UNITED STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-KSB
 
 [X] 
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
ACT OF 1934
 FOR THE
FISCAL YEAR ENDED
 DECEMBER
31, 2007
 
 [  
]  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES
 EXCHANGE
ACT OF 1934
 
 COMMISSION FILE NUMBER 0-27889
 
 THE
AMACORE GROUP, INC.
 (Name of
small business issuer in its charter)
 
 Delaware
              59-3206480(State
      or Other Jurisdiction of
              (I.R.S.
      EmployerIncorporation
      or Organization)
              Identification
      No.)
  1211
North Westshore Boulevard, Suite 512
 Tampa,
Florida 33607
 (Address
of principal executive offices)
 
 (813)
289-5552
 (Issuer's
telephone number)
 
 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.
 
 Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  o
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past twelve months (or 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
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.   o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  o       
No x
 
 The
issuer’s revenues for its most recent fiscal year were: $4,320,862
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of March
31, 2008: $54,129,978.
 
 The number of shares outstanding of each of the
issuer’s classes of common stock as of March 31, 2008:
 109,736,748
shares ofClass A common stock, par value $0.001 and29,069,055
shares ofClass B common stock, par value $0.001
  Documents
incorporated by reference: None.
 Transitional
Small Business Disclosure Format (Check One): Yes  o       
No x
 
  
  
 
 
 AMACORE
GROUP, INC.
 
 FORM
10-KSB
 For
the Year Ended December 31, 2007
 
 TABLE
OF CONTENTS
 
 PART
      I
              
              PAGE
      NO.ITEM
      1.
              DESCRIPTION
      OF BUSINESS.
              1ITEM
      2.
              DESCRIPTION
      OF PROPERTY.
              7ITEM
      3.
              LEGAL
      PROCEEDINGS.
              8ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.
              8PART
      IIITEM
      5.
              MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
              9ITEM
      6.
              MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
              11ITEM
      7.
              FINANCIAL
      STATEMENTS.
              20ITEM
      8.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.
              44ITEM
      8A.
              CONTROLS
      AND PROCEDURES.
              44ITEM
      8B.
              OTHER
      INFORMATION.
              45PART
      IIIITEM
      9.
              DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
    ACT.
              45ITEM
      10.
              EXECUTIVE
      COMPENSATION.
              47ITEM
      11.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.
              50ITEM
      12.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.
              51ITEM
      13.
              EXHIBITS.
              52ITEM
      14.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.
              53
 
  
   PART I
 
 Special
Note Regarding Forward-Looking Statements
 
 Information contained in this report, other than
historical information, is considered “forward-looking statements” that are
subject to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of our business, financial
condition, liquidity, results of operations, plans and objectives including,
without limitation, statements about our ability to continue operations through
December 2008, our liability for claims made in pending litigation, plans for
future products and programs, the planned launch and/or expansion of call
centers and other distribution channels, and future acquisitions.  In
some cases, you may identify forward-looking statements by words such as "may,"
"should," "plan," "intend," "potential," "continue," "believe," "expect,"
"predict," "anticipate" and "estimate," the negative of these words or other
comparable words. These statements are only predictions. One should not place
undue reliance on these forward-looking statements. The forward-looking
statements are qualified by their terms and/or important factors, many of which
are outside our control, involve a number of risks, uncertainties and other
factors that could cause actual results and events to differ materially from the
statements made. The forward-looking statements are based on our beliefs,
assumptions and expectations of our future performance, taking into account
information currently available to us. These beliefs, assumptions and
expectations can change as a result of many possible events or factors,
including those events and factors described in "Risk Factors" section in this
report, not all of which are known to us.  If a change occurs, our
business, financial condition, liquidity and results of operations may vary
materially from those expressed in the aforementioned forward-looking
statements.  In addition, actual results in future periods may differ
materially from those expressed or implied in such forward-looking statements as
a result of many possible events or factors, including those events and factors
described in "Risk Factors" section in this report.  We will update
this forward-looking information only to the extent required under applicable
securities laws. Neither we nor any other person assumes responsibility for the
accuracy or completeness of these forward-looking
statements.
  ITEM
1. DESCRIPTION OF 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.  As used in this report, the
“Company,” “Amacore,” “we,” “our,” and “us” all refer to The
Amacore Group, Inc. together with its consolidated
subsidiaries.
 
 Overview
 
 The
Company was founded over 10 years ago andbegan selling memberships in our
discount vision program to retail customers in an effort to prove that a vision
discount plan with an ophthalmologic (amedical doctorspecializing in eye
care) panel included would
be not only accepted, but desired, by the general public and prove to other
marketers of various health plans the benefits of including such a plan in their
products.We sold the plan on a retail only basis
for many years proving that the general public did desire to have a vision plan
with their medical coverage.  Once proof of concept became a reality,
we shifted our emphasis to marketing our plan to marketers of health benefit plans.Marketing programs on a retail basis
requires a broad national marketing staff which we were not financially prepared
to support, whereas a much smaller staff is needed to market to others on a
wholesale basis.During the period during which we were transitioning to andbuilding up our wholesale network,
revenues decreased and losses increased.  Our retail marketing efforts
were reduced and we devoted most of our time to the continued development of our
wholesalenetwork and developing
contractual relationships with other marketers of various health plans,
including, but not limited to, insurance companies and marketers of other
discount plans such as dental, vision (without a vision medical component), and
prescription drugs.  Those contracts did not
produce a substantial amount of revenue but served to establish The Amacore
Group as having a product capable of not only servicing the needs of the general
public, but servicing the marketers of other healthcare programs as a lead
generator for their agents.  It also served to position us with
marketers of other healthcare programs in such a way as to attract those
marketers to The Amacore Group from a management perspective.  We then
initiated activity designed to increase the scope of our product line; increase
our distribution channels for our product line and increase our ability to
generate sales leads for our distribution channels.  Integral
tothese goals was the
hiring of executive personnel, experienced in the design and marketing of
various types of healthcare programs ranging from discount programs to insured
components.  Additionally, it was important for us to further develop
the free eye exam component of our vision plan so that this component could
serve as a sales lead generator for a wide range of other healthcare
products.
  In
January, 2007, we entered into long-term employment agreements with Mr. Jay
Shafer, the former president of Protective Marketing Enterprises, Inc. (PME),
and Mr. Guy Norberg, the former vice president of sales and marketing of PME. We
also entered into an agreement employing Mr. William Heneghan, former vice
president of operations for Innovative HealthCare Benefits, Inc., which had an
intimate relationship with PME. Mr.Shafer now serves as Amacore Group’s
President, Mr. Norberg serves as its Senior Vice President of Sales and
Marketing and Mr. Heneghan serves as its Director of Operations. Along with the
hiring of Messrs. Shafer, Norberg and Heneghan, we have also hired other staff
members to support our expanding programs and opened a second office near
Orlando, Florida.
 
 During
2007, we concentrated our efforts on developing a wide range of both discount
and insured products, which we intended to market through a significant number
of distribution channels with whom Messrs. Shafer and Norberg had worked in the
past. We successfully contracted with a number of distribution channels
experienced not only in the sale of the types of products designed by us, but
with the networks forming the components of our new product line.  As
a result, we have now positioned ourselves to provide not only vision programs
but discount medical doctor visit programs, hospital savings programs, dental
programs, hearing programs, chiropractic programs, pharmacy programs, an
emergency informational system called Contact 911, long-term care programs,
emergency medical travel and savings on alternative medicine, vitamins and
nutritional supplements.  Some program features
include access to a 24-hour nurse hotline, 24-hour counseling, a service whichcan get medical histories delivered to medical service providers around
the world and the services of a personal patient advocate.  Weare also in a position to market
limited medical indemnity and accident group insurance
programs.In addition, we added an innovative network product
of state-licensed, primary care physicians that diagnose routine, non-emergency,
medical problems and recommend treatment and prescribe medication with a phone
call called TelaDoc. Further, the addition of the program Global MedNet
distributes personal medical records worldwide in the event of an emergency
medical crisis.
  
  We
contracted with Chase Paymentech Solutions, LLC, who is one of the world’s
largest merchant acquirers accepting payments at the point of sale. During the
same period, we simultaneously worked on developing various electronic systems
necessary not only for the sale of our products, but the tracking of our revenue
and payment of commissions to our sales agents on a weekly basis - a payment
schedule we believe is unique to the healthcare industry. Management believes
that this type of payment schedule will significantly strengthen our
relationships with our various sales organizations. On May 1, in a 60-day
program build, we completed the development of The Amacore Group gateway for
transactions that include direct response, call center and web enrollment
integrating commerce engines, our direct lease line to Paymentech and commission
reconciliation for the benefit of our marketing partners. Further, this
development allowed us to transition existing ECI business to a monthly renewal
model.
 
 We also
entered into a strategic development agreement with Bridgeport,
Connecticut-based OPTIMUS Solutions Consulting LLC (“OPTIMUS”), a privately held
pioneer in the field of integrated solution development, as part of our
continuing strategic initiative to aggressively expand healthcare services
distribution channels. OPTIMUS has fully integrated the development of our back
office system with the OPTIMUS front-end, call center marketing system and they
are on target to launch two licensed call centers (containing licensed
representatives able to sell insurance products) that are expected to produce
sales in the second quarter of 2008.  With the development now
complete, the focus now will be on expanding distribution through additional
call center relationships under OPTIMUS’s management.
 
 Employees
 
 As of
December 31, 2007, the Company, including LifeGuard and JRM, had seventy-six
(76) employees. The Company, LifeGuard and JRM had sixteen (16), fifty (50) and
ten (10) employees, respectively.
 
 Customers
 
 For the
year ended December 31, 2007, Amacore’s products have been purchase by over 1.5
million consumers.  Amacore’s direct to consumer business is small,
but growing.  Most of the consumers who have purchased one of the
Amacore products have made their purchase through a third party, such as a call
center or agent, or have purchased an Amacore product that has been embedded
into a larger healthcare plan, where Amacore has a wholesale arrangement with
the marketer of that healthcare plan.  At this stage, the majority of
Amacore’s customers are the vendors that have contracted with Amacore to market
our product to their client base.  As the Company becomes more
vertically integrated and begins to own more of its distribution channel, the
Company will be able to reach those consumers directly.
  Competition
 
 The
Company competes in a highly competitive, rapidly evolving, highly fragmented
healthcare industry and is subject to rapid technological change.  In
addition, there are low barriers to entry, so in order to maintain better than
average margins, participants need to have a sustainable competitive advantage
over their competitors.  The Company believes that the diversity of
its distribution model provides it with a competitive advantage.  The
Company is not aware that any of its direct competitors have in place all of the
distribution channels the Company has in place.  However, many
companies have one or more of each of the distribution channels the Company has
built and therefore are direct competitors within those distribution
channels.  Among other things, the Company competes on its ability to
expand our offerings through product development, marketing and distribution;
our relationships with vendors and insurance carriers; our ability to provide
exceptional service to our agents; and our ability to attract and retain key
personnel.  Our major competitors include marketers of traditional
healthcare insurance products and discount and limited medical plan providers
such as Access Plans, AmeriPlans, Assurant Health, CAREington International, New
Benefits, Vertrue and other smaller and larger organizations. Many of our
competitors are more established than we are, have substantially larger customer
bases and have greater financial and non-financial resources than we
do.
  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
RegulationsMore than twenty (20) 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
registrationof 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.
 
  2
  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 plansas discussed
above.  However, we may receive inquires from insurance
commissioners in various states in which we
operate requestingthat 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 that 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.
 
 Additional
governmental regulation or future interpretation of existing regulations may
increase the cost of compliance or materially affect the 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
AdvertisingRegulations.  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 method 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
Reformand Legislative
Developments.In addition to the
foregoing, ongoing legislative and regulatory reforms of the healthcare
industry at the state and federal levelsmay 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 legislationwill be proposed orenacted 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.
 
 Risk
Factors
 
 Investors should carefully consider the risks
described below before investing or maintaining an
investmentin the Company. We consider these risks to be significant
risksto our
business, operations and financial results. If any of the following risks
occur, our business, results of operations and financial condition could be
seriously harmed, the trading price of our common stock could decline and you
may lose part or all of your investment.In
addition, the risks described below could cause our results of operations to
differ significantly from those expressed in forward-looking
statements.
 
