a derivative instrument and has recorded it at fair
value.  We recorded an unrealized gain from the adjustment to fair
value on the conversion feature for the year ended December 31, 2009 of
approximately $15 thousand.  No share conversion feature existed at
December 31, 2008.  This gain is a non-cash item not impacting
operating cash flows or results of operations. See Note 12– Assets and Liabilities
Measured at Fair Value, to financial statements contained within Item 8
of Part II of this Form 10-K for additional information with respect to the
calculation of change in fair value of this conversion feature for the year
ended December 31, 2009.





Gain
on extinguishment of debt





The
Company recognized a gain on the extinguishment of debt in the amount of
approximately $430 thousand and $862 thousand for the years ended December 2009
and 2008, respectively.  During 2008, the Company was successful in
renegotiating certain outstanding accounts and notes payable.  The
decrease in gain recognized for the year ended December 31, 2009 was a result of
less agreements reached and less qualifying accounts and notes payable as
compared to 2008.  The majority of the gain recognized in 2009 is a
result of legal circumstances that eliminated certain of the Company’s
obligations.





Interest
expense





Interest
expense for the year ended December 31, 2009 was approximately $419 thousand
compared to approximately $746 thousand for the same period in
2008.  During the year ended December 31, 2008, the company paid off
certain notes payable issued at a discount. As a result of paying off these
notes, $504 thousand of unamortized discount was recognized as additional
interest expense during the year ended December 31, 2008.  Excluding
the effect of the prior year note payoff, interest expense increased $177
thousand as a result of additional notes payable issued during the year in the
principal amount of approximately $2.5 million.





Loss
on conversion of note payable





There was
no loss on conversion of notes payable for the year ended December 31, 2009,
while a loss of approximately $243 thousand was incurred for the year ended
December 31, 2008.





23





Loss
on change in fair value of marketable securities





The
Company’s marketable securities consist of non-registered common stock. The
Company has classified these securities as an available-for-sale security due to
the six month holding requirement imposed by the Securities and Exchange
Commission on non-exempt security purchases.  The Company, however, has
elected to fair value these securities on a recurring basis and record an
unrealized gains or losses within the consolidated Statement of
Operations.  The Company recorded an unrealized loss of $530 thousand
for the year ended December 31, 2009.  No marketable securities
existed at December 31, 2008.  This loss is a non-cash item not
impacting operating cash flows or results of operations. See Note 12– Assets and Liabilities
Measured at Fair Value, to financial statements contained within Item 8
of Part II of this Form 10-K for additional information with respect to the
determination of fair value.





Income
Taxes:





For the
year ended December 31, 2009, the Company estimated approximately $53 thousand
in Texas gross margin tax and none for the year ended December 31, 2008. The
increase is directly related to the Company’s increased revenue and
profitability between the two periods.  The Company realized no tax
benefit from the deferred tax asset resulting from net operation glosses
carryforward as the deferred tax asset has been fully reserved.





Net
loss:





The
Company’s net loss amounted to approximately $13.1 million for the year ended
December 31, 2009 as compared to approximately $33.9 million net loss for
2008.   The $20.8 million decrease is attributable to less impairment
recognized, significant gains recognized from the change in fair value of the
Company’s warrants and successful cost reduction and containment measures
employed over the past twelve months.





Net
loss attributed to non-controlling interest in Zurvita Holdings,
Inc.:





Amacore’s
ownership in Zurvita changed from 100% to 66% due to the share exchange entered
into on July 31, 2009.   As a result, net loss attributed to the
non-controlling interest in Zurvita represents 34% of Zurvita’s net loss for the
period subsequent to the change in ownership of Zurvita.  Zurvita’s
net loss for the period July 31, 2009 to December 31, 2009 was $6.8 million, of
which $4.5 million represents Amacore’s portion and $2.3 million represents the
non-controlling interest’s portion of Zurvita’s net loss.  Amacore’s
portion is recognized within the financial statement caption “Net loss
attributed to The Amacore Group, Inc.” of the consolidated Statement of
Operations.





Net
loss attributed to The Amacore Group, Inc.:





After
reducing consolidated net loss by the amount allocated to the non-controlling
interest in Zurvita, the net loss attributed to The Amacore Group, Inc. before
preferred stock dividends and accretion was approximately $10.7 million for the
year ended December 31, 2009 as compared to approximately
$33.9  million for the year ended December 31, 2008.  The
decrease of approximately $23.2 million between the years ended is attributable
to Amacore’s reduction of ownership of Zurvita on July 30, 2009 as a result of
the aforementioned share exchange. During the year ended December 31, 2008,
Zurvita was a wholly-owned subsidiary and 100% of its net loss was included
within consolidated net loss and net loss attributable to The Amacore Group,
Inc.





Preferred
stock dividends and accretion:





Preferred
stock dividends amounted to approximately $2.1 million for the year ended
December 31, 2009 as compared to $1.3 million for the same period in 2008.
 An additional 18.5 million shares of preferred stock has been issued
since December 31, 2008 which accounted for an additional $646 thousand of
preferred stock dividends accrued.





Accretion
of the preferred stock's beneficial conversion feature amounted to
approximately $8.4 million for the year ended December 31, 2009 as compared to
$6.7 million for the same period in 2008.  The increase over the prior year
period resulted from the issuances of Series L Preferred Stock on June 29, 2009
and November 13, 2009 which had a conversion price of $0.01 while the market
price of the underlying common stock was at $0.05 and $0.03, respectively, and
had been fully accreted as of December 31, 2009.





Net
loss attributed to The Amacore Group, Inc. available to common
stockholders:





After the
effect of allocating to the non-controlling interest its portion of Zurvita’s
net loss and after the effects of income taxes and preferred stock dividends and
accretion, the net loss attributed to The Amacore Group, Inc. common
stockholders was approximately $21.2 million  for the year ended
December 31, 2009 as compared to approximately $42 million for the year ended
December 31, 2008.  The decrease of $20.7 million for the year ended
December 31, 2009 is attributable to less impairment recognized, significant
gains on fair valuing the Company’s warrants which significantly offset the loss
recognized on fair valuing the Zurvita warrants and cost reduction and
containment measures employed over the past twelve months.





24





Loss
per common share:





Loss per
common share amounted to $0.02 for the year ended December 31, 2009 compared to
$0.28 for the year ended December 31, 2008.  The decrease in loss per
share between the periods resulted due to the improvement in the Company’s net
loss and the increase in the number of weighted-average common shares
outstanding by approximately 879 million for the year ended December 31,
2009.  The significant share increase is attributed to the December
31, 2008 conversion of Series J and Series K preferred stock into 775.3 million
and 155.8 million, respectively, shares of common stock.

























25











Segment
Analysis





Lifeguard
Division








2009
              
              
              2008Revenues
              
              $
              21,606,850
              
              
              $
              24,537,797Cost
      of Sales
              
              
              (16,587,068
              )
              
              
              (18,967,251
              )Gross
      Profit
              
              
              5,019,782
              
              
              
              5,570,546Operating
      Expenses
              
              
              (10,198,161
              )
              
              
              (22,705,698
              )Other
      Income (Expense)
              
              
              5,791
              
              
              
              (8,906
              )Net
      Loss before taxes
              
              $
              (5,172,588
              )
              
              $
              (17,144,058
              )Income
      Taxes
              
              
              11,831
              
              
              
              -Net
      Loss
              
              $
              (5,184,419
              )
              
              $
              (17,144,058
              )





LifeGuard’s
revenue was approximately $21.6 million compared to approximately $24.5 million
for the year ended December 31, 2009 and 2008, respectively.  The
decrease in revenue for the year ended December 31, 2009 is attributable to the
cancellation of a significant contract with a third-party direct response
marketer who was marketing a lifestyle benefit product of the LifeGuard
division.  The contract was cancelled by the Company in the fourth
quarter of 2008 due to certain contractual terms that resulted in significant
customer acquisition costs and selling and marketing costs. During the year
ended December 31, 2009, the Company added multiple new direct response
marketing partnerships that have lowered customer acquisition costs but have yet
to achieve the same transaction volume of the prior year
contract.  The Company is focusing on the addition of marketing
partnerships that support the Company’s efforts on lowering customer acquisition
costs and reducing refund and charegback risk as well as increasing member
persistency.





Cost of
sales decreased approximately $2.4 million for the year ended December 31, 2009
over the prior year.  The cost of sales decrease is a direct result of
decreased revenue during the year ended December 31, 2009 over the prior year
and the result of lower customer acquisition costs from sales of new marketing
partnerships.  Operating expenses and net loss decreased approximately
$12.5 million and $12 million, respectively, for the year ended December 31,
2009 as compared to the same period in 2008.  The decrease is
attributed to less goodwill and other intangible asset impairment recognized in
2009 as compared to 2008 and the reduction of selling and marketing costs
incurred.  The Company recognized an impairment of approximately $4.3
million for the year ended December 31, 2009 as compared to approximately $9.1
million during the year ended December 31, 2008.





On
February 26, 2010, LifeGuard accepted termination from Direct Medical Network
Solutions, Inc. (“DirectMed”) and Consumer Assistance Services
Association with respect to certain marketing and servicing agreements
specific to DirectMed products.  The impact of this will result in less
revenue recognized in this reporting unit, as replacement product revenue is
expected to be recognized in other reporting units.  This division will
continue to realize residual commission revenue from previously sold insurance
and lifestyle membership products.  The division will also continue to
provide benefits administration for its residual members and the members of
other reporting units.





26





USHBG
Division





2009
              
              
              2008Revenues
              
              $
              4,198,959
              
              
              $
              4,240,932Cost
      of Sales
              
              
              (1,671,859
              )
              
              
              (1,338,818
              )Gross
      Profit
              
              
              2,527,100
              
              
              
              2,902,114Operating
      Expenses
              
              
              (7,826,545
              )
              
              
              (9,218,102
              )Other
      Expense
              
              
              (127,146
              )
              
              
              (374,834
              )Net
      Loss before taxes
              
              $
              (5,426,591
              )
              
              $
              (6,690,822
              )Income
      Taxes
              
              
              -
              
              
              
              -Net
      Loss
              
              $
              (5,426,591
              )
              
              $
              (6,690,822
              )





USHBG
revenues remained consistent at $4.2 million for the year ended December 31,
2009 and 2008 due to general economic conditions.  Operating expenses
decreased $1.4 million for the year ended December 31, 2009 compared to prior
year.  The decrease in operating expenses is related to the impairment
loss of approximately $4 million taken during the year ended December 31, 2009
compared to $5.9 million taken during the prior year.  Excluding the
effects of the impairment charges, operating expense increased by approximately
$492 thousand.  The increase is due to consolidating a full year of
activity in 2009 as well as increased lead costs incurred to support same level
of revenues.





On
February 26, 2010, a Marketing Agreement between USHBG and DirectMed was
terminated by USHBG for cause.  USHBG is no longer required to
exclusively market the DirectMed suite of limited medical
products.  USHBG has replaced the DirectMed product suite with another
comparable limited medical benefit plan.  USHBG is continuing to sell
major medical insurance and has also begun to sell other lifestyle benefit
membership plans.





Zurvita
Division





For
      the Year Ended December 31,2009
              
              
              2008Revenues
              
              $
              5,126,019
              
              
              $
              2,371,142Cost
      of Sales
              
              
              (4,066,625
              )
              
              
              (2,947,171
              )Gross
      Profit (Loss)
              
              
              1,059,394
              
              
              
              (576,029
              )Operating
      Expenses
              
              
              (6,840,919
              )
              
              
              (5,401,197
              )Other
      Income
              
              
              (4,599,912
              )
              
              
              -Net
      Loss before taxes
              
              $
              (10,381,437
              )
              
              $
              (5,977,226
              )Income
      Taxes
              
              
              36,172
              
              
              
              -Net
      Loss
              
              $
              (10,417,609
              )
              
              $
              (5,977,226
              )








For the
year ended December 31, 2009 and 2008, Zurvita’s revenues were approximately
$5.1 million and $2.4 million, respectively, an approximate increase of $2.7
million.  Revenue primarily consisted of administrative websites,
advertising sales, marketing fees, and membership product sales and were $1.3
million, $170 thousand, $2 million and $1.4 million, respectively, for the year
ended December 31, 2009 as compared to $486 thousand, $0, $806 thousand and $1.1
million, respectively, for the year ended December 31, 2008.  The
increase in total revenue as well as individual components of revenue are a
direct result of growth in the division’s network sales representatives to 6,588
as of December 31, 2009 compared to 3,220 as of December 31,
2008.  The division was able to attract and retain more
representatives as a result of greater product offering as of December 31, 2009
as compared to December 31, 2008.





27





Cost of
sales for the year ended December 31, 2009 increased by approximately $1.1
million to $4.1 million over the same prior year period.  Costs of
sales included sales commissions paid to marketing representatives and the
benefit and product cost associated with the products and services
sold.  For the year ended December 31, 2009, these costs were
approximately $3.1 million and $924 thousand, respectively, as compared to $2.5
million and $482 thousand, for the year ended December 31, 2008,
respectively.  The increase in cost of sales is directly related to
the increase in revenues as each product sold generates sales commissions and
contains a product cost.  However, cost of sales as a percentage of
revenue has decreased from 124% to 79% for the year ended December 31, 2009 as
compared to the same prior period as a result of less non-traditional sales
incentive compensation strategies.  In order to attract and retain
marketing representatives while the division was being structured and products
developed, non-traditional means of sales compensation were
employed.  During 2009, the division had a greater product offering
and larger marketing representative base thereby reducing the need for
non-traditional compensation methods.





Operating
expenses and net loss were approximately $6.8 million and $10.4 million,
respectively, for the year ended December 31, 2009 as compared to operating
expenses and net loss of $5.4 million and $6.0 million, respectively, for the
same prior year period.  The $4.4 million increase in net loss for the
year ended December 31, 2009 is attributed to the $4 million loss recognized
from fair valuing of Zurvita’s warrants and the recognition of a $600 thousand
loss with respect to a legal settlement.  Zurvita and Amacore were
able to settle the outstanding litigation for $1.8 million by means of a Mutual
Compromise and Settlement Agreement of which $1.2 million was paid by Amacore
and of which $600 thousand was the future responsibility of Zurvita and
structured as a note payable.





In
October 2009, Zurvita entered into a marketing agreement with OmniReliant,
whereby Zurvita was granted a perpetual right, under all intellectual property
rights applicable to the LocalAdLink software, to market the LocalAdLink online
local search directory and sell advertisements which are displayed within the
directory. For this right, Zurvita issued a promissory note in the principal
amount of $2 million as consideration. The division is focusing its efforts and
resources on this product and is recruiting representatives based on its
availability.





JRM
Division





For
      the Year Ended December 31,2009
              
              
              2008Revenues
              
              $
              190,248
              
              
              $
              291,697Cost
      of Sales
              
              
              (13,719
              )
              
              
              (140
              )Gross
      Profit
              
              
              176,529
              
              
              
              291,557Operating
      Expenses
              
              
              (842,593
              )
              
              
              (1,024,774
              )Other
      Expense
              
              
              (32,488
              )
              
              
              (28,711
              )Net
      Loss before taxes
              
              $
              (698,552
              )
              
              $
              (761,928
              )Income
      Taxes
              
              
              -
              
              
              
              -Net
      Loss
              
              $
              (698,552
              )
              
              $
              (761,928
              )





During
the fourth quarter of 2008 and continuing in the first quarter of fiscal 2009,
the JRM division shifted its resources to market other insurance related
products as a result of the national economic downturn in the mortgage
market.  The impact of the decline in demand for the division’s mortgage
protection product, which was the main product that JRM marketed during
2008, has contributed to the decrease in revenue of approximately $101
thousand for the year ended December 31, 2009 as compared to the year ended
December 31, 2008.  At December 31, 2008, the division realized an
impairment loss on its goodwill and other intangible assets of $305 thousand
which was attributed to lower forecasted cash flows as a result of less demand
for the mortgage protection product.




28





During
the second quarter of fiscal 2009, this division migrated all sales effort to an
agent distribution network model and reduced its focus on call center services
while further shifting its resources to market other insurance related products
such as final expense, dental and critical illness life. These products are
being sold in the voluntary employee benefits market, through small employer
groups and through agent and broker networks.  For the year ended
December 31, 2009, the division realized an additional impairment loss on its
goodwill and other intangible assets of $167 thousand as a result of decreasing
revenue and the forecasted trend of the division’s fixed operating costs
exceeding its revenue. As of December 31, 2009, there were no carrying amounts
of goodwill or other intangible assets attributable to this
division.




Excluding
the impairment loss recognized on goodwill and other intangible assets of $167
thousand and $305 thousand as of December 31, 2009 and 2008, respectively,
operating expenses for the year ended December 31, 2009 were approximately $676
thousand as compared to $720 for the year ended December 31, 2008. Operating
expenses decreased approximately $44 thousand for the year ended December 31,
2009 due to the workforce reduction and other operating cost reductions
implemented during the end of the second quarter of
2009.




Effective
March 1, 2010, the Company halted JRM’s sales call center operations which
historically telemarketed products as well as recruited agents for the division.
This division will continue to realize residual commission revenue from
previously sold insurance plans and will incur limited operating expenses to
facilitate the collection of such revenue as well as to provide minimal
resources to the Senior Vice Presidents of JRM who will be focusing on
recruiting agents and other direct response marketers to sell the products of
other reporting units.







Corporate
and Other





For
      the Year Ended December 31,2009
              
              
              2008Revenues
              
              $
              893,434
              
              
              $
              1,054,542Cost
      of Sales
              
              
              (278,619
              )
              
              
              (587,154
              )Gross
      Profit
              
              
              614,815
              
              
              
              467,388Operating
      Expenses
              
              
              (9,530,309
              )
              
              
              (8,161,266
              )Other
      Income
              
              
              17,594,216
              
              
              
              4,339,551Net
      Income (Loss) before taxes
              
              $
              8,678,722
              
              
              $
              (3,354,327
              )Income
      Taxes
              
              
              5,086
              
              
              
              -Net
      Income (Loss)
              
              $
              8,673,636
              
              
              $
              (3,354,327
              )





This
division’s primary function is to provide executive managerial support and to
provide financial resources to the Company’s various divisions and is
responsible for corporate governance and compliance.  Operating
expenses and net income were approximately $9.5 million and $8.7 million,
respectively, for the year ended December 31, 2009 as compared to operating
expenses and net loss of $8.2 million and $3.4 million, respectively, for the
prior year.  Excluding the $1.8 million legal settlement entered into
during 2009 and the effect of reversing a $3 million litigation accrual upon a
successful settlement during 2008, operating expenses decreased $3.4 million
primarily as a result of reduction in consulting expense of approximately $2.3
million and other costs cutting measures, such as reduction in payroll
expenses.





Other
income for this division is mainly due to the change in the fair value of the
Company’s warrants accounted for as liabilities.  At each reporting
period, the warrants are measured at fair value and any resulting gain or loss
is recognized as other income or expense.  A significant input for
determining fair value is the market price of the Company’s common
stock.  Due to the Company’s share price decreasing from $0.12 at
December 31, 2008 to $0.03 at December 31, 2009, significant gains have resulted
and have been recorded as other income at each reporting
period.  These gains are non-cash transactions and do not impact cash
flows from operations.





Net
income or net loss for this division is driven by the level of the division’s
operating expenses and market conditions affecting the reoccurring valuations of
certain of the Company’s financial instruments.  This division has
operated as a cost center and recognizes minimal residual revenue from the
initial launch of certain market campaigns prior to the acquisition of
LifeGuard.





29





Off
Balance Sheet Arrangements





As of
December 31, 2009 and 2008, the Company did not have any off balance sheet
arrangements.





Liquidity
and Capital Resources





The
following table compares our cash flows for the years ended December 31, 2009
and 2008.





December
      31, 2009
              
              
              December
      31, 2008Net
      cash used in operating activities
              
              $
              (15,231,607
              )
              
              $
              (22,169,665
              )Net
      cash used in investing activities
              
              
              (1,074,400
              )
              
              
              (1,451,732
              )Net
      cash provided by financing activities
              
              
              19,389,697
              
              
              
              21,698,792Net
      increase (decrease) in cash
              
              $
              3,083,690
              
              
              $
              (1,922,605
              )








Since its
inception, the Company has met its capital needs principally through sales of
its equity and debt securities, including sales of common stock upon the
exercise of outstanding warrants. We have used the proceeds from the
exercise of warrants and our other sales of securities to pay virtually all of
the costs and expenses we have incurred over the past 12 years. These costs
and expenses included operating expenses, such as salary expenses,
professional fees, rent expenses and other general and administrative expenses
discussed above, and the costs of sales discussed above to the extent such costs
of sales exceeded our revenue. In addition, while the majority of the
consideration we paid in our recent acquisitions consisted of the Company’s
Class A common stock, cash consideration was also paid as part of the purchase
price.





We
believe that without significant equity and debt investment from internal and
external sources, the Company will not be able to sustain its current planned
operations for the next 12 months.  During 2009, the Company has
raised from its majority shareholder $18.5 million of equity funding and Zurvita
has raised from its preferred stock shareholder $3.75 million of equity
funding.  Subsequent to December 31, 2009, Zurvita has raised an
additional $1 million in equity funding from its preferred stock
shareholder.  In order to raise capital, the Company may sell
additional equity or convertible debt securities which would result in
additional dilution to our stockholders. The issuance of additional debt would
result in increased expenses and could subject us to covenants that may have the
effect of restricting our operations.  We can provide no assurance
that additional financing will be available in an amount or on terms acceptable
to us, if at all. If we are unable to obtain additional funds when they are
needed or if such funds cannot be obtained on terms favorable to us, we may be
unable to execute upon our business plan or pay our costs and expenses as they
are incurred, which could have a material adverse effect on our business,
financial condition and results of operations.





Currently,
the Company does not maintain a line of credit or term loan with any commercial
bank or other financial institution.  The Company has approximately
$2.6 million of outstanding notes payable as of December 31, 2009.





The
Company’s commitments and contingencies will either utilize future operating
cash flow or require the sale of debt or equity securities to fulfill the
commitments.  Refer to NOTE 20 – Commitments and
Contingenciesfor additional detail on nature and cash flow
requirements.





Critical
Accounting Policies





Revenue
Recognition





Administrative
Websites





Zurvita’s
independent representatives pay a fee to the Company entitling them to use of
websites that facilitate their business operations.  This revenue is
recognized ratably over the website subscription period.





Advertising
Sales





The
Company markets subscriptions to a service that facilitates the ability of
customers, typically small business owners, to display commercial advertising on
on-line search directories.  This revenue is recognized ratably over
the advertising subscription period.





30





Commissions





The
Company is paid a commission for its sales of third-party products. Commissions
are recognized as products are sold and services performed and the Company has
accomplished all activities necessary to complete the earnings
process.





Marketing
Fees and Materials





The
Company markets certain of its products through a multi-level sales organization
whereby independent distributors establish their own network of
associates.  The independent distributors pay the Company an annual fee to
become marketing representatives on behalf of the Company.  In exchange,
the representatives receive access, on an annual basis, to various marketing and
promotional materials and tools as well as access to customized management
reports; accordingly, revenue from marketing fees is recognized over an annual
period.  The Company also earns ancillary revenue from the sale of
marketing materials to third parties.  Revenue is recognized when
marketing materials are delivered.





Membership
Fees





The
Company recognizes revenues from membership fees for the sales of health-related
and lifestyle discount benefit plans as earned.  These arrangements
are generally renewable monthly and revenue is recognized over the renewal
period.  These products often include elements sold through contracts
with third-party providers.  Based on consideration of each
contractual arrangement, revenue is reported on a gross basis.





The
Company records a reduction in revenue for estimated refunds and
chargebacks from credit card companies, and allowances based upon actual history
and management’s evaluation of current facts and circumstances.  
Refunds and chargebacks totaled approximately $4.5 million and $8.1 million for
the year ended December 31, 2009 and 2008, respectively, and were recorded as a
reduction of revenue in the accompanying statements of
operations.  Estimates for an allowance for refunds and chargebacks
totaled approximately $160 thousand and $390 thousand at December 31, 2009 and
2008, respectively and were included in accrued expenses and other liabilities
in the accompanying balance sheets.





Use of
Estimates





The
preparation of the Company’s consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and 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.  The
accounting estimates requiring a high degree of management’s subjective
judgments include the allowance for sales refunds and chargebacks,
capitalization of certain assets, depreciable/amortizable lives, impairment
of long-lived assets, the expected volatility of common stock, and the fair
value of common stock and warrants issued for services as well as the allocation
of proceeds from the issuance of debt and equity instruments.  Due to
the uncertainty inherent in such estimates, actual results may differ from these
estimates.





Goodwill and Acquired
Intangible Assets





Management
assesses goodwill related to reporting units for impairment annually as of
October 1 or more frequently if an event occurs or circumstances indicate that
the asset might be impaired and determines if a reduction of the carrying amount
of goodwill is required.  An impairment charge is recorded if the implied
fair value of goodwill of a reporting unit is less than the book value of
goodwill for that unit.





For
purposes of testing goodwill impairment, each of our reportable segments is a
reporting unit. We review each reporting unit for possible goodwill
impairment by comparing the estimated fair value of each respective reporting
unit to the carrying value of that reporting unit’s net assets. If the estimated
fair value exceeds the net assets, no goodwill impairment is deemed to exist. If
the fair value of the reporting unit does not exceed the carrying value of that
reporting unit’s net assets, we then perform, on a notional basis, a purchase
price allocation of allocating the reporting unit’s fair value to the fair value
of all tangible and identifiable intangible assets and liabilities with residual
fair value representing the implied fair value of goodwill of that reporting
unit.  The carrying value of goodwill for the reporting unit is
written down to this implied value.





Intangible
assets with a finite useful life recorded as a result of acquisition
transactions are amortized over their estimated useful lives on a straight-line
basis as follows:





Software
            3
      yearsCustomer
      and vendor relationships
            5
      yearsTradenames
            16
      months





The
Company evaluates its intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying value of such assets may not
be recoverable.  To determine recoverability, the Company compares the
carrying value of the assets to the estimated future cash flows.  If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized for the amount by which the carrying amount of
the asset exceeds the fair value of the asset.





31





Stock-Based
Compensation





The
Company recognizes the cost resulting from all share-based payment transactions
in the financial statements using a fair-value-based measurement
method.  The Company uses the Black-Scholes Option Pricing Model in
computing the fair value of warrant instrument issuances and uses closing market
prices in computing the fair value of Common A and Common B stock
issuances.





The
measurement date for valuing share-based payments made to non-employees is the
earlier of the date at which a commitment for performance by the counterparty to
earn the equity instruments is reached or the date at which a commitment for
performance by the counterparty to earn the equity instruments is reached or the
date at which the counterparty’s performance is complete.





Convertible
Instruments





The
Company reviews the terms of convertible debt and equity securities for
indications that bifurcation and separate accounting for the embedded conversion
feature is required. Generally, embedded conversion features where the ability
to physical or net-share settle the conversion option is not within the control
of the Company are bifurcated and accounted for as derivative financial
instruments. Bifurcation of the embedded derivative instrument requires
allocation of the proceeds first to the fair value of the embedded derivative
instrument with the residual allocated to the debt or equity instrument. The
resulting discount to the face value of the debt instruments is amortized
through periodic charges to interest expense using the effective interest
rate method.





Derivative Financial
Instruments





The
Company generally does not use derivative financial instruments to hedge
exposures to cash-flow or market risks. However, certain other financial
instruments, such as warrants to purchase the Company’s common stock and the
embedded conversion features of debt and preferred instruments that are indexed
to the Company’s common stock are classified as liabilities when either (a) the
holder possesses rights to net-cash settlement, (b) physical or net share
settlement is not within the control of the Company, or (c) based on its
settlement provisions, the instrument is determined not to be indexed to the
Company’s common stock.  In such instances, net-cash settlement is
assumed for financial accounting and reporting. Such financial instruments are
initially recorded at fair value and subsequently adjusted to fair value at the
close of each reporting period with resulting gains and losses recognized within
the Statement of Operations. Fair value for option-based derivative financial
instruments is determined using the Black-Scholes Option Pricing
Model.





Other
convertible instruments that are not derivative financial instruments are
accounted for by recording the intrinsic value of the embedded conversion
feature as a discount from the initial value of the instrument and accreting it
back to face value over the period to the earliest conversion date using the
effective interest rate method.





Income
Taxes





The
Company accounts for income taxes using an asset and liability method pursuant
to which deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to reverse.  The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.  A valuation allowance is
provided against deferred tax assets based on the weight of available evidence
when it is more likely than not that some or all of the deferred tax assets will
not be realized.





When tax
returns are filed, it is highly certain that some positions taken would be
sustained upon examination by the taxing authorities, while others may be
subject to uncertainty about the merits of the position taken or the amount of
the position that would be ultimately sustained.  The benefit of a tax
position is recognized in the financial statements in the period during which,
based on all available evidence, we believe it is more likely than not that the
position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any.  Tax positions taken are not offset
or aggregated with other positions.  Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority.  The portion of the
benefits associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheet along with any associated interest and penalties that
would be payable to the taxing authorities upon examination. Interest and
penalties associated with unrecognized tax benefits are classified as income tax
expense in the statement of operations.





32





Fair Value
Measurements





U.S. GAAP
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability to a third party with the same credit standing (an exit
price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date.
In many cases, the exit price and the transaction (or entry) price will be the
same at initial recognition.  However, in certain cases, the
transaction price may not represent fair value.  Fair value is a
market-based measurement determined based on a hypothetical transaction at the
measurement date, considered from the perspective of a market participant, not
based solely upon the perspective of the reporting entity.  When
quoted prices are not used to determine fair value, consideration is given to
broad valuation techniques: (i) the market approach, (ii) the income approach,
and (iii) the cost approach.  Entities are required to determine the
most appropriate valuation technique to use, given what is being measured and
the availability of sufficient inputs.  Inputs to fair valuation
techniques are prioritized, allowing for the use of unobservable inputs to the
extent that observable inputs are not available.  The applicable
guidance establishes a three-level hierarchy, based on the priority of the
inputs to the respective valuation technique.  The fair value
hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3).  An asset or liability’s classification
within the fair value hierarchy is based on the lowest level of significant
input to its valuation.  The input levels are defined as
follows:





Level
      1
            Unadjusted
      quoted prices in active markets for identical assets or
      liabilities.





Level
      2
            Quoted
      prices in markets that are not active or inputs that are observable either
      directly or indirectly. Level 2 inputs include quoted prices for similar
      assets or liabilities other than quoted prices in Level 1, quoted prices
      in markets that are not active, or other inputs that are observable or can
      be derived principally from or corroborated by observable market data for
      substantially the full term of the assets or
  liabilities.





Level
      3
            Unobservable
      inputs that are supported by little or no market activity and are
      significant to the fair value of the assets or
      liabilities.  Unobservable inputs reflect the reporting entity’s
      own assumptions about the assumptions that market participants would use
      in pricing the asset or liability.  Level 3 assets and
      liabilities include those whose values are determined using pricing
      models, discounted cash flow methodologies, or similar techniques, as well
      as those for which the determination of fair value requires significant
      management judgment or estimation.








ITEM 7A.QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not
applicable.


33





ITEM
8. FINANCIAL STATEMENTS.
 
 Report
of Independent Registered Public Accounting Firm
  
  To the
Board of Directors and Stockholders
  The
Amacore Group, Inc.
  
  We have
audited the accompanying consolidated balance sheets of The Amacore Group, Inc.
and subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of operations, stockholders' deficit, and cash flows for the years
then ended.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of The Amacore Group, Inc. and
subsidiaries as of December 31, 2009 and 2008, and the results of their
operations and their cash flows for the years then ended, in conformity with
U.S. generally accepted accounting principles.
  We were
not engaged to examine management's assessment of the effectiveness of The
Amacore Group, Inc.'s internal control over financial reporting as of December
31, 2009, included in the accompanying Management’s Annual Report on Internal
Control over Financial Reporting and, accordingly, we do not express an opinion
thereon.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has not generated sufficient cash flows from operations to meet its
needs.  This raises substantial doubt about the Company's ability to
continue as a going concern.  Management's plans in regard to these
matters are also described in Note 1.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
  
  
 /s/
McGladrey & Pullen, LLP
 
 Orlando,
Florida
  March 31,
2010
  34
  THE
AMACORE GROUP, INC.
 CONSOLIDATED
BALANCE SHEETS
 December
      31, 2009
              
              
              December
      31, 2008ASSETSCurrent
      assetsCash
      and cash equivalents
              
              $
              3,322,127
              
              
              $
              238,437Marketable
      securities (at fair value)
              
              
              240,000
              
              
              
              -Accounts
      receivable (net of allowance for doubtful accounts of $100,000 and $0for 2009 and 2008, respectively)
              
              
              691,681
              
              
              
              612,945Deferred
      expenses
              
              
              2,756,733
              
              
              
              2,816,952Deposits
      and other current assets
              
              
              172,353
              
              
              
              337,720Total
      current assets
              
              
              7,182,894
              
              
              
              4,006,054Property,
      plant and equipment (net of accumulated depreciation of $892,619 and
      $447,709for 2009 and 2008, respectively)
              
              
              1,005,601
              
              
              
              863,537Deferred
      customer acquisition costs
              
              
              66,072
              
              
              
              407,297Goodwill
              
              
              –
              
              
              
              6,408,605Other
      intangible assets
              
              
              2,407,939
              
              
              
              3,336,286Deposits
      and other assets
              
              
              1,383,293
              
              
              
              2,172,321Total
      assets
              
              $
              12,045,799
              
              
              $
              17,194,100LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilitiesAccounts
      payable
              
              $
              2,318,537
              
              
              $
              3,064,721Accounts
      payable - related party
              
              
              485,013
              
              
              
              524,633Loans
      and notes payable - current
              
              
              672,765
              
              
              
              1,059,373Notes
      payable - related parties
              
              
              353,265
              
              
              
              833,092Accrued
      expenses and other liabilities
              
              
              1,038,812
              
              
              
              2,429,315Deferred
      compensation - related party
              
              
              91,546
              
              
              
              82,954Deferred
      acquisition payments
              
              
              581,250
              
              
              
              472,670Deferred
      revenue
              
              
              2,847,957
              
              
              
              2,752,365Total
      current liabilities
              
              
              8,389,145
              
              
              
              11,219,123Capital
      lease obligation
              
              
              209,695
              
              
              
              52,900Deferred
      acquisition payments
              
              
              250,000
              
              
              
              648,399Deferred
      compensation - related party
              
              
              223,827
              
              
              
              315,364Loans
      and notes payable - long term
              
              
              158,126
              
              
              
              -Loans
      and notes payable - long term - related party
              
              
              1,458,648
              
              
              
              -Accrued
      dividends
              
              
              3,119,604
              
              
              
              879,575Fair
      value of share conversion feature
              
              
              577,949
              
              
              
              -Fair
      value of warrants
              
              
              8,042,489
              
              
              
              13,315,364Total
      liabilities
              
              
              22,429,483
              
              
              
              26,430,725Redeemable
      preferred stock - Zurvita Holdings, Inc.
              
              
              2,280,162
              
              
              
              -Stockholders'
      DeficitThe
      Amacore Group, Inc.Preferred
      Stock, $.001 par value, 20,000,000 shares authorized;Series
      G mandatorily convertible preferred stock; 1,200 shares
      authorized;1,200
      shares issued and outstanding.
              
              
              1
              
              
              
              1Series
      H mandatorily convertible preferred stock; 400 shares
      authorized;400
      shares issued and outstanding.
              
              
              -
              
              
              
              -Series
      I mandatorily convertible preferred stock; 10,000 shares
      authorized;1,650
      and 850 shares issued and outstanding for 2009 and 2008,
      respectively.
              
              
              1
              
              
              
              -Series
      L mandatorily convertible preferred stock; 1,050 shares
      authorized;1,050
      and 0 shares issued and outstanding for 2009 and 2008,
      respectively.
              
              
              1
              
              
              
              -Series
      A mandatorily convertible preferred stock; 1,500 shares
      authorized;155
      shares issued and outstanding.
              
              
              -
              
              
              
              -Common
      Stock A, $.001 par value, 1,360,000,000 shares authorized;
      1,047,725,428and
      1,008,806,919 shares issued and outstanding for 2009 and 2008,
      respectively.
              
              
              1,047,725
              
              
              
              1,008,807Common
      Stock B, $.001 par value, 120,000,000 shares authorized;
      200,000shares
      issued and outstanding.
              
              
              200
              
              
              
              200Additional
      paid-in capital
              
              
              129,611,376
              
              
              
              109,295,378Accumulated
      deficit
              
              
              (140,777,381
              )
              
              
              (119,541,011
              )Total
      Amacore Group, Inc. stockholders' deficit
              
              
              (10,118,077
              )
              
              
              (9,236,625
              )Deficit
      related to noncontrolling interest in Zurvita Holdings,
    Inc.
              
              
              (2,545,769
              )
              
              
              -Total
      stockholders' deficit
              
              
              (12,663,846
              )
              
              
              (9,236,625
              )Total
      liabilities and stockholders' deficit
              
              $
              12,045,799
              
              
              $
              17,194,100
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  35
 
 THE
AMACORE GROUP, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
  For
      the Years EndedDecember
      31,2009
                
                
                2008REVENUESAdministrative
      websites
                
                $
                1,340,753
                
                
                $
                201,974Advertising
      sales
                
                
                169,609
                
                
                
                -Commissions
                
                
                1,599,238
                
                
                
                1,289,384Marketing
      fees and materials
                
                
                2,317,185
                
                
                
                1,328,930Membership
      fees
                
                
                23,403,067
                
                
                
                26,641,534Total
      revenues
                
                
                28,829,852
                
                
                
                29,461,822COST
      OF SALESBenefit
      and service cost
                
                
                4,832,255
                
                
                
                5,107,365Sales
      commissions
                
                
                14,599,977
                
                
                
                15,698,881Total
      cost of sales
                
                
                19,432,232
                
                
                
                20,806,246GROSS
      PROFIT
                
                
                9,397,620
                
                
                
                8,655,576OPERATING
      EXPENSESAmortization
                
                
                878,626
                
                
                
                3,057,904Depreciation
                
                
                444,910
                
                
                
                335,346Impairment
      loss on goodwill
                
                
                6,408,605
                
                
                
                3,597,544Impairment
      loss on other intangible assets
                
                
                2,074,756
                
                
                
                11,711,400Office
      related expenses
                
                
                2,542,200
                
                
                
                2,198,792Payroll
      and employee benefits
                
                
                8,701,736
                
                
                
                8,771,271Professional
      fees and legal settlements
                
                
                7,117,046
                
                
                
                5,052,320Selling
      and marketing
                
                
                6,588,375
                
                
                
                10,462,421Travel
                
                
                482,273
                
                
                
                1,324,059Total
      operating expenses
                
                
                35,238,527
                
                
                
                46,511,037Loss
      from operations before other income and (expense)
                
                
                (25,840,907
                )
                
                
                (37,855,461
                )OTHER
      INCOME (EXPENSE)Gain
      on change in fair value of warrants
                
                
                13,282,358
                
                
                
                4,025,694Gain
      on change in fair value of share conversion feature
                
                
                15,477
                
                
                
                -Gain
      on extinguishment of debt
                
                
                429,822
                
                
                
                862,395Interest
      expense
                
                
                (419,488
                )
                
                
                (746,046
                )Interest
      income
                
                
                14,814
                
                
                
                23,963Loss
      on conversion of note payable
                
                
                -
                
                
                
                (242,652
                )Loss
      on change in fair value of marketable securities
                
                
                (530,000
                )
                
                
                -Other
                
                
                47,478
                
                
                
                3,746Total
      other income
                
                
                12,840,461
                
                
                
                3,927,100Net
      loss before income taxes
                
                
                (13,000,446
                )
                
                
                (33,928,361
                )Income
      taxes
                
                
                53,089
                
                
                
                -Net
      loss
                
                
                (13,053,535
                )
                
                
                (33,928,361
                )Less:  Net
      loss attributed to non-controlling interest in Zurvita Holdings,
      Inc.
                
                
                2,318,511
                
                
                
                -Net
      loss attributed to The Amacore Group, Inc.
                
                
                (10,735,024
                )
                
                
                (33,928,361
                )Preferred
      stock dividend and accretion
                
                
                (10,501,346
                )
                
                
                (8,054,985
                )Net
      loss attributed to The Amacore Group, Inc. available to common
      stockholders
                
                $
                (21,236,370
                )
                
                $
                (41,983,346
                )Basic
      and diluted loss per share
                
                $
                (0.02
                )
                
                $
                (0.28
                )Basic
      and diluted weighted average number of  common shares
      outstanding
                
                
                1,028,482,088
                
                
                
                149,676,100
  The
accompanying notes are an integral part of these consolidated financial
statements.
  36
 THE
AMACORE GROUP, INC.
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT
 For
the Year Ended December 31, 2009
  NoncontrollingInterestin
      ZurvitaPreferred
      Stock
                      
                      Common
      Stock
                      
                      
                      Paid-In
                      
                      
                      Accumulated
                      
                      
                      Holdings,Series
      A
                      
                      Series
      G
                      
                      Series
      H
                      
                      Series
      I
                      
                      
                      Series
      J
                      
                      
                      Series
      K
                      
                      Series
      L
                      
                      Class
      A
                      
                      
                      Class
      B
                      
                      
                      Capital
                      
                      
                      Deficit
                      
                      
                      Inc.
                      
                      
                      TotalDecember
      31, 2008
                      $
                      0.16
                      
                      
                      $
                      1.20
                      
                      
                      $
                      0.40
                      
                      
                      $
                      0.85
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      1,008,807
                      
                      
                      $
                      200
                      
                      
                      $
                      109,295,378
                      
                      
                      $
                      (119,541,011
                      )
                      
                      $
                      -
                      
                      
                      $
                      (9,236,625
                      )Issuance
      of preferred stock
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      0.80
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      0.90
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      12,036,873
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      12,036,875Contingent
      share adjustment
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      18,861
                      
                      
                      
                      
                      
                      
                      
                      (18,861
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      -Partial
      disposition of ownership of Zurvita Holdings, Inc.
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      921,004
                      
                      
                      
                      
                      
                      
                      
                      (305,396
                      )
                      
                      
                      615,608Common
      stock issuance for
      consulting services
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      19,757
                      
                      
                      
                      
                      
                      
                      
                      572,963
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      592,720Exercise
      of warrants
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      300
                      
                      
                      
                      
                      
                      
                      
                      3,700
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      4,000Share
      based compensationto employees
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      164,894
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      164,894USHBG
      purchase price adjustment
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (1,721,450
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (1,721,450
                      )Common
      stock issuancefor consulting services attributable to
      noncontrolling interest
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      78,138
                      
                      
                      
                      78,138Net
      loss attributable tononcontrolling interest
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (2,318,511
                      )
                      
                      
                      (2,318,511
                      )Preferred
      stock accretion
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      8,356,875
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      8,356,875Net
      loss available tocommon stockholders
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (21,236,370
                      )
                      
                      
                      
                      
                      
                      
                      (21,236,370
                      )December
      31, 2009
                      $
                      0.16
                      
                      
                      $
                      1.20
                      
                      
                      $
                      0.40
                      
                      
                      $
                      1.65
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      0.90
                      
                      
                      $
                      1,047,725
                      
                      
                      $
                      200
                      
                      
                      $
                      129,611,376
                      
                      
                      $
                      (140,777,381
                      )
                      
                      $
                      (2,545,769
                      )
                      
                      $
                      (12,663,846
                      )
  The
accompanying notes are an integral part of these consolidated financial
statements.
  37
  THE
AMACORE GROUP, INC.
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT
 For
the Year Ended December 31, 2008
  Preferred
      Stock
                        
                        Common
                        
                        
                        Paid-In
                        
                        
                        AccumulatedSeries
      A
                        
                        Series
      D
                        
                        Series
      E
                        
                        Series
      G
                        
                        Series
      H
                        
                        Series
      I
                        
                        Series
      J
                        
                        Series
      K
                        
                        Class
      A
                        
                        
                        Class
      B
                        
                        
                        Capital
                        
                        
                        Deficit
                        
                        
                        TotalDecember
      31, 2007
                        
                        $
                        0.16
                        
                        
                        $
                        0.69
                        
                        
                        $
                        0.14
                        
                        
                        $
                        0.30
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        110,149
                        
                        
                        $
                        27,563
                        
                        
                        $
                        84,414,311
                        
                        
                        $
                        (77,557,665
                        )
                        
                        $
                        6,994,358Purchase
      price adjustment
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,010,643
                        
                        
                        
                        
                        
                        
                        
                        2,010,643Reclassification
      ofnoncompensatory warrants
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (626,638
                        )
                        
                        
                        
                        
                        
                        
                        (626,638
                        )Private
      placement stock issuances
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        0.90
                        
                        
                        
                        0.40
                        
                        
                        
                        0.85
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        150
                        
                        
                        
                        
                        
                        
                        
                        5,290,349
                        
                        
                        
                        
                        
                        
                        
                        5,290,501Conversion
      of notes payableinto common stock
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        5,673
                        
                        
                        
                        
                        
                        
                        
                        642,507
                        
                        
                        
                        
                        
                        
                        
                        648,180Conversion
      of accrued dividendsinto preferred stock
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        0.08
                        
                        
                        
                        0.02
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        975,584
                        
                        
                        
                        
                        
                        
                        
                        975,584Conversion
      into preferred stock
                        
                        
                        
                        
                        (0.69
                        )
                        
                        
                        (0.14
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        0.69
                        
                        
                        
                        0.14
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Conversion
      of preferred stockinto class A common stock
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (0.77
                        )
                        
                        
                        (0.16
                        )
                        
                        
                        853,248
                        
                        
                        
                        
                        
                        
                        
                        (853,247
                        )
                        
                        
                        
                        
                        
                        
                        -Exercise
      of warrants
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,702
                        
                        
                        
                        
                        
                        
                        
                        169,318
                        
                        
                        
                        
                        
                        
                        
                        172,020Issuance
      of stock foracquisitions
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,800
                        
                        
                        
                        
                        
                        
                        
                        8,998,200
                        
                        
                        
                        
                        
                        
                        
                        9,000,000Stock
      and warrants issued forservices
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        7,722
                        
                        
                        
                        
                        
                        
                        
                        2,056,285
                        
                        
                        
                        
                        
                        
                        
                        2,064,007Conversion
      of common stockB for common stock A
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        27,363
                        
                        
                        
                        (27,363
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Equity
      issuance costs
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (510,000
                        )
                        
                        
                        
                        
                        
                        
                        (510,000
                        )Preferred
      stock accretion
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        6,728,066
                        
                        
                        
                        
                        
                        
                        
                        6,728,066Net
      loss available tocommon stockholders
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (41,983,346
                        )
                        
                        
                        (41,983,346
                        )December
      31, 2008
                        
                        $
                        0.16
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        1.20
                        
                        
                        $
                        0.40
                        
                        
                        $
                        0.85
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        1,008,807
                        
                        
                        $
                        200
                        
                        
                        $
                        109,295,378
                        
                        
                        $
                        (119,541,011
                        )
                        
                        $
                        (9,236,625
                        )
 The
accompanying notes are an integral part of these consolidated financial
statements.
  38
 
 THE AMACORE GROUP, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For
      the Years EndedDecember
      31,2009
                
                
                2008Cash
      flows from operating activities:Net
      loss
                
                $
                (13,053,535
                )
                
                $
                (33,928,361
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amortization
      of deferred marketing agreement
                
                
                273,917
                
                
                
                -Amortization
      of notes payable discount
                
                
                38,073
                
                
                
                504,419Amortization
      of intangible assets
                
                
                878,626
                
                
                
                3,057,904Depreciation
                
                
                444,910
                
                
                
                335,346Gain
      on change in fair value of warrants
                
                
                (13,282,358
                )
                
                
                (18,775,694
                )Gain
      on change in fiar value of share conversion liability
                
                
                (15,477
                )
                
                
                -Loss
      on change in fair value of marketable securities
                
                
                530,000
                
                
                
                -Gain
      on extinguishment of debt
                
                
                (429,822
                )
                
                
                (862,395
                )Loss
      on conversion of note payable
                
                
                -
                
                
                
                242,652Loss
      on impairment of goodwill and other intangible assets
                
                
                8,483,361
                
                
                
                15,308,944Notes
      payable issued in legal settlements
                
                
                790,173
                
                
                
                -Loss
      on the issuance of warrants
                
                
                -
                
                
                
                14,750,000Provision
      for doubtful accounts
                
                
                169,315
                
                
                
                -Share-based
      payments to employees and consultants
                
                
                164,894
                
                
                
                2,064,007Share-based
      payments attributable to non-controlling interest
                
                
                78,138
                
                
                
                -Changes
      in operating assets and liabilitiesIncrease
      in accounts receivable
                
                
                (248,051
                )
                
                
                (22,292
                )Increase
      in deferred expenses
                
                
                (213,698
                )
                
                
                (1,793,154
                )Increase
      in deposits and other current assets
                
                
                (151,602
                )
                
                
                (174,285
                )Decrease
      (increase) in deferred customer acquisition costs
                
                
                341,225
                
                
                
                (407,297
                )Decrease
      (increase) in deposits and other assets
                
                
                1,446,428
                
                
                
                (1,838,091
                )Decrease
      in accounts payable and accrued expenses
                
                
                (1,488,771
                )
                
                
                (2,095,619
                )Decrease
      in deferred compensation - related party
                
                
                (82,945
                )
                
                
                121,870Increase
      in deferred revenue
                
                
                95,592
                
                
                
                1,342,381Net
      cash used in operating activities
                
                
                (15,231,607
                )
                
                
                (22,169,665
                )Cash
      flows from investing activities:Acquisition
      payment
                
                
                -
                
                
                
                (1,215,568
                )Purchase
      of property and equipment
                
                
                (304,400
                )
                
                
                (368,869
                )Purchase
      of certificate of deposit
                
                
                -
                
                
                
                (184,230
                )Purchase
      of marketable securities
                
                
                (770,000
                )
                
                
                -Decrease
      in restricted cash
                
                
                -
                
                
                
                316,935Net
      cash used in investing activities
                
                
                (1,074,400
                )
                
                
                (1,451,732
                )Cash
      flows from financing activities:Deferred
      acquisition payments
                
                
                (1,705,059
                )
                
                
                (268,182
                )Equity
      issuance costs
                
                
                -
                
                
                
                (510,000
                )Net
      reduction/proceeds from credit card borrowing
                
                
                (28,411
                )
                
                
                66,892Principal
      payments on capital lease obligations
                
                
                (86,818
                )
                
                
                -Principal
      payments made on notes payable
                
                
                (1,044,015
                )
                
                
                (576,938
                )Principla
      payments on redeemed convertible notes
                
                
                -
                
                
                
                (575,000
                )Proceeds
      from exercise of Amacore Group, Inc. common stock warrants
                
                
                4,000
                
                
                
                172,020Proceeds
      from private placement equity issuance
                
                
                -
                
                
                
                500Proceeds
      from promissory notes
                
                
                -
                
                
                
                1,889,500Proceeds
      from sale of Amacore Group, Inc. preferred stock and
    warrants
                
                
                18,500,000
                
                
                
                21,500,000Proceeds
      from sale of Zurvita Holdings, Inc.preferred stock and
      warrants
                
                
                3,750,000
                
                
                
                -Net
      cash provided by financing activities
                
                
                19,389,697
                
                
                
                21,698,792Increase
      (decrease) in cash
                
                
                3,083,690
                
                
                
                (1,922,605
                )Beginning
      cash and cash equivalents
                
                
                238,437
                
                
                
                2,161,042Ending
      cash and cash equivalents
                
                $
                3,322,127
                
                
                $
                238,437SUPPLEMENTAL
      INFORMATION:Cash
      paid for interest
                
                $
                82,498
                
                
                $
                43,521Cash
      paid for income taxes
                
                $
                30,086
                
                
                $
                -
  The
accompanying notes are an integral part of these consolidated financial
statements.
  39
  THE
AMACORE GROUP, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
 
 NOTE
1 – NATURE OF OPERATIONS
 
 The
Amacore Group, Inc. (the “Company,” “Amacore,”  “we,” “our,” and “us”
all refer to The Amacore Group, Inc. together with its consolidated
subsidiaries) is primarily a provider and marketer of healthcare-related
membership products such as limited and major medical insurance programs,
supplemental medical insurance and discount dental and vision programs for
individuals and families.  The Company distributes these products and
services through various distribution methods such as its agent network, inbound
call center, in-house sales representatives, network marketing and affinity
marketing partners as well as through third-party direct response marketers. To
generate leads for these distribution methods, the Company utilizes a variety of
means such as Direct Response TV, internet advertising, database mining, and
third-party leads as well as affiliate marketing partners’ lead
sources. The Company’s secondary line of business is to provide and market
lifestyle membership programs through these same marketing
channels.  These membership programs utilize the same back office and
systems creating marketing efficiencies to provide low cost ancillary products
such as identity theft protection, home warranty, travel protection, term life
insurance, involuntary unemployment insurance, accident insurance and pet
insurance.  The Company’s offers these secondary products not only to
new leads but also to existing members to increase member persistency and
lifetime membership value. The Company also markets its administrative services
such as billing, fulfillment, patient advocacy, claims administration and
servicing.
 
 The
Company operates through five different business divisions:
 
 ·
              LifeGuard Benefit Services
      Division – This division generates revenue primarily from the sale
      of healthcare benefit membership plans and provides product fulfillment,
      customer support, membership billing, claims administration, provider
      membership network maintenance and information technology.  The
      Company operates this division through LifeGuard Benefit Services, Inc., a
      wholly owned subsidiary of the Company
  (“LifeGuard”).
 