 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 market. The Company’sbusiness has undergone significant transformation during the past year 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.  Many companies with business plans based on providing
similar healthcare products and services have failed to be successful. We have
experienced significant losses since inception and, even if demand from members
exists, we cannot assure you that our business will be
successful.
  3
  The Company has a history of
significant losses and may not be profitable in the future and has going concern
considerations.The
Company has a history of net losses and has an accumulated deficit of
$77,099,408, from inception through December 31, 2007.  In addition, for each of the past three years, the
Company has generated large net operating losses and negative operating cash
flows.Furthermore, developing the Company’s business strategy
and expanding the Company’s services will require additional capital, which may
or may not be available to the Company. You should not rely solely on the public
market valuation of the Company and the views of security 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 or
maintain profitability may cause volatility in the price of our common stock in
the public market.
  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 and
external sales forces. To this end, the Company has decided to invest
substantial funds to increase its sales and marketing resources in order to grow
revenues. In order to implement this strategy, the Company will require funding
for additional personnel, capital expenditures and other expenses, 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. This, in turn, could 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 combinationof both, then the
shareholders will suffer dilution, and any new securities may have rights,
preferences and privileges senior to those of our common stockand 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;
and
 ·
              the departure of key management and
      employees.
 
 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 servicemakeit 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 ormembers. 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.
  4
  The Companyfacessignificant 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.
 
 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 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
companiescould 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 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 providing such benefits exists, then the Company may
experience adverse operating results.
 Government regulation of healthcare
and insurance creates risks and challenges with respect tothe 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 faces potential
liability related to the privacy and security of personal information it
collects from consumers through its websites.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.
 
 We face litigation risks from
currently pending claims as well as claims which may arise in the
future.  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.
  5
  Risks
Related to Our Stock
 
 Our practice of issuing shares
valued at a certain “peg price” as a portion of the consideration payable in
connection with acquiring businesses may require us to issue additional shares
in the future or may result in the unwinding of certain
acquisitions.Shares of Class A
common stock typically comprise a significant portion of the consideration
payable in connection with our strategic acquisitions.  In such cases,
the value of the shares paid as consideration is generally deemed equal to $5.00
per share (the Peg Price).  In the event the trading price of the
Company’s Class A common stock does not meet the Peg Price as of a future date
defined in the applicable acquisition agreement (the Determination Date), the
Company may be required to issue a substantial number of additional shares of
Class A common stock to the parties from whom the business was
acquired.  If the trading price of Class A common stock is below a
certain threshold, typically $1.50, as of the Determination Date, the Company
may elect to unwind the acquisition rather than issuing additional
shares.  In the event the Company elects to unwind the acquisition,
typically the Company is entitled to receive back 80% of the shares of Class A
common stock initially issued to the parties from whom the business was
acquired.  Although we may have the right to unwind an acquisition
transaction, it may be difficult or impossible for us to do so, especially if
the acquired business has to be integrated into our operations.  In
addition, any unwinding is likely to be costly and disruptive to our business
operations.  In the event the Company is required to issue additional
shares of Class A common stock, such additional issuance will be dilutive to our
stockholders.  The amount of dilution could be substantial and will
depend upon the trading price of the Company’s Class A common stock on the
Determination Date.  In the alternative, unwinding the transaction may
result in the loss of a substantial portion of our business and may slow our
growth and have a material adverse affect our
operations.
  We incur costs as a result of being
a publicly-traded company.As a publicly-traded company, we
incur legal, accounting and other expenses, including costs associated with the
periodic reporting requirements applicable to a company whose securities are
registered under the Securities Exchange Act of 1934, as amended (the Exchange Act), recently adopted corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002, and
other rules implemented relatively recently by the Securities and Exchange
Commission (SEC) and the Financial Industry
Regulatory Authority (FINRA).
 We do not intend to pay dividends on
ourcapital 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 mayraise 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 andour
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.
  Weidentifiedamaterialweaknessinourinternal 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.  The first annual assessment of our internal
controls that our management was required to prepare was completed in connection
with the preparation of our financial statements for the year ended December 31,
2007.  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, 2007.
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 relativelynew 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, 2008, unless extended by the SEC as currently
proposed.  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.
  6
  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 Companywillreceive 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 use 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.
  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 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 shareholders.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
2. DESCRIPTION OF PROPERTY
 
 Amacore’s
executive offices are located at 1211 North Westshore Boulevard, Suite 512,
Tampa, Florida 33607. Our telephone number is (813) 289-5552. In addition,
Amacore maintains a sales and administrative office located at 195 International
Pkwy, Lake Mary, Florida 32746 Suite 101.  The sales and
administrative office phone number is (407) 805-8900.  The executive
office lease expires on May 31, 2008, with four one-year renewal periods, and
the sales and administrative office is leased on a month-to-month basis. In
total, these offices consist of approximately 6,000 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
executive offices, customer service center and fulfillment center are located at
4929 W. Royal Ln., Irving, Texas 76063.  The office telephone number is
(972) 915-4800.  These facilities are leased and consist of approximately
30,000 square feet.  The lease expires on September 30, 2011.
 
 Rent
expense relating to these properties totaled $157,537 and $80,156 for the years
ended December 31, 2007 and December 31, 2006, respectively.
  7
  
 ITEM
3. LEGAL PROCEEDINGS
 
 As of
December 31, 2007, we were involved in various lawsuits, 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, but cannot be certain.
  In
addition to various lawsuits, claims or dispute arising in the ordinary course
of business, on January 9, 2006, the Company was served with a Summons and
Complaint (the Complaint) in an action captioned, "Richard Abrahamson, M.D., Plaintiff vs. The Amacore
Group, Inc., F/K/A Eye Care International, Inc.,
Defendant."  The Complaint, which was filed in The Court of
Common Pleas for Hamilton County, Ohio on December 30, 2005, alleged nonpayment
by the Company of certain promissory notes and sought damages in the amount of
$111,839. The Company believed, at that time, that the plaintiff's records were
in error and proceeded to document to plaintiff's counsel full payment of all
monies due plaintiff under the promissory notes. Plaintiff's counsel and the
Company agreed to extend the Company's time to answer or move with respect to
the Complaint for an indefinite period of time in order to provide plaintiff
with an opportunity to recheck plaintiff's records. It was the Company's belief
that when so rechecked, plaintiff would withdraw the Complaint.
  On
February 15, 2007, Plaintiff filed an amended complaint in The Court of Common
Pleas for Hamilton County, Ohio, Case No. A 0511133, captioned, Richard Abrahamson, Plaintiff vs. The Amacore Group,
Inc., F/K/A Eye Care International, Inc. and Clark A. Marcus, Defendants,
alleging breach of promissory notes, breach of oral loan agreements, action on
account of promissory notes and oral agreements, breach of third party
beneficiary contracts, breach of fiduciary duty to issue share certificate upon
gift of share to plaintiff, breach of fiduciary duties and unjust enrichment.
Actual damages alleged are in excess of $3,900,000, not including interest. An
additional $2,400,000 in punitive damages is also claimed. The amended complaint
also asserts the right to recover attorney's fees.
  While the
Company is unable to predict the ultimate outcome of the litigation, after
reviewing the amended complaint, the Company believes that neither it nor Mr.
Marcus is liable to the plaintiff; they have defenses to each allegations in the
amended complaint; and intend to vigorously defend their position and advance
appropriate counterclaims.  The ultimate outcome of this litigation
cannot be predicted.  If the outcome is not favorable to the Company,
it would have a material adverse affect on the Company, its cash flows and
financial position.
 
 LifeGuard
is named as a defendant in the matter styled Martex
Software, Inc. vs. LifeGuard Benefit Services, Inc.  This claim is
for an unpaid invoice totaling $442,992.  LifeGuard has consistently
maintained that Martex Software, Inc. submitted an invoice that was grossly
inflated and rendered in bad faith.  LifeGuard never entered into an
agreement to pay Martex Software, Inc. for any time or service past the point of
December 22, 2004.  All invoices up to that point were paid in full by
LifeGuard.  An offer of $75,000 was made in May 2007 to bring to matter to
a close.  This offer was not accepted by Martex Software, Inc.  The
court date for this lawsuit has been schedule for October 2008 with mediation to
begin in September 2008.
 
 LifeGuard
is named as a defendant in the matter styled Planmedica
Healthcare Solutions, LLC vs. Protective Life Insurance Company et
al.  This claim totals $2,400,000 and is against Protective
Life Insurance Company.  Although it was named as a co-defendant,
LifeGuard is vigorously contesting that it should not be a party to this
litigation as it does not have a contract with the
plaintiff.  Management believes that this litigation will not have a
material effect on LifeGuard.
 
 On
January 30, 2008, the Company’s wholly owned subsidiary, Zurvita, Inc. (Zurvita)
filed for declaratory judgment, Mark
Jarvis and Zurvita, Inc. vs. Ameriplan Corp., asking the court to
determine the rights of Zurvita and its President, Mark Jarvis to market, sell
and compete against AmeriPlan®, a company to which Jarvis was an independent
contractor to for the past 14 years.  AmeriPlan® filed their own
petition with the court and sought to restrain and prevent Jarvis and Zurvita
from soliciting members of Jarvis’s downline sales professionals (and others) to
join Zurvita’s sales force.  On March 27, 2008, after a full
evidentiary hearing, the 192nd Judicial District Court of Dallas County denied
AmeriPlan®’s motion for a temporary injunction against Jarvis and
Zurvita.  The court still has to decide on Zurvita’s petition for
declaratory judgment.  There is a possibility that the court may
declare that Zurvita and Jarvis may be unable to market certain products in
direct competition with AmeriPlan® and therefore restrict Zurvita’s product
range and potential sales. However, given that Jarvis has no contractual
non-compete obligation with AmeriPlan®, Zurvita believes that the court will
resolve this matter in its favor.
 
 While the
Company believes that all the above lawsuits are without merit and will continue
to vigorously defend each suit, the Company has accrued $3,700,000 to cover
potential settlements and judgments, and ongoing legal defense
costs.
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS
 
 In
January, 2007, we received written consent from a majority of our shareholders
to increase our authorized shares from six hundred forty million (640,000,000)
shares to one billion (1,000,000,000) shares. The authorized shares for Class A
common stock was increased from five hundred million (500,000,000) shares to
eight hundred sixty million (860,000,000); our authorized shares of Class B
common stock remained at one hundred twenty million (120,000,000) shares and our
authorized shares of preferred stock remained at twenty million (20,000,000)
shares.
 
 In
December, 2007, we received written consent from a majority of our shareholders
to increase our authorized shares from one billion (1,000,000,000) shares to one
billion five hundred million (1,500,000,000) shares. The authorized shares for
Class A common stock was increased from eight hundred sixty million
(860,000,000) shares to one billion three hundred sixty (1,360,000,000) million
shares; our authorized shares of Class B common stock remained at one hundred
twenty million (120,000,000) shares and our authorized shares of preferred stock
remained at twenty million (20,000,000) shares.
 
  8
  PART II
  ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..
 
 Market
Information
 
 Our Class
A common stock is listed and traded principally on the OTCBB under the symbol
"ACGI." 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, 2007 and
2006. These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
 
 Quarter
      Ended
              High
              LowMarch
      31, 2006
              0.05
              0.02June
      30, 2006
              0.05
              0.01September
      30, 2006
              0.09
              0.01December
      31, 2006
              0.06
              0.02March
      31, 2007
              0.31
              0.03June
      30, 2007
              0.38
              0.21September
      30, 2007
              0.45
              0.20December
      31, 2007
              0.75
              0.31
 
 Holders
 
 As of
March 31, 2008, 109,736,748 shares of our Class A common stock are issued and
outstanding and there were three hundred and four (304) stockholders of record.
There were also seventeen (17) stockholders of record holding 29,069,055 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.
However, all preferred stock series are entitled to receive dividends payable on
their respective stated values at a rate of 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 of the Corporation legally available for the payment of
dividends.  The accumulation of unpaid dividends shall bear interest
at a rate of 6% per annum.  We have never paid any dividends on our
common or preferred 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.
 
 Recent
Sales of Unregistered Securities
 
 On
January 30, 2007, we issued 75 shares of our Series D, Mandatory Convertible, 6%
Preferred Stock (Series D Preferred Stock)to Vicis Capital Master Fund (“Vicis”)in exchange for $750,000.  Shares
of Series D Preferred Stock, which
have a maturity date of July 15, 2011, are convertible into shares ofour Class
Acommon stockat a conversion
price of $0.01 per share at any time after January 31, 2009. The
conversion price is subject to certain adjustments.  In addition, if
on July 15, 2011 any share of Series D 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 D Preferred Stock into Class A common stock at the then
applicable Conversion Price.
 
 On April
1, 2007 we issued 150 shares of our Series D Preferred Stock to Vicis in
exchange for $1,500,000.
 
 On March
30, 2007, we received a loan from Vicis in the amount of
$3,300,000.  The loan, which accrued interest at the rate of 4% compounded
monthly, could be redeemed at the
discretion of the Company, in part or in whole and including accrued interest,
until May 1, 2007, when it was converted
into shares ofSeries D Preferred Stock. On
May 1, 2007, this loan of $3,300,000 and
accrued interest of $11,000 was converted into 331.1 shares of Series D
Preferred Stock.  Up to 90% of the
shares of Series D Preferred Stock were subject to redemption by the Company
from May 1, 2007 through December 1, 2007.  The Company chose
not to redeem any part of the preference shares.
 