 ·
              U.S. Health Benefits Group
      Division – This is an inbound lead generation telemarketing
      operation primarily marketing major and limited medical benefit
      plans.  The Company operates this division through US Health
      Benefits Group, Inc., US Healthcare Plans, Inc. and On the Phone, Inc.,
      each a wholly owned subsidiary of the Company  (collectively,
      “USHBG”).·
              Zurvita Holdings
      Inc.– This is a network marketing company that is a
      provider of products and benefits through the use of a multi-level
      marketing distribution channel which consists of independent business
      operators.  The products marketed include residential gas and
      electricity energy rate plans, discount healthcare benefits and discount
      benefits on various retail products and services, and online
      advertising.  Zurvita Holdings, Inc. (“Zurvita”) also markets
      numerous low cost ancillary lifestyle membership products such as home
      warranty, legal assistance and restoration services for identity theft and
      consumer credit. Zurvita is a variable interest entity, and the Company is
      the primary beneficiary of Zurvita.·
              JRM Benefits Consultants
      Division – This division historically marketed various
      financial services and healthcare products through its telemarketing
      center and agent distribution network to individuals, families and
      employer groups.  Effective March 1, 2010, the Company shut down
      operations of JRM.  The Senior Vice Presidents of JRM will focus
      on recruiting agents and other direct response marketers to sell the
      products of other reporting units.  The Company operates this
      division through JRM Benefits Consultants, LLC, a wholly owned subsidiary
      of the Company (“JRM”).
 
 ·
              Corporate and Other
      Division – This division provides management and financial support
      to the Company’s various divisions and is responsible for corporate
      governance and compliance. The Company operates this division through The
      Amacore Group, Inc. and its wholly owned subsidiary Amacore Direct
      Marketing, Inc.  Other legal entities such as LBI Inc. and LBS
      Acquisition Corp. which do not have any activity are included within the
      other division segments.  These entities were originally created
      for strategic transaction purposes.
 
 Management’s Assessment of
Liquidity
 At
December 31, 2009, the Company had negative working capital of approximately
$1.2 million, an accumulated deficit of approximately $140.8 million and
negative cash flows from operating activities of approximately $15.2
million.  For the year ended December 31, 2009, the Company had a loss
from operations of approximately $25.8 million.  The financial statements
do not reflect any adjustments that would be necessary under the assumption that
the Company would not continue as a going concern.
 
 The
Company believes that existing cash resources, together with projected revenue
and the expected continued support of its majority stockholder, will be
sufficient to sustain current planned operations for the next 12 months. During
2009, the Company has raised from its majority shareholder $18.5 million of
equity funding and Zurvita has raised from its preferred stock shareholder $3.75
million of equity funding.  Subsequent to December 31, 2009, Zurvita has
raised an additional $1 million in equityfunding from its preferred stock
shareholder. Additional cash resources may be required should the Company
not meet its sales targets, exceed its projected operating costs, wish to
accelerate sales or complete one or more acquisitions or if unanticipated
expenses arise or are incurred.
  40
  The
Company does not currently maintain a line of credit or term loan with any
commercial bank or other financial institution and has not made any other
arrangements to obtain additional financing.  We can provide no
assurance that we will not require additional financing.  Likewise, we
can provide no assurance that if we need additional financing that it will be
available in an amount or on terms acceptable to us, if at all.  If we
are unable to obtain additional funds when they are needed or if such funds
cannot be obtained on terms favorable to us, we may be unable to execute upon
our business plan or pay our costs and expenses as they are incurred, which
could have a material, adverse effect on our business, financial condition and
results of operations.
 
 NOTE
2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
 Principles
of Consolidation
  The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(U.S. GAAP). They include the accounts of Amacore and its wholly-owned
subsidiaries, Amacore Direct Marketing Inc., JRM, LBI, LifeGuard, and USHBG, and
Zurvita.
  The
Company owns approximately 66 percent of the outstanding common stock of Zurvita
which represents approximately 44 percent of the voting rights of total
outstanding equity securities.  Management has determined Zurvita to
be a variable interest entity and Amacore to be the primary beneficiary;
therefore, the accounts of Zurvita are included in the accompanying consolidated
financial statements.  See Note 16 –Non-Controlling
Interest for more information.
  Intercompany
balances and transactions have been eliminated in consolidation.
  Revenue
Recognition
 
 Administrative
Websites
 
 Zurvita’s
independent representatives pay a fee to the Company entitling them to use of
websites that facilitate their business operations.  This revenue is
recognized ratably over the website subscription period.
 
 Advertising
Sales
 
 The
Company markets subscriptions to a service that facilitates the ability of
customers, typically small business owners, to display commercial advertising on
on-line search directories.  This revenue is recognized ratably over
the advertising subscription period.
 
 Commissions
 
 The
Company is paid a commission for its sales of third-party products. Commissions
are recognized as products are sold and services performed and the Company has
accomplished all activities necessary to complete the earnings
process.
 
 Marketing
Fees and Materials
 
 The
Company markets certain of its products through a multi-level sales organization
whereby independent distributors establish their own network of
associates.  The independent distributors pay the Company an annual fee to
become marketing representatives on behalf of the Company.  In exchange,
the representatives receive access, on an annual basis, to various marketing and
promotional materials and tools as well as access to a customized management
reporting platform; accordingly, revenue from marketing fees is recognized over
an annual period.  The Company also earns ancillary revenue from the
sale of marketing materials to third parties.  Revenue is recognized
when marketing materials are delivered.
 
 Membership
Fees
 
 The
Company recognizes revenues from membership fees for the sales of health-related
discount benefit plans as earned.  These arrangements are generally
renewable monthly and revenue is recognized over the renewal
period.  These products often include elements sold through contracts
with third-party providers.  Based on consideration of each
contractual arrangement, revenue is reported on a gross basis.
 
 The
Company records a reduction in revenue for estimated refunds and
chargebacks from credit card companies based upon actual history and
management’s evaluation of current facts and circumstances.   Refunds
and chargebacks totaled approximately $4.5 million and $8.1 million for the
years ended December 31, 2009 and 2008, respectively, and were recorded as a
reduction of revenue in the accompanying statements of
operations.  Estimates for an allowance for refunds and chargebacks
totaled approximately $160 thousand and $390 thousand at December 31, 2009 and
2008, respectively and were included in accrued expenses and other liabilities
in the accompanying balance sheets.
  41
 Selling and Marketing
Costs
 
 The
Company classifies merchant account fees, fulfillment costs and lead cost not
identifiable with specific product sales within selling and marketing costs
within the Statement of Operations.
 Concentration of Credit
Risk
  For the
year ended December 31, 2009, revenue generated by LifeGuard represented
approximately 74% of total consolidated revenue.  Revenue from
Direct Medical Network Solutions, Inc. (“DirectMed”), a company 33% owned by a
former majority shareholder of LifeGuard, accounted for 45% of LifeGuard’s
revenue and 33% of consolidated revenue.  LifeGuard’s products are
dependent upon strategic relationships with insurance companies; accordingly, a
change in these strategic relationships, contractual or otherwise, could
negatively impact the Company’s business.  As of February 26, 2010,
LifeGuard and USHBG are no longer providing marketing or servicing to DirectMed
due to contract terminations.
 
 At
certain times, the Company’s bank deposits exceed the amounts insured by the
FDIC.  Should the financial institution cease operations when the
Company’s deposit balances exceed FDIC insured limits, it could be a significant
disruption to the Company’s cash flow. All of
the Company’s credit card processing is with one merchant
processor.  All of Zurvita’s marketing sales commission payments are
calculated by a third-party service provider.
 
 Use of
Estimates
 
 The
preparation of the Company’s consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and 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.  The
accounting estimates requiring a high degree of management’s subjective
judgments include the allowance for sales refunds and chargebacks,
capitalization of certain assets, depreciable/amortizable lives, impairment
of long-lived assets, determination of amount of allowance for doubtful
accounts, the fair value of marketable securities, the expected volatility of
common stock, and the fair value of common stock and warrants as well as the
allocation of proceeds from the issuance of debt and equity
instruments.  Due to the uncertainty inherent in such estimates,
actual results may differ from these estimates.
 
 Marketable
Securities
 
 The
Company’s marketable securities consist of non-registered common stock. The
Company has classified these securities as an available-for-sale security due to
the six month holding requirement imposed by the Securities Exchange Commission
on non-exempt security purchases.  The Company, however, has elected to
fair value these securities on a recurring basis and has accounted for these
securities as trading securities in accordance with U.S. GAAP.  The
Company’s election was made due to its short term investment outlook on these
securities.  Accordingly, these investments are carried in the accompanying
consolidated balance sheet at fair value, with the difference between cost and
fair value (unrealized gains and losses) included in the Statement of
Operations.  Marketable securities are classified as current assets as they
are available to meet the current operating needs of the Company.
  Cash
and Cash Equivalents
 
 Cash and
cash equivalents consist of highly liquid investments with an original maturity
date at acquisition of three months or less. At year-end the Company had
approximaely $2.3 million in a money market account, which is used as an
overnight sweep account.
  Accounts
Receivable
 
 Accounts
receivable are primarily comprised of balances due from memberships and are
stated at the contractual amount due less an allowance for uncollectible
accounts.  In determining collectability, historical trends are
evaluated and specific customer issues are reviewed to determine if an allowance
is appropriate or the account needs to be written-off.  The activity in the
allowance for doubtful accounts is as follows for the years ended December 31,
2009 and 2008:
  January 1,
      2009
                  
                  $
                  -Bad
      Debt Expense
                  
                  
                  169,315Write-offs
                  
                  
                  (69,315
                  )Recoveries
                  
                  
                  -December 31,
      2009
                  
                  $
                  100,000
 
 Property, Plant and
Equipment
 
 Property,
plant and equipment is recorded at cost.  The cost of additions and
improvements are capitalized, while maintenance and repairs are charged to
expense as incurred.  The Company provides for depreciation and
amortization using the straight-line method over the estimated useful lives of
the property as follow: computer hardware, 3 years; furniture and fixtures, 7
years; equipment and machinery, 5 years; and leasehold improvements, the shorter
of the term of the lease or the life of the asset.  When assets are
retired or otherwise disposed of, the assets and related accumulated
depreciation are eliminated from the accounts and the resulting gain or loss is
reflected in the results of operations.
 
 Deferred Customer
Acquisition Costs
 
 Customer
acquisition costs relate to contractual arrangements with certain marketing
companies primarily for the sale of LifeGuard membership products. Payments
are made as leads are provided and are amortized to cost of sales term relevant
to the expected life of the membership.  The majority of these costs
are amortized on an accelerated basis over a period less than twelve months, in
proportion to recognition of the related revenue.  At December 31,
2009 and December 31, 2008, unamortized customer acquisition costs of $533
thousand and $1.6 million, respectively, are included in deferred expenses and
$66 thousand and $407 thousand, respectively, are included in deferred customer
acquisition costs in the accompanying consolidated balance
sheets.  Amounts paid for leads that do not result in a sale are
expensed immediately as a selling and marketing expense.
  42
  Customer
acquisition costs of $0 and $4.9 million for the year ended December 31, 2009
and 2008, respectively, and are included in selling and marketing in the
accompanying consolidated statements of operations.
 
 Goodwill and Other
Intangible Assets
 
 Management
assesses goodwill related to reporting units for impairment annually as of
October 1 or more frequently if an event occurs or circumstances indicate that
the asset might be impaired and determines if a reduction of the carrying amount
of goodwill is required.  An impairment charge is recorded if the implied
fair value of goodwill of a reporting unit is less than the book value of
goodwill for that unit.
 
 For
purposes of testing goodwill impairment, each of our reportable segments is a
reporting unit. We review each reporting unit for possible goodwill
impairment by comparing the estimated fair value of each respective reporting
unit to the carrying value of that reporting unit’s net assets. If the estimated
fair value exceeds the net assets, no goodwill impairment is deemed to exist. If
the fair value of the reporting unit does not exceed the carrying value of that
reporting unit’s net assets, we then perform, on a notional basis, a purchase
price allocation by allocating the reporting unit’s fair value to the fair value
of all tangible and identifiable intangible assets and liabilities with residual
fair value representing the implied fair value of goodwill of that reporting
unit.  The carrying value of goodwill for the reporting unit is
written down to this implied value.
 
 Intangible
assets with a finite useful life recorded as a result of acquisition
transactions are amortized over their estimated useful lives on a straight-line
basis as follows:
 
 Software
                3
      yearsCustomer
      and vendor relationships
                5
      yearsTradenames
                16
      months
 
 The
Company evaluates its intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying value of such assets may not
be recoverable.  To determine recoverability, the Company compares the
carrying value of the assets to the estimated future cash flows.  If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized for the amount by which the carrying amount of
the asset exceeds the fair value of the asset.
 
 Advertising
Costs
 
 Advertising
costs are charged to expense as incurred.  For the years ended
December 31, 2009 and 2008, advertising costs were approximately $107 thousand
and $70 thousand, respectively.
 
 Stock-Based
Compensation
 
 The
Company recognizes the cost resulting from all share-based payment transactions
in the financial statements using a fair-value-based measurement
method.  The Company uses the Black-Scholes Option Pricing Model in
computing the fair value of warrant instrument issuances and uses closing market
prices in computing the fair value of Common A and Common B stock
issuances.
 
 The
measurement date for valuing share-based payments made to non-employees is the
earlier of the date at which a commitment for performance by the counterparty to
earn the equity instruments is reached or the date at which the counterparty’s
performance is complete.
 
 Convertible
Instruments
 
 The
Company reviews the terms of convertible debt and equity securities for
indications that bifurcation and separate accounting for the embedded conversion
feature is required. Generally, embedded conversion features where the ability
to physical or net-share settle the conversion option is not within the control
of the Company are bifurcated and accounted for as derivative financial
instruments. Bifurcation of the embedded derivative instrument requires
allocation of the proceeds first to the fair value of the embedded derivative
instrument with the residual allocated to the debt or equity instrument. The
resulting discount to the face value of the debt instruments is amortized
through periodic charges to interest expense using the effective interest
rate method.
  43
 Derivative Financial
Instruments
 
 The
Company generally does not use derivative financial instruments to hedge
exposures to cash-flow or market risks. However, certain other financial
instruments, such as warrants to purchase the Company’s common stock and the
embedded conversion features of debt and preferred instruments that are indexed
to the Company’s common stock are classified as liabilities when either (a) the
holder possesses rights to net-cash settlement, (b) physical or net share
settlement is not within the control of the Company, or (c) based on its
settlement provisions, the instrument is determined not to be indexed to the
Company’s common stock.  In such instances, net-cash settlement is
assumed for financial accounting and reporting. Such financial instruments are
initially recorded at fair value and subsequently adjusted to fair value at the
close of each reporting period with resulting unrealized gains and losses
recognized within the Statement of Operations. Fair value for option-based
derivative financial instruments is determined using the Black-Scholes Option
Pricing Model.
 
 Other
convertible instruments that are not derivative financial instruments are
accounted for by recording the intrinsic value of the embedded conversion
feature as a discount from the initial value of the instrument and accreting it
back to face value over the period to the earliest conversion date using the
effective interest rate method.
 
 Income
Taxes
 
 The
Company accounts for income taxes using an asset and liability method pursuant
to which deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to reverse.  The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.  A valuation allowance is
provided against deferred tax assets based on the weight of available evidence
when it is more likely than not that some or all of the deferred tax assets will
not be realized.
 
 When tax
returns are filed, it is highly certain that some positions taken would be
sustained upon examination by the taxing authorities, while others may be
subject to uncertainty about the merits of the position taken or the amount of
the position that would be ultimately sustained.  The benefit of a tax
position is recognized in the financial statements in the period during which,
based on all available evidence, we believe it is more likely than not that the
position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any.  Tax positions taken are not offset
or aggregated with other positions.  Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority.  The portion of the
benefits associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheet along with any associated interest and penalties that
would be payable to the taxing authorities upon examination. Interest and
penalties associated with unrecognized tax benefits are classified as income tax
expense in the statement of operations.
 
 Fair Value
Measurements
 
 U.S. GAAP
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability to a third party with the same credit standing (an exit
price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date.
In many cases, the exit price and the transaction (or entry) price will be the
same at initial recognition.  However, in certain cases, the
transaction price may not represent fair value.  Fair value is a
market-based measurement determined based on a hypothetical transaction at the
measurement date, considered from the perspective of a market participant, not
based solely upon the perspective of the reporting entity.  When
quoted prices are not used to determine fair value, consideration is given to
broad valuation techniques: (i) the market approach, (ii) the income approach,
and (iii) the cost approach.  Entities are required to determine the
most appropriate valuation technique to use, given what is being measured and
the availability of sufficient inputs.  Inputs to fair valuation
techniques are prioritized, allowing for the use of unobservable inputs to the
extent that observable inputs are not available.  The applicable
guidance establishes a three-level hierarchy, based on the priority of the
inputs to the respective valuation technique.  The fair value
hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3).  An asset or liability’s classification
within the fair value hierarchy is based on the lowest level of significant
input to its valuation.  The input levels are defined as
follows:
 
 Level
      1
                Unadjusted
      quoted prices in active markets for identical assets or
      liabilities.
 
 Level
      2
                Quoted
      prices in markets that are not active or inputs that are observable either
      directly or indirectly. Level 2 inputs include quoted prices for similar
      assets or liabilities other than quoted prices in Level 1, quoted prices
      in markets that are not active, or other inputs that are observable or can
      be derived principally from or corroborated by observable market data for
      substantially the full term of the assets or
  liabilities.
 
 Level
      3
                Unobservable
      inputs that are supported by little or no market activity and are
      significant to the fair value of the assets or
      liabilities.  Unobservable inputs reflect the reporting entity’s
      own assumptions about the assumptions that market participants would use
      in pricing the asset or liability.  Level 3 assets and
      liabilities include those whose values are determined using pricing
      models, discounted cash flow methodologies, or similar techniques, as well
      as those for which the determination of fair value requires significant
      management judgment or estimation.
  44
 Loss Per
Share
 
 Basic
earnings (loss) per share are calculated by dividing net income (loss) available
to common stockholders by the weighted average number of shares of common stock
outstanding for the period. Diluted earnings (loss) per share is calculated by
dividing the net income (loss) by the weighted average number of shares of
common stock outstanding for the period, adjusted for the dilutive effect of
common stock equivalents, using the treasury stock method for warrants and the
if converted method for convertible preferred stock and convertible debt.
Convertible debt and warrants, officer, employee and non-employee stock options
that are considered potentially dilutive are included in the fully diluted
shares calculation as long as the effect is not
anti-dilutive.  Contingently issuable shares are included in the
computation of basic earnings (loss) per share when the issuance of the shares
is no longer contingent and in the computation of diluted earnings (loss) per
share based on the number of shares issuable as if the end of the reporting
period were the end of the contingency period.  Weighted average
shares outstanding include both Class A and Class B common stock.  There is
no difference between the dividend rights and earnings allocation of Class A and
Class B common stock.  For the years ended December 31, 2009 and 2008,
securities that could potentially dilute earnings per share in the future were
not included within the Company’s earnings (loss) per share calculation as their
effect would be anti-dilutive.
 
 Reclassifications
 
 Nontrade
receivables and inventory on the balance sheet for the prior periods have been
reclassified to deposits and other assets to conform to the current period
presentation.  The prior year goodwill has been reclassified from
goodwill and other intangibles and presented separately on the balance
sheet.  Certain amounts within the marketing fees and materials
category on the Statement of Operations for the prior period have been
reclassified to administrative websites to conform to the current period
presentation.  In addition, the prior year impairment loss recognized on
goodwill and other intangible assets within the Statement of Operations has been
presented separately in the current year as impairment loss on goodwill and
impairment loss on other intangible assets.  These reclassifications had no
impact on the previously reported net loss or stockholders'
deficit.
 
 NOTE
3 – NONCASH INVESTING AND FINANCING ACTIVITIES
 
 The
following table presents a summary of the various noncash investing and
financing transactions that the Company entered into during the years ended
December 31, 2009 and December 31, 2008.
  45
  2009
                    
                    
                    
                    2008Beneficial
      conversion feature accretion
                    
                    
                    8,356,875
                    
                    
                    
                    6,728,066Common
      stock issued as acquisition consideration
                    
                    
                    -
                    
                    
                    
                    9,000,000Common
      stock issued for consulting services
                    
                    
                    592,670
                    
                    
                    
                    -Common
      stock of Zurvita issed in exchange for marketing services
                    
                    
                    657,400
                    
                    
                    
                    -Conversion
      value of Common B stock to Common A stock
                    
                    
                    -
                    
                    
                    
                    27,363Conversion
      val.ue of accrued dividends and accrued interest onaccrued
      dividends into preferred stock
                    
                    
                    -
                    
                    
                    
                    975,584Conversion
      value of notes payable and interest to common stock
                    
                    
                    -
                    
                    
                    
                    648,180Conversion
      value of preferred stock into common stock
                    
                    
                    -
                    
                    
                    
                    853,248Convertible
      debenture issued for marketing agreement
                    
                    
                    1,406,574Embedded
      conversion feature on note payable issued
                    
                    
                    593,426
                    
                    
                    
                    -Financed
      insurance agreement
                    
                    
                    22,031
                    
                    
                    
                    -Liability
      issued as acquisition consideration
                    
                    
                    -
                    
                    
                    
                    1,484,535Preferred
      stock dividends
                    
                    
                    2,144,471
                    
                    
                    
                    1,326,919Property
      and equipment acquired under capital lease obligations
                    
                    
                    282,574
                    
                    
                    
                    243,837Reclassification
      of noncompensatory warrants from equity to liability
                    
                    
                    -
                    
                    
                    
                    626,638USHBG
      purchase price adjustment
                    
                    
                    742,950
                    
                    
                    
                    -
 
 NOTE 4
- DEFERRED EXPENSES
 
 Deferred
expenses consist of the following at December 31, 2009 and 2008:
 
 December
      31,
                      2009
                    
                    
                    December
      31,
                      2008Agent
      advances
                    
                    $
                    1,269,881
                    
                    
                    $
                    874,533Commissions
                    
                    
                    121,462
                    
                    
                    
                    -Conference
      fees
                    
                    
                    125,000
                    
                    
                    
                    -Customer
      acquisition costs
                    
                    
                    533,481
                    
                    
                    
                    1,649,775Marketing
      cost
                    
                    
                    383,483
                    
                    
                    
                    -Prepaid
      expenses
                    
                    
                    323,426
                    
                    
                    
                    292,644Total
                    
                    $
                    2,756,733
                    
                    
                    $
                    2,816,952
 The
marketing cost shown in the preceding table relates to an Advertising and
Marketing Agreement whereby Zurvita issued 3.8 million shares of its common
stock in exchange for certain marketing services, which subsequently was
adjusted to 15.2 million shares following a one (1) for four (4)
forward stock split.  The marketing cost was capitalized at the
estimated fair market value of the Zurvita stock issued and amortized over the
life of the agreement, which has a one-year contract term.  See Note 12 – Assets and Liabilities
Measure at Fair Value for further information on the Company’s
determination of fair value of the stock issued.  Approximately $274
thousand of amortization was recognized during the year ended December 31, 2009,
and is included in selling and marketing in the accompanying consolidated
statements of operations.
 
  46
 
 NOTE
5 – PROPERTY, PLANT AND EQUIPMENT
 
 Property,
Plant and Equipment, net of accumulated depreciation, consist of the following
at December 31, 2009 and 2008:
  December
      31, 2009
                    
                    
                    December
      31, 2008Computer
      hardware
                    
                    $
                    547,878
                    
                    
                    $
                    412,953Furniture
      and fixtures
                    
                    
                    405,498
                    
                    
                    
                    355,133Equipment
      and machinery
                    
                    
                    694,026
                    
                    
                    
                    318,927Leasehold
      improvements
                    
                    
                    250,818
                    
                    
                    
                    224,2331,898,220
                    
                    
                    
                    1,311,246Less
      accumulated depreciation
                    
                    
                    (892,619
                    )
                    
                    
                    (447,709
                    )Total
                    
                    $
                    1,005,601
                    
                    
                    $
                    863,537
 
 Depreciation
expense including amortization of assets held under capital leases for the years
ended December 31, 2009 and 2008 was approximately $445 thousand and
approximately $335 thousand, respectively.  The amount of assets under
capital leases was approximately $399 thousand and $117 thousand at December 31,
2009 and 2008, respectively. Accumulated amortization with respect to assets
under capital leases at December 31, 2009 and 2008 was approximately $95 and
$23, respectively.
 
 NOTE
6 – GOODWILL AND OTHER INTANGIBLE ASSETS
 
 The
following table reflects the components of goodwill and other intangible assets
as of December 31, 2009 and December 31, 2008:
  December
      31, 2009GrossCarrying
                      
                      
                      Accumulated
                      
                      
                      Impairment
                      
                      
                      CarryingAmount
                      
                      
                      Amortization
                      
                      
                      Loss
                      
                      
                      ValueGoodwill
                      
                      $
                      6,408,605
                      
                      
                      $
                      -
                      
                      
                      $
                      6,408,605
                      
                      
                      $
                      -Customer
      and vendor relationships
                      
                      
                      2,639,000
                      
                      
                      
                      586,444
                      
                      
                      
                      2,052,556
                      
                      
                      
                      -Marketing
      agreement
                      
                      
                      2,000,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,000,000Software
                      
                      
                      588,087
                      
                      
                      
                      323,143
                      
                      
                      
                      -
                      
                      
                      
                      264,944Trademarks
      and tradenames
                      
                      
                      475,825
                      
                      
                      
                      310,630
                      
                      
                      
                      22,200
                      
                      
                      
                      142,995Total
                      
                      $
                      12,111,517
                      
                      
                      $
                      1,220,217
                      
                      
                      $
                      8,483,361
                      
                      
                      $
                      2,407,939
  December
      31, 2008GrossCarrying
                      
                      
                      Accumulated
                      
                      
                      Impairment
                      
                      
                      CarryingAmount
                      
                      
                      Amortization
                      
                      
                      Loss
                      
                      
                      ValueGoodwill
                      
                      $
                      10,006,149
                      
                      
                      $
                      -
                      
                      
                      $
                      3,597,544
                      
                      
                      $
                      6,408,605Customer
      and vendor relationships
                      
                      
                      16,262,000
                      
                      
                      
                      2,313,910
                      
                      
                      
                      11,455,700
                      
                      
                      
                      2,492,390Software
                      
                      
                      712,690
                      
                      
                      
                      211,494
                      
                      
                      
                      -
                      
                      
                      
                      501,196Trademarks
      and tradenames
                      
                      
                      1,130,900
                      
                      
                      
                      532,500
                      
                      
                      
                      255,700
                      
                      
                      
                      342,700Total
                      
                      $
                      28,111,739
                      
                      
                      $
                      3,057,904
                      
                      
                      $
                      15,308,944
                      
                      
                      $
                      9,744,891
  At
December 31, 2008, goodwill represented the excess of the purchase price over
the sum of the amounts assigned to assets acquired less liabilities assumed with
respect to the JRM, LifeGuard and USHBG acquisitions.  At December 31,
2009, the Company had fully impaired its goodwill. None of this goodwill is
expected to be deducted for tax purposes.
 
  47
  Amortization
expense related to all of the Company’s identifiable intangible assets for the
year ended December 31, 2009 and 2008 was approximately $879 thousand and $3.1
million, respectively.   Future amortization of intangible assets,
consisting of software, is shown in the following table:
 
 2010
                    
                    $
                    224,5662011
                    
                    
                    35,5352012
                    
                    
                    4,843Total
                    
                    $
                    264,944
 
 The
weighted-average remaining amortization period for software is 1.16
years.
 
 The table
below presents the total carrying amount by intangible asset class for
intangible assets not subject to amortization.
 