 On
November 9, 2007, the Company issued 300 shares of its Series G Mandatory
Convertible,6% Preferred Stock (Series G Preferred Stock)to Vicis for
$3,000,000.  Shares of Series G
Preferred Stock are convertible into that number of shares ofClass A common stock
determined by dividing the stated value per share
($10,000) by the conversion price.  Should the market price of
our Class A common stock not exceed $5.00
per share on the second anniversary of this financing, the conversion price will
be adjusted to reflect the market price of the shares at that time, but not
adjusted below $0.01 per share.The
conversion price is also subject to other adjustments.  If the
Conversion Price is reduced below $1.50 as a result of an adjustment on the
second anniversary of issuance, the Company may, within ten (10) days after the
second anniversary of the issuance date of the Series G Preferred Stock, elect
to redeem all, but not less than all, of the outstanding Series G Preferred
Stock by paying cash in exchange for each share to be redeemed in an amount
equal to 150% of the Stated Value, less all dividends paid
thereon.  In addition, 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 Conversion
Price.
 
 The shares referenced in the issuances described above were offered and sold
to Vicis in private placement transactions in reliance upon exemptions from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended(the Securities
Act).  The Company based such reliance on certain
representations made by Vicis to the Company in the respectively purchase agreements including that
Vicis is an accredited investor as defined in Rule 501 of Regulation Dpromulgated pursuant to Section 4(2) of the Securities
Act.
  9
  Authorized for Issuance UnderEquity 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, 2007 no
options have been granted under the Plan.
 
 As of December 31, 2007, warrants to acquire an
aggregate of 20,452,850 shares of Class A common stock at exercise prices
ranging from $0.01 to $2.40 are outstanding.  Warrants to acquire an
aggregate of 7,965,000 shares of Class B common stock at exercise prices ranging
from $0.16 to $0.50 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.  All warrants are exercisable immediately upon date of
grant.
 
 The following is a summary of our stock option plans and
outstanding warrants issued pursuant to compensatory equity arrangements as of
December 31, 2007:
 
 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
              28,417,850
              $0.37
              n/aTotal
              28,417,850
              $0.37
              750,000











10





Item
6. Management's Discussion and Analysis or Plan of Operations





The
following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto, and other financial
information included elsewhere in this Form 10-KSB. This report contains
forward-looking statements that involve risks and uncertainties. Actual results
in future periods may differ materially from those expressed or implied in such
forward-looking statements as a result of a number of factors, including, but
not limited to, the risks discussed under the heading "Risk Factors" and
elsewhere in this Form 10-KSB.  The Risk Factors should be reviewed in
conjunction with the following discussions and analysis





Overview





The
Company was founded over 10 years ago andbegan selling memberships in our
discount vision program to retail customers in an effort to prove that a vision
discount plan with an ophthalmologic (amedical doctorspecializing in eye
care) panel included would
be not only accepted, but desired, by the general public and prove to other
marketers of various health plans the benefits of including such a plan in their
products.We sold the plan on a retail only basis
for many years proving that the general public did desire to have a vision plan
with their medical coverage.  Once proof of concept became a reality,
we shifted our emphasis to marketing our plan to marketers of health benefit plans.Marketing programs on a retail basis
requires a broad national marketing staff which we were not financially prepared
to support, whereas a much smaller staff is needed to market to others on a
wholesale basis.During the period during which we were transitioning to andbuilding up our wholesale network,
revenues decreased and losses increased.  Our retail marketing efforts
were reduced and we devoted most of our time to the continued development of our
wholesalenetwork and developing
contractual relationships with other marketers of various health plans,
including, but not limited to, insurance companies and marketers of other
discount plans such as dental, vision (without a vision medical component), and
prescription drugs.  Those contracts did not
produce a substantial amount of revenue but served to establish The Amacore
Group as having a product capable of not only servicing the needs of the general
public, but servicing the marketers of other healthcare programs as a lead
generator for their agents.  It also served to position us with
marketers of other healthcare programs in such a way as to attract those
marketers to The Amacore Group from a management perspective.  We then
initiated activity designed to increase the scope of our product line; increase
our distribution channels for our product line and increase our ability to
generate sales leads for our distribution channels.  Integral
tothese goals was the
hiring of executive personnel, experienced in the design and marketing of
various types of healthcare programs ranging from discount programs to insured
components.  Additionally, it was important for us to further develop
the free eye exam component of our vision plan so that this component could
serve as a sales lead generator for a wide range of other healthcare
products.




In
January, 2007, we entered into long-term employment agreements with Mr. Jay
Shafer, the former president of Protective Marketing Enterprises, Inc. (PME),
and Mr. Guy Norberg, the former vice president of sales and marketing of PME. We
also entered into an agreement employing Mr. William Heneghan, former vice
president of operations for Innovative HealthCare Benefits, Inc., which had an
intimate relationship with PME. Mr.Shafer now serves as Amacore Group’s
President, Mr. Norberg serves as its Senior Vice President of Sales and
Marketing and Mr. Heneghan serves as its Director of Operations. Along with the
hiring of Messrs. Shafer, Norberg and Heneghan, we have also hired other staff
members to support our expanding programs and opened a second office near
Orlando, Florida.





During
2007, we concentrated our efforts on developing a wide range of both discount
and insured products, which we intended to market through a significant number
of distribution channels with whom Messrs. Shafer and Norberg had worked in the
past. We successfully contracted with a number of distribution channels
experienced not only in the sale of the types of products designed by us, but
with the networks forming the components of our new product line.  As
a result, we have now positioned ourselves to provide not only vision programs
but discount medical doctor visit programs, hospital savings programs, dental
programs, hearing programs, chiropractic programs, pharmacy programs, an
emergency informational system called Contact 911, long-term care programs,
emergency medical travel and savings on alternative medicine, vitamins and
nutritional supplements.  Some program features
include access to a 24-hour nurse hotline, 24-hour counseling, a service whichcan get medical histories delivered to medical service providers around
the world and the services of a personal patient advocate.  Weare also in a position to market
limited medical indemnity and accident group insurance
programs.In addition, we added an innovative network product
of state-licensed, primary care physicians that diagnose routine, non-emergency,
medical problems and recommend treatment and prescribe medication with a phone
call called TelaDoc. Further, the addition of the program Global MedNet
distributes personal medical records worldwide in the event of an emergency
medical crisis.





We
contracted with Chase Paymentech Solutions, LLC, who is one of the world’s
largest merchant acquirers accepting payments at the point of sale. During the
same period, we simultaneously worked on developing various electronic systems
necessary not only for the sale of our products, but the tracking of our revenue
and payment of commissions to our sales agents on a weekly basis - a payment
schedule we believe is unique to the healthcare industry. Management believes
that this type of payment schedule will significantly strengthen our
relationships with our various sales organizations. On May 1, in a 60-day
program build, we completed the development of The Amacore Group gateway for
transactions that include direct response, call center and web enrollment
integrating commerce engines, our direct lease line to Paymentech and commission
reconciliation for the benefit of our marketing partners. Further, this
development allowed us to transition existing ECI business to a monthly renewal
model.





We also
entered into a strategic development agreement with Bridgeport,
Connecticut-based OPTIMUS Solutions Consulting LLC (“OPTIMUS”), a privately held
pioneer in the field of integrated solution development, as part of our
continuing strategic initiative to aggressively expand healthcare services
distribution channels. OPTIMUS has fully integrated the development of our back
office system with the OPTIMUS front-end, call center marketing system and they
are on target to launch two licensed call centers (containing licensed
representatives able to sell insurance products) that are expected to produce
sales in the second quarter of 2008.  With the development now
complete, the focus now will be on expanding distribution through additional
call center relationships under OPTIMUS’s management.













11





STRATEGIC
INITIATIVES





Our
strategic initiatives in 2007 focused around a three-staged plan.  The
plan had, as its initial stage, the development of an electronic system capable
of supporting a full administrative array of services involved in the healthcare
industry.  In particular:  (a) total agent support,
including the payment of agent commissions on a weekly basis; (b) customer
support; and (c) full carrier support.  The second stage involved the
development of a substantially enhanced array of products, and the third stage
involved the establishment of six major distribution channels – direct response
banking, direct response marketing, direct sales, agent sales, private label and
wholesale transactions.





In
developing this plan, we were well aware of the fact that the first two stages
of development would produce little to no revenue and could take the better part
of the entire 2007 year.  That notwithstanding, we were also acutely
aware of the fact that without the proper development of the first two stages,
whatever sales that might inure to Amacore through the development of the third
stage (distribution channels) might well be short-lived.  With that in
mind, we entered into the strategic plan as outlined above.





During
the first two quarters of 2007, we devoted substantially the entirety of our
time to the development of our back-office systems as described
above.  Revenues during the first two quarters were, in the aggregate,
less than $600,000.  During the third quarter of 2007, we initiated
the testing phase of those systems, including our inbound telemarketing
system.  During this quarter, we generated approximately $215,000 in
revenues but, more importantly, we were able to refine all of our systems and
position ourselves for launch during the fourth quarter of 2007.





By the
fourth quarter, we believed that we had properly developed our electronic
system; developed a substantially enhanced array of products totaling
approximately 86 different modular programs and had well advanced our
acquisition and contractual arrangements with distribution
channels.  Simply put, by the fourth quarter, we believed we had
achieved a forefront position in the healthcare industry.  In
particular, with respect to our distribution channels, we had either purchased
or put in place contracts to secure these channels.  On August 31,
2007, we acquired JRM a ten-seat inbound telemarketing call center with
additional agent distribution channels available to it.  On October 9,
2007, we acquired LifeGuard Benefit Services, Inc. (LifeGuard), which brought us
an additional 52 inbound telemarketing seats plus significant agent distribution
channels plus an array of additional company-owned products complementary to
those products already either owned or otherwise being marketed by
us.  LifeGuard also provides us with an established vertical
administrative electronic system capable of tracking distribution, sales
fulfillment, commission payments and a patient advocacy program unique in the
healthcare industry.  Prior to these acquisitions, we had also
contracted with OPTIMUS Solutions Consulting LLC (OPTIMUS) which provided us
with access to approximately 150 inbound telemarketing rooms plus additional
distribution channels, and OPTIMUS’s obligation to construct an additional
electronic system, customized to our needs, to track sales of our products
through our various distribution channels including affiliate internet marketing
partners, credit card service centers, infomercial inbound centers and banking
channels.  The cost of the construction of this system was borne
exclusively by the OPTIMUS group.  We believe that these efforts
helped us to achieve gross revenues in the fourth quarter of
approximately $3,500,000, with prospects for the first quarter of 2008 to be
substantially greater.  While we believe our revenues will increase in
2008, we cannot offer any assurance that we will be profitable or reduce our
losses in 2008.





Leading
into 2008, we had already commenced discussions to acquire yet another
distribution channel, US Health Benefits Group (USHBG) (See Note 22 – Subsequent
Events), a fifty-seat, inbound telemarketing call center that engages in
the marketing of association membership programs and health insurance plans to
individuals and families throughout the United States. USHBG utilizes its
proprietary call center software application (LeadMaster) to connect consumers
who are searching online for a health care quote with sales agents in one of its
multiple call centers.  USHBG markets LifeGuard’s DirectMed
association membership program generating approximately $1 million a month in
gross revenue for LifeGuard, resulting in $500,000 per month in commission
revenue to USHGB.





All these
activities are in line with our aim of vertical integration.  Through
well planned vertical integration, we believe we will be able to own even more
of the products we sell and own more of our distribution channels, allowing us
to retain more of the end dollar spent by each customer.  We intend to continue to seek acquisitions that
we believe further the Company’s strategic
initiatives.  With our products ready to go to market and our
distribution channels in place, we expect the hard work during 2007 to bear
fruit, which began in the fourth quarter of 2007 with increased traction and
growth anticipated in 2008.  Growth is anticipated to occur both
organically through Amacore, LifeGuard and JRM as well as from additional
strategic acquisitions such as USHBG.While we do anticipate growth, profitability
in 2008 can be guaranteed.





Critical
Accounting Policies





General





Management’s
discussion and analysis of its financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The consolidated
financial statements as of and for the fiscal year ended December 31, 2007 and
2006 include the accounts of Amacore Group, Inc. and our wholly-owned
subsidiaries LBI, Inc., JRM and LifeGuard.  Significant intercompany
balances and transactions have been eliminated in consolidation. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On an on-going basis,
we evaluate our estimates, including those related to the reported amounts of
revenues and expenses, bad debt, investments, intangible assets, income taxes,
and contingencies and litigation. We base our estimates on historical experience
and on various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from these estimates under different
assumptions or conditions.










12





Industry
Segment





The products offered and operationalactivities of
JRM and LifeGuard are similar in nature to the
Company’s activities.  Management has not reported these entities as
separate reporting segments for 2007 since in management’s opinion they are
managed collectively.  The Company’s subsidiary LBI had immaterial
activity during 2007 and 2006; accordingly, LBI has not been considered a
reportable segment since in management’s opinion the results of LBI Inc’s
operations are not usedin decision making
relating to the allocation of resources and in the assessment of the Company’s overall performance.





Cash
and Cash Equivalents





For
purposes of the statement of cash flows, we consider all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.





Restricted
Cash





Pursuant
to the merger agreement between the Company and LifeGuard, the Company deposited
$316,935 into escrow to be used for the settlement of an Internal Revenue
Service liability currently in negotiation and expected to be resolved during
fiscal 2008.





Software
Development Costs





The
Company has adopted Statement of Position 98-1, “Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use.” This statement requires
that certain costs incurred in purchasing or developing software for internal
use be capitalized as internal use software development costs and included in
fixed assets. Amortization of the software begins as software is ready
for its intended use. The Company has capitalized software development costs in
accordance with SOP 98-1 and is amortizing those costs over an estimated useful
life of three years.





Intangible
assets





Intangible
assets consist primarily of intellectual property. Effective January 1,
2004 in accordance with SFAS No. 142 “Goodwill and Other
Intangibles”, intangible assets with an indefinite life, namely
goodwill are not amortized. Intangible assets with a definite life are
amortized on a straight-line basis with estimated useful lives of 3-20
years.  Intangible assets with indefinite lives are not amortized and
will be reviewed for impairment yearly or at such time of a change in a
circumstance or event that would indicate that the carrying amount may be
impaired, should this occur prior to the yearly review.




Impairment
of Assets




In
accordance with the provisions of Statement of Financial Accounting Standard No.
144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”, the Company’s policy is to
evaluate whether there has been a permanent impairment in the value of
long-lived assets, certain identifiable intangibles and goodwill when certain
events have taken place that indicate the remaining unamortized balance may not
be recoverable. When factors indicate that the intangibles assets should be
evaluated for possible impairment, the Company uses an estimate of related
undiscounted cash flows. Factors considered in the valuation include current
operating results, trends and anticipated undiscounted future cash
flows.  There were no impairment losses during the fiscal years ended
December 31, 2007 and December 31, 2006.




Concentration
of Credit Risk





For the
year ended December 31, 2007, LifeGuard’s revenue of $3,191,255 represented
approximately seventy-four (74) percent of total consolidated revenue of
$4,320,861. Of LifeGuard’s revenue, approximately seventy-five (75) percent or
$2,790,075 was derived through one (1) call center, US Heath Benefits Group,
that markets LifeGuard products.  On March 31, 2008, the Company
substantially eliminated this risk by its acquisition of US Heath Benefits Group
(see Subsequent
Events).





Advertising
Costs





The
Amacore Group charges its non-direct response advertising costs to expense as
incurred. During 2007 and 2006, advertising costs were $42,755 and $0,
respectively.





Use
of Estimates




The
preparation of the Company’s consolidated financial statements in conformity
with the rules and regulations of the SEC 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, if any, and
expenses during the reporting period.  The accounting estimates that
require management’s most difficult and subjective judgments include
capitalization of certain assets, depreciation/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 of
the uncertainty inherent in such estimates, actual results may differ from these
estimates.

















13





Revenues
and Commissions Recognition




The
Company recognizes revenues in accordance with SEC Staff Accounting Bulletin No.
101, “Revenue Recognition in
Financial Statements”(“SAB No. 101”) as amended by SEC Staff Accounting
Bulletin No. 104, “Revenue
Recognition”, revised and updated (“SAB No. 104”), which stipulates that
revenue generally is realized or realizable and earned, once persuasive evidence
of an arrangement exists, delivery has occurred or services have been rendered,
the fee is fixed or determinable and collectability is reasonably assured. In
addition, we have reviewed the reporting requirements discussed in EITF 99-19
entitled “Reporting Revenue
Gross as a Principal versus Net as an Agent”, issued by the Financial
Accounting Standards Board, and have determined that revenue from the sale of a
number of our bundled products sold through contracts with vendors should be
reported on a gross basis. The Company’s main source of revenue during the year
ended December 31, 2007 was from the sales of bundled discount benefits with
added insurance components that have a monthly renewal period.  This
revenue is recorded as earned.  We record a provision for estimated
refunds, returns, and allowances which are computed based upon prior actual
history of refunds, returns, and allowances.  Commission expense
associated with this revenue is recorded at the time of sale and is adjusted for
refunds, returns, and allowances.   Revenue of $4,188,084 was
from the sale of the Company’s programs with an estimate for refunds, returns,
and allowances of approximately $19,442.  Another component of revenue
consists of straight commissions with no direct expense or ultimate risk related
to this type of revenue generation.  Commission revenue during 2007
was immaterial.  During 2006, revenues were generated primarily from
membership fees and were recognized over the life of the memberships which
generally are one year from the month after a member signs up for the
program.  Also during 2006, the Company sold two and three year
memberships which the revenues were and, still are, amortized over the life of
these memberships.  During 2007, these revenues are
immaterial.




Fixed
Assets





Fixed
Assets, consisting principally of furniture and fixtures, equipment, computer
equipment and capitalized purchased and internally developed software programs,
are recorded at cost. Depreciation and amortization are provided for, using the
straight-line method, in amounts sufficient to relate the cost of depreciable
and amortizable assets to operations over their estimated useful lives. Repairs
and maintenance are charged to operations as incurred.





A summary
of the estimated useful lives of the property and equipment is presented
below:





Estimated
      useful livesComputer
      hardware
            
            3
      yearsComputer
      software
            
            3
      yearsEquipment
            
            5
      yearsFurniture
      and fixtures
            
            7
      yearsLeasehold
      improvements
            
            Shorter
      of life of asset or lease term




Accounts
Receivable




Accounts
receivable are stated at estimated net realizable value. Accounts receivable are
mostly comprised of balances due from memberships, net of estimated allowances
for uncollectible accounts. In determining collectability, historical trends are
evaluated and specific customer issues are reviewed to arrive at appropriate
allowances. As of December 31, 2007 and December 31, 2006, the allowance
for uncollectible accounts was $0.





Convertible
Instruments





The
Company reviews the terms of convertible debt and equity securities for
indications requiring bifurcation, and separate accounting, for the embedded
conversion feature. 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 (See Derivative Financial Instruments below). 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 instrument. The resulting discount to the face value of debt instrument
is amortized through periodic charges to interest expense using the Effective
Interest Method. The resulting discount to the redemption value of convertible
preferred securities is accreted through periodic charges to dividends over the
term of the instrument using the Effective Interest Rate Method. In June 2006,
the Company redeemed the convertible debt that had been identified as derivative
financial instruments and recognized a Gain on Extinguishment of Debt of
$493,695.  No convertible debt instruments were issued during the year
ended December 31, 2007.





Stock-Based
Compensation





Effective
January 1, 2006, we were required to adopt Statement of Financial Accounting
Standards (SFAS) No. 123R “Share Based Payment” (SFAS
123R) which replaces SFAS 123 and SFAS 148, and supersedes Accounting Principles
Board (APB) Opinion No. 25 “
Accounting for Stock Issued to Employees”. SFAS 123R requires the cost
relating to share-based payment transactions in which an entity exchanges its
equity instruments for goods and services from either employees or non-employee
be recognized in the financial statements as the goods are received or when the
services are rendered. That cost will be measured based on the fair value of the
equity instrument issued. We will no longer be permitted to follow the
previously-followed intrinsic value accounting method that APB 25 allowed which
resulted in no expense being recorded for stock option grants where the exercise
price was equal to or greater than the fair market value of the underlying stock
on the date of grant and further permitted disclosure-only pro forma
compensation expense effects on net income.  SFAS 123R now applies to
all of our existing outstanding unvested share-based stock option/warrant awards
as well as any and all future awards. We have elected to use the modified
prospective transition as opposed to the modified retrospective transition
method such that financial statements prior to adoption remain unchanged. The
Black-Scholes model will continue to be our method of compensation expense
valuation.








14





Derivative
Financial Instruments





The
Company has adopted Statement of Financial Accounting Standard No. 133 “Accounting for Derivative
Instruments and Hedging Activities”.


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 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
or (b) physical or net share settlement is not within the control of the
Company. In such instances, net-cash settlement is assumed for financial
accounting and reporting. Such derivative financial instruments are initially
recorded at fair value and subsequently adjusted to fair value at the close of
each reporting period. Fair value for option-based derivative financial
instruments is determined using the Black-Scholes Valuation Model.





Other
convertible instruments that are not derivative financial instruments are
accounted for pursuant to EITF 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios” and EITF 00-27 “Application of Issue No. 98-5 to
Certain Convertible Instruments” by recording the fair value of the
embedded conversion feature (ECF) as a discount from the initial value of the
instrument and accreted back to face value over the term of the instrument using
the effective interest rate method.





Income
Taxes




We have
adopted Statement of Financial Accounting Standard No. 109 “Accounting for Income
Taxes”.  We have not made a provision for income tax purposes due to
incurring losses since inception.  There is no current tax expense, and
after consideration of a valuation allowance, there is no deferred tax
benefit.





Loss
Per Common Share




Basic
loss per common share was computed using (a) as the numerator, net loss adjusted
for preferred stock dividends and accretions and (b) as the denominator, the
weighted average number of shares outstanding during the periods presented.
Since the Company has a reported net operating loss, diluted loss per common
share is considered to be the same as basic loss per common share since the
effects of convertible securities and common stock option equivalents, if
included in the earnings per share calculation, would have the effect of
reducing the loss per common share.
















15








Results
of Operations





Revenue:





For the
year ended December 31, 2007, revenue was $4,320,862, as compared to $364,807
for the year ended December 31, 2006,an increase of
$3,956,055.  New product offerings and growth in Amacore’s membership
base as well as the recent acquisitions of LifeGuard and JRM contributed to the
significant increase in revenue earned during the year ended December 31,
2007.





Cost
of Goods Sold:





For the
year ended December 31, 2007, cost of goods sold was $2,225,947 as compared to
$15,642 for the year ended December 31, 2006, an increase of
$2,210,305.  The increase in cost of goods sold is a direct result of
the increase in revenue as commissions are due and payable to sales agents when
revenue is earned and recognized.





Gross
Profit:





For the
year ended December 31, 2007, gross profit was $2,094,915 as compared to
$349,165 for the year ended December 31, 2006, an increase of
$1,745,750.  Growth in the Company’s revenue due to new product
offerings, increased membership base and recent acquisitions all contributed to
the increase in gross profit.





Operating
Expenses:





For the
year ended December 31, 2007, operating expenses were $23,278,059 as compared to
$2,608,739 for the year ended December 31, 2006, an increase of
$20,669,320.  The following are the most notable expense categories
that contributed to the overall increase in operating expenses.





Consulting





For the
year ended December 31, 2007, consulting expenses were $3,177,473 as compared to
$222,959 for the year ended December 31, 2006, an increase of
$2,954,514.  This increase is mainly due to $2,301,100 of equity
awards to various vendors and consultants who provided consultative
services.





Payroll and related
benefits





For the
year ended December 31, 2007, payroll and related benefits were $3,366,391 as
compared to $1,333,328 for the year ended December 31, 2006, an increase of
$2,033,063. During the year, the Company added a new executive team consisting
of a new President, Senior Vice President of Operations, Director of Operations,
Chief Medical Officer and administrative staff.   In addition to
these new Amacore executive positions, the recent acquisitions of LifeGuard and
JRM have increased the Company’s number of employees to seventy-six (76) from
seven (7) as of December 31, 2007 and December 31, 2006,
respectively.





Stock and warrant
expense





For the
year ended December 31, 2007, stock and warrant expense were $10,351,250 as
compared to $140,111 for the year ended December 31, 2006, an increase of
$10,211,139.  As an incentive to attract and retain talented
executives and board members, the Company has increased its equity awards to
such Company personnel during fiscal 2007. For further discussion on management
compensation, see Item 10 “Management Compensation” herein.





Accrued Litigation
Expense





For the
year ended December 31, 2007, accrued litigation expense was $3,035,116 as
compared to $0 for the year ended December 31, 2006, an increase of
$3,035,116.  The increase in accrued litigation expense is a result of
additional litigation involving the Company and its subsidiaries and
management’s assessment of probable costs associated in defending each of those
actions in compliance with Statement of Financial Accounting Standard No. 5 “Accounting for
Contingencies.”