 December
      31, 2009
                    
                    
                    December
      31, 2008Goodwill
                    
                    $
                    -
                    
                    
                    $
                    6,408,605Marketing
      agreement
                    
                    
                    2,000,000
                    
                    
                    
                    -Trademarks
      and tradenames
                    
                    
                    142,995
                    
                    
                    
                    165,200$
                    2,142,995
                    
                    
                    $
                    6,573,805
 
 The
marketing agreement represents an agreement between Zurvita and OmniReliant
Holdings, Inc. (“OmniReliant”) whereby the Company was granted a perpetual
right, under all intellectual property rights applicable to the LocalAdLink
Software, to market and sell the product through Zurvita’s independent sales
representatives. This marketing agreement may be terminated for any reason at
any time by either party with 60 days' prior notice to the other
party.  The marketing agreement is classified as an intangible asset with
an indefinite life and subject to impairment analysis annually or more
frequently if events and circumstances change.
 
 Based on
the Company’s annual impairment analysis and consideration of current and
expected future market conditions, we determined that goodwill and certain
intangible assets related to the JRM and USHBG reporting units were impaired as
of September 30, 2009.  The Company recorded non-cash, pre-tax total
impairment charges of approximately $167 thousand and $4.0 million for JRM and
USHBG, respectively as of September 30, 2009.  Subsequent to the annual
impairment testing date, the Company recognized certain impairment indicators
affecting the LifeGuard reporting unit.  Consequently, the Company
performed another impairment analysis on the LifeGuard reporting unit and
determined that the remaining goodwill of $4.3 million was impaired as of
December 31, 2009.  The analyses were conducted by an independent
valuation specialist.  The subsequent decline in estimated fair values
resulted from an analysis of the current economic conditions, the Company’s
fourth quarter performance as compared to budget and lower estimated future cash
flows as a result of the discontinuance of USHBG’s marketing and LifeGuard’s
servicing of DirectMed products.  For the year ended December 31,
2009, the non-cash, pre-tax total impairment charges recognized for JRM,
Lifeguard and USHBG were approximately $167 thousand, $4.3 million and $4.0
million, respectively.
 
 Inherent
in management’s fair value determinations are certain judgments and estimates,
including projections of future cash flows, the discount rate reflecting the
risk inherent in future cash flows, the interpretation of current economic
indicators and market valuations and our strategic plans with regard to our
operations.  A change in these underlying assumptions would cause a change
in the results of the tests, which could cause the fair value of one or more
reporting units to be more or less than their respective carrying amounts.
 In addition, to the extent that there are significant changes in market
conditions or overall economic conditions or the Company’s strategic plans
change, it is possible that the Company’s conclusion regarding impairment could
change.
 
 The
Company has recognized aggregate impairment losses on goodwill and other
intangible assets in the amount of $8.5 million for the year ended December 31,
2009 and $15.3 million for the year ended December 31, 2008.  These
impairment losses have been included within the Company’s statements of
operations under the caption “Impairment loss on goodwill and other intangible
assets.”  Of the aggregate impairment losses recorded for the year
ended December 31, 2009 and 2008, approximately $6.4 million and $3.6 million,
respectively, were attributable to carrying amounts of goodwill.  The
following table details the impairment loss by intangible asset category as well
as by reporting unit.
   48
 
 Reporting
      UnitFor
      the Year Ended, December 31, 2009JRM
                    
                    
                    Lifeguard
                    
                    
                    USHBG
                    
                    
                    TotalGoodwill
                    
                    $
                    156,400
                    
                    
                    $
                    4,281,662
                    
                    
                    $
                    1,970,543
                    
                    
                    $
                    6,408,605Customer
      and vendor relationships
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,052,556
                    
                    
                    
                    2,052,556Trademarks
      and tradenames
                    
                    
                    10,200
                    
                    
                    
                    -
                    
                    
                    
                    12,000
                    
                    
                    
                    22,200Total
                    
                    $
                    166,600
                    
                    
                    $
                    4,281,662
                    
                    
                    $
                    4,035,099
                    
                    
                    $
                    8,483,361Reporting
      UnitFor
      the Year Ended, December 31, 2008JRM
                    
                    
                    Lifeguard
                    
                    
                    USHBG
                    
                    
                    TotalGoodwill
                    
                    $
                    165,844
                    
                    
                    $
                    -
                    
                    
                    $
                    3,431,700
                    
                    
                    $
                    3,597,544Customer
      and vendor relationships
                    
                    
                    113,900
                    
                    
                    
                    9,084,800
                    
                    
                    
                    2,257,000
                    
                    
                    
                    11,455,700Trademarks
      and tradenames
                    
                    
                    25,700
                    
                    
                    
                    -
                    
                    
                    
                    230,000
                    
                    
                    
                    255,700Total
                    
                    $
                    305,444
                    
                    
                    $
                    9,084,800
                    
                    
                    $
                    5,918,700
                    
                    
                    $
                    15,308,944
  NOTE 7
– DEPOSITS AND OTHER ASSETS
 
 Deposits
and other noncurrent assets consist of the following at December 31, 2009 and
2008:
 
 December
      31,
                      2009
                    
                    
                    December
      31,
                      2008Agent
      advances
                    
                    $
                    -
                    
                    
                    $
                    507,299Merchant
      reserve deposit
                    
                    
                    1,100,000
                    
                    
                    
                    1,100,000Certificate
      of deposit
                    
                    
                    191,486
                    
                    
                    
                    185,832Prepaid
      and other expenses
                    
                    
                    91,807
                    
                    
                    
                    379,190Total
                    
                    $
                    1,383,293
                    
                    
                    $
                    2,172,321
 
 NOTE 8
- LOANS AND NOTES PAYABLE
 
 Loans and
notes payable consist of the following at December 31, 2009 and
2008:
 
 49
 
 December
      31, 2009
                    
                    
                    December
      31, 2008Convertible
      promissory note payable to investor; bearing interest at 10% per annum;
      due December 2006; currently in default and subject of legal
      dispute
                    
                    $
                    100,000
                    
                    
                    $
                    100,000Convertible
      note payable to sharedholder; face amount $2 million; bearing interest of
      6% per annum; unsecured; principal payment due on October 9, 2012, net of
      discount
                    
                    
                    1,444,648
                    
                    
                    
                    -Promissory
      notes payable to Company executives bearing interest of 6% per annum;
      payable on demand
                    
                    
                    -
                    
                    
                    
                    814,500Promissory
      notes payable to investors; bearing interest ranging from 7.5% to 10% per
      annum; due December 2006; currently in default, of which $100 thousand is
      subject of legal dispute
                    
                    
                    114,500
                    
                    
                    
                    425,000Promissory
      notes payable to investors; bearing interest of 1.53% per annum; due
      through June 2004, increasing to 15% thereafter, currently in default and
      subject of legal dispute
                    
                    
                    114,950
                    
                    
                    
                    114,950Promissory
      note payable for legal settlement; bearing interest of 7.5% per annum;
      payable in monthly installments of approximately $27 thousand; due through
      July 2011
                    
                    
                    431,485
                    
                    
                    
                    -Revolving
      consumer credit cards
                    
                    
                    185,347
                    
                    
                    
                    378,485Capital
      lease obligations, at interest rates ranging from 0% to
10%
                    
                    
                    289,594
                    
                    
                    
                    93,838Insurance
      financing agreement; bearing interest at 5.25% per annum; payable in
      monthly installments of approximately $2.5 thousand; due through July
      2010
                    
                    
                    17,210
                    
                    
                    
                    -Promissory
      notes payable to shareholders (on demand; noninterest
    bearing)
                    
                    
                    18,592
                    
                    
                    
                    18,592Promissory
      notes payable to shareholders (noninterest bearing; payable in monthly
      installments of approximately $5 thousand; due through December
      2010)
                    
                    
                    91,000
                    
                    
                    
                    -Promissory
      notes payable to shareholders (noninterest bearing; payable in monthly
      installments of approximately $7 thousand; due through August
      2010)
                    
                    
                    45,173
                    
                    
                    
                    -Total
      notes and loans payable
                    
                    $
                    2,852,499
                    
                    
                    $
                    1,945,365
 
 
 The $2
million convertible note payable contains an embedded conversion option which
resulted in a discount of $593,426, which is being amortized over the life of
the note.  Total interest expense related to this note was
approximately $65.7 thousand, of which approximately $38.1 thousand represented
amortization of the discount.  The note payable is convertible at the
option of the Note Holder and is convertible into 4 million shares of Zurvita’s
common stock.  Unpaid interest may be added to the principal balance
at the election of the holder.  As of December 31, 2009 and 2008,
approximately $1.0 million and $1.9 million, respectively, of the loans and
notes payable are classified as current due to either maturity dates or events
of default.
 
 The
promissory note payable for a legal settlement was issued by Zurvita and is
guaranteed by the Company.
 
 The
following is a schedule of the future payments required under the Company’s
notes payable:
 
 As
      of December 31, 20092010
                      
                      $
                      1,026,0292011
                      
                      
                      245,6882012
                      
                      
                      2,067,8862013
                      
                      
                      68,2483,407,851Net
      of discount on convertible note payable
                      
                      
                      (555,352
                      )$
                      2,852,499
 
 The
following schedule details the future minimum lease payments on capital leases
at December 31, 2009:
 
  50
 
 For
      the Year Ended December 31,2010
                    
                    $
                    102,9932011
                    
                    
                    90,4612012
                    
                    
                    78,1792013
                    
                    
                    72,038Total
      minimum payments
                    
                    
                    343,671Less:
      Amount representing interest
                    
                    
                    (54,077
                    )Present
      value of capital lease obligations
                    
                    
                    289,594Less:
      Current portion
                    
                    
                    (79,899
                    )Long-term
      capital lease obligations
                    
                    $
                    209,695
  NOTE 9–
ACCRUED EXPENSES AND OTHER LIABILITIES
 
 Accrued
expenses and other liabilities consist of the following at December 31, 2009 and
2008:
 
 December
      31, 2009
                    
                    
                    December
      31, 2008Allowance
      for sales returns and chargebacks
                    
                    $
                    160,130
                    
                    
                    $
                    390,498Franchise
      and sales tax payable
                    
                    
                    61,795
                    
                    
                    
                    111,696Interest
                    
                    
                    211,966
                    
                    
                    
                    225,487Legal
      settlement
                    
                    
                    -
                    
                    
                    
                    250,000Other
                    
                    
                    147,262
                    
                    
                    
                    248,881Payroll
                    
                    
                    358,689
                    
                    
                    
                    328,188Professional
      Fees
                    
                    
                    25,000
                    
                    
                    
                    830,308Rent
                    
                    
                    73,970
                    
                    
                    
                    44,257Total
                    
                    $
                    1,038,812
                    
                    
                    $
                    2,429,315
 
 NOTE
10 – DEFERRED ACQUISITION PAYMENTS
 
 The
Company entered into a Stock Purchase Agreement on March 31, 2008 which was
subsequently amended on April 3, 2008 with USHBG and the sole stockholder of
USHBG (“Stockholder”).  Effective April 1, 2008, the Company acquired
all outstanding stock of USHBG.  The Stock Purchase Agreement
provided, on the share adjustment date, as defined, that the Company had the
option of unwinding the acquisition or issuing additional shares to the
Stockholder with a minimum value of $9 million.
 
 In lieu
of unwinding the transaction or issuing additional shares, on September 10, 2009
(the “Amendment Closing”), the Company and USHBG entered an Amendment to Stock
Purchase Agreement (the “Amendment”).  Pursuant to the Amendment, the
value of the acquired entities has been reduced from $11,625,445 to $4,331,664
(the “Amended Purchase Price”).  The Amended Purchase Price is payable
as follows in accordance with the terms of the Amendment:
 
 ·
                  As
      of the Amendment Closing, the Company had paid the Stockholder the
      aggregate sum of $2,191,664, which amount was deemed a reduction in the
      Amended Purchase Price
 ·
                  Upon
      the Amendment Closing, the Company paid the Stockholder the sum of
      $737,500
 ·
                  Upon
      the Amendment Closing, the Company issued an aggregate of 1,800,000 shares
      of the Company’s Class A common stock, which for the purposes of the
      Amendment were valued at $0.05 per share or $90,000.  This
      amount was also treated as a reduction to the Amended Purchase
      Price
 ·
                  Upon
      the Amendment Closing, the Company issued a Promissory Note to the
      Stockholder in the principal amount of $1,312,500 with an interest rate of
      3.25% per annum, payable over a three year
term.
 
 After
taking into consideration prior amortization, impairment charges as well as an
adjustment for change in value of deferred cash consideration, a $1.7 million
adjustment resulted. This adjustment was made to paid-in capital reflecting a
modification to the amount of equity consideration recorded in connection with
the acquisition of USHBG. Of the $1.7 million adjustment to paid-in capital,
$743 thousand represented a non-cash portion that has no impact on operating
cash flows or results of operations.  These transactions resulted in
deferred acquisition payments of approximately $831 thousand as of December 31,
2009, of which $581 thousand is classified as short term, due to its maturity
date being less than one year.
   51
 
 The
following is a schedule of the future payments required:
 For
      the Year Ended December 31,2010
                      
                      $
                      581,2502011
                      
                      
                      200,0002012
                      
                      
                      50,000831,250
 NOTE
11 – DEFERRED REVENUE
 
 Deferred
revenue consists of the following at December 31, 2009 and
2008:
 
 December
      31, 2009
                    
                    
                    December
      31, 2008Advertising
      sales
                    
                    $
                    181,937
                    
                    
                    $
                    -Marketing
      fees and materials
                    
                    
                    41,484
                    
                    
                    
                    -Member
      fees
                    
                    
                    2,624,536
                    
                    
                    
                    2,752,365Total
                    
                    $
                    2,847,957
                    
                    
                    $
                    2,752,365
 
 NOTE
12– ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
 
 Assets
and liabilities measured at estimated fair value in the consolidated financial
statements on a recurring basis include certain marketable securities,
redeemable and other non-compensatory warrants and a conversion feature
associated with a promissory note.  The fair value of the marketable
securities was determined by using the share price as quoted by OTC Bulletin
Board® (OTCBB).  The fair value of conversion feature and the warrants
was determined by an independent valuation specialist using the Black-Scholes
Option Pricing Model.  See Note 17 – Stock Warrantsfor
specifics on the inputs used in determining the fair value.
 
 Assets
and liabilities measured at estimated fair value on a recurring basis and their
corresponding level within the fair value hierarchy is summarized as
follows:
   52
  December
      31, 2009Fair
      Value Measurements at Reporting Date UsingQuoted
      Prices in
                    
                    
                    SignificantActive
      Markets for
                    
                    
                    UnobservableIdentical
      Assets
                    
                    
                    Inputs
                    
                    
                    Total(Level
      1)
                    
                    
                    (Level
      3)
                    
                    
                    Fair
      ValueMarketable
      Securities
                    
                    $
                    240,000
                    
                    
                    $
                    -
                    
                    
                    $
                    240,000Total
      Assets
                    
                    $
                    240,000
                    
                    
                    $
                    -
                    
                    
                    $
                    240,000Share
      conversion feature
                    
                    $
                    -
                    
                    
                    $
                    577,949
                    
                    
                    $
                    577,949Warrants
                    
                    
                    -
                    
                    
                    $
                    8,042,489
                    
                    
                    $
                    8,042,489Total
      liabilities
                    
                    $
                    -
                    
                    
                    $
                    8,620,438
                    
                    
                    $
                    8,620,438December
      31, 2008Fair
      Value Measurements at Reporting Date UsingQuoted
      Prices in
                    
                    
                    SignificantActive
      Markets for
                    
                    
                    UnobservableIdentical
      Assets
                    
                    
                    Inputs
                    
                    
                    Total(Level
      1)
                    
                    
                    (Level
      3)
                    
                    
                    Fair
      ValueWarrants
                    
                    $
                    -
                    
                    
                    $
                    13,315,364
                    
                    
                    $
                    13,315,364Total
      liabilities
                    
                    $
                    -
                    
                    
                    $
                    13,315,364
                    
                    
                    $
                    13,315,364
  The
Company has categorized its assets and liabilities measured at fair value into
the three-level fair value hierarchy, as defined in Note 2 – Basis of Presentation and
Significant Accounting Policies, based upon the priority of inputs to
respective valuation techniques.   Liabilities included within level 3
of the fair value hierarchy presented in the preceding table
include:  (1) warrant instruments which contain redemption provisions
which under certain circumstances may require cash settlement or were
determined, based on their settlement provisions, not to be indexed to the
Company’s stock (2) certain non-compensatory warrants and (3) a conversion
feature embedded in a promissory note.  The valuation methodologies
use a combination of observable and unobservable inputs in calculating fair
value.
 
 The
changes in level 3 liabilities measured at fair value on a recurring basis are
summarized as follows:
 
 Balance Beginning of
      Period
                    
                    
                    Reclassification
      of Warrants as Liabilities
                    
                    
                    Issuance
                    
                    
                    (Gain)
      LossRecognized in Earnings from Change in Fair
      Value
                    
                    
                    Balance
      Endof PeriodFor
      the Year EndedDecember
      31, 2009Share
      Conversion
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    593,426
                    
                    
                    $
                    (15,477
                    )
                    
                    $
                    577,949Warrants
                    
                    $
                    13,315,364
                    
                    
                    $
                    -
                    
                    
                    $
                    8,009,483
                    
                    
                    $
                    (13,282,358
                    )
                    
                    $
                    8,042,489Balance Beginning of
      Period
                    
                    
                    Reclassification
      of Warrants as Liabilities
                    
                    
                    Issuance
                    
                    
                    (Gain)
      LossRecognized in Earnings from Change in Fair
      Value
                    
                    
                    Balance
      Endof
      PeriodFor
      the Year EndedDecember
      31, 2008Warrants
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    31,464,419
                    
                    
                    $
                    (18,731,693
                    )
                    
                    $
                    12,732,726Non-compensatory
      warrants
                    
                    $
                    -
                    
                    
                    $
                    626,638
                    
                    
                    $
                    -
                    
                    
                    $
                    (44,000
                    )
                    
                    $
                    582,638
        53
 
 Nonrecurring
Fair Value Measurements
 
 The
following table presents the assets and liabilities carried on the balance sheet
by level within the hierarchy as of December 31, 2009 for which a nonrecurring
change in fair value has been recorded during the year ended December 31,
2009:
  Year
                      
                      
                      Significant
                        Unobservable
      Inputs (Level 1)
                      
                      
                      Significant
                        Unobservable
      Inputs (Level 2)
                      
                      
                      Significant
                        Unobservable
      Inputs (Level 3)
                      
                      
                      Total
      LossesEnded12/31/2009Goodwill
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      (6,408,605
                      )Marketing
      agreement
                      
                      $
                      2,000,000
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      2,000,000
                      
                      
                      $
                      -Deferred
      marketing costs
                      
                      $
                      383,483
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      657,400
                      
                      
                      $
                      -Other
      intangible assets
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      (2,052,556
                      )Trademarks
      and tradenames
                      
                      $
                      142,995
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      142,995
                      
                      
                      $
                      (22,200
                      )$
                      2,526,478
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      2,800,395
                      
                      
                      $
                      (8,483,361
                      )
 With
respect to the deferred marketing costs which are included
within deferred expenses in the consolidated balance sheet, there was no
quoted market price for Zurvita’s securities at the date Zurvita issued common
stock as consideration.  Consequently, Zurvita utilized an independent
valuation specialist to determine the fair value of stock
issued.  This estimate utilized Zurvita’s July 30, 2009 sale of
convertible preferred stock with common stock warrants.  This was
Zurvita’s sole issuance of securities for cash.  The conversion price
of the preferred stock was $0.0625.  The common stock was valued by
subtracting the $0.04 fair value of warrants using the Black-Scholes Pricing
Model from the conversion price of $0.0625.  At date of issuance the fair
value was determined to be approximately $657 thousand, with approximately $278
thousand of amortization recognized during the year ended December 31,
2009, the ending balance included within deferred expenses is approximately $383
thousand.
 
 The
carrying value of the indefinite-lived marketing agreement classified as an
intangible asset was determined by the fair value of consideration given, which
was a $2 million note payable.
 
 Goodwill
and other intangible assets, consisting of customer and vendor relationships and
trade names, with prior carrying amounts of approximately $6.4 million and $3.1
million, respectively, were written down to their fair values of $0 and $143
thousand, respectively, resulting in impairment charges of approximately $6.4
million and $2.1 million, respectively, for a total impairment of $8.5
million.  Both market and income approaches were used to estimate fair
value of goodwill and other intangible assets.  These valuation
techniques utilized a significant number of nonobservable inputs.
 
 Fair
value of Financial Instruments
 
 The fair
values of accounts receivable and accounts payable approximate the carrying
values due to the short term nature of these instruments.  The fair
values of the notes payable approximate their carrying amounts as interest rates
on these obligations are representative of estimated market rates available to
the Company on similar instruments.
 
 NOTE
13—REDEEMABLE PREFERRED STOCK
 
 On July
30, 2009, Zurvita issued 1.75 million shares of Series A Convertible Preferred
Stock for proceeds of $1.75 million which are convertible at a conversion price
of $0.0625 into 28 million shares of Zurvita common stock.  On October
6, 2009, Zurvita issued 2 million shares of Series B Convertible Preferred Stock
for proceeds of $2 million which are convertible at a conversion price of $0.25
into 4 million shares of Zurvita common stock.  The stated value of
each issued share of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock (the “Convertible Preferred Stock”) is
$1.00.  Zurvita had no redeemable preferred stock issued and
outstanding as of December 31, 2008.
 
 Events
that may result in the redemption for cash of preferred stock, and that are not
within a company’s control, require the preferred stock to be classified outside
of stockholders’ equity (in the mezzanine section).  Zurvita’s
Convertible Preferred Stock contains redemption for cash provisions with respect
to change of control, bankruptcy, adverse judicial judgment and the failure to
have available a sufficient number of authorized and unreserved shares of common
stock to issue in the event of a conversion. All the aforementioned events are
presumed not to be within Zurvita’s control. Accordingly, these instruments are
recorded within the Redeemable Preferred Stock caption of the balance sheet,
which is outside of stockholders’ equity.  Management estimates the
probability of the events to be remote due to the Company’s financial condition
and the affiliation of stockholders that represent a majority of the outstanding
common and preferred stock.  Therefore, the carrying value of the
preferred stock has not been increased to the full redemption
value.  The reason the carrying value is not equal to the total
proceeds received is due to the allocation of proceeds to certain warrants
issued in connection with the preferred stock.
 
 The
following table summarizes for each redeemable preferred stock issuance the
value allocated to the warrants and preferred stock:
  54
 
 Total
                  
                  
                  Value
                  
                  
                  Preferred
      StockPreferred
      Stock
                  
                  Proceeds
                  
                  
                  Allocated
      to
                  
                  
                  CarryingIssuance
                  
                  Received
                  
                  
                  Warrants
                  
                  
                  AmountSeries
      A
                  
                  $
                  1,750,000
                  
                  
                  $
                  539,000
                  
                  
                  $
                  1,211,000Series
      B
                  
                  $
                  2,000,000
                  
                  
                  $
                  930,838
                  
                  
                  $
                  1,069,162
  NOTE 14—PREFERRED
STOCK
 
 The
Company is authorized to issue 20 million shares of preferred
stock.
 
 On March
5, 2009, the Board of Directors of the Company approved the elimination of
series B, C, D, E, J, and K Preferred Stock.
 
 Series G,
H, I and L Preferred Stock are entitled to receive dividends payable on the
stated value of the preferred stock at a rate of six percent (6%) per annum,
which shall be cumulative, accrue daily from the issuance date and be due and
payable on the first day of each calendar quarter.  Such dividends
accrue whether or not declared, but no dividend shall be paid unless there are
profits, surplus or other funds legally available for the payment of
dividends.  Dividends are payable in cash or Class A common stock, at
the option of the holder.  The accumulation of unpaid dividends shall
bear interest at a rate of six percent (6%) per annum.  At December
31, 2009 and December 31, 2008, accrued and unpaid dividends related to the
preferred stock are approximately $3.1 million and $880 thousand,
respectively.  The Company’s Series A Preferred Stock does not accrue
dividends.
 
 Each
Series G, J, I, and L Preferred Stock is subject to adjustment for certain
events, including the payment of a dividend payable in capital stock of the
Company, any stock split, combination, or reclassification and certain issuances
of Class A common stock or securities convertible into or exercisable for Class
A common stock at a price per share or conversion price less than the then
applicable series conversion price.  In the event of certain corporate
changes, including any consolidation or merger in which the Company is not the
surviving entity, sale or transfer of all or substantially all of the Company’s
assets, certain share exchanges and certain distributions of property or assets
to the holders of Class A common stock, the holders of the applicable series
Preferred Stock have the right to receive upon conversion, in lieu of shares of
Class A common stock otherwise issuable, such securities and/or other property
as would have been issued or payable as a result of such corporate change with
respect to or in exchange for the Class A common stock issuable upon conversion
of the applicable series Preferred Stock.
 
 In the
event of any liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, and before any junior security of the
Company, the holders of preferred stock shall be entitled to be paid out of the
assets of the Company available for distribution to its stockholders an
amount per share equal to the stated value of the holder’s respective preferred
stock series plus the aggregate amount of accumulated but unpaid dividends on
each share of preferred stock.  If, upon a liquidation event, the
assets of the Company are insufficient to permit payment in full to such holders
of the aggregate amount that they are entitled to be paid by their respective
terms, then the entire assets, or proceeds thereof, available to be distributed
to the Company’s stockholders shall be distributed to the holders of the
preferred stock ratably in accordance with the respective amounts that would be
payable on such shares if all amounts payable were paid in full.  The
liquidation value of Series A, G, H, I, and L as of December 31, 2009 were
approximately $155 thousand, $13.5 million, $4.4 million, $17.5 million and
$10.7 million, respectively.
 
 The table
below sets forth the preferred stock outstanding as of December 31, 2009 and
December 31, 2008.
 
 2009
                      
                      
                      2008Series
      A
                      
                      
                      155
                      
                      
                      
                      155Series
      G
                      
                      
                      1,200
                      
                      
                      
                      1,200Series
      H
                      
                      
                      400
                      
                      
                      
                      400Series
      I
                      
                      
                      1,650
                      
                      
                      
                      850Series
      L
                      
                      
                      1,050
                      
                      
                      
                      -4,455
                      
                      
                      
                      2,605
   55
 
 Series A Preferred
Stock
 
 As of
December 31, 2009, 155 shares of Series A Convertible Preferred Stock (“Series A
Preferred Stock”) were outstanding. There were no issuances of Series A
Preferred Stock during the year ended December 31, 2009.  Each share
of Series A Preferred Stock is convertible into 2,000 shares of Class A common
stock, subject to adjustment for stock dividend, stock split or combination,
reclassification, reorganization, consolidation, merger or sale of all or
substantially all of the assets or certain other corporate events.  As
of December 31, 2009, the outstanding shares of Series A Preferred Stock were
convertible into 310,000 shares of Class A common stock.
 
 Series G
Preferred Stock
 
 As of
December 31, 2009, each share of Series G Convertible Preferred Stock (“Series G
Preferred Stock”) is convertible at any time, at the option of the holder, into
that number of shares of Class A common stock equal to $10,000 divided by
$0.0275 (the “Series G Conversion Price”).  If on July 15, 2011, any
share of Series G Preferred Stock remains outstanding and a registration
statement covering the resale of all of the Class A Common Stock underlying the
Series G Preferred Stock is effective and has been effective for 90 days prior
to such date, the Company must convert each share of the Series G Preferred
Stock into Class A common stock at the then applicable Series G Conversion
Price.
 
 The
Company had the option to redeem all of the outstanding Series G Preferred Stock
ten (10) days after November 7, 2009 (“Conversion Price Adjustment Date”), but
elected not to do so.
 
 No shares
of Series G Preferred Stock were issued during the year ended December 31,
2009.
 
 As of
December 31, 2009, 1,200 shares of Series G Preferred Stock were outstanding and
convertible into 436,363,636 Class A common shares.
 
 Series H Preferred
Stock
 
 As of
December 31, 2009 each share of Series H Convertible Preferred Stock (“Series H
Preferred Stock”) is convertible at any time, at the option of the holder, into
that number of shares of Class A common stock equal to $10,000 divided by
$0.0275 (the “Series H Conversion Price”).   If on July 15, 2011, any
share of Series H Preferred Stock remains outstanding and a registration
statement covering the resale of all of the Class A common stock underlying the
Series H Preferred Stock is effective and has been effective for 90 days prior
to such date, the Company must convert each share of the Series H Preferred
Stock into Class A common stock at the then applicable Series H Conversion
Price.
 
 The
Company had the option to redeem all of the outstanding Series H Preferred Stock
ten (10) days after the conversion price adjustment date, but elected not to do
so.
 
 No shares
of Series H Preferred Stock were issued during the year ended December 31,
2009.
 
 As of
December 31, 2009, 400 shares of Series H Preferred Stock were outstanding and
convertible into 145,454,545 Class A common shares.
 
 Series I Preferred
Stock
 
 As of
December 31, 2009 each share of Series I Convertible Preferred Stock (“Series I
Preferred Stock”) is convertible at any time, at the option of the holder, into
that number of shares of Class A common stock equal to $10,000 divided by
$0.0275 (the “Series I Conversion Price”).  If on July 15, 2011 any
share of Series I Preferred Stock remains outstanding and a registration
statement covering the resale of all of the Class A common stock underlying the
Series I Preferred Stock is effective and has been effective for 90 days prior
to such date, the Company must convert each share of the Series I Preferred
Stock into Class A common stock at the then applicable Series I Conversion
Price.
 
 The
Company had the option to redeem all of the outstanding Series I Preferred Stock
ten (10) days after the conversion price adjustment date, but elected not to do
so.
 
 So long
as there is an aggregate of not less than 363 shares of Series I Preferred Stock
issued and outstanding (subject to appropriate adjustment for any stock split,
stock dividend combination or other similar event), the majority of the holders
of Series I Preferred Stock, voting exclusively as a separate class and with
each share of Series I Preferred Stock entitled to one vote, shall have the
right to nominate and elect two of the members of the Board of Directors of the
Company.
 
 In
January and March 2009, the Company issued 400 shares each (800 shares total) of
its Series I Preferred Stock and a warrant agreement to acquire 45,000,000
shares each (90,000,000 shares total) of the Company’s Class A common stock,
exercisable for five (5) years at an exercise price of $0.375, for an aggregate
cash purchase price of $8,000,000.  These warrants are classified as
liabilities due to certain settlement provisions; these warrants were determined
not to be indexed to the Company’s stock.  The fair value of the
warrants at date of issuance was $4.3 million and was determined by a
third–party valuation specialist based upon the Black-Scholes Option Pricing
Model.
 
  56
  At
December 31, 2009, the fair value of these warrants is approximately $900
thousand. The effect of mark-to market adjustments was a decrease in value
of $3.4 million and has been recorded as “Gain on change in fair value of
warrants” within the accompanying Statement of Operations to
date.  See Note 12 –
Assets and Liabilities Measure at Fair Value for additional fair value
disclosure information.
 
 As of
December 31, 2009, 1,650 shares Series I Preferred Stock were outstanding and
convertible into 600,000,000 Class A common shares.
 
 Series L Preferred
Stock
 
 Each
share of Series L Convertible Preferred Stock (“Series L Preferred Stock”) is
convertible at any time, at the option of the holder, into that number of shares
of Class A common stock equal to $10,000 divided by $0.01 (the “Series L
Conversion Price”).   If on July 15, 2011 any share of Series L
Preferred Stock remains outstanding and a registration statement covering the
resale of all of the Class A common stock underlying the Series L Preferred
Stock is effective and has been effective for 90 days prior to such date, the
Company must convert each share of the Series L Preferred Stock into Class A
common stock at the then applicable Series L Conversion Price.
 
 In June
and September 2009, the Company issued a total of 1,050 shares of its Series L
Preferred Stock and a warrant agreement to acquire 50,625,000 and 67,500,000
respectively (118,125,000 shares total) of the Company’s Class A common stock,
exercisable for five (5) years at an exercise price of $0.375, for an aggregate
cash purchase price of $10,500,000.  These warrants are classified as
liabilities due to certain settlement provisions; these warrants were determined
not to be indexed to the Company’s stock.  The fair value of the
warrants at date of issuance was $2.1 million and was determined by a
third–party valuation specialist based upon the Black-Scholes Option Pricing
Model.
 
 At
December 31, 2009, the fair value of these warrants is approximately $1.3
million.  The effect of mark-to-market adjustments was a decrease in
value of approximately $844 thousand and has been recorded as “Gain on change in
fair value of warrants” within the accompanying Statement of Operations to
date.  See Note 12 –
Assets and Liabilities Measure at Fair Value for additional fair value
disclosure information.
 
 In
connection with the Series L Preferred Stock, the Company recorded an aggregate
beneficial conversion feature of approximately $8.4 million.   The
resulting discounts were accreted as a dividend to the preferred stockholders
from the date of issuance to the earliest conversion date, using the effective
yield method. Accretion recognized for the year ended December 31, 2009 was
approximately $8.4 million.
 
 As of
December 31, 2009, 1,050 shares Series L Preferred Stock were outstanding and
convertible into 1,050,000,000 Class A common shares.
 
 NOTE
15 – COMMON STOCK
 
 The
Company has authorized one billion three hundred sixty million (1,360,000,000)
Class A common stock shares and one hundred twenty million (120,000,000) Class B
common stock shares.  The Company currently does not have sufficient
authorized common stock to satisfy the conversion of all outstanding securities
and the exercise of all outstanding options and warrants.  The Company is
in the process of increasing its authorized common stock.  On all matters
required by law to be submitted to a vote of the holders of common stock, each
share of Class A common stock is entitled to one vote per share, and each share
of Class B common stock is entitled to five votes.
 
 During
August 2009, the Company issued 5,074,872 shares of its common stock to an
individual in settlement of potential claims, and during November 2009, the
Company issued 13,786,260 shares of its common stock and a promissory note for
$105,000 to an individual in settlement of potential claims.  Both
were issued in a transaction that was exempt from registration
under  the Securities Act of 1933, as amended (the “Securities Act”)
pursuant to Section 4(2) of the Securities Act, which exempts transactions by an
issuer not involving a public offering.
  NOTE 16 – NON-CONTROLLING
INTEREST
 
 On July
30, 2009 (the “Closing Date”), Red Sun Minning Inc. (“Red Sun”), entered into a
Share Exchange Agreement (the “Share Exchange Agreement”) with Zurvita and
Amacore, pursuant to which, among other things, Amacore contributed all of their
securities of Zurvita to Red Sun in exchange for Red Sun’s issuance to them of
9.3 million shares of common stock of Red Sun (the “Share Exchange”), which now
represents 37.2 million shares following a one (1) for four (4)
forward stock split. Prior to the consummation of the Share Exchange Agreement,
Zurvita was a wholly-owned subsidiary of Amacore, and Red Sun was a public shell
company.
 
 Concurrent
with the closing of the Share Exchange, Zurvtia entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with an accredited investor and
closed a private placement offering pursuant to which it raised gross proceeds
of $1.75 million and, among other things, issued and sold convertible preferred
stock convertible into shares of Zurvita’s common stock at an initial conversion
price of $0.25, which was subsequently adjusted to $0.0625 following a one
(1) for four (4) forward stock split.
   57
 
 Concurrent
with the closing of the Share Exchange, Zurvita entered into an Advertising and
Marketing Agreement with OmniReliant Holdings, Inc. (“OmniReliant”), pursuant to
which Zurvita agreed to provide placement of advertising for OmniReliant on its
website and OmniReliant agreed to provide Zurvita with certain marketing
services (the “OmniReliant Agreement”). The marketing services to be provided by
OmniReliant include the production of infomercials, video production services,
management of call centers, buying and fulfillment services. In consideration
for such services, OmniReliant received an aggregate of 3.8 million shares of
Zurvita’s common stock which subsequently was adjusted to 15.2 million
shares following one (1) for four (4) forward stock split.
 
 Pursuant
to the terms of a agreement (the “Repurchase Agreement”), Red Sun repurchased 2
million or 66% of the outstanding shares of Red Sun common stock for a total
price of $210 thousand.
  As a
result of the Share Exchange and the consummation of the transactions pursuant
to the Repurchase Agreement, Red Sun experienced a change in control and ceased
to be a shell company. Zurvita became a wholly-owned subsidiary of Red Sun and
Amacore became the owner of approximately 66 percent of Red Sun’s issued and
outstanding shares of common stock and 44 percent of the voting rights of total
equity securities outstanding (after giving effect to subsequent issuances of
common and preferred stock).  The combined entity elected to change
its name from Red Sun Mining, Inc. to Zurvita Holdings, Inc. and succeeded to
the business of Zurvita as its sole line of business.
 
 Subsequent
to the Share Exchange, management determined Zurvita to be a variable interest
entity due to affiliated parties participating in the design of the entity and
insufficient equity investment at risk to permit Zurvita to finance its
activities without requiring additional subordinated financial
support.  Management also determined Amacore to be the primary
beneficiary and has included the accounts of Zurvita within its consolidated
financial statements.  Significant factors that led to this
determination were Amacore’s voting rights relative to other common and
preferred stockholders as well as how closely associated Amacore and Zurvita are
relative to other related party variable interest holders.
 
 As a
result of the aforementioned transactions, Amacore’s ownership interest changed
from 100% to 66%.  The schedule below shows the effects of this change
on Amacore’s equity
  Net
Loss Attributable to The Amacore Group, Inc. and Transfers
to the Noncontrolling Interest
 Net
      loss attributable to The Amacore Group, Inc.
                    
                    $
                    (9,902,575
                    )Increase
      in additional paid in capital from share exchange
                    
                    
                    921,004Change
      from net loss attributable to The Amacore Group, Inc. and
      transfers to noncontrolling interest
                    
                    $
                    (8,981,571
                    )
 
 The loss
attributable to the non-controlling interest exceeds the non-controlling
interest in the equity capital of Zuvita Holdings, resulting in a deficit
non-controlling interest.  ASC Paragraph 810-10-45-21 requires that
the non-controlling interest continue to be attributed its share of losses even
if that attribution results in a deficit non-controlling interest balance. The
table below presents consolidated net loss attributable to Amacore and earnings
(loss) per share on a pro forma basis as if the said excess had been charged to
the controlling interest.
 
 58
  For
      the Year Ended December 31, 2009As
      Reported
                    
                    
                    Pro
      Forma AdjDecrease
      (Increase)
                    
                    
                    
                    
                    
                    Pro
      FormaBalanceNet
      loss before income taxes
                    
                    
                    (13,000,446
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    (13,000,446
                    )Income
      taxes
                    
                    
                    53,089
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    53,089Net
      Loss
                    
                    
                    (13,053,535
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    (13,053,535
                    )Less:
      Net loss attributable to the noncontrolling interest
                    
                    
                    2,318,511
                    
                    
                    
                    (2,318,511
                    )
                    (1)
                    
                    
                    
                    
                    -Net
      loss attributed to The Amacore Group, Inc.
                    
                    
                    (10,735,024
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (13,053,535
                    )Preferred
      stock dividend and accretion
                    
                    
                    (10,501,346
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (10,501,346
                    )Net
      loss attributed to The Amacore Group, Inc. available to common
      stockholders
                    
                    
                    (21,236,370
                    )
                    
                    
                    (2,318,511
                    )
                    (1)
                    
                    
                    
                    
                    (23,554,881
                    )Basic
      and diluted loss per share
                    
                    $
                    (0.02
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    $
                    (0.02
                    )Basic
      and diluted weighted average number of common shares
      outstanding
                    
                    
                    1,028,482,088
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,028,482,088(1)
      Noncontrolling interest's portion of net loss in excess of noncontrolling
      interest's equity capital
  As of
December 31, 2009, the consolidated assets and liabilities of Zurvita are
included in the consolidated balance sheet of the Company and are disclosed as
follows:
  December
      31, 2009ASSETSCurrent
      assetsCash
                    
                    $
                    191,194Marketable
      securities (at fair value)
                    
                    
                    240,000Accounts
      receivable
                    
                    
                    91,384Deferred
      expenses
                    
                    
                    1,662,119Total
      current assets
                    
                    
                    2,184,697Property,
      plant and equipment (net of accumulated depreciation of
      $45,876)
                    
                    
                    104,461Deposits
      and other assets
                    
                    
                    148,936Other
      intangible assets - marketing agreement
                    
                    
                    2,000,000Total
      Assets
                    
                    $
                    4,438,094LIABILITIESCurrent
      liabilitiesAccounts
      payable
                    
                    $
                    323,269Loans
      and notes payable - current
                    
                    
                    290,569Accrued
      expenses and other liabilities
                    
                    
                    248,623Deferred
      revenue
                    
                    
                    1,214,417Total
      current liabilities
                    
                    
                    2,076,878Fair
      value of warrants
                    
                    
                    5,584,041Fair
      value of share conversion feature
                    
                    
                    577,949Loans
      and notes payable - long term
                    
                    
                    1,602,774Total
      liabilities
                    
                    $
                    9,841,642
 
 There are
no restrictions as to the use of Zurvita’s assets as of December 31,
2009.
 
 
 Note
17 – STOCK WARRANTS
   59
 
 Amacore
 
 Employee Stock Incentive
Plan
 
 The
Company’s Stock Incentive Plan (the “Plan”) is administered by the Board of
Directors or a committee thereof and provides for options to purchase 750,000
shares of Class A common stock to be granted under the Plan to employees,
officers, directors, independent contractors and consultants to the
Company.  The Plan authorizes the issuance of incentive stock options
(“ISOs”), as defined in the Internal Revenue Code of 1986, as amended,
non-qualified stock options (“NQSOs”) and stock appreciation rights
(“SARs”).  Consultants and directors who are not also employees of the
Company are eligible for grants of only NQSOs and SARs. The exercise price of
each ISO may not be less than 100% of the fair market value of the common stock
at the time of grant, except that in the case of a grant to an employee who owns
10% or more of the outstanding Class A common stock of the Company or a
subsidiary of the Company, the exercise price may not be less than 110% of the
fair market value on the date of grant. The exercise price of each NQSO or SAR
may not be less than 85% of the fair market value of the Class A common stock at
the time of grant. Generally, options shall vest at 20%, per year, and shall be
outstanding for ten years. As of December 31, 2009 and December 31, 2008, no
options have been granted under the Plan.
 
 Warrants
 
 During
the year ended December 31, 2009, the Company issued warrants to purchase an
aggregate of 208.2 million shares of Class A common stock.  At December 31,
2009, there were outstanding warrants to purchase approximately 438.3 million
and 8.0 million shares of Class A and Class B common stock, respectively,
exercisable at varying prices through 2014.
 
 The
following table summarizes the status of all warrants outstanding and
exercisable at December 31, 2009:
 
 Class
      AOutstanding
      Warrants
                      
                      
                      Exercisable
      WarrantsRange
      of
                        Exercise
      Prices
                      
                      Number
      of
                          Warrants
                      
                      
                      Weighted
      Average
                          Exercise
                          Price
                      
                      
                      Weighted
                          Average
                          Remaining
                          Contractual
                          Life
      in Years
                      
                      
                      Number
      of
                          Warrants
                      
                      
                      Weighted
                          Average
                          Exercise
                          Price$0.01
      to $0.49
                      
                      
                      
                      429,643,217
                      
                      
                      $
                      0.37
                      
                      
                      
                      3.94
                      
                      
                      
                      428,518,217
                      
                      
                      $
                      0.37$0.50
      to $0.99
                      
                      
                      
                      7,850,000
                      
                      
                      $
                      0.51
                      
                      
                      
                      2.95
                      
                      
                      
                      7,850,000
                      
                      
                      $
                      0.51$1.00
      to $1.49
                      
                      
                      
                      825,000
                      
                      
                      $
                      1.10
                      
                      
                      
                      2.46
                      
                      
                      
                      575,000
                      
                      
                      $
                      1.14438,318,217
                      
                      
                      $
                      0.37
                      
                      
                      
                      3.92
                      
                      
                      
                      436,943,217
                      
                      
                      $
                      0.37
  Class
      BOutstanding
      and Exercisable WarrantsRange
      of
                        Exercise
      Prices
                      
                      
                      
                      Number
      of
                        Warrants
                      
                      
                      
                      Weighted
                        Average
                        Exercise
      Price
                      
                      
                      
                      Weighted
                        Average
                        Remaining
                        Contractual
      Term$0.01
      to $0.49
                      
                      
                      
                      1,500,000
                      
                      
                      $
                      0.16
                      
                      
                      
                      0.41$0.50
      to $0.99
                      
                      
                      
                      6,465,000
                      
                      
                      $
                      0.50
                      
                      
                      
                      2.937,965,000
                      
                      
                      $
                      0.44
                      
                      
                      
                      2.46
 
 Equity
Warrants
 
 Assumptions
used to determine the fair value of equity stock options and warrants granted
during the year ended Decedmber 31, 2008 are as follows.  There were no
equity options or warrants granted during the year ended Decrember 31,
2009.
  December
      31, 2008Expected
      dividends
                    0%Expected
      volatility
                    175%
      - 245%Risk
      free interest rate
                    2.78%
      - 4.52%Expected
      life
                    
                    5 years
  The
following tables summarize the activity for compensatory warrants classified as
equity for the year ended December 31, 2009:
   60
  Class
      A WarrantsWarrants
                    
                    
                    Weighted
      Average
                      Exercise
      Price
                    
                    
                    Weighted
      Average
                      Remaining
                      Contractual
      Term
                    
                    
                    
                    Aggregate
                      Intrinsic
      ValueOutstanding
      at December 31, 2008
                    
                    
                    13,125,000
                    
                    
                    $
                    0.46
                    
                    
                    
                    3.76
                    
                    
                    $
                    -Granted
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at December 31, 2009
                    
                    
                    13,125,000
                    
                    
                    $
                    0.46
                    
                    
                    
                    2.76
                    
                    
                    $
                    -Exercisable
      at December 31, 2009
                    
                    
                    12,375,000
                    
                    
                    $
                    0.45
                    
                    
                    
                    2.72
                    
                    
                    $
                    -Class
      B WarrantsWarrants
                    
                    
                    Weighted
      Average
                      Exercise
      Price
                    
                    
                    Weighted
      Average
                      Remaining
                      Contractual
      Term
                    
                    
                    
                    Aggregate
                      Intrinsic
      ValueOutstanding
      at December 31, 2008
                    
                    
                    7,965,000
                    
                    
                    $
                    0.44
                    
                    
                    
                    3.46
                    
                    
                    $
                    -Granted
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      and exercisable at December 31, 2009
                    
                    
                    7,965,000
                    
                    
                    $
                    0.44
                    
                    
                    
                    2.46
                    
                    
                    $
                    -
  A summary
of the status of all of the Company's non-vested equity warrants as of December
31, 2009, and the changes during the year ended December 31, 2009, is presented
below.  There were no non-vested outstanding Class B equity warrants
outstanding as of December 31, 2009 and December 31, 2008, nor were there any
issuances during the year ended December 31, 2009.
 
 Class
      A Equity WarrantsWarrants
                    
                    
                    Weighted
      Average
                      Excerise
      PriceNon-vested
      at December 31, 2008
                    
                    
                    1,925,000
                    
                    
                    $
                    0.59Granted
                    
                    
                    -
                    
                    
                    
                    -Vested
                    
                    
                    (1,175,000
                    )
                    
                    
                    0.60Exercised
                    
                    
                    -
                    
                    
                    
                    -Non-vested
      at December 31, 2009
                    
                    
                    750,000
                    
                    
                    $
                    0.59
 
 As of
December 31, 2009, there was approximately $173 thousand of total unrecognized
compensation cost related to non-vested warrants that is expected to be
recognized over a weighted-average period of 1 year.  The intrinsic
value of warrants exercised during the year ended December 31, 2008 was $454
thousand.  The total fair value of warrants vested during the year
ended December 31, 2009 and December 31, 2008 was $495 thousand and $144
thousand, respectively. The weighted average grant date fair value of
warrants granted during the year ended December 31, 2008 was $0.41.
 
 Liability
Warrants
 
 Certain
of these warrants are liability instruments issued in conjunction with preferred
stock and convertible promissory notes.  These warrants are classified
as liability instruments as net share settlement is not considered within the
Company’s control and due to non-standard anti-dilutive provisions.  At
December 31, 2009, there were warrants to purchase 425.2 million shares of Class
A common stock that were classified as liabilities.
 
 The fair
value of each option award classified as a liability on the balance sheet is
estimated on the date of the grant using the Black-Scholes Option Pricing Model
and the assumptions noted in the following table. Expected volatility is based
on the historical volatility of the Company’s stock. The risk-free rate for
periods within the contractual life of the option is based on the U.S. Treasury
Strip yield curve in effect at the time of grant. The expected term of options
granted represents the period of time that options granted are expected to be
outstanding.
   61
 
 Assumptions
used to determine the fair value of the stock options and warrants granted
during the year ended December 31, 2009 and 2008  are as
follows.
 
 December
      31, 2009
                      December
      31, 2008Expected
      dividends
                      0%
                      0%Expected
      volatility
                      123.3%
                      175%
      - 245%Risk
      free interest rate
                      0.53%
      - 2.62%
                      2.78%
      - 4.52%Expected
      life
                      
                      3 -
      5 years
                      5 years
 
 A summary
of the activity of the Company's non-compensatory warrants classified as
liabilities on the balance sheet for the year ended December 31, 2009 is
presented below.
  Warrants
                    
                    
                    Weighted
                      Average
                      Exercise
      Price
                    
                    
                    Weighted
                      Average
      Remaining Contractual Term
                    
                    
                    Aggregate
                      Intrinsic
      ValueOutstanding
      at December 31, 2008
                    
                    
                    218,368,217
                    
                    
                    $
                    0.37
                    
                    
                    
                    4.47
                    
                    
                    $
                    458,500Granted
                    
                    
                    208,225,000
                    
                    
                    
                    0.37
                    
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    (1,400,000
                    )
                    
                    
                    0.92
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at December 31, 2009
                    
                    
                    425,193,217
                    
                    
                    $
                    0.37
                    
                    
                    
                    3.96
                    
                    
                    $
                    29,000Exercisable
      at December 31, 2009
                    
                    
                    424,568,217
                    
                    
                    $
                    0.37
                    
                    
                    
                    3.96
                    
                    
                    $
                    29,000
 
 A summary
of the status of all of the Company's non-vested liability warrants as of
December 31, 2009, and the changes during the year ended December 31, 2009, is
presented below.
 
 Class
      A
                          Liability
      WarrantsYear Ended,December 31, 2009Warrants
                    
                    
                    Weighted
      Average
                      Grant-Date
                      Fair
      ValueNon-vested
      at December 31, 2008
                    
                    
                    1,250,000
                    
                    
                    $
                    0.45Granted
                    
                    
                    -
                    
                    
                    
                    -Vested
                    
                    
                    (625,000
                    )
                    
                    
                    0.45Exercised
                    
                    
                    -
                    
                    
                    
                    -Non-vested
      at December 31, 2009
                    
                    
                    625,000
                    
                    
                    $
                    0.45
 
 Stock Awards
Issued
 
 During
the years ended December 31, 2009 and 2008, 19,757,377 and 3,200,000 shares of
common stock were issued for various purposes, such as employment compensation
and for goods and services, respectively.  The Company’s stock awards
consist of Class A and Class B common stock.  The grant date fair value is
based on the share price as of the award date.  For the year ended
December 31, 2009 no share-based compensation was recognized within the
Statement of Operations.  For the year ended December 31, 2008,
approximately $1.2 million of share-based compensation was recognized within the
Statement of Operations.
   62
 
 Stock-Based Compensation
Expense
 
 For the
years ended December 31, 2009 and 2008, the Company recognized stock-based
compensation expense, including both expense related to compensatory warrants
and expense related to share awards, within the Statement of Operations as
follows:
 
 For
      the year endedDecember
      31,2009
                    
                    
                    2008Stock-based
      compensation:Professional
      fees
                    
                    $
                    -
                    
                    
                    $
                    1,581,267Payroll
      and employee benefits
                    
                    
                    164,894
                    
                    
                    
                    482,740Total
                    
                    $
                    164,894
                    
                    
                    $
                    2,064,007
 
 Zurvita
 
 During
the year ended December 31, 2009, Zurvita issued warrants to purchase Zurvita
common stock.  The effect of issuing these warrants is included in the
consolidated financial statements of the Company.  Zurvita issued both
compensatory and non-compensatory warrants.  The following details this
activity.
  Compensatory Liability
Warrants
 
 During
the year end December 31, 2009, Zurvita issued compensatory warrants to purchase
an aggregate of 700 thousand shares of common stock.  There were
approximately 700 thousand warrants outstanding as of December 31, 2009, all of
which are classified as liabilities.  These warrants are classified as
liability instruments as net share settlement is not considered within Zurvita’s
control or certain exercise prices are not fixed which has the potential to
cause a variable number of shares and/or value exchange upon
exercise.
 
 The fair
value of each option award classified as a liability on the balance sheet is
estimated on the date of the grant using the Black-Scholes Option Pricing Model
and the assumptions noted in the following table. Expected volatility was
determined by independent valuation specialists. The risk-free rate for periods
within the contractual life of the option is based on the U.S. Treasury Strip
yield curve in effect at the time of grant. The expected term of options granted
represents the period of time that options granted are expected to be
outstanding.
 
 Assumptions
used to determine the fair value of the compensatory warrants granted during the
year ended December 31, 2009 are as follows.  There were no
compensatory warrants granted during the year ended Decrmber 31,
2008.
 
 December
      31, 2009Expected
      dividends
                    0%Expected
      volatility
                    65%Risk
      free interest rate
                    2.62%Expected
      life
                    5
      years
  A summary
of the activity of Zurvita’s compensatory warrants classified as liabilities on
the balance sheet for the year ended December 31, 2009 is presented
below.
   63
 
 Compensatory
      Warrants
                    
                    
                    Weighted
      Average Exercise Price
                    
                    
                    Weighted
      Average Remaining Contractual TermOutstanding
      at December 31, 2008
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -Granted
                    
                    
                    700,000
                    
                    
                    
                    0.25
                    
                    
                    
                    4.87Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      and exercisable at December 31, 2009
                    
                    
                    700,000
                    
                    
                    $
                    0.25
                    
                    
                    
                    4.87
 
 As of
December 31, 2009, there was no unrecognized compensation cost related to
non-vested compensatory warrants as all warrants outstanding are
vested.  There were no compensatory warrants exercised during the year
ended December 31, 2009 and 2008 and therefore, no intrinsic value
associated.  The total fair value of compensatory warrants vested
during the year ended December 31, 2009 was approximately $66
thousand.  The weighted average grant date fair value of compensatory
warrants granted during the year ended December 31, 2009 was $0.09.
 