Professional
fees





For the
year ended December 31, 2007, professional fees were $884,913 as compared to
$211,575 for the year ended December 31, 2006, an increase of
$673,338.  The increase in professional fees is a result of legal
services and accounting expenses relating to litigation, business development
and strategic acquisitions.





Travel and
entertainment





For the
year ended December 31, 2007, travel and entertainment were $527,179 as compared
to $228,607 for the year ended December 31, 2006, an increase of
$298,572.  During 2007, Company’s executive management team was
focused on business development and identifying strategic acquisitions which
resulted in significant travel and entertainment expenses.











16





Selling and
Marketing





For the
year ended December 31, 2007, selling and marketing were $1,255,518 as compared
to $93,007 for the year ended December 31, 2006, an increase of
$1,162,511.  This increase is a result of the Company’s focus on
increasing membership as well as marketing new products to existing
membership.





Prepaid
Expenses





Prepaid
expenses increased $946,023 to $1,023,798 as of December 31,
2007.  This increase is attributable to LifeGuard’s deferred
commission expenses.  Commissions are paid at time of sale but are
amortized to expense over the membership contractual term.





Other
Income (Expense):





Interest
Expense





Interest
expense for the year ended December 31, 2007 was $154,200 as compared to
$439,260 for the year ended December 31, 2006, a decrease of $285,060. Interest
expense includes a number of components including (a) accrued interest on our
notes payable, (b) amortization of the discounts on convertible debentures,
using the effective interest method, and (c) losses on the conversion of
convertible debentures.  Interest expense decreased mainly as a result
of the decline in notes and loans payable. The Company’s notes and loans payable
decreased from $1,916,950 to $1,414,530 as of December 31, 2007 and December 31,
2006, respectively.





Interest
expense on our notes payable for the year ended December 31, 2007 was $90,039
compared to $221,904 for the same period in 2006.





Amortization
of the discounts on our convertible debentures for the year ended December 31,
2007 was $0 compared to $132,362 for the same period in 2006. The convertible
debentures were converted during the year ended December 31, 2006.





Included
within interest expense for the year ended December 31, 2006, was the loss on
the conversion of convertible debentures in the amount of $118,610. No such loss
was experienced during the year ended December 31, 2007.





Derivative instrument income
(expense) and Extinguishment of Debt





Derivative
instrument income or expense arises from fair value adjustments for certain
financial instruments that are indexed to the Company’s common stock, and are
classified as liabilities when either (a) the holder possesses rights to
net-cash settlement or (b) physical or net share settlement is not within the
control of the Company. In such instances, net-cash settlement is assumed for
financial accounting and reporting purposes when the holder possesses rights to
net-cash settlement or (b) physical or net share settlement is not within the
control of the Company. Such derivative financial instruments are initially
recorded at fair value and subsequently adjusted to fair value through charges
or credits to income at the close of each reporting period in accordance with
Statement of Financial Accounting Standard No. 133 “Accounting for Derivative
Instruments and Hedging Activities”.





Fair
value for our option-based derivative financial instruments is determined using
the Black-Scholes Valuation Model. The Black-Scholes Model requires the
development of highly-subjective assumptions, such as the expected term of
exercise and volatility. Changes to these assumptions may arise from both
internal (e.g. contract renegotiation) and external factors (e.g. changes in the
trading market value of our common stock); such changes could have resulted in
material changes to the fair values of our derivative financial instruments.
Derivative expense was $439,260 for the year ended December 31, 2006. However,
the debentures that were determined to be derivative financial instruments were
redeemed in June 2006, which resulted in a Gain on Extinguishment of Debt of
$493,695. During 2007, the Company did not enter into any derivative instruments
and, accordingly, no derivative income or expense was recognized for the year
ended December 31, 2007.





Net
loss:





Our net
loss amounted to $21,230,186 for the year ended December 31, 2007 compared to
$1,736,247 for the year ended December 31, 2006. The significant increase in our
net loss is discussed above in the details of changes in major income statement
categories.





Preferred
stock dividends and accretions:





Although
the Company has not declared any dividends on its common or preferred stock,
based on the features of the preferred stock, the Company has accrued for
dividends and has recorded such as a reduction to income available to common
shareholders.  The Company also has recorded accretion related to the
beneficial conversion features of certain convertible preferred stock
issued.  Preferred stock dividends and accretions amounted to $590,781
for the year ended December 31, 2007 as compared to $453,498 for the year ended
December 31, 2006. Preferred stock will continue to be accreted until the
preferred stock is converted into common stock or redeemed.





Loss
per common share:





Loss per
common share amounted to $0.18 for the year ended December 31, 2007 compared to
$0.03 for the year the year ended December 31, 2006. Loss per common share is
calculated by dividing loss applicable to common stockholders by the weighted
average number of common shares outstanding. Since the Company has a reported
net operating loss, diluted loss per common share is considered to be the same
as basic loss per common share since the effects of convertible securities and
common stock option equivalents, if included in the earnings per share
calculation, would have the effect of reducing the loss per common
share.











17





Loans
to Stockholders and Officers:





As of
December 31, 2007 and 2006, there were no advances to stockholders or
officers.





Contractual
Obligations





Lease
Commitments: See Note
18 - Commitments and
Contingency in our annual financial statements for information about
non-cancelable commitments under our lease agreements.





Off
Balance Sheet Arrangements





As of
December 31, 2007 and 2006, the Company did not have any off balance sheet
arrangements.





Subsequent
Events





On
January 15, 2008 and March 13, 2008, the Company issued 300 shares and 400
shares, respectively, of its Series G Preferred Stock to Vicis for $3,000,000
and $4,000,000, respectively.





On
February 13, 2008, the Company received notice to convert a promissory note in
the amount of $100,000 with accrued interest of $142,652 into 1,617,680 shares
of Class A common stock which were issued on or about February 13,
2008.





On March
31, 2008, the Company received notice to convert a promissory note in the amount
of $350,000 with accrued interest of $53,162 into 4,031,620 shares of Class A
common stock which were issued on or about March 31, 2008.





On March
31, 2008, the Company acquired USHBG (See Financial Statements Note 22
—Subsequent Events), a call center-based marketing company that engages
in the marketing of association membership programs and health insurance plans
to individuals and families throughout the United States.  USHBG
utilizes its proprietary call center software application (LeadMaster) to
connect consumers who are searching online for a health care quote with sales
agents in one of its multiple call centers.





The
consideration for the acquisition is a combination of cash and
stock.  The agreed value of the acquisition is $14,300,000 and is
payable as follows:





-
            Cash
      at closing $1,140,910


-
            1,800,000
      unregistered shares of our Class A common stock with a deemed value of
      $5.00 per share ($9,000,000
equivalent)


-
            Deferred
      cash of $1,609,090 payable in equal installments quarterly in advance over
      a three year period; and


-
            Earn
      out equal to $2,550,000, being $850,000 per annum based on USHBG attaining
      an audited net contribution of $2,000,000 (Target Contribution) in each of
      the next three (3) years.  This amount will be reduced if USHBG
      does not achieve the Target Contribution or will be or increased if it
      exceeds the Target Contribution.





The
purchase agreement provides for a share adjustment, if necessary, eighteen (18)
months from the acquisition’s effective date.  Within the immediate
preceding thirty (30) day period prior to the share adjustment date if the
Company’s common stock has an average trading price below $5.00 per share,
additional shares of the Company’s common stock will be issued such that the
aggregate number of shares issued under the terms of the merger agreement has a
value equal to the agreed-upon value of $9,000,000.  In the event the
Company’s common stock has an average trading price for the said period of $5.00
or more, no adjustment shall be made to the amount of common stock previously
issued and the previous stock issuance shall be deemed final and not subject to
further adjustment.  However, in the event the average common stock
price is below $1.50 for the said adjustment period, the Company has the right
to effectively unwind the merger and irrevocably transfer 100% of USHBG’s
acquired stock to previous USHBG shareholders.  In addition, the
Company has the right to receive from USHBG shareholders 80% of the Company’s
common stock issued as consideration.





The USHBG
group includes three companies:


·
            US
      Healthcare Plans, Inc, a health benefit discount plan marketing
      company;


·
            On
      The Phone, Inc., a consulting company that receives overrides on all
      Health Care Sales; and


·
            US
      Health Benefits Group, Inc., a health benefit plan marketing
      company.





USHBG’
largest partner is LifeGuard and USHBG markets LifeGuard’s DirectMed association
membership program, which currently generates approximately $1,000,000 a month
in revenues for LifeGuard, resulting in approximately in $500,000 per month in
revenue for USHBG.










18





Liquidity
and Capital Resources





The
following table compares our cash flows for the fiscal years ended December 31,
2006 and 2007.





2007
              
              
              2006Net cash used by operating
      activities
              
              $
              (5,542,322
              )
              
              $
              (2,291,307
              )Net cash (used) provided by
      investing activities
              
              
              (469,187
              )
              
              
              47,715Net cash provided by financing
      activities
              
              
              8,037,505
              
              
              
              2,357,417Net increase (decrease) in
      cash
              
              $
              2,025,996
              
              
              
              113,825


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.





Now that
the Company has begun to generate substantial revenues, we believe that our
current cash resources, together with anticipated revenue, will be sufficient to
sustain our current planned operations for the next 12 months. The Company
raised $7,000,000 from Vicis Capital in two tranches completed in January 2008
and March 2008.  Although management believes that the Company’s
current cash position and anticipated revenue in 2008 will be sufficient to meet
its current levels of operations, 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.  If additional cash
resources are needed, the Company may sell additional equity or convertible debt
securities which would result in additional dilution to our shareholders. 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.





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.






























19




ITEM
7. FINANCIAL STATEMENTS.




REPORT OF INDEPENDENT
REGISTERED


PUBLIC
ACCOUNTING FIRM




Audit
Committee


The
Amacore Group, Inc.


Tampa,
Florida




We have
audited the accompanying consolidated balance sheets of The Amacore Group, Inc.
as of December 31, 2007 and 2006 and the related consolidated statements of
operations, stockholders’ deficit and cash flows for the years then ended. 
These consolidated financial statements are the responsibility of The Amacore
Group'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. as
of December 31, 2007 and 2006 and the results of operations, changes in
shareholders’ deficit and cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.




The
Company is not required to have, nor were engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.







/s/Brimmer,
Burek & Keelan LLP




Brimmer,
Burek & Keelan LLP


Certified
Public Accountants


Tampa,
Florida





April 14,
2008











20








THE AMACORE GROUP,
      INC.CONSOLIDATED BALANCE
      SHEETSAs of December 31, 2007 and
      2006
  2007
              
              
              2006ASSETSCurrent
    assetsCash
              
              $
              2,161,042
              
              
              $
              135,046Restricted
    cash
              
              
              316,935
              
              
              
              -Accounts receivable (net of $0
      allowancefor doubtful accounts in 2007 and
      2006, respectively)
              
              
              470,049
              
              
              
              54,756Non-trade receivables - related
      party
              
              
              64,385
              
              
              
              -Inventory
              
              
              37,814
              
              
              
              -Prepaid
      expenses
              
              
              1,023,798
              
              
              
              77,775Deposits
              
              
              61,236
              
              
              
              -Total current
      assets
              
              
              4,135,259
              
              
              
              267,577Fixed assets (net of accumulated
      depreciation of $132,387 and $84,780for 2007 and 2006,
      respectively)
              
              
              418,356
              
              
              
              21,113Other
assetsGoodwill
              
              
              492,144
              
              
              
              -Intangible assets -
      net
              
              
              667,086
              
              
              
              -Unallocated
      assets
              
              
              13,566,020
              
              
              
              -Total
assets
              
              $
              19,278,865
              
              
              $
              288,690LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)Current
      liabilitiesAccounts
      payable
              
              $
              2,639,200
              
              
              $
              760,148Loans and notes
      payable
              
              
              1,414,530
              
              
              
              1,916,950Accrued expenses and payroll
      taxes
              
              
              5,738,553
              
              
              
              384,761Accrued
      dividends
              
              
              479,896
              
              
              
              53,635Deferred compensation - related
      party
              
              
              602,344
              
              
              
              970,753Deferred
      revenue
              
              
              1,409,984
              
              
              
              6,022Total current
      liabilities
              
              
              12,284,507
              
              
              
              4,092,269Long-Term
      LiabilitiesDeferred
      revenue
              
              
              -
              
              
              
              33,473Total
      liabilities
              
              
              12,284,507
              
              
              
              4,125,742Stockholders' Equity
      (Deficit)Preferred Stock, $.001 par value,
      20,000,000 shares authorized;Series A mandatory convertible
      preferred stock; 1,500 shares authorized;155 shares issued and outstanding;
      aggregate liquidation value of$155,000 as of 2007 and
      2006.
              
              
              -
              
              
              
              -Series C mandatory convertible
      preferred stock; 86 shares authorized;0 and 86 shares issued and
      outstanding as of 2007 and 2006, respectively;aggregate liquidation value of $0
      and $860,000 as of 2007 and 2006,
      respectively.
              
              
              -
              
              
              
              -Series D mandatory convertible
      preferred stock; 689 shares authorized; 689and 133 shares issued and
      outstanding as of 2007 and 2006, respectively; aggregateliquidation value
      of  $7,306,076 and $1,413,425 as of 2007 and 2006,
      respectively.
              
              
              -
              
              
              
              -Series E mandatory convertible
      preferred stock; 139 shares authorized;139 and 84 issued and outstanding,
      respectively; aggregate liquidationvalue of  $1,468,396 and
      $865,386 as of 2007 and 2006,
    respectively.
              
              
              -
              
              
              
              -Series G mandatory convertible
      preferred stock; 300 shares authorized;300 and 0 shares issued and
      outstanding as of 2007 and 2006, respectively;aggregate liquidation value of
      $3,041,425 and $0 as of 2007 and 2006,
      respectively.
              
              
              -
              
              
              
              -Common Stock A, $.001 par value,
      1,500,000,000 shares authorized;110,149,156 and 91,303,820 shares
      issued and outstanding as of 2007 and 2006,
      respectively.
              
              
              110,149
              
              
              
              91,303Common Stock B, $.001 par value,
      120,000,000 shares authorized;27,563,802 and 3,302,802 shares
      issued and outstanding as of 2007 and 2006,
      respectively.
              
              
              27,563
              
              
              
              3,303Additional paid-in
      capital
              
              
              83,956,054
              
              
              
              51,346,783Accumulated
      deficit
              
              
              (77,099,408
              )
              
              
              (55,278,441
              )Total stockholders' equity
      (deficit)
              
              
              6,994,358
              
              
              
              (3,837,052
              )Total liabilities and
      stockholders' equity (deficit)
              
              $
              19,278,865
              
              
              $
              288,690See notes to consolidated
      financial statements





21








THE AMACORE GROUP, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSFor
      the Years Ended December 31, 2007 and 20062007
                
                
                2006REVENUESMembership
      fees
                
                $
                4,188,084
                
                
                $
                364,807Commissions
                
                
                108,787
                
                
                
                -Fulfillment
                
                
                23,991
                
                
                
                -Total
      revenue
                
                
                4,320,862
                
                
                
                364,807COST
      OF SALESSales
      commissions
                
                
                2,086,180
                
                
                
                15,642Insurance
      product cost
                
                
                139,767
                
                
                
                -Total
      cost of sales
                
                
                2,225,947
                
                
                
                15,642GROSS
      PROFIT
                
                
                2,094,915
                
                
                
                349,165OPERATING
      EXPENSESDepreciation
                
                
                47,607
                
                
                
                7,496Amortization
                
                
                41,164
                
                
                
                -Occupancy
      Rent
                
                
                157,537
                
                
                
                80,156Consulting
                
                
                3,177,473
                
                
                
                222,959Payroll
      and benefits
                
                
                3,366,391
                
                
                
                1,333,328Stock
      and warrant employee compensation
                
                
                10,351,250
                
                
                
                140,111Professional
      fees
                
                
                884,913
                
                
                
                211,575Insurance
                
                
                64,073
                
                
                
                114,804Travel
      and entertainment
                
                
                527,179
                
                
                
                228,607Contract
      labor
                
                
                73,889
                
                
                
                78,183Bad
      debt expense
                
                
                -
                
                
                
                5,167Office
      related
                
                
                136,724
                
                
                
                60,640Telephone
                
                
                159,225
                
                
                
                32,706Litigation
      and legal costs
                
                
                3,035,116
                
                
                
                -Selling
      and marketing
                
                
                1,255,518
                
                
                
                93,007Total
      operating expenses
                
                
                23,278,059
                
                
                
                2,608,739Operating
      loss from operations before other income and expense
                
                
                (21,183,144
                )
                
                
                (2,259,574
                )OTHER
      INCOME (EXPENSE)Interest
      income
                
                
                102,652
                
                
                
                -Interest
      expense
                
                
                (154,200
                )
                
                
                (439,260
                )Derivative
      instrument income
                
                
                -
                
                
                
                468,892Extinguishment
      of debt
                
                
                -
                
                
                
                493,695Miscellaneous
                
                
                4,506
                
                
                
                -Total
      other income (expense)
                
                
                (47,042
                )
                
                
                523,327Net
      loss before income taxes
                
                
                (21,230,186
                )
                
                
                (1,736,247
                )Income
      taxes
                
                
                -
                
                
                
                -Net
      loss
                
                
                (21,230,186
                )
                
                
                (1,736,247
                )Preferred
      stock dividend and accretion
                
                
                (590,781
                )
                
                
                (453,498
                )Net
      loss available to common stockholders
                
                $
                (21,820,967
                )
                
                $
                (2,189,745
                )Basic
      and diluted loss per share
                
                $
                (0.18
                )
                
                $
                (0.03
                )Basic
      and diluted weighted average number of  common shares
      outstanding
                
                
                119,654,979
                
                
                
                68,306,991See
      notes to consolidated financial statements





22





THE AMACORE GROUP,
      INC.CONSOLIDATED STATEMENTS OF
      STOCKHOLDERS' EQUITY (DEFICIT)For the Years Ended December 31,
      2007 and 2006
  Preferred
    Stock
              
              
              Common
StockSeries A
              
              Series C
              
              
              Series D
              
              Series E
              
              
              Series G
              
              Series A
              
              Series B
              
              Paid-In
              
              
              RetainedShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalBal ance -December 31,
      2005
              
              
              155
              
              
              
              -
              
              
              
              86
              
              
              
              244,021
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              45,572,570
              
              
              
              45,572
              
              
              
              4,302,802
              
              
              
              4,303
              
              
              
              47,712,483
              
              
              
              (52,914,089
              )
              
              
              (4,907,710
              )Conversion
    ofCommon B to
      A
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              (1,000,000
              )
              
              
              (1,000
              )
              
              
              
              
              
              
              
              
              
              
              -Conversion of
      debtto common
      A
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              31,697,010
              
              
              
              31,697
              
              
              
              
              
              
              
              
              
              
              
              439,678
              
              
              
              
              
              
              
              471,375Common
stockissued for
      servicescancelled
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,750,000
              )
              
              
              (1,750
              )
              
              
              
              
              
              
              
              
              
              
              1,750
              
              
              
              
              
              
              
              -Common
stockissued for
      services
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,459,240
              
              
              
              7,459
              
              
              
              
              
              
              
              
              
              
              
              132,662
              
              
              
              
              
              
              
              140,121Exercise of
      warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,325,000
              
              
              
              7,325
              
              
              
              
              
              
              
              
              
              
              
              15,425
              
              
              
              
              
              
              
              22,750Retirement
    ofpreferred
      stock
              
              
              
              
              
              
              
              
              
              
              (86
              )
              
              
              (244,021
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,679,785
              
              
              
              (174,606
              )
              
              
              1,261,158Sale of preferred
      stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              132.5
              
              
              
              
              
              
              
              84
              
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,365,000
              
              
              
              
              
              
              
              1,365,000Net loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,189,746
              )
              
              
              (2,189,746
              )Balance -December 31,
      2006
              
              
              155
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              133
              
              
              $
              -
              
              
              
              84
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              91,303,820
              
              
              $
              91,303
              
              
              
              3,302,802
              
              
              $
              3,303
              
              
              $
              51,346,783
              
              
              $
              (55,278,441
              )
              
              $
              (3,837,052
              )Sale of preferred
      stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              225
              
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              300
              
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,250,000
              
              
              
              
              
              
              
              5,250,000Covertion of notes
      andaccounts payable
      to  stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              331.1
              
              
              
              -
              
              
              
              55
              
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              7,594,807
              
              
              
              7,595
              
              
              
              
              
              
              
              
              
              
              
              4,088,275
              
              
              
              
              
              
              
              4,095,870Common
stockissued for
      servicescancelled
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,000,000
              )
              
              
              (1,000
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,000
              )Exercise of
      warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,805,750
              
              
              
              1,806
              
              
              
              4,200,000
              
              
              
              4,200
              
              
              
              48,272
              
              
              
              
              
              
              
              54,278Issuance of stock
      foracquisitions
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,669,771
              
              
              
              2,670
              
              
              
              
              
              
              
              
              
              
              
              10,515,543
              
              
              
              
              
              
              
              10,518,213Stock and warrants issued
      forservices
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,335,000
              
              
              
              5,335
              
              
              
              22,500,000
              
              
              
              22,500
              
              
              
              13,084,515
              
              
              
              
              
              
              
              13,112,350Conversion of
      commonB for Common
      A
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,440,000
              
              
              
              2,440
              
              
              
              (2,440,000
              )
              
              
              (2,440
              )
              
              
              
              
              
              
              
              
              
              
              -Equity issuance
      costs
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (552,000
              )
              
              
              
              
              
              
              (552,000
              )Net loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (21,820,967
              )
              
              
              (21,820,967
              )Preferred stock
      accretion
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              174,666
              
              
              
              
              
              
              
              174,666Balance -December 31,
      2007
              
              
              155
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              689
              
              
              $
              -
              
              
              
              139
              
              
              $
              -
              
              
              
              300
              
              
              $
              -
              
              
              
              110,149,148
              
              
              $
              110,149
              
              
              
              27,562,802
              
              
              $
              27,563
              
              
              $
              83,956,054
              
              
              $
              (77,099,408
              )
              
              $
              6,994,358See notes to consolidated
      financial statements





23





THE
      AMACORE GROUP, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFor
      the Years ended December 31, 2007 and 20062007
                
                
                2006Cash
      flows from operating activitiesNet
      loss
                
                $
                (21,230,186
                )
                
                $
                (1,736,247
                )Adjustment
      to reconcile net loss to net cash provided by(used)
      in operating activitiesAmortization
      of discount on convertible debt
                
                
                -
                
                
                
                225,972Issuances
      of shares and warrants for services
                
                
                13,112,350
                
                
                
                177,308Amortization
                
                
                41,164
                
                
                
                -Depreciation
                
                
                47,607
                
                
                
                7,497Derivative
      instrument income
                
                
                -
                
                
                
                (468,892
                )Gain
      on extinguishment of debt
                
                
                -
                
                
                
                (571,590
                )Changes
      in operating assets and liabilities(Increase)
      decrease in accounts receivable
                
                
                72,090
                
                
                
                (28,833
                )(Increase)
      decrease in accounts receivable - related party
                
                
                (346,515
                )
                
                
                -(Increase)
      decrease in prepaids
                
                
                (394,600
                )
                
                
                4,851(Increase)
      decrease in deposits
                
                
                (27,500
                )
                
                
                -Increase
      (decrease) in accounts payable  and accrued
    expenses
                
                
                3,383,086
                
                
                
                (121,688
                )Increase
      (decrease) in deferred compensation
                
                
                (368,410
                )
                
                
                186,952Increase
      (decrease) in deferred revenue
                
                
                168,591
                
                
                
                (6,636
                )Net
      cash used by operating activities
                
                
                (5,542,322
                )
                
                
                (2,291,307
                )Cash
      flows from investment activitiesPurchase
      of property and equipment
                
                
                (152,253
                )
                
                
                (2,825
                )Increase
      in restricted cash
                
                
                (316,934
                )
                
                
                50,000Net
      cash (used) provided by investing activities
                
                
                (469,187
                )
                
                
                47,175Cash
      flows from financing activitiesProceeds
      from sale of preferred stock
                
                
                5,250,000
                
                
                
                1,365,000Equity
      issuance costs
                
                
                (552,000
                )
                
                
                -Proceeds
      on and redemption of convertible notes
                
                
                -
                
                
                
                1,666,500Proceeds
      from exercise of common stock warrants
                
                
                54,278
                
                
                
                22,750Proceeds
      from promissory notes
                
                
                3,334,771
                
                
                
                -Payments
      made on notes payable
                
                
                (330,319
                )
                
                
                -Payments
      on and redemption of convertible notes
                
                
                -
                
                
                
                (969,833
                )Cash
      portion of JRM acquisition price
                
                
                (25,000
                )Funds
      obtained through acquisitions
                
                
                305,775Net
      cash provided by financing activities
                
                
                8,037,505
                
                
                
                2,357,417Increase
      in cash and cash equivalents
                
                
                2,025,996
                
                
                $
                113,285Beginning
      cash and cash equivalents
                
                
                135,046
                
                
                
                21,761Ending
      cash and cash equivalents
                
                
                2,161,042
                
                
                $
                135,046SUPPLEMENTAL
      INFORMATION:Cash
      paid for interest
                