 A summary
of the status of Zurvita’s non-vested shares as of December 31, 2009, and the
changes during the year ended December 31, 2009, is presented
below.
 
 Compensatory
                      Warrants
                    
                    
                    Weighted
                      Average
                      Grant-Date
                      Fair
      ValueNon-vested
      at December 31, 2008
                    
                    
                    -
                    
                    
                    $
                    -Granted
                    
                    
                    700,000
                    
                    
                    
                    0.09Vested
                    
                    
                    (700,000
                    )
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Non-vested
      at December 31, 2009
                    
                    
                    -
                    
                    
                    $
                    -
  
 Non-compensatory
LiabilityWarrants
 
 During
the year ended December 31, 2009, Zurvita issued in conjunction with preferred
stock non-compensatory warrants to purchase an aggregate of approximately 36.6
million shares of common stock.  There were approximately 36.6 million
non-compensatory warrants outstanding as of December 31, 2009, all of which were
classified as liabilities.  These warrants are classified as liability
instruments as net share settlement is not considered within Zurvita’s control
or certain exercise prices are not fixed which has the potential to cause a
variable number of shares and/or value exchange upon exercise.
 
 The fair
value of each option award classified as a liability on the balance sheet is
estimated on the date of the grant using the Black-Scholes Option Pricing Model
and the assumptions noted in the following table. Expected volatility was
determined by independent valuation specialists. The risk-free rate for periods
within the contractual life of the option is based on the U.S. Treasury Strip
yield curve in effect at the time of grant. The expected term of options granted
represents the period of time that options granted are expected to be
outstanding.
 
 Assumptions
used to determine the fair value of the non-compensatory warrants granted during
the year ended December 31, 2009 are as follows.  There were no
non-compensatory warrants granted during the year ended December 31,
2008.
 
 December
      31, 2009Expected
      dividends
                    0%Expected
      volatility
                    65%Risk
      free interest rate
                    1.56-
      3.36%Expected
      life
                    
                    5 -
      7 years
   64
  A summary
of the activity of Zurvita's non-compensatory warrants classified as liabilities
on the balance sheet during the year ended December 31, 2009 is presented
below.
  Non-Compensatory
                      Warrants
                    
                    
                    Weighted
      Average
                      Exercise
      Price
                    
                    
                    Weighted
      Average
                      Remaining
      Contractual TermOutstanding
      at December 31, 2008
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -Granted
                    
                    
                    36,560,000
                    
                    
                    
                    0.10
                    
                    
                    
                    6.59Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      and exercisable at December 31, 2009
                    
                    
                    36,560,000
                    
                    
                    $
                    0.10
                    
                    
                    
                    6.59
 
 There
were no warrants exercised during the year ended December 31, 2009 and 2008 and
therefore no intrinsic value associated.  The total fair value of
warrants vested during the year ended December 31, 2009 was approximately $1.5
million.  The weighted average grant date fair value of warrants
granted during the year ended December 31, 2009 was $0.05.
 
 A summary
of the status of the Company's non-vested shares as of December 31, 2009, and
the changes during the year ended December 31, 2009, is presented
below.
  Non-compensatory
                      Warrants
                    
                    
                    Weighted
      Average
                      Grant-Date
                      Fair
      ValueNon-vested
      at December 31, 2008
                    
                    
                    -
                    
                    
                    $
                    -Granted
                    
                    
                    36,560,000
                    
                    
                    
                    0.05Vested
                    
                    
                    (36,560,000
                    )
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Non-vested
      at December 31, 2009
                    
                    
                    -
                    
                    
                    $
                    -
 
 Share-Based
Expense
 
 For the
years ended December 31, 2009, Zurvita issued to a related party, for consulting
services, a warrant to purchase up to 140 thousand shares of Common Stock at an
initial exercise price of $0.25 per share.  Due to a one (1) for four
(4) forward stock split, the number of warrants increased to 560 thousand and
the exercise price has been adjusted to $0.0625 per share.  For the
year ended December 31, 2009, $11 thousand share-based expense is included
within the Statement of Operations, respectively.  For the year ended
December 31, 2008 no share-based compensation was recognized within the
Statement of Operations.
 
 Zurvita Stock Awards
Issued
 
 On July
30, 2009, Zurvita granted to an executive 1.8 million shares of common stock, to
be held in escrow, in connection with the execution of an employment agreement
and pursuant to Zurvita’s 2009 Incentive Stock Plan.  These shares
will be issued in accordance with the vesting period or upon completion of
certain performance measures.  Due to a four (4) for one (1) forward
stock split, the amount of shares was increased to 7.2 million.  3.6
million shares vest on July 30, 2010 and 3.6 million shares vest on July 30,
2011.  The grant date fair value was $180 thousand. For the year
ended December 31, 2009, approximately $97 thousand of share-based compensation
was recognized within the Statement of Operations.  For the year ended
December 31, 2008, no share-based compensation was recognized within the
Statement of Operations.  Zurvita utilized an independent expert
valuation specialist to determine the fair value of stock issued.  The
common stock’s fair value was estimated to be $0.04325 per share at the time of
issuance.
 
 Stock-Based Compensation
Expense
 
 For the
years ended December 31, 2009 and 2008, the Company recognized stock-based
compensation expense, including both expense related to compensatory warrants
and expense related to share awards, within the Statement of Operations as
follows:
  65
 
 For
      the Year EndedDecember
      31,2009
                    
                    
                    2008Stock-based
      compensation:Professional
      fees
                    
                    $
                    10,780
                    
                    
                    $
                    -Payroll
      and employee benefits
                    
                    
                    342,855
                    
                    
                    
                    164,230Total
                    
                    $
                    353,635
                    
                    
                    $
                    164,230
 
 NOTE 18
- INCOME TAXES
 
 The below
tables present the Company’s current year income tax provision and the temporary
differences that result from the differences in recognition criteria of certain
income and expense items for financial reporting purposes and income tax
purposes.
  2009
                    
                    
                    2008Current:Federal
      income tax
                    
                    $
                    -
                    
                    
                    $
                    -State
      income tax
                    
                    
                    53,089
                    
                    
                    
                    -Deferred:Federal
      income tax
                    
                    
                    -
                    
                    
                    
                    -State
      income tax
                    
                    
                    -
                    
                    
                    
                    -Total
      provision for income taxes
                    
                    $
                    53,089
                    
                    
                    $
                    -
 
 Temporary
      differences that give rise to deferred tax assets and liabilities are
      summarized as follows:2009
                      
                      
                      2008Deferred
      tax assets:Net
      operating loss carryforward
                      
                      $
                      40,058,774
                      
                      
                      $
                      33,126,268Fixed
      assets
                      
                      
                      101,569
                      
                      
                      
                      -Provision
      for litigation costs
                      
                      
                      -
                      
                      
                      
                      87,756Deferred
      compensation
                      
                      
                      118,675
                      
                      
                      
                      103,163Stock
      based compensation
                      
                      
                      531,255
                      
                      
                      
                      336,133Unrealized
      loss on marketable securities
                      
                      
                      199,439
                      
                      
                      
                      -Other
                      
                      
                      127,822
                      
                      
                      
                      184,885Gross
      deferred tax asset
                      
                      
                      41,137,534
                      
                      
                      
                      33,838,205Valuation
      allowance
                      
                      
                      (34,480,932
                      )
                      
                      
                      (31,012,585
                      )Deferred
      tax asset - net
                      
                      
                      6,656,602
                      
                      
                      
                      2,825,620Deferred
      tax liabilities:Fixed
      assets
                      
                      
                      -
                      
                      
                      
                      (75,555
                      )Warrant
      liabilities
                      
                      
                      (6,512,898
                      )
                      
                      
                      (1,514,869
                      )Intangible
      Assets
                      
                      
                      (143,704
                      )
                      
                      
                      (1,235,196
                      )Gross
      deferred tax liability
                      
                      
                      (6,656,602
                      )
                      
                      
                      (2,825,620
                      )Net
      Deferred income taxes
                      
                      $
                      -
                      
                      
                      $
                      -
 
 As of
December 31, 2009, realization of the Company’s net deferred tax assets of
approximately $34.5 million was not considered more likely than not, and
accordingly, a valuation allowance of an equal amount was provided. The net
change in the total valuation allowance during the year ended December 31, 2009
was approximately $3.5 million.
 
 The
Company has a total of approximately $106.5 million of net operating losses
available to be offset against future taxable income and that expire
between 2011 and 2029.
  The
Company determined that there were no uncertain tax positions, and accordingly
no associated interest and penalties were required to be accrued at December 31,
2009 and 2008, respectively.  The Company does not believe that there
are any tax positions for which a material change in unrecognized tax benefit or
liability is reasonably possible in the next twelve months.  The
Company believes that there are no uncertain tax positions which, if recognized,
would impact the effective tax rate.
 
 The
Company has evaluated its open years by major jurisdiction and concluded that
the tax years 2006 through 2009 remain open to examination by federal and state
tax authorities.
 Below is
a reconciliation of the statutory federal income tax rate to the Company’s
effective tax rate for the years ended December 31, 2009 and
2008.
  66
  2009
                      
                      2008Tax
      provision at U.S. federal income tax rate
                      
                      $
                      (7,990,609
                      )
                      
                      34.0%
                      
                      $
                      (11,535,643
                      )
                      
                      34.0%State
      income tax provision net of federal tax benefit
                      
                      
                      (853,115
                      )
                      
                      3.6%
                      
                      
                      (1,231,600
                      )
                      
                      3.6%Non-deductible
      goodwill impairment and amortization
                      
                      
                      2,178,926
                      
                      
                      (9.3)%
                      
                      
                      1,353,757
                      
                      
                      (4.0)%Meals
      and entertainment
                      
                      
                      20,968
                      
                      
                      (0.1)%
                      
                      
                      41,750
                      
                      
                      (0.1)%Preferred
      stock dividends
                      
                      
                      3,570,458
                      
                      
                      (15.2)%
                      
                      
                      -
                      
                      
                      0.0%Change
      in valuation allowance
                      
                      
                      3,468,346
                      
                      
                      (14.8)%
                      
                      
                      11,363,695
                      
                      
                      (33.5)%Penalties
                      
                      
                      2,284
                      
                      
                      0.0%
                      
                      
                      -
                      
                      
                      0.0%Franchise
      Taxes
                      
                      
                      53,089
                      
                      
                      (0.2)%
                      
                      
                      -
                      
                      
                      0.0%Other
                      
                      
                      (397,258
                      )
                      
                      1.7%
                      
                      
                      8,041
                      
                      
                      0.0%Provision
      for income taxes
                      
                      $
                      53,089
                      
                      
                      (0.2)%
                      
                      $
                      -
                      
                      
                      0.0%
 
 NOTE
19 - EARNINGS PER SHARE
 
 Earnings
(loss) per share are computed using the basic and diluted calculations on the
face of the statement of operations. Basic earnings (loss) per share are
calculated by dividing net income (loss) available to common stockholders by the
weighted average number of shares of common stock outstanding for the period.
Diluted earnings (loss) per share is calculated by dividing the net income
(loss) by the weighted average number of shares of common stock outstanding for
the period, adjusted for the dilutive effect of common stock equivalents, using
the treasury stock method for warrants and the if converted method for
convertible preferred stock and convertible debt.  Convertible debt
and warrants, officer, employee and non-employee stock options that are
considered potentially dilutive are included in the diluted shares calculation
as long as the effect is not anti-dilutive.  Contingently issuable
shares are included in the computation of basic loss per share when the issuance
of the shares is no longer contingent.  Weighted average shares
outstanding include both Class A and Class B Common stock.  There is no
difference between the dividend rights and earnings allocation of Class A and
Class B Common stock.
 
 The
following is the computation of basic and diluted net earnings (loss) per common
share for the years ended December 31, 2009 and 2008:
 
 For
      the Year EndedDecember
      31,2009
                    
                    
                    2008Numerator:Net
      income (loss) attributed to The Amacore Group, Inc.
                    
                    $
                    (10,735,024
                    )
                    
                    $
                    (33,928,361
                    )Less
      preferred stock dividends and accretion
                    
                    
                    (10,501,346
                    )
                    
                    
                    (8,054,985
                    )Net
      income (loss) available to common stockholders (Basic)
                    
                    $
                    (21,236,370
                    )
                    
                    $
                    (41,983,346
                    )Net
      income (loss) (Dilutive)
                    
                    $
                    (21,236,370
                    )
                    
                    $
                    (41,983,346
                    )Denominator:Weighted
      average basic shares outstanding
                    
                    
                    1,028,482,088
                    
                    
                    
                    149,676,100Weighted
      average diluted shares outstanding
                    
                    
                    1,028,482,088
                    
                    
                    
                    149,676,100Earnings
      (loss) per common share - basic
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.28
                    )Earnings
      (loss) per common share - diluted
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.28
                    )
 
 During
the years ended December 31, 2009 and 2008, the effect of outstanding
exercisable warrants, convertible debt, and convertible preferred stock were not
included within the Company’s earnings (loss) per share calculation as their
effect would be anti-dilutive.  Weighted average shares outstanding
include both Class A and Class B common stock.  Securities that could
potentially dilute earnings per share in the future, but which were not included
in the calculation of diluted earnings per share because to do so would have
been anti-dilutive for the periods presented, are as follows:
   67
 
 As
      of December 31,2009
                    
                    
                    2008Potentially
      dilutive securities outstanding at end of period:Common
      stock warrants
                    
                    
                    446,283,217
                    
                    
                    
                    239,460,217Convertible
      preferred stock:Series
      A
                    
                    
                    310,000
                    
                    
                    
                    310,000Series
      G
                    
                    
                    436,363,636
                    
                    
                    
                    2,400,000Series
      H
                    
                    
                    145,454,545
                    
                    
                    
                    800,000Series
      I
                    
                    
                    600,000,000
                    
                    
                    
                    1,700,000Series
      L
                    
                    
                    1,050,000,000
                    
                    
                    
                    -Total
      Preferred Stock
                    
                    
                    2,232,128,181
                    
                    
                    
                    5,210,000Total
      potentially dilutive securities
                    
                    
                    2,678,411,398
                    
                    
                    
                    244,670,217
 
 NOTE
20 - COMMITMENTS AND CONTINGENCIES
 
 The
Company is committed under several leases of office space through September 30,
2015.   For the years ended December 31, 2009 and 2008, rent
expense was approximately $581 thousand and approximately $588 thousand,
respectively.
 
 The
following is a schedule of future minimum lease payments required under the
Company’s various leased offices.
 
 For
      the Year Ended December 31,2010
                    
                    $
                    490,7042011
                    
                    
                    397,6882012
                    
                    
                    199,4092013
                    
                    
                    141,2042014
                    
                    
                    145,435Thereafter
                    
                    
                    48,954$
                    1,423,394
 
 NOTE
21 - LEGAL PROCEEDINGS
  As of
July 9, 2009 a Mutual Compromise and Settlement Agreement and General Release of
Claims was entered into between AmeriPlan Corporation, The Amacore Group, Inc.,
Zurvita Inc., TransMark Financial Services, Inc. and Mark Jarvis in regards to
the litigation by and among numerous parties.  The settlement terms
stated that the Company pay a lump sum of $1,150,000 and deliver a promissory
note in the principal amount of $600,000 bearing interest at a 7.5% per annum,
payable in 24 monthly installments to Ameriplan.  This agreement
discharges all claims, counter-claims and causes of action, known or unknown,
including without limitation, the allegations set forth in the litigation
aforementioned.  On July 9, 2009, the Company paid the lump sum
payment of $1,150,000.  As of December 31, 2009, approximately $431
thousand remains of the promissory note in the line item loans and notes payable
– current portion on the balance sheet.
 Ty Bruggemann, Paul Johnson, Thomas
Welch, Rocky Williams, Richard Burton, and Kim Fleischer v. The Amacore Group,
Inc., Jay Shafer, Shad Stastney, Chris Phillips, Clark A. Marcus, Giuseppe
Crisafi, Guy Norberg, Jerry Katzman, Vicis Capital, LLC, and John Doe
1-100; In the United States District Court, District of New Jersey; Case
No. 2:09-cv-02776-JAG-MCA (the “New Jersey Litigation”). In September 2009,
despite knowledge of the pending Florida Litigation, the above named plaintiffs
initiated the New Jersey Litigation against Amacore and other named individuals
and companies for allegations arising from the same transaction or occurrence
giving rise to the Florida Litigation described below. Plaintiffs asserted
claims against the defendants for fraud in the inducement, common law fraud,
breach of fiduciary duties, breach of contract, unjust enrichment, breach of
covenant of good faith and fair dealing, New Jersey consumer fraud statute,
conversion, declaratory judgment, and sought to pierce the corporate veil, all
arising from disputes between the parties regarding the Agreement of Plan and
Merger between Amacore Group, Inc., LBS Acquisition Corp., and Lifeguard Benefit
Services, Inc. dated on or about October 12, 2007. Amacore and the individually
named defendants who are or were officers or directors of Amacore responded by
filing a motion to dismiss based upon jurisdictional and other
grounds.  On December 16, 2009 the District Court of New Jersey
granted Amacore’s motion to transfer the case to the District Court of the
Middle District of Florida. In response to a motion to consolidate, the District
Court of the Middle District of Florida designated this case as the surviving
case.  Amacore and numerous individual defendants have pending motions
to dismiss which have not yet been ruled upon.   Discovery has
not yet begun in this matter.  Amacore was granted leave to assert its
counterclaim in the below referenced matter to preserve its
claims.  Amacore will vigorously defend against all of the allegations
and will assert a counterclaim against Plaintiffs.
 The Amacore Group, Inc. v. Ty
Bruggemann, Thomas Welch, Paul Johnson, Lifeguard Benefit Services, Inc.,
Consumer Assistance Services Association, Direct Medical Network Solutions,
Inc.; In the United States District Court, Middle District of Florida,
Tampa Division; Case No. 8:09-cv-00748-JSM-TGW (the “Florida Litigation”). In
April, 2009, Amacore initiated the Florida Litigation against the named
individuals and companies asserting fraud in the inducement with respect to an
October 12, 2007, Agreement of Plan and Merger between Amacore Group, Inc.
(“Amacore”), LBS Acquisition Corp., and Lifeguard Benefit Services, Inc.
(“Lifeguard”) (“Agreement”). Alternatively, Amacore initiated this litigation to
dispute or modify certain adjustments that were to be made on or about April 12,
2009, pursuant to the terms of the Agreement. Amacore asserted causes of action
against the defendants including fraud in the inducement, negligent
misrepresentation, conspiracy to commit fraud, breach of contract, theft and
conversion, unjust enrichment, and a demand for an accounting. Defendants
responded by filing a motion to dismiss based upon jurisdictional and other
grounds. As a result of the transfer of the New Jersey Litigation to Florida,
the Florida Litigation was stricken by the Court on March 4, 2010, because the
matter described below was substantially similar to the transferred New Jersey
Litigation and pending in the same court. Amacore was granted leave to assert
its counterclaim in the below referenced matter to preserve its
claims.  (See summary of the New Jersey Litigation
above).
 
 Caroline McDonald
v. The Amacore Group, Inc.,Superior Court of New Jersey, Union
County, Case No. UNN-L-790-09; United States District Court, District of New
Jersey, Case. No. 2:09-cv-01608-SDW-MCA;on March 10, 2009, Caroline
McDonald, a former employee, filed a Civil Action alleging that Amacore had
breached her Employment Agreement by wrongfully terminating her shortly after
she commenced her employment in May, 2007.  Subsequently, the Court
transferred the Civil Action to the District Court.  Liability in this
matter is disputed.  Amacore filed a Motion to Dismiss based upon lack
of personal, general, or specific jurisdiction as to Shafer, Katzman, Marcus and
Amacore.  Amacore also argued the Court should enforce the agreement’s
forum selection clause.  The Motion to Dismiss is currently pending
and all Memoranda in Support are filed.  The parties await a
determination on disputed jurisdictional issues. Discovery has not yet begun.
Amacore will vigorously defend against all of the allegations and may assert a
counterclaim against Plaintiff once the motions to dismiss have been decided
upon.
 
 As of
December 31, 2009, Amacore was involved in various lawsuits, legal proceedings,
claims or disputes arising in the normal course of business not considered
material to the Company.  Management believes that in the event of an
unfavorable outcome to these matters, that the financial position and results of
operations will not be materially, aversely affected.
 NOTE 22
- RELATED PARTY TRANSACTIONS
 
 Branding
and Agent Fees
 
 LifeGuard
markets a membership product, which it licenses from Direct Medical Solutions
(“DirectMed”), a company 33% owned by a former majority shareholder of
LifeGuard.   LifeGuard pays DirectMed a branding fee based on the
number of memberships sold. During the years ended December 31, 2009 and
2008, LifeGuard paid DirectMed approximately $466 thousand and $492 thousand,
respectively, in branding fees.  In addition, LifeGuard owed DirectMed
approximately $485 thousand and $525 thousand as of December 31, 2009 and
December 31, 2008, respectively, for unpaid branding fees.  Branding
fees are included in sales commissions in the accompanying Statements of
Operations.
 
 The agent
of record for USHBG is an immediate family member of the president of
USHBG.  For the year ended December 31, 2009 and 2008, the Company has
paid approximately $208 thousand and $175 thousand, respectively, for agent
fees.
 
 Commissions
Paid
 
 There are
immediate family members of Mr. Jarvis (Zurvita Co-Chief Executive Officer) who
operate as Independent Business Owners (“IBO”) who were paid agent advances and
commission compensation which amounted to approximately $58 thousand and $102
thousand, respectively, for the year ended December 31, 2009 and approximately
$61 thousand and $53 thousand, respectively, for the year ended December 31,
2008. These amounts were for work they performed on behalf of the
Company.
   68
 
 Notes
Payable
 
 See Note 8 – Loans and Notes
Payable for additional related party shareholders’ notes payable
disclosure information.
 
 As part
of the 2007 acquisition agreement between the Company and JRM, the Company
assumed $287 thousand of liabilities of which $163 thousand and $69 thousand
represented personal credit card balances and business credit lines,
respectively. The liabilities are personally guaranteed by two of the
Senior Vice Presidents of the JRM and are recorded within the Company’s
notes and loans payable category of the Balance Sheet.  As of December
31, 2009 and December 31, 2008, the outstanding balance of these personal credit
cards and business credit lines was approximately $185 thousand and $203
thousand, respectively.
 
 In 2008,
the Company and Jay Shafer (Chief Executive Officer) entered into promissory
notes in an aggregate amount of $800 thousand payable to Jay Shafer evidencing
loans made by Mr. Shafer to the Company.  The promissory notes bore
interest at 6% and were payable upon demand. On November 17, 2009, the
Company paid off the promissory notes with accrued interest of approximately $54
thousand.
 
 Zurvita
recognized approximately $66 thousand of interest expense for the year ended
December 31, 2009 with respect to a note payable due OmniReliant, who is a
significant shareholder of Zurvita.   The interest due OmniReliant was
accrued and will either be paid or deferred at Zurvita’s election based upon the
contractual terms of the note payable.  No such related party interest
expense was incurred during the year ended December 31, 2009.
 
 NOTE
23 – SEGMENT ANALYSIS
 
 The
Company's reportable segments are strategic business units that offer different
products and services and have separate management teams and each respective
segment’s financial performance is analyzed separately for making operational
and financial decisions. The business units represent five reportable segments:
JRM, LifeGuard, USHBG, Zurtiva and Corporate and Other. The LifeGuard segment is
the Company’s operations division consisting of product fulfillment, customer
support, membership billing, claims administration, provider membership network
maintenance and information technology.  LifeGuard generates revenue
primarily from the sale of healthcare benefit membership plans. USHBG segment is
an outbound telemarketing company primarily marketing major and limited medical
benefit plans.  The Zurvita segment is a provider of products and
benefits through the use of a multi-level marketing distribution channel which
consists of independent business operators.  The products marketed
include residential gas and electricity energy rate plans, discount healthcare
benefits and discount benefits on various retail products and services, and
online advertising.  The Corporate and Other segment provides
management and financial support to the Company’s various divisions as well as
performs corporate governance and compliance. The Corporate and Other segment
recognizes residual revenue from agreements entered into prior to the
acquisitions of LifeGuard, JRM and USHBG.
 
  69
  The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on operating earnings of the respective business segments.
 
 Summarized
financial information concerning the Company's reportable segments is shown in
the following tables, followed by a  reconciliation of segment revenue
and assets to consolidated revenue and assets is as follows for the years ended
December 31, 2009 and 2008:
 
 For
      the Year Ended December 31, 2009LifeGuard
                    
                    USHBG
                    
                    Zurvita
                    
                    JRM
                    
                    
                    Corporate
                      and
      Other
                    
                    TotalTotal
      revenue
                    
                    $
                    21,606,850
                    
                    
                    $
                    4,198,959
                    
                    
                    $
                    5,126,019
                    
                    
                    $
                    190,248
                    
                    
                    $
                    893,434
                    
                    
                    $
                    32,015,510Net
      income (loss) before in income taxes
                    
                    $
                    (5,172,588
                    )
                    
                    $
                    (5,426,591
                    )
                    
                    $
                    (10,381,437
                    )
                    
                    $
                    (698,552
                    )
                    
                    $
                    8,678,722
                    
                    
                    $
                    (13,000,446
                    )Income
      taxes
                    
                    $
                    11,831
                    
                    
                    $
                    -
                    
                    
                    $
                    36,172
                    
                    
                    $
                    -
                    
                    
                    $
                    5,086
                    
                    
                    $
                    53,089Net
      income (loss)
                    
                    $
                    (5,184,419
                    )
                    
                    $
                    (5,426,591
                    )
                    
                    $
                    (10,417,609
                    )
                    
                    $
                    (698,552
                    )
                    
                    $
                    8,673,636
                    
                    
                    $
                    (13,053,535
                    )Total
      assets held
                    
                    $
                    2,687,753
                    
                    
                    $
                    2,790,377
                    
                    
                    $
                    4,438,094
                    
                    
                    $
                    22,396
                    
                    
                    $
                    4,435,663
                    
                    
                    $
                    14,374,283Depreciation
      and amortization
                    
                    $
                    617,333
                    
                    
                    $
                    580,383
                    
                    
                    $
                    33,994
                    
                    
                    $
                    4,767
                    
                    
                    $
                    87,059
                    
                    
                    $
                    1,323,536For
      the Year Ended December 31, 2008LifeGuard
                    
                    USHBG
                    
                    Zurvita
                    
                    JRM
                    
                    Corporate
                      and
      Other
                    
                    TotalTotal
      revenue
                    
                    $
                    24,537,797
                    
                    
                    $
                    4,240,932
                    
                    
                    $
                    2,371,142
                    
                    
                    $
                    291,697
                    
                    
                    $
                    1,054,542
                    
                    
                    $
                    32,496,110Net
      loss before income taxes
                    
                    $
                    (17,144,058
                    )
                    
                    $
                    (6,690,822
                    )
                    
                    $
                    (5,977,226
                    )
                    
                    $
                    (761,928
                    )
                    
                    $
                    (3,354,327
                    )
                    
                    $
                    (33,928,361
                    )Income
      taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (17,144,058
                    )
                    
                    $
                    (6,690,822
                    )
                    
                    $
                    (5,977,226
                    )
                    
                    $
                    (761,928
                    )
                    
                    $
                    (3,354,327
                    )
                    
                    $
                    (33,928,361
                    )Total
      assets held
                    
                    $
                    8,834,704
                    
                    
                    $
                    6,375,261
                    
                    
                    $
                    1,394,586
                    
                    
                    $
                    184,754
                    
                    
                    $
                    1,701,279
                    
                    
                    $
                    18,490,584Depreciation
      and amortization
                    
                    $
                    2,513,827
                    
                    
                    $
                    798,595
                    
                    
                    $
                    11,881
                    
                    
                    $
                    23,012
                    
                    
                    $
                    45,935
                    
                    
                    $
                    3,393,250
  For
      the Year ended December 31,2009
                    
                    
                    2008RevenuesTotal
      revenues for reportable segments
                    
                    $
                    32,015,510
                    
                    
                    $
                    32,496,110Elimination
      of intersegment revenues
                    
                    
                    (3,185,658
                    )
                    
                    
                    (3,034,288
                    )Total
      consolidated revenue
                    
                    $
                    28,829,852
                    
                    
                    $
                    29,461,822Net
      lossNet
      total loss for reportable segments
                    
                    $
                    (13,053,535
                    )
                    
                    $
                    (33,928,361
                    )Elimination
      of intersegment profits
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (13,053,535
                    )
                    
                    $
                    (33,928,361
                    )AssetsTotal
      assets for reportable segements
                    
                    $
                    14,374,283
                    
                    
                    $
                    18,490,584Elimination
      of intersegment receivables
                    
                    
                    (2,328,484
                    )
                    
                    
                    (1,296,484
                    )Total
      consolidated assets
                    
                    $
                    12,045,799
                    
                    
                    $
                    17,194,100
 
 Total
interest expense for the year ended December 31, 2009 for LifeGuard, USHBG,
Zurvtia, JRM and Corporate and Other was approximately $34 thousand, $2
thousand, $86 thousand, $33 thousand, and $265 thousand,
respectively.  For the year ended December 31, 2008, total interest
expense for LifeGuard, JRM and Corporate and Other was approximately $9
thousand, $31 thousand, and $706 thousand, respectively.
 