                $
                -
                
                
                $
                -Cash
      paid for taxes
                
                $
                -
                
                
                $
                -See
      notes to consolidated financial statements






24


THE
AMACORE GROUP, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2006














NOTE
1 – NATURE OF OPERATIONS




The
Amacore Group, Inc. (Amacore or the Company) was founded over 10 years ago
andbegan selling memberships in
our discount vision program to retail customers in an effort to prove that a
vision discount plan with an ophthalmologic (amedical doctorspecializing in eye care)
panel included would be not only accepted, but desired, by the general public
and prove to other marketers of various health plans the benefits of including
such a plan in their products. We sold the plan on a retail only basis for many
years proving that the general public did desire to have a vision plan with
their medical coverage.  Once proof of concept became a reality, we
shifted our emphasis to marketing our plan to marketers of health benefit
plans. Marketing programs
on a retail basis requires a broad national marketing staff which we were not
financially prepared to support, whereas a much smaller staff is needed to
market to others on a wholesale basis.During the period during which we were transitioning to andbuilding our wholesale network,
revenues decreased and losses increased.  We continued to market the
plan on a retail basis with less emphasis and devoted most of our time to the
continued development of our wholesalenetwork and developing contractual relationships with other marketers of
various health plans, including, but not limited to, insurance companies and
marketers of other discount plans such as dental, vision (without a vision
medical component), and prescription drugs.  Those contracts did not
produce a substantial amount of revenue but served to establish Amacoreas having a product capable of not only
servicing the needs of the general public, but servicing the marketers of other
healthcare programs as a lead generator for their agents.  It also
served to position us with marketers of other healthcare programs in such a way
as to attract those marketers to The Amacore Group from a management
perspective.  We then initiated activity designed to increase the
scope of our product line; increase our distribution channels for our product
line and increase our ability to generate sales leads for our distribution
channels.  Integral to these goals was the hiring of executive
personnel, experienced in the design and marketing of various types of
healthcare programs ranging from discount programs to insured
components.  Additionally, it was important for us to further develop
the free eye exam component of our vision plan so that this component could
serve as a sales lead generator for a wide range of other healthcare
products.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis of
Presentation





The
accompanying consolidated financial statements include the accounts of Amacore
and its wholly-owned subsidiaries LBI, Inc. (LBI), LifeGuard Benefit Services,
Inc. (LifeGuard) and JRM Benefits Consultants, LLC
(JRM).  Intercompany balances and transactions have been eliminated in
consolidation.





On
October 12, 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 Corp. On September 1, 2007, the Company
completed the acquisition of 100% ownership of JRM Benefits Consultants, LLC
(JRM) through a stock-for-stock merger.  Both acquisitions have been
accounted for using the purchase method of accounting. Operating results of JRM
and LifeGuard are included within the Company’s consolidated statement of
operations beginning September 1, 2007 and October 9, 2007, respectively.
Acquisitions are discussed in more detail in Note 3.





Certain
amounts in the 2006 consolidated financial statements have been reclassified to
conform with the 2007 presentation. Such


reclassification
includes $15,642 of commission expense reclassified from operating expenses to
cost of goods sold.




Industry
Segment





The
products offered and operational activities of JRM and LifeGuard are similar in
nature to the Company’s activities.   Management has not reported
these entities as separate reporting segments for 2007 since in management’s
opinion they are managed collectively.  The Company’s subsidiary LBI
had immaterial activity during 2007 and 2006; accordingly, LBI has not been
considered a reportable segment since in management’s opinion the results of LBI
Inc’s operations are not used in decision making relating to the allocation of
resources and in the assessment of the Company’s overall
performance.





Cash and Cash
Equivalents





For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.





Restricted
Cash





Pursuant
to the merger agreement between the Company and LifeGuard, the Company deposited
$316,935 into escrow to be used for the settlement of an Internal Revenue
Service liability currently in negotiation and expected to be resolved during
fiscal 2008.





25








Inventory





Inventory
includes raw materials used in fulfillment of member packages, including paper,
print materials, toner cartridges, etc.  Inventory on hand is valued
at the lower of cost or market value using the First-In First-Out valuation
method.





Software Development
Costs





The
Company has adopted Statement of Position 98-1, “Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use.” This statement requires
that certain costs incurred in purchasing or developing software for internal
use be capitalized as internal use software development costs and included in
fixed assets. Amortization of the software begins as software is ready
for its intended use. The Company has capitalized software development costs in
accordance with SOP 98-1 and is amortizing those costs over an estimated useful
life of three years.





Intangible
assets





Intangible
assets consist primarily of intellectual property. Effective January 1,
2004, in accordance with SFAS 142 “Goodwill and Other
Intangibles”, intangible assets with an indefinite life, namely
goodwill, are not amortized. Intangible assets with a definite life are
amortized on a straight-line basis with estimated useful lives of three (3) to
twenty (20) years. Intangible assets with indefinite lives are not amortized and
will be reviewed for impairment yearly or at such time of a change in a
circumstance or event that would indicate that the carrying amount may be
impaired, should this occur prior to the yearly review.




Impairment of
Assets





In
accordance with the provisions of Statement of Financial Accounting Standard No.
144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”, the Company’s policy is to
evaluate whether there has been a permanent impairment in the value of
long-lived assets, certain identifiable intangibles and goodwill when certain
events have taken place that indicate the remaining unamortized balance may not
be recoverable. When factors indicate that the intangibles assets should be
evaluated for possible impairment, the Company uses an estimate of related
undiscounted cash flows. Factors considered in the valuation include current
operating results, trends and anticipated undiscounted future cash flows. The
Company has designated October 1 as the annual impairment assessment
date.  There were no impairment losses recorded for the years 2007 and
2006.





Concentration of Credit
Risk





For the
year ended December 31, 2007, LifeGuard’s revenue of $3,191,255 represented
approximately seventy-four (74) percent of total consolidated revenue of
$4,320,861. Of LifeGuard’s revenue, approximately seventy-five (75) percent or
$2,790,075 was derived through one (1) call center, US Heath Benefits Group,
that markets LifeGuard products.  On March 31, 2008, the Company
eliminated this risk by its acquisition of US Heath Benefits Group (see Subsequent
Events).





Advertising
Costs





The
Amacore Group charges its non-direct response advertising costs to expense as
incurred. During 2007 and 2006, advertising costs were $42,755 and $0,
respectively.




Use of
Estimates




The
preparation of the Company’s condensed consolidated financial statements in
conformity with the Rules and Regulations of the Securities and Exchange
Commission require 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, if any, and expenses during the reporting period. The accounting
estimates that require management’s most difficult and subjective judgments
include 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 options issued for services as well as the
allocation of proceeds from the issuance of debt and equity instruments. Because
of the uncertainty inherent in such estimates, actual results may differ from
these estimates.





Revenues and Commissions
Recognition





The
Company recognizes revenues in accordance with SEC Staff Accounting Bulletin No.
101, Revenue Recognition in
Financial Statements(“SAB No. 101”) as amended by SEC Staff Accounting
Bulletin No. 104, “Revenue
Recognition”, revised and updated (“SAB No. 104”), which stipulates that
revenue generally is realized or realizable and earned, once persuasive evidence
of an arrangement exists, delivery has occurred or services have been rendered,
the fee is fixed or determinable and collectability is reasonably assured. In
addition, we have reviewed the reporting requirements discussed in EITF 99-19
entitled “Reporting Revenue
Gross as a Principal versus Net as an Agent”, issued by the Financial
Accounting Standards Board, and have determined that revenue from the sale of a
number of our bundled products sold through contracts with vendors should be
reported on a gross basis. The Company’s main source of revenue during the year
ended December 31, 2007 was from the sales of bundled discount benefits with
added insurance components that have a monthly renewal period.  This
revenue is recorded as earned.  We record a provision for estimated
refunds, returns, and allowances which are computed based upon prior actual
history of refunds, returns, and allowances.  Commission expense
associated with this revenue is recorded at the time of sale and is adjusted for
refunds, returns, and allowances.   Revenue of $4,188,084 was
from the sale of the Company’s programs with an estimate for membership refunds
and returns of approximately $19,442.  Another component of revenue
consists of straight commissions with no direct expense or ultimate risk related
to this type of revenue generation.  Commission revenue during 2007
was $108,787.  During 2006, revenues were generated primarily from
membership fees and were recognized over the life of the memberships which
generally are one year from the month after a member signs up for the
program.  Also during 2006, the Company sold two (2) and three (3)
year memberships which the revenues were and, still are, amortized over the life
of these memberships.  During 2007, these revenues are
immaterial.











26





Accounts
Receivable




Accounts receivable are stated at
estimated net realizable value.  Accounts receivable are primarily
comprised of balances due from memberships, net of estimated allowances for
uncollectible accounts.  In determining collectability, historical
trends are evaluated and specific customer issues are reviewed to arrive at
appropriate allowances.As
of December 31, 2007 and December 31, 2006, the allowance for uncollectible
accounts was $0.





Fixed
Assets





Fixed
Assets, consisting principally of furniture and fixtures, equipment, computer
equipment and capitalized purchased and internally developed software programs,
are recorded at cost. Depreciation and amortization are provided for, using the
straight-line method, in amounts sufficient to relate the cost of depreciable
and amortizable assets to operations over their estimated useful lives. Repairs
and maintenance are charged to operations as incurred.





A summary
of the estimated useful lives of the property and equipment is presented
below:





Estimated
      useful livesComputer
      hardware
            
            3
      yearsComputer
      software
            
            3
      yearsEquipment
            
            5
      yearsFurniture
      and fixtures
            
            7
      yearsLeasehold
      improvements
            
            Shorter
      of life of asset or lease term






Prepaid
Expenses
  Prepaid
expenses increased $946,023 to $1,023,798 as of December 31,
2007.  This increase is attributable to LifeGuard’s deferred
commission expenses.  Commissions are paid at time of sale but are
amortized to expense over the membership contractual term.




Stock-Based
Compensation





Effective
January 1, 2006, we were required to adopt Statement of Financial Accounting
Standards (SFAS) No. 123R “Share Based Payment” (SFAS
123R) which replaces SFAS 123 and SFAS 148, and supersedes Accounting Principles
Board (APB) Opinion No. 25 “
Accounting for Stock Issued to Employees”.  SFAS 123R requires
the cost relating to share-based payment transactions in which an entity
exchanges its equity instruments for goods and services from either employees or
non-employee be recognized in the financial statements as the goods are received
or when the services are rendered. That cost will be measured based on the fair
value of the equity instrument issued. We will no longer be permitted to follow
the previously-followed intrinsic value accounting method that APB 25 allowed
which resulted in no expense being recorded for stock option grants where the
exercise price was equal to or greater than the fair market value of the
underlying stock on the date of grant and further permitted disclosure-only pro
forma compensation expense effects on net income.  SFAS 123R now
applies to all of our existing outstanding unvested share-based stock
option/warrant awards as well as any and all future awards. We have elected to
use the modified prospective transition as opposed to the modified retrospective
transition method such that financial statements prior to adoption remain
unchanged. The Black-Scholes model will continue to be our method of
compensation expense valuation.








Convertible
Instruments





The
Company reviews the terms of convertible debt and equity securities for
indications requiring bifurcation, and separate accounting, for the embedded
conversion feature. 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. (See Derivative Financial
Instruments below). 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 instrument. The
resulting discount to the face value of debt instrument is amortized through
periodic charges to interest expense using the Effective Interest
Method.  The resulting discount to the redemption value of convertible
preferred securities is accreted through periodic charges to dividends over the
term of the instrument using the Effective Interest Rate Method.  In
June 2006 the Company redeemed the convertible debt that had been identified as
derivative financial instruments and recognized a Gain on Extinguishment of Debt
of $493,695. No convertible debt instruments were issued during the year ended
December 31, 2007.










27





Derivative Financial
Instruments





The
Company has adopted Statement of Financial Accounting Standard No. 133 “Accounting for Derivative
Instruments and Hedging Activities”. 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 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 or (b) physical or net share settlement
is not within the control of the Company. 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. Fair value for option-based derivative
financial instruments is determined using the Black-Scholes Valuation
Model.





Other
convertible instruments that are not derivative financial instruments are
accounted for pursuant to EITF 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios” and EITF 00-27 “Application of Issue No. 98-5 to
Certain Convertible Instruments” by recording the intrinsic value of the
embedded conversion feature (ECF) as a discount from the initial value of the
instrument and accreted back to face value over the term of the instrument using
the effective interest rate method.





Income
Taxes




The
Amacore Group has adopted Statement of Financial Accounting Standard No. 109
“Accounting for Income
Taxes”.  The Amacore Group has not made a provision for income tax
purposes due to incurring losses since inception.  There is no current tax
expense, and after consideration of a valuation allowance, there is no deferred
tax benefit.  See note 6.