 Intercompany
Transactions
 
 Intersegment
revenue represents USHBG’s commission revenue from the sale of LifeGuard’s
DirectMed product.  The intersegment receivable represents the amount
of unpaid commissions due to USHBG from LifeGuard.
   70
 
 Significant Non-Cash
Transactions
 Two
significant non-cash transactions took place during the year ended December 31,
2009 in regards to impairment and valuation of warrants.  Based on the
Company’s annual impairment analysis and consideration of current and expected
future market conditions, we determined that goodwill and certain intangible
assets related to the LifeGuard, JRM, and USHBG reporting units were impaired
for the year ended December 31, 2009.  The Company recorded non-cash,
pre-tax total impairment charges of approximately $4.3 million, $167 thousand
and $4.0 million for LifeGuard, JRM and USHBG, respectively.
 
 Certain
of the Company’s warrants are recorded at fair value with changes in their fair
value reflected in the Company’s consolidated Statement of
Operations.  For the year ended December 31, 2009, the gain on change
in fair value of warrants was $13.3 million which included a $4 million loss
recognized from the change in fair value of Zurvita’s issued warrants for the
year ended December 31, 2009.
  NOTE 24
- SUBSEQUENT EVENTS
   Board
of Director Changes
 
 On
January 25, 2010, Chris Phillips resigned from his position as a member of the
board of directors of the Company.  There were no disagreements or
dispute between Mr. Phillips and the Company which led to his
resignation.  His resignation was effective immediately.
  Effective
March 1, 2010, the Company appointed Keith Hughes as a member of its Board of
Directors. Mr. Hughes has served as the Chief Financial Officer and Chief
Compliance Officer of Vicis Capital LLC (“Vicis”) since 2006.
 
 Contract
Terminations
  On
February 16, 2010, a Marketing Agreement dated November 7, 2006 by and between
UCHBG and DirectMed was terminated by USHBG for cause.
 
 On
February 26, 2010, LifeGuard accepted the termination dated February 25, 2010
from DirectMed and Consumer Assistance Services Association with respect to
certain marketing and servicing agreements specific to DirectMed
products.
 
 Security
Issuances
  On
January 29, 2010, Zurvita sold to Vicis Capital Master Fund 1 million shares of
newly designated Series C Convertible Preferred Stock along with 4 million
warrants to purchase common stock at an exercise price of $0.25.  The
proceeds of $1 million were received from escrow on February 1,
2010.
 On
February 1, 2010, Zurvita granted and issued certain of its Consultants an
aggregate of approximately 1.1 million options to purchase common
stock.  The options are immediately exercisable at an exercise price
of $0.50 and have a contractual life of six months. On February 1, 2010,
Zurvita's stock was trading at $1.02. As of March 31, 2010, approximately 28
thousand of these options were exercised for proceeds of approximately $14
thousand.
 
 On
February 9, 2010, Zurvita issued an aggregate of 97,000 shares of common stock
to various parties as consideration for monthly accounting and legal services to
be provided through April 30, 2010.  As consideration for deferring
interest and principal payments for three months, Zurvita also entered into an
agreement with a Note Holder for the issuance of 200,000 shares of common
stock.  In addition, Zurvita granted and issued an aggregate of
405,000 options for common stock to various vendors and consultants as
consideration for future consulting services.  The options have a
contractual life of five years and have exercise prices ranging from $0.50 to
$0.75 with vesting terms ranging from zero to six months. On February 9, 2010,
Zurvita's stock was trading at $0.85.
 
 The
impact of these security issuances resulted in Amacore’s ownership and voting
power changing from 65.98% and 40.29%, respectively, to 65.69% and 40.18%,
respectively, immediately following the issuances.
 
 Subsidiary
Terminations
 
 Effective
March 1, 2010, the Company halted JRM’s sales call center operations which
historically telemarketed products as well as recruited agents for the division.
This division will continue to realize residual commission revenue from
previously sold insurance plans and will incur limited operating expenses to
facilitate the collection of such revenue as well as to provide minimal
resources to the Senior Vice Presidents of JRM who will be focusing on
recruiting agents and other direct response marketers to sell the products of
other reporting units.
  71
 
 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
 
 We had no
changes in or disagreements with accountants on accounting and financial
disclosure in 2009 or 2008.
 
 ITEM
9A. CONTROLS AND PROCEDURES.
 
 Evaluation
of Disclosure Controls and Procedures
 
 Our
management, with the participation of our principal executive and principal
financial officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this annual report on Form 10-K. Based on
this evaluation, our principal executive and principal financial officer
concluded that our disclosure controls and procedures are ineffective to ensure
that information we are required to disclose in reports that we file or submit
under the Exchange Act (i) is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and (ii) is
accumulated and communicated to our management, including our principal
executive and principal financial officers, as appropriate to allow timely
decisions regarding required disclosure. Our disclosure controls and procedures
are not designed adequately to provide reasonable assurance that such
information is accumulated and communicated to our management. Our disclosure
controls and procedures include components of our internal control over
financial reporting. Management's assessment of the effectiveness of our
internal control over financial reporting is expressed at the level of
reasonable assurance that the control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the
control system's objectives will be met. This conclusion was based on the
material weaknesses identified below with regard to internal controls over
financial reporting.
 
 Report
of Management on Internal Control over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  Internal control over financial
reporting is a process designed by, or under the supervision of, our principal
executive and principal financial officer and effected by our Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of
America.  Internal control over financial reporting includes policies
and procedures that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the Company’s transactions and dispositions
of its assets; (ii) provide reasonable assurance that transactions are recorded
as necessary for preparation of our financial statements in accordance with
accounting principles generally accepted in the United States of America and
that receipts and expenditures of the Company’s assets are made in accordance
with authorizations of our management and directors; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on our financial statements.  Because of its inherent limitations,
internal control over financial reporting is not intended to provide absolute
assurance that a misstatement of the Company’s financial statements would be
prevented or detected.
 
 Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting as of December 31, 2009 using the criteria set forth in
the Internal Control over Financial Reporting – Guidance for Smaller Public
Companies issued by the Committee of Sponsoring Organizations of the Treadway
Commission.   Based upon the evaluation, our management concluded that
our internal controls over financial reporting were not effective as of December
31, 2009 because of a material weakness in our internal control over financial
reporting.  A material weakness is a control deficiency that results
in a more than remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected on a timely basis
by employees in the normal course of their assigned functions.  Our
management concluded that we have several material weaknesses in our internal
control over financial reporting because of inadequate segregation of duties
over authorization, review and recording of transactions as well as the
financial reporting of such transactions.  In addition, the lack of
standardization in the financial reporting process of the Company’s subsidiaries
increases the risk that financial information is not captured completely and
accurately. The Company has developed a plan and is in process of executing the
plan to mitigate these material weaknesses, which includes the addition of
personnel to the accounting function and utilizing an accounting
software  system access restrictions based on management defined user
roles based on job function.  Upon full utilization of this accounting
system, the risk of incomplete and inaccurate reporting of financial information
will be mitigated.  In addition, consultants have been retained to
provide specialized technical skills such as valuation of warrant instruments
requiring fair value accounting, reporting unit valuation for impairment
testing, and income tax provision calculation and disclosure..  Use of
specialists will reduce the likeliness of a material error occurring in more
technical accounting areas.
 
 This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the
SEC  that  permit the Company to provide only management's
report in this annual report.
 
 Changes
in Internal Controls
 
 There was
no change in our internal control over financial reporting that occurred during
the fourth quarter covered by this annual report on Form 10-K that materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
 
 ITEM
9B - OTHER INFORMATION
 
 Not
Applicable.
 
 72
 
 PART
III
 
 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
 
 The
following is a list of our directors and executive officers:
  Name
                      Age
                      PositionJay
      Shafer
                      49
                      Chief
      Executive Officer and DirectorGuy
      Norberg
                      48
                      President
      and DirectorG.
      Scott Smith
                      57
                      Chief
      Operating Officer and Interim Chief Financial OfficerJason
      Post
                      34
                      Principal
      Accounting Officer and Secretary to the Board of
  DirectorsShadron
      Stastney
                      39
                      DirectorKeith
      Hughes
                      53
                      Director
  Executive
Officers and Directors
 
 Jay
Shafer – Chief Executive Officer and Director
 
 Jay
Shafer was appointed as President in January 2007 and was elected to the Board
of Directors in March 2007 and was appointed Chief Executive Officer in August
2008. Prior to joining the Company, Mr. Shafer was employed by Protective
Marketing Enterprises, Inc. (PME) from 1997 to 2006. He served as PME’s Vice
President Business Development from 1997 to 2002 and as its Chief Executive
Officer from 2002 to 2006. He was Vice President- Financial Services Division of
John Harland Company from 1988 to 1997.  Mr. Shafer resigned as
President in December 2008.
 
 Guy
Norberg – President and Director
 
 Guy
Norberg was appointed as President in December 2008 and was elected to the Board
of Directors August 2008.  Mr. Norberg has been the Company’s Senior
Vice President, Sales and Marketing since June, 2008.  Prior to
joining the Company, Mr. Norberg was Vice President, Sales and Marketing of
Protective Marketing Enterprises, Inc. and prior to that he was a founder and
the President of US Health Options / Innovative Health Benefits.
 
 G.
Scott Smith – Chief Operating Officer and Interim Chief Financial
Officer
 
 G. Scott
Smith was appointed as the Company’s interim Chief Financial Officer in August
2008.  Mr. Smith had been the Company’s Chief Operating Officer since
June 2008.  Since December 2007, Mr. Smith served as Chief Operating
Officer of LifeGuard.  Mr. Smith served as Chief Marketing Officer of
ECOM PPO Advisors Inc., a technology company that assists companies in
maximizing their preferred provider discounts and savings, from 2006 through
2007.  From 2004 to 2006, Mr. Smith served in several senior executive
positions at Insurance Capital Management, Inc., a holding company focusing on
insurance marketing and discount benefit programs, including President and Chief
Executive Officer.  Prior to 2004, Mr. Smith served as President and
Chief Executive Officer of National Health Insurance Company, a life health and
annuity insurance company which specialized in health insurance for self
employed individuals and qualified annuities in the 403(b) teachers
market.
 
 Jason
Post – Principal Accounting Officer and Secretary to the Board of
Directors
 
 Jason
Post is the Company’s Principal Accounting Officer and Secretary to the Board of
Directors.  Mr. Post joined the Company in March of 2008 as Manager of
Finance and was promoted to Vice President of Corporate Finance in January of
2009.  Prior to joining the Company, Mr. Post was an external auditor for
Deloitte & Touche, LLP.  While at Deloitte, he gained specialized
knowledge and experience in the area Sarbanes Oxley and developmental stage
enterprises.  Mr. Post received a B.S. in Accountancy from the University
of South Florida and holds an active Florida CPA license and the American
Institute of Certified Fraud Examiner’s CFE designation.
 
 Shadron
Stastney - Director
 
 Shadron
Stastney was elected to the Board of Directors August 2008.  Mr.
Stastney is the Chief Operating Officer and Head of Research for Vicis Capital,
LLC, a company he jointly founded in 2004. Mr. Stastney also jointly founded
Victus Capital Management LLC in 2001. From 1998 through 2001, Mr. Stastney
worked with the corporate equity derivatives origination group of Credit Suisse
First Boston, eventually becoming a Director and Head of the Hedging and
Monetization Group, a joint venture between derivatives and equity capital
markets. In 1997, he joined Credit Suisse First Boston’s then-combined
convertible/equity derivative origination desk. From 1994 to 1997, he was an
associate at the law firm of Cravath, Swaine and Moore in New York, in their tax
and corporate groups, focusing on derivatives. He graduated from the University
of North Dakota in 1990 with a B.A. in Political Theory and History, and from
the Yale Law School in 1994 with a J.D. degree focusing on corporate and tax
law. Mr. Stastney currently is a director of Ambient Corporation, MDwerks, Inc
and Master Silicon Carbide Industries, Inc.
  73
  Keith
Hughes - Director
  Keith
Hughes was elected to the Board of Directors March 2010.  Mr. Hughes
has been the Chief Financial Officer and Chief Compliance Officer for Vicis
Capital, LLC since January 2006.  From 1986 through 1998, Mr. Hughes
worked at the Union Bank of Switzerland (UBS) where he was a Managing Director
and the Equity Controller for North America.  From 1998 to 2001, he
held various financial roles with hedge funds including Treasurer, Controller
and Chief Financial Officer.  From 2001 to 2006, he worked at
International Fund Services, the fund administrator, where he was a Managing
Director of Operation.  Mr. Hughes is a CPA and received a B.A. in
Accounting from St. John’s University in 1978.
  Section
16(a) Beneficial Ownership Reporting Compliance
 
 Section
16(a) of the Exchange Act requires our officers, directors and persons who own
more than ten percent of our class A common stock to file certain reports of
ownership and changes in ownership with the SEC within specified time periods.
Officers, directors and ten-percent stockholders are required by regulation to
furnish us with copies of all Section 16(a) forms they file. Our former officers
and directors have not filed any Section 16 reports.
  Board
Leadership Structure and Role in Risk Oversight
 
 Although
we have not adopted a formal policy on whether the Chairman and Chief Executive
Officer positions should be separate or combined, we have traditionally
determined that it is in the best interests of the Company and its shareholders
to combine these roles.  Jay Shafer has served as our Chairman since
March 2007 and as our Chief Executive Officer since August 2008. Due to the
small size and early stage of the Company, we believe it is currently most
effective to have the Chairman and Chief Executive Officer positions
combined.
 
 Our Board
of Directors receives and reviews periodic reports from management, auditors,
legal counsel, and others, as considered appropriate regarding our company’s
assessment of risks. Our Board of Directors focuses on the most significant
risks facing our company and our company’s general risk management strategy, and
also ensure that risks undertaken by us are consistent with the Board’s appetite
for risk. While the Board oversees our company’s risk management, management is
responsible for day-to-day risk management processes. We believe this division
of responsibilities is the most effective approach for addressing the risks
facing our company.
 
 Code
of Ethics
 
 We have
adopted a Code of Business Conduct and Ethics (Code of Ethics) that applies to
our principal executive officer, principal financial officer, principal
accounting officer or controller, and persons performing similar functions. A
copy of our Code of Ethics was filed with our Form 10-KSB for the period ending
December 31, 2004. We will provide a copy of our Code of Ethics to any
stockholder without charge upon a written request.
 
 Corporate
Governance
 
 Meetings
and committees of the Board of Directors
 
 Our Board
of Directors (the Board) conducts its business through meetings of the Board and
through activities of its committees.
 
 Procedure
for Nominating Directors
 
 We have
not made any material changes to the procedures by which security holders may
recommend nominees to our board of directors.
 
 The Board
does not have a written policy or charter regarding how director candidates are
evaluated or nominated for the board. Additionally, the Board has not adopted
particular qualifications or minimum standards that candidates for the Board
must meet. Instead, the Board considers how a candidate could contribute to the
company's business and meet the needs of the company and the board.  The
Board considers, among other things, the diversity of potential board members'
backgrounds, including their professional experience, education, skills and
other individual attributes in assessing their potential appointment to the
Board.
 
 The Board
will consider candidates for director recommended by our stockholders.
Candidates recommended by stockholders are evaluated with the same methodology
as candidates recommended by management or members of the Board. To refer a
candidate for director, please send a resume or detailed description of the
candidate's background and experience with a letter describing the candidate's
interest in the company to Maitland Promenade 1, 485 North Keller Road, Suite
450, Maitland, FL 32751, Attention: Chairman. All candidate referrals are
reviewed by at least one current board member.
 
 Audit
Committee and Audit Committee Financial Expert
 
 As of
December 31, 2009, the Company did not have an audit committee.  Since
our common stock is not listed for trading on a national securities exchange,
but rather quoted on the OTCBB, we are not subject to rules relating to the
independence of our directors or audit committee members.
 
 Other
Committees
 
 The Board
does not have a compensation committee or a nominating committee, the functions
of which are performed by the Board.
 
 All of
our directors hold office until the next annual meeting of stockholders or until
their successors are duly elected and qualified, and all executive officers hold
office at the discretion of the Board of Directors.
 
 74
 
 ITEM
11. EXECUTIVE COMPENSATION
 
 Summary
Compensation Table
 
 The
following table sets forth information concerning the compensation of our (1)
principal executive officer and (2) two most highly compensated executive
officers, other than our principal executive officer (collectively, the “named
executive officers”) and up to two additional highly compensated individuals as
if they had been Officers as of our last two fiscal years ended December 31,
2009 and December 31, 2008.
 
 Name
      and Principal Position
                      Year
                      
                      Base
                        Salary
                        ($)
                      
                      
                      Stock
                        Awards
                        ($)(1)
                      
                      
                      Option
                        Awards
                        ($)(1)
                      
                      
                      Bonus
                        ($)
                      
                      
                      All
      Other Compensation
                        ($)(3)
                      
                      
                      Dollar
      Value of Total Compensation for the Convered Fiscal Year
    ($)Jay
      Shafer
                      2009
                      
                      
                      432,906
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      432,906Current
      Chief Executive Officer
                      2008
                      
                      
                      378,720
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,537
                      
                      
                      
                      -
                      
                      
                      
                      381,257Clark
      Marcus
                      2009
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Former
      Chief Executive Officer  (2)
                      2008
                      
                      
                      560,845
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      17,858
                      
                      
                      
                      578,703Scott
      Smith
                      2009
                      
                      
                      279,173
                      
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      279,173Chief
      Operating Officer &
                      2008
                      
                      
                      250,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      250,000Interim
      Chief Financial OfficerGuy
      Norberg
                      2009
                      
                      
                      432,906
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      432,906President
                      2008
                      
                      
                      378,720
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,537
                      
                      
                      
                      -
                      
                      
                      
                      381,257Giuseppe
      Crisafi (4)
                      2009
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Former
      Chief Financial Officer
                      2008
                      
                      
                      266,241
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      266,241Jerry
      Katzman MD (5)
                      2009
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Former
      Chief Medical Officer
                      2008
                      
                      
                      252,692
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      252,692
  (1)  Represents
      the dollar amount recognized for financial statement reporting purposes in
      accordance with US GAAP.  For a discussion of valuation
      assumptions, see Note 17 to the financial statements contained in this
      Annual Report of Form 10-K.(2)
      Mr. Marcus resigned on August 25, 2008 as Chief Executive Officer of the
      Company.  Compensation of $296,615 has been excluded from this
      table as it was paid to Mr. Marcus under the terms of his consulting
      agreement entered into August 25, 2008.(3)  All
      other compensation for Mr. Marcus consists of car allowance and life
      insurance premiums.  Life insurance premiums were $0 and $17,858
      for 2009 and 2008, respectively.(4)  Not
      included herein is compensation of $90,173 paid to Mr. Crisafi under the
      terms of his consulting agreement entered into on August 25,
      2008.  In addition, stock award compensation of $145,000 paid to
      Mr. Crisafi has been exlcuded from the stock awards section of the above
      table as the compensation was in respect to his separation agreement
      entered into on August 25, 2008.(5)  Not
      included herein is compensation of $61,538 paid to Mr. Katzman under the
      terms of his consulting agreement entered into on August 25,
      2008.
  Narrative Disclosure to Summary
Compensation Table
  Current
Executive Officers
  Jay
Shafer, Chief Executive Officer
  Mr.
Shafer serves as the Company’s Chief Executive Officer.  Effective
December 17, 2008, Mr. Shafer resigned as President of the
Company.  Pursuant to an employment agreement which expired January
15, 2010, Mr. Shafer receives a salary of $360,000 per annum, increased by an
amount no less than an amount equal to the percentage increase in the consumer
price index for the Orlando, Florida metropolitan area. A special bonus in the
amount equal to 1% percent of the Company’s pre-tax profits from the preceding
year (as determined by the application of generally accepted accounting
principles), up to the first $1,000,000 dollars of such profits; plus an
additional sum equal to 2% of the Company’s pre-tax profits for all sums over
$1,000,000 dollars.  Mr. Shafer received $416,592 in base compensation
for the year ended December 31, 2009.
  75
  In
connection with his employment, Mr. Shafer also received a sign-on bonus of
1,500,000 shares of the Company’s Class A common stock.  Mr. Shafer is
also entitled to receive other benefits generally received by other senior
executives of the Company and reimbursement of expenses.  Mr. Shafer
also entered into a standard Employee Confidentiality Agreement.
  The
Company may, in its sole discretion, terminate Mr. Shafer’s employment in the
event of his “disability” as defined in his employment agreement.  If
the Company elects to so terminate his employment, Mr. Shafer will be entitled
to receive his accrued but unpaid salary, expenses and bonuses, the proceeds of
any disability insurance policy plus an amount from the Company monthly which,
when added to the amount received by Mr. Shafer from any disability policy then
in effect, will equal the Executive's salary for a twelve-month period following
the date of termination.  Such termination shall have no effect on the
Company's obligation to pay the special bonus.
  In the
event that 50% or more of the equity securities of the Company are acquired by
any single person or identifiable group and Mr. Shafer’s employment is
terminated without “cause” twelve months after such acquisition, the Company
shall pay to Mr. Shafer a lump sum amount equal to the aggregate of (i) accrued
unpaid salary, if any; (ii) accrued but unpaid expenses, if any; (iii) accrued
but unpaid bonuses, if any; (iv) unissued warrants, if any; and (v) the total
compensation which would have been paid to Mr. Shafer through three full years
of compensation from the date of termination.  In addition, all
unvested securities and benefits attributable to Mr. Shafer will immediately
vest.  In addition, Mr. Shafer will be entitled to registration rights
with respect to certain of his securities.
  In the
event of gross misconduct in office by Mr. Shafer in the performance of his
duties hereunder, the Company may terminate Mr. Shafer’s employment agreement
and, on the termination date, the Company shall pay to Mr. Shafer the aggregate
of accrued but unpaid expenses, if any, and the net salary compensation which
would have been paid to Mr. Shafer through the date of
termination.  Furthermore, any warrants to be issued pursuant to his
employment agreement, and any options granted pursuant to plans then applicable
to Mr. Smith which have not then vested shall be forfeited as of the termination
date.
  Guy
Norberg, President
  Mr.
Norberg currently serves as the Company’s President Pursuant to an employment
agreement which expired January 15, 2010.  Mr. Norberg receives a
salary of $30,000 per month, increased by an amount no less than an amount equal
to the percentage increase in the consumer price index for the Orlando, Florida
metropolitan area.  A special bonus in the amount equal to 1% percent
of the Company’s pre-tax profits from the preceding year (as determined by the
application of generally accepted accounting principles), up to the first
$1,000,000 dollars of such profits; plus an additional sum equal to 2% of the
Company’s pre-tax profits for all sums over $1,000,000 dollars.  Mr.
Norberg received $432,906 in base compensation for the year ended December 31,
2009.
  In
connection with his employment, Mr. Norberg also received a sign-on bonus of
1,500,000 shares of the Company’s Class A common stock.Mr. Norberg is also
entitled to receive other benefits generally received by other senior executives
of the Company and reimbursement of expenses.  Mr. Smith also entered
into a standard Employee Confidentiality Agreement.
  The
Company may, in its sole discretion, terminate Mr. Norberg’s employment in the
event of his “disability” as defined in his employment agreement.  If
the Company elects to so terminate his employment, Mr. Norberg will be entitled
to receive his accrued but unpaid salary, expenses and bonuses, the proceeds of
any disability insurance policy plus an amount from the Company monthly which,
when added to the amount received by Mr. Norberg from any disability policy then
in effect, will equal the Executive's salary for a twelve-month period following
the date of termination.  Such termination shall have no effect on the
Company's obligation to pay the special bonus.
  In the
event that 50% or more of the equity securities of the Company are acquired by
any single person or identifiable group in which the average acquisition price
per share is $5.00 per share or more and Mr. Norberg’s employment is terminated
without “cause” twelve months after such acquisition, the Company shall pay to
Mr. Norberg a lump sum amount equal to the aggregate of (i) accrued unpaid
salary, if any; (ii) accrued but unpaid expenses, if any; (iii) accrued but
unpaid bonuses, if any; (iv) unissued warrants, if any; and (v) the total
compensation which would have been paid to Mr. Norberg through one full year of
compensation from the date of termination.
  In the
event of gross misconduct in office by Mr. Norberg in the performance of his
duties hereunder, the Company may terminate Mr. Norberg’s employment agreement
and, on the termination date, the Company shall pay to Mr. Norberg the aggregate
of accrued but unpaid expenses, if any, and the net salary compensation which
would have been paid to Mr. Norberg through the date of
termination.  Furthermore, any warrants to be issued pursuant to his
employment agreement, and any options granted pursuant to plans then applicable
to Mr. Smith which have not then vested shall be forfeited as of the termination
date.
  76
  Scott
Smith, Chief Operating Officer and interim Chief Financial Officer
  Mr. Smith
serves as the Company’s Chief Operating Officer and interim Chief Financial
Officer pursuant to an employment agreement which expires on June 16,
2011.  The agreement provides for a salary of $250,000 per annum,
increased by an amount no less than an amount equal to the percentage increase
in the consumer price index for the Dallas, Texas metropolitan area. A special
bonus in the amount equal to 0.5% percent of the Company’s pre-tax profits from
the preceding year (as determined by the application of generally accepted
accounting principles), up to the first $1,000,000 dollars of such profits; plus
an additional sum equal to 0.75% of the Company’s pre-tax profits for all sums
over $1,000,000 dollars up to the first $2,000,000;  plus an
additional sum equal to 1% of the Company’s pre-tax profits for all sums over
$2,000,000 dollars up to the first $4,000,000; plus an additional sum equal to
1.25% of the Company’s pre-tax profits for all sums over $4,000,000 In
connection with his employment, Mr. Smith also received a warrant to purchase
1,000,000 shares of the Company’s Class A common stock at $0.38 per share to
vest in four equal annual installments starting on July 1, 2009.  Mr.
Smith is also entitled to receive other benefits generally received by other
senior executives of the Company and reimbursement of expenses.  Mr.
Smith also entered into a standard Employee Confidentiality
Agreement.
  The
Company may, in its sole discretion, terminate Mr. Smith’s employment in the
event of his “disability” as defined in his employment agreement.  If
the Company elects to so terminate his employment, Mr. Smith will be entitled to
receive his accrued but unpaid salary, expenses and bonuses, the proceeds of any
disability insurance policy plus an amount from the Company monthly which, when
added to the amount received by Mr. Smith from any disability policy then in
effect, will equal the Executive's salary for a twelve-month period following
the date of termination.  Such termination shall have no effect on the
Company's obligation to pay the special bonus.
  In the
event Mr. Smith’s employment is terminated without “cause” 12 months from a
change in control, the Company shall pay to Mr. Smith a lump sum amount equal to
the aggregate of (i) accrued unpaid salary, if any; (ii) accrued but unpaid
expenses, if any; (iii) accrued but unpaid bonuses, if any; (iv) unissued
warrants, if any; and (v) the total compensation which would have been paid to
Mr. Smith through the longer of the remaining term, if any, of the employment
period, or three years compensation.  In addition, all unvested
securities and benefits attributable to Mr. Smith will immediately
vest.
  In the
event of gross misconduct in office by Mr. Smith in the performance of his
duties hereunder, the Company may terminate Mr. Smith’s employment agreement
and, on the termination date, the Company shall pay to Mr. Smith the aggregate
of (i) accrued but unpaid expenses, if any (ii) accrued but unpaid bonuses, if
any; and (iii) the net salary compensation which would have been paid to Mr.
Shafer through the date of termination.  Furthermore, any warrants to
be issued pursuant to his employment agreement, and any options granted pursuant
to plans then applicable to Mr. Smith which have not then vested shall be
forfeited as of the termination date.
  Former
Executive Officers
  Clark
Marcus, Former Chief Executive Officer
  Mr.
Marcus resigned as the Company’s Chief Executive Officer, effective August 25,
2008.  For the year ended December 31, 2008, Mr. Marcus received
$560,845 as compensation for his service as Chief Executive Officer pursuant to
his employment agreement.  The Company also paid insurance premiums
totaling $17,857 on his behalf.
  In
connection with his resignation as Chief Executive Officer, and in lieu of any
severance or termination payments, Mr. Marcus entered into both a Separation
Agreement and a Consulting Agreement with the Company.  Pursuant to
Mr. Marcus’s Separation Agreement, the Company will continue to provide Mr.
Marcus with certain benefits for up to 18 months from the date of his
resignation.  Pursuant to the Consulting Agreement, Mr. Marcus
provides the Company with certain consultation services.  In exchange,
Mr. Marcus is to be paid a onetime fee of $112,000 and is entitled to a fee
payable at an annual rate of $600,000 and reimbursement of
expenses.  For the year ended December 31, 2008, Mr. Marcus received
payments totaling $296,615 in accordance with the terms of his Consulting
Agreement.
  Mr.
Marcus’s Consulting Agreement contains customary non-compete and confidentiality
obligations and contains customary mutual indemnification
provisions.   The Consulting Agreement has a term of one year and
is renewable at the mutual consent of the parties for additional one-year
terms.  The Consulting Agreement may be terminated by prior written
notice to the other party upon a breach by such other party or conviction of the
other party of a felony violation.   The Company may terminate
the Consulting Agreement if Mr. Marcus is arrested or charged with a crime not
instigated by the Company and such arrest or charge negatively affects the
business or reputation of the Company.  In addition, the Company may
terminate the agreement, effective immediately, if Mr. Marcus knowingly makes
any materially false or untrue statements or representations to the Company or
in the performance of his obligations or engages in gross negligence, willful
misconduct or fraud in the performance of the services.
  77
  Benefits
and payments received pursuant to his Separation Agreement and Consulting
Agreement are not reflected for Mr. Marcus in the “Summary Compensation Table”
above.
  Giuseppe
Crisafi, Former Chief Financial Officer
  Mr.
Crisafi resigned as the Company’s Chief Financial Officer, effective August 25,
2008.  For the year ended December 31, 2008, Mr. Crisafi received
$266,241 as base compensation for his service as Chief Executive Officer
pursuant to his employment agreement.
  In
connection with his resignation as Chief Financial Officer, and in lieu of any
severance or termination payments, Mr. Crisafi entered into both a Separation
Agreement and a Consulting Agreement with the Company.  Pursuant to
the Consulting Agreement, Mr. Crisafi provided the Company with certain
consultation services.  For the year ended December 31, 2008, Mr.
Crisafi received payments totaling $90,172.74 in accordance with the terms his
Consulting Agreement.  In addition, Mr. Crisafi received 500,000
shares of the Company’s Class A common stock pursuant to his Consulting
Agreement.
  Mr.
Crisafi’s Consulting Agreement terminated as of March 2009.
  Benefits
and payments received pursuant to his Separation Agreement and Consulting
Agreement are not reflected for Mr. Crisafi in the “Summary Compensation Table”
above.
  Jerry
Katzman, Former Chief Medical Officer
  Dr.
Katzman resigned as the Company’s Chief Medical Officer, effective August 25,
2008.  For the year ended December 31, 2008, Dr. Katzman received
$261,614 as compensation for his service as Chief Medical Officer pursuant to
his employment agreement.
  In
connection with his resignation as Chief Medical Officer, and in lieu of any
severance or termination payments, Dr. Katzman entered into both a Separation
Agreement and a Consulting Agreement with the Company.  Pursuant to
Dr. Katzman’s Separation Agreement, the Company will continue to provide Dr.
Katzman with certain benefits for up to 18 months from the date of his
resignation.  Pursuant to the Consulting Agreement, Dr. Katzman
provides the Company with certain consultation services.  In exchange,
Dr. Katzman is to be paid approximately $46,000 in the form of forgiveness of a
debt in favor of the Company and is entitled to a fee payable at an annual rate
of $200,000 and reimbursement of expenses.  For the year ended
December 31, 2008, Dr. Katzman received payments totaling $61,538.48 and $46,000
in the form of forgiveness of a debt in favor of the Company in accordance with
the terms of his Consulting Agreement.
  Dr.
Katzman’s Consulting Agreement contains customary non-compete and
confidentiality obligations and contains customary mutual indemnification
provisions.   The Consulting Agreement has a term of one year and
is renewable at the mutual consent of the parties for additional one-year
terms.  The Consulting Agreement may be terminated by prior written
notice to the other party upon a breach by such other party or conviction of the
other party of a felony violation.   The Company may terminate
the Consulting Agreement if Dr. Katzman is arrested or charged with a crime not
instigated by the Company and such arrest or charge negatively affects the
business or reputation of the Company.  In addition, the Company may
terminate the agreement, effective immediately, if Dr. Katzman knowingly makes
any materially false or untrue statements or representations to the Company or
in the performance of his obligations or engages in gross negligence, willful
misconduct or fraud in the performance of the services.
  Benefits
and payments received pursuant to his Separation Agreement and Consulting
Agreement are not reflected for Dr. Katzman in the “Summary Compensation Table”
above.
  Outstanding
Equity Awards at Fiscal Year-End Table
 
 The
following table sets forth, for each named executive officer, information
regarding unexercised warrants as of the end of our fiscal year ended December
31, 2009.  None of the named executive officers own stock that has not
vested nor has any non-vested outstanding equity incentive plan
awards.
 
 78
  Name
                      
                      Number of Securities or
      Underlying Unexercised Options (#) Exercisable(1)
                      
                      
                      Number of Securities or
      Underlying Unexercised Options (#) unexercisable(2)
                      
                      
                      Option
      Exercise Price ($)
                      
                      
                      Option
      Expiration DateJay
      Shafer
                      
                      
                      1,000,000
                      
                      
                      
                      -
                      
                      
                      
                      0.30
                      
                      
                      3/26/2012Chief
      Executive Officer
                      
                      
                      3,500,000
                      
                      
                      
                      -
                      
                      
                      
                      0.50
                      
                      
                      12/6/2012Guy
      Norberg
                      
                      
                      1,000,000
                      
                      
                      
                      -
                      
                      
                      
                      0.30
                      
                      
                      3/26/2012President
                      
                      
                      3,500,000
                      
                      
                      
                      -
                      
                      
                      
                      0.50
                      
                      
                      12/6/2012Scott
      Smith
                      
                      
                      500,000
                      
                      
                      
                      500,000
                      
                      
                      
                      0.38
                      
                      
                      6/13/2013Chief
      Operating Officer &Interim
      Chief Financial OfficerJason
      Post
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Principal
      Accounting Officer &Secretary
      of the Board of DirectorsClark
      Marcus
                      
                      
                      1,000,000
                      
                      
                      
                      -
                      
                      
                      
                      0.16
                      
                      
                      5/27/2010Former
      Chief Executive OfficerGiuseppe
      Crisafi
                      
                      
                      250,000
                      
                      
                      
                      -
                      
                      
                      
                      0.30
                      
                      
                      3/26/2012Former
      Chief Financial Officer
                      
                      
                      4,965,000
                      
                      
                      
                      -
                      
                      
                      
                      0.50
                      
                      
                      12/6/2012Jerry
      Katzman MD
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Former
      Chief Medical Officer(1) The
      securities listed in this column consist of unexercised warrants awarded
      to each named executive officer. Warrants presented herein are fully
      vested and immediately exercisable upon grant.(2) The
      securities listed in this column consist of warrants awarded to each named
      executive officer that are not vested and exercisable.
  Payments upon Change in Control
 
 In the
event that any of the named executive officers’ employment is terminated within
twelve (12) months following a change in control, the Company shall pay to such
terminated named executive officer a lump sum amount equal to the aggregate of
(i) accrued unpaid salary, if any; (ii) accrued but unpaid expenses, if any;
(iii) accrued but unpaid bonuses, if any; (iv) unissued warrants, if any; and
(v) the total compensation which would have been paid to such named executive
officer through five (5) full years of compensation from the date of
termination.
 
 Compensation
of Directors
 
 There was
no compensation for Directors other than executives that are also
Directors.  Their associated compensation including compensation for
their directorship, is included in Summary Compensation table under “Item 11.
Executive Compensation.”
 
 ITEM
12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
 The
following table sets forth certain information as of March 18, 2009 regarding
the beneficial ownership of our common stock held by each of our named executive
officers and directors, individually and as a group, and by each person who
beneficially owns in excess of five percent of our common stock. In general,
beneficial ownership includes those shares that a person has the power to vote,
sell, or otherwise dispose. Beneficial ownership also includes that number of
shares which an individual has the right to acquire within 60 days (such as
warrants and stock options) of the date this table was prepared. Two or more
persons may be considered the beneficial owner of the same shares. The inclusion
in this section of any shares deemed beneficially owned does not constitute an
admission by that person of beneficial ownership of those shares.  The
persons named in the table have sole voting and investment power with respect to
all shares shown as beneficially owned by them, except as noted
below.
  79
  Amount
      and Nature Of Beneficial Ownership (2)
                      Amount
      and Nature Of Beneficial Ownership (2)
                      Percentage
      of Common Stock Beneficially Owned (3)
                      Percentage
      of Common Stock Beneficially Owned (3)Name
      (1)
                      
                      Class
      A Common Stock
                      Class
      B Common Stock
                      As
      a % of All Class A
                      As
      a % of All Class BExecutive
      Officers and Directors:Jay
      Shafer (4)
                      
                      6,250,000
                      
                      -
                      
                      0.58%
                      
                      0.00%Guy
      Norberg (4)
                      
                      6,250,000
                      
                      -
                      
                      0.58%
                      
                      0.00%Scott
      Smith (5)
                      
                      530,000
                      
                      -
                      
                      0.05%
                      
                      0.00%Keith
      Hughes (6)
                      
                      -
                      
                      -
                      
                      0.00%
                      
                      0.00%Shadron
      Stastney (6)
                      
                      -
                      
                      -
                      
                      0.00%
                      
                      0.00%Jason
      Post
                      
                      45,000
                      
                      -
                      
                      0.00%
                      
                      0.00%All
      officers and directors as a group (6 persons) (7)
                      13,075,000
                      
                      -
                      
                      1.20%
                      
                      0.00%Other
      Beneficial Owners:Vicis
      Capital Master Fund (8)
                      
                      1,307,566,950
                      
                      -
                      
                      87.47%(1)
      Unless otherwise indicated, the address for each individual listed in this
      column is c/o The Amacore Group, Inc., Maitland Promenade 1, 485 North
      Keller Road, Suite 450, Maitland, Florida 32751.(2)
      Unless otherwise indicated, each person has sole investment and voting
      power with respect to the shares indicated, subject to community property
      laws, where applicable.  For purposes of this table, a person or
      group of persons is deemed to beneficially own any shares that such person
      has the right to acquire within sixty (60) days after January 4,
      2010.(3)
      Calculated as a percentage of the total number of shares of Class A and
      Class B common stock issued and outstanding without respect to voting
      power. The total number of shares of Class A common stock outstanding for
      purposes of calculating percentage ownership of a person includes the
      number of shares of Class A common stock beneficially owned by such
      person.  As of January 4, 2010, we had 1,047,725,428 and 200,000
      shares of Class A and Class B common stock outstanding.(4)
      Mr. Shafer's and Mr. Norberg's beneficial ownership includes 4,500,000
      shares of Class A common stock underlying warrants which are presently
      exercisable.(5)
      Mr. Smith's beneficial ownership includes 500,000 shares of Class A common
      stock underlying warrants which are presently
  exercisable.(6)
      Mr. Hughess and Mr. Stastney are Directors of the Company and hold no
      benefical interest in the Company(7)
      To the best of the Company's knowledge, the ownership amounts reflect
      accurately the named officers' and beneficial owners' current holdings as
      of the date of this analysis.(8)
      Vicis' beneficial ownership includes 416,250,000 shares of Class A common
      stock underlying warrants which are presently
  exercisable.
 
 80
 
 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
 
 Transactions
with Related Persons
 
 Other
than the transactions described below, none of the following parties has, since
our date of incorporation, had any material interest, direct or indirect, in any
transaction with us or in any presently proposed transaction that has or will
materially affect us:
 
 
                    Any
      of our directors or executive officers;
                    Any
      person proposed as a nominee for election as a
director;
                    Any
      person who beneficially owns, directly or indirectly, shares carrying more
      than 5% of any class of voting securities;
                    Any
      of our promoters;
                    Any
      relative or spouse of any of the foregoing persons who has the same house
      as such person.
  Pursuant
to the acquisition agreement between the Company and JRM, the Company assumed
approximately $287 thousand of liabilities of which approximately $160 thousand
and $69 thousand represent personal credit card balances used for business
purposes and business credit lines, respectively.  The Company will
continue to pay the monthly required payments for eighteen (18) months and will
continue to do so if the eighteen (18) month minimum sales target is met. The
liabilities are personally guaranteed by both James Reed and James Mignogna (who
are both Senior Vice Presidents of the JRM Division) and are recorded within the
Company’s notes and loans payable category of the balance sheet.  As
of December 31, 2009, the outstanding balance of said liabilities was
approximately $185 thousand.
 
 During
the years ended December 31, 2009 and 2008, LifeGuard marketed a membership
product which it licensed from DirectMed, a company 33% owned by an employee and
former majority stockholder of LifeGuard. LifeGuard paid DirectMed a branding
fee based on the number of memberships sold. For the years ended December 31,
2009 and 2008, the branding fee paid to DirectMed was approximately $110
thousand and approximately $492 thousand, respectively.  In addition,
LifeGuard owes DirectMed approximately $485 and approximately $524 thousand at
December 31, 2009 and 2008, respectively, for unpaid branding fees.
 
 Director
Independence
 
 We are
currently traded on the OTCBB. The OTCBB does not require that a majority of the
Board be independent.
 
 81
 
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 The
following table presents fees for professional audit services performed by our
principal accountants, McGladrey & Pullen, LLP for the audit of our annual
financial statements and review of financial statements included in our
quarterly reports for our fiscal years ended December 31, 2009 and 2008,
respectively, and fees billed for other services rendered by McGladrey &
Pullen, LLP during such years.
  December
      31, 2009
                      
                      
                      December
      31, 2008Audit
      fees
                      
                      
                      448,029
                      
                      
                      
                      167,016Tax
      fees
                      
                      
                      35,950
                      
                      
                      
                      27,838Other
                      
                      
                      -
                      
                      
                      
                      718,971483,979
                      
                      
                      
                      913,825
  
 Pre-Approval
Policy and Procedures
 
 We may
not engage our independent auditors to render any audit or non-audit service
unless our Board approves the service in advance.
 
 82
 
 Item
15. Exhibits
  1.01
                    Series
      L Preferred Stock Purchase Agreement by and between the Company and Vicis
      Capital Master Fund dated September 29, 2009 (incorporated by reference to
      Exhibit 10.1, 10.2 and 10.3 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission July 2, 2009)1.02
                    Entry
      into a material definitive agreement, dated July 30, 2009 (incorporated by
      reference to Exhibit 2.4, 10.5 and 99.1 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on August 5,
      2009).1.03
                    Termination
      of a material definitive agreement, dated February 16, 2010 (incorporated
      by reference to Exhibit 1.02 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on February 19,
  2010).2.03
                    Creating
      of a Direct Financial Obligation or an Obligation under an Off-Balance
      Sheet arrangement of a registrant, dated July 9, 2009 (incorporated by
      reference to Exhibit 4.1, 4.2, and 10.16 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on July 14,
    2009).2.3(c)
                    Amendment
      to Stock Purchase Agreement by and among the Company, US health Benefits
      Group, Inc., US Healthcare Plans, Inc., On the Phone, Inc. and
      stockholders, dated September 10, 2009 (incorporated by reference to
      Exhibit 2.3(c)) to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on September 10, 2009)3.1
                    Certificate
      of Designation of Series L Convertible Preferred Stock, filed with the
      Delaware Secretary of State on September 26, 2009. (incorporated by
      reference to Exhibit 3.2 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on July 2, 2009).3.2
                    Bylaws
      of The Amacore Group, Inc. amended and restated on September 23, 2009
      (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on September 23,
      2009).3.3
                    Amended
      and Restated Certificate of Designation of Series L Convertible Preferred
      Stock, filed with the Delaware Secretary of State on November 13, 2009
      incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on November 13,
      2009).4.2
                    Guaranty
      Agreement, dated July 9, 2009 (incorporated by reference to Exhibit 4.2 to
      the Company’s Form 8-K filed with the Securities and Exchange Commission
      on July 14, 2009).4.3
                    Promissory
      Note of Zurvita, Inc., dated July 9, 2009 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on July 14, 2009).5.02
                    Departure
      of Directors or Certain Officers; Election of Directors; Appointment of
      Certain Officers; Compensatory Arrangements of Certain Officers
      (incorporated by reference to Exhibit 5.02 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on January 28,
      2010)10.1
                    Securities
      Purchase Agreement by and between the Company and Vicis Capital Master
      Fund dated September 29, 2009 (incorporated by reference to Exhibit 10.1
      to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on July 2, 2009).10.2
                    Warrant
      Agreement by and between the Company and Vicis Capital Master Fund dated
      September 29, 2009 (incorporated by reference to Exhibit 10.2 to the
      Company’s Form 8-K filed with the Securities and Exchange Commission on
      July 2, 2009).10.3
                    Registration
      Rights Agreement by and between The Amacore Group, Inc. and Vicis Capital
      Master Fund, dated September 29, 2009 (incorporated by reference to
      Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on July 2, 2009).10.4
                    Securities
      Purchase Agreement by and between the Company and Vicis Capital Master
      Fund dated November 12, 2009, 2009 (incorporated by reference to Exhibit
      10.1 to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on November 12, 2009).10.5
                    Warrant
      Agreement by and between the Company and Vicis Capital Master Fund dated
      November 12, 2009 (incorporated by reference to Exhibit 10.2 to the
      Company’s Form 8-K filed with the Securities and Exchange Commission on
      November 12, 2009).10.6
                    Registration
      Rights Agreement by and between The Amacore Group, Inc. and Vicis Capital
      Master Fund, dated November 12, 2009 (incorporated by reference to Exhibit
      10.3 to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on November 12, 2009).10.7
                    First
      Amendment to Warrant by and between The Amacore Group, Inc. and Vicis
      Capital Master Fund, dated November 12, 2009 (incorporated by reference to
      Exhibit 10.4 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on November 12, 2009).10.16
                    Mutual
      Compromise Settlement Agreement and General Release of Claims, dated July
      9, 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Form
      8-K filed with the Securities and Exchange Commission on July 14,
      2009).31.1
                    Certification
      of Chief Executive Officer pursuant to Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
                    Certification
      of Chief Financial Officer pursuant to Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
 
 83
 
 SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 
 Dated:March 31,
      2010
                    /s/ Jay
      ShaferJay
      ShaferChief
      Executive Officer
 
 In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant on the 31st day
of March, 2010 in the capacities indicated.
 
 /s/Jay
Shafer
 Jay
Shafer
 Chief
Executive Officer and
 Director
 
 /s/ Guy
Norberg
 Guy
Norberg
 President
and Director
 
 /s/  Scott
Smith
 Scott
Smith
 Chief
Operating Officer,
 Interim
Chief Financial Officer
 
 /s/  Jason
Post
 Jason
Post
 Principal
Accounting Officer
 
 
 Shad
Stastney
 Director
 
 /s/  Keith
Hughes
 Keith
Hughes
 Director
 
 84
 
 Exhibit
Index
 
 1.01
                    Series
      L Preferred Stock Purchase Agreement by and between the Company and Vicis
      Capital Master Fund dated September 29, 2009 (incorporated by reference to
      Exhibit 10.1, 10.2 and 10.3 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission July 2, 2009)1.02
                    Entry
      into a material definitive agreement, dated July 30, 2009 (incorporated by
      reference to Exhibit 2.4, 10.5 and 99.1 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on August 5,
      2009).1.03
                    Termination
      of a material definitive agreement, dated February 16, 2010 (incorporated
      by reference to Exhibit 1.02 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on February 19,
  2010).2.03
                    Creating
      of a Direct Financial Obligation or an Obligation under an Off-Balance
      Sheet arrangement of a registrant, dated July 9, 2009 (incorporated by
      reference to Exhibit 4.1, 4.2, and 10.16 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on July 14,
    2009).2.3(c)
                    Amendment
      to Stock Purchase Agreement by and among the Company, US health Benefits
      Group, Inc., US Healthcare Plans, Inc., On the Phone, Inc. and
      stockholders, dated September 10, 2009 (incorporated by reference to
      Exhibit 2.3(c)) to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on September 10, 2009)3.1
                    Certificate
      of Designation of Series L Convertible Preferred Stock, filed with the
      Delaware Secretary of State on September 26, 2009. (incorporated by
      reference to Exhibit 3.2 to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on July 2, 2009).3.2
                    Bylaws
      of The Amacore Group, Inc. amended and restated on September 23, 2009
      (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on September 23,
      2009).3.3
                    Amended
      and Restated Certificate of Designation of Series L Convertible Preferred
      Stock, filed with the Delaware Secretary of State on November 13, 2009
      incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on November 13,
      2009).4.2
                    Guaranty
      Agreement, dated July 9, 2009 (incorporated by reference to Exhibit 4.2 to
      the Company’s Form 8-K filed with the Securities and Exchange Commission
      on July 14, 2009).4.3
                    Promissory
      Note of Zurvita, Inc., dated July 9, 2009 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on July 14, 2009).5.02
                    Departure
      of Directors or Certain Officers; Election of Directors; Appointment of
      Certain Officers; Compensatory Arrangements of Certain Officers
      (incorporated by reference to Exhibit 5.02 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on January 28,
      2010)5.03
                    Departure
      of Directors or Certain Officers; Election of Directors; Appointment of
      Certain Officers; Compensatory Arrangements of Certain Officers
      (incorporated by reference to Exhibit 5.02 to the Company’s Form 8-K filed
      with the Securities and Exchange Commission on March 8,
    2010)10.1
                    Securities
      Purchase Agreement by and between the Company and Vicis Capital Master
      Fund dated September 29, 2009 (incorporated by reference to Exhibit 10.1
      to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on July 2, 2009).10.2
                    Warrant
      Agreement by and between the Company and Vicis Capital Master Fund dated
      September 29, 2009 (incorporated by reference to Exhibit 10.2 to the
      Company’s Form 8-K filed with the Securities and Exchange Commission on
      July 2, 2009).10.3
                    Registration
      Rights Agreement by and between The Amacore Group, Inc. and Vicis Capital
      Master Fund, dated September 29, 2009 (incorporated by reference to
      Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on July 2, 2009).10.4
                    Securities
      Purchase Agreement by and between the Company and Vicis Capital Master
      Fund dated November 12, 2009, 2009 (incorporated by reference to Exhibit
      10.1 to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on November 12, 2009).10.5
                    Warrant
      Agreement by and between the Company and Vicis Capital Master Fund dated
      November 12, 2009 (incorporated by reference to Exhibit 10.2 to the
      Company’s Form 8-K filed with the Securities and Exchange Commission on
      November 12, 2009).10.6
                    Registration
      Rights Agreement by and between The Amacore Group, Inc. and Vicis Capital
      Master Fund, dated November 12, 2009 (incorporated by reference to Exhibit
      10.3 to the Company’s Form 8-K filed with the Securities and Exchange
      Commission on November 12, 2009).10.7
                    First
      Amendment to Warrant by and between The Amacore Group, Inc. and Vicis
      Capital Master Fund, dated November 12, 2009 (incorporated by reference to
      Exhibit 10.4 to the Company’s Form 8-K filed with the Securities and
      Exchange Commission on November 12, 2009).10.16
                    Mutual
      Compromise Settlement Agreement and General Release of Claims, dated July
      9, 2009 (incorporated by reference to Exhibit 4.1 to the Company’s Form
      8-K filed with the Securities and Exchange Commission on July 14,
      2009).31.1
                    Certification
      of Chief Executive Officer pursuant to Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
                    Certification
      of Chief Financial Officer pursuant to Section 13(a) or 15(d) of the
      Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
  85