Loss Per Common
Share




Basic
loss per common share was computed using (a) as the numerator, net loss adjusted
for preferred stock dividends and accretions and (b) as the denominator, the
weighted average number of shares outstanding during the periods presented.
Since the Company has a reported net operating loss, diluted loss per common
share is considered to be the same as basic loss per common share since the
effects of convertible securities and common stock option equivalents, if
included in the earnings per share calculation, would have the effect of
reducing the loss per common share.





Recent Accounting
Pronouncements Issued But Not Yet Adopted




In
September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements(“SFAS No. 157”), which defines fair value, establishes a framework for
measuring fair value under GAAP, and expands disclosures about fair value
measurements. SFAS No. 157 applies to other accounting pronouncements that
require or permit fair value measurements. The new guidance is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and for interim periods within those fiscal years. The Company is evaluating the
potential impact, if any, of the adoption of SFAS No. 157 on its condensed
consolidated financial statements.





In
February 2007, FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities(“SFAS No. 159”). SFAS No. 159 provides
a “Fair Value Option” under which a company may irrevocably elect fair value as
the initial and subsequent measurement attribute for certain financial assets
and liabilities. SFAS No. 159 will be available on a contract-by-contract basis
with changes in fair value recognized in earnings as those changes occur. SFAS
No. 159 is effective for fiscal years after November 15, 2007. SFAS No. 159 also
allows early adoption provided that the entity also adopts the requirements of
SFAS No. 157. The Company does not believe the adoption of SFAS No. 159 will
have a material impact, if any, on its condensed consolidated financial
statements.





In December 2007, the FASB issued SFAS
160 "Noncontrolling
Interests in Consolidated Financial Statements - An Amendment of ARB No. 51''(``SFAS 160''). SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS
160is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. The Company does not have any
noncontrolling interests in subsidiaries and believes that SFAS 160 will not
have a material impact on its financial statements.




In December 2007, the FASB issued SFAS
141 (Revised 2007)"Business
Combinations''(``SFAS
141R''). SFAS 141R establishes principles and requirements for the reporting
entity in a business combination, including recognition and measurement in the
financial statements of the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree. SFAS 141R also
establishes disclosure requirements to enable users of the financial statements
to evaluate the nature and financial effects of the business combination. SFAS
141R applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008, and interim periods within those fiscal
years.





Management
does not believe that any other recently issued, but not yet effected,
accounting standards if currently adopted would have a material effect on the
Company’s condensed consolidated financial statements.





Note 3 –
Acquisitions





On
September 1, 2007, the Company completed the acquisition of 100% ownership of
JRM Benefits Consultants, LLC (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.








28





In
consideration for the shares of JRM common stock, the Company issued 200,000
unregistered shares of its Class A common stock with a deemed value of $5.00 per
share for all outstanding shares of JRM and assumed $287,144 of
liabilities.  The agreed-upon acquisition value per the acquisition
agreement was $1,000,000. The merger agreement provides for a share adjustment,
if necessary, eighteen (18) months from the acquisition’s effective
date.  Within the immediate preceding thirty (30) day period prior to
the share adjustment date if the Company’s common stock has an average trading
price below $5.00 per share, but not less than $2.00 per share, additional
shares of the Company’s common stock will be issued such that the aggregate
number of shares issued under the terms of the merger agreement has a value
equal to the agreed-upon value of $1,000,000.  In the event the
Company’s common stock has an average trading price of $5.00 or in excess of
$5.00 for the said period, no adjustment shall be made to the amount of common
stock previously issued and the previous stock issuance shall be deemed final
and not subject to further adjustment.  However, in the event the
average common stock price is below $2.00 for the said adjustment period, the
Company has the option to terminate this transaction in which event the Company
shall return 100% of the shares received from JRM to previous JRM shareholders
in the same proportion as held immediately prior to the acquisition. In the
event of termination, the Company has the right to receive from the prior JRM
shareholders 80% of the Company’s common stock issued as consideration for the
purchase price.





The
accounting for the below-market guarantee in the above transaction was accounted
for based on guidance from EITF Issue No. 97-15, “Accounting for Contingency
Arrangements Based on Security Prices in a Purchase Business
Combination”. The Company recorded $180,000 as the value of the maximum
amount of shares that potentially may be issued as it is lower than the targeted
value of $1,000,000.  Total recorded acquisition cost was $492,143,
which consists of $180,000 share compensation and $287,143 of liabilities
assumed and $25,000 of bank overdraft.  As a result of this
acquisition, the Company recorded $492,144 of goodwill.





On
October 12, 2007, the Company completed the acquisition of 100% ownership of
LifeGuard Benefit Services, Inc. (LifeGuard) through a stock-for-stock merger
between LifeGuard and the Company’s wholly owned subsidiary, LBS Acquisition
Corp.  The acquisition of LifeGuard strategically assists the
Company’s vertical integration plan within the health benefits program market,
provides new distribution channels, and allows the Company to enhance existing
product offerings to the Company’s clients.





In
consideration for the merger the Company issued 2.469771 unregistered shares of
Class A common stock with a deemed value of $5.00 per share for each share of
outstanding LifeGuard common stock as well as assumed LifeGuard’s retained
deficit of $3,634,085, for an aggregate purchase price of
$15,982,939.  The aggregate number of shares of our Class A common
stock issued in connection with this acquisition was 2,469,771 based on an
agreed-upon value of $12,348,855. The merger agreement provides for a share
adjustment, if necessary, eighteen (18) months from the acquisition’s effective
date.  Within the immediate preceding thirty (30) day period prior to
the share adjustment date if the Company’s common stock has an average trading
price below $5.00 per share, additional shares of the Company’s common stock
will be issued such that the aggregate number of shares issued under the terms
of the merger agreement has a value equal to the agreed-upon value of
$12,348,855.  In the event the Company’s common stock has an average
trading price for the said period of $5.00 or more, no adjustment shall be made
to the amount of common stock previously issued and the previous stock issuance
shall be deemed final and not subject to further adjustment.  However,
in the event the average common stock price is below $1.50 for the said
adjustment period, the Company has the right to effectively unwind the merger
and irrevocably transfer 100% of LifeGuard’s acquired stock to previous
LifeGuard shareholders in the same proportion as held immediately prior to the
merger.  In addition, the Company has the right to receive from
LifeGuard shareholders 80% of the Company’s common stock issued as merger
consideration.  As part of the merger agreement, the Company reserved
approximately $1,770,000 in cash to pay off certain LifeGuard liabilities and as
of December 31, 2007, $316,935 remained in escrow.





Notwithstanding
that the merger was completed on October 12, 2007, pursuant to the merger
agreement, the effective date of the merger is October 9, 2007, and,
accordingly, the results of LifeGuard’s operations from the effective date
through December 31, 2007 have been included in the Company’s consolidated
income statement.





With
regard to the LifeGuard acquisition, the Company is in the process of obtaining
fair market values with respect to certain intangible assets, such as customer
list and intellectual property, and will reallocate to the appropriate asset
categories when completed.  As of December 31, 2007, the Company had
unallocated assets of $13,566,020 within the “Other Asset” section of the
balance sheet.








29





The below
table shows the amount of purchase price assigned to each major asset and
liability captions of the acquired entities.





LifeGuard
              
              JRMAs of
                October 9,
      2007
              
              As of
                September 1,
      2007Fair market value of
      assets:Cash
              
              $
              305,776
              
              
              $
              -Accounts
      receivable
              
              
              409,598
              
              
              
              -Inventory
              
              
              37,814
              
              
              
              -Other
      assets
              
              
              663,045
              
              
              
              -Fixed
      assets
              
              
              421,806
              
              
              
              -Goodwill
              
              
              -
              
              
              
              492,144Software
              
              
              625,000
              
              
              
              -Unallocated intangible
      assets
              
              
              13,519,900Total
      assets
              
              $
              15,982,939
              
              
              
              492,144Fair market of
      liabilities:Accounts
      payable
              
              $
              1,639,839
              
              
              
              -Accounts payable - related
      party
              
              
              873,073
              
              
              
              -Accrued
      expenses
              
              
              1,712,986
              
              
              
              -Loans and notes
      payable
              
              
              271,343
              
              
              
              287,144Deferred
      revenue
              
              
              1,147,486Total
      liabilities
              
              $
              5,644,727
              
              
              $
              287,144





Unaudited Pro Forma
Condensed Consolidated Financial Information





The
following unaudited pro forma condensed consolidated financial information
presents the results of operations for the Company assuming the JRM and
LifeGuard acquisitions had occurred at the beginning of the respective periods
presented. This unaudited pro forma information does not necessarily represent
what the Company’s actual results of operations would have been if the
acquisition had occurred as of the date indicated or what such results would be
for any future periods.





2007
              
              
              2006Revenues
              
              $
              10,046,285
              
              
              $
              4,247,758Cost of goods
      sold
              
              
              2,558,583
              
              
              
              1,315,965Gross
Profit
              
              
              7,487,702
              
              
              
              2,931,793Operating
      Expenses
              
              
              29,652,981
              
              
              
              5,901,462Other
      income/(expense)
              
              
              9,976
              
              
              
              279,556Net Income
      (Loss)
              
              
              (22,155,303
              )
              
              
              (2,690,113
              )Preferred stock dividend and
      accretion
              
              
              (590,782
              )
              
              
              (453,498
              )Net Income (Loss) available to
      common stockholders
              
              $
              (22,746,085
              )
              
              $
              (3,143,611
              )Basic and diluted loss per
      share
              
              $
              (0.19
              )
              
              $
              (0.04
              )Basic and diluted weighted average
      number ofcommon shares
      outstanding
              
              
              121,323,322
              
              
              
              70,776,762





Additional
Acquisition





On March
31, 2008, the Company acquired US Heath Benefits Group (USHBG) (See Note 22 —Subsequent
Events), a call center-based marketing company that engages in the
marketing of association membership programs and health insurance plans to
individuals and families throughout the United States.  USHBG utilizes
its proprietary call center software application (LeadMaster) to connect
consumers who are searching online for a health care quote with sales agents in
one of its multiple call centers.








30





The
consideration for the acquisition is a combination of cash and
stock.  The agreed value of the acquisition is $14,300,000 and is
payable as follows:





·
            Cash
      at closing $1,140,910


·
            1,800,000
      unregistered shares of our Class A common stock with a deemed value of
      $5.00 per share ($9,000,000
equivalent)


·
            Deferred
      cash of $1,609,090 payable in equal installments quarterly in advance over
      a three year period; and


·
            Earn
      out equal to $2,550,000, being $850,000 per annum based on USHBG attaining
      an audited net contribution of $2,000,000 (Target Contribution) in each of
      the next three (3) years.  This amount will be reduced if USHBG
      does not achieve the Target Contribution or will be increased if it
      exceeds the Target Contribution.





The
purchase agreement provides for a share adjustment, if necessary, eighteen (18)
months from the acquisition’s effective date.  Within the immediate
preceding thirty (30) day period prior to the share adjustment date if the
Company’s common stock has an average trading price below $5.00 per share,
additional shares of the Company’s common stock will be issued such that the
aggregate number of shares issued under the terms of the merger agreement has a
value equal to the agreed-upon value of $9,000,000.  In the event the
Company’s common stock has an average trading price for the said period of $5.00
or more, no adjustment shall be made to the amount of common stock previously
issued and the previous stock issuance shall be deemed final and not subject to
further adjustment.  However, in the event the average common stock
price is below $1.50 for the said adjustment period, the Company has the right
to effectively unwind the merger and irrevocably transfer 100% of USHBG’s
acquired stock to previous USHBG shareholders.  In addition, the
Company has the right to receive from USHBG shareholders 80% of the Company’s
common stock issued as consideration.





The USHBG
group includes three companies:


·
            US
      Healthcare Plans, Inc, a health benefit discount plan marketing
      company;


·
            On
      The Phone, Inc., a consulting company that receives overrides on all
      Health Care Sales; and


·
            US
      Health Benefits Group, Inc., a health benefit plan marketing
      company.





USHBG’
largest partner is LifeGuard and USHBG markets LifeGuard’s DirectMed association
membership program, which currently generates approximately $1,000,000 a month
in revenues for LifeGuard, resulting in approximately in $500,000 per month in
revenue for USHBG.








NOTE
4 – 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, 2007 and December 31, 2006.





2007
              
              
              2006Conversion value of note payable
      and interest to preferred stock
              
              $
              3,916,000
              
              
              $
              -Common stock and warrants issued
      for compensation and consideration
              
              $
              13,112,350
              
              
              $
              140,111Preferred stock dividends and
      discount accreted to retained earnings
              
              $
              590,781
              
              
              $
              453,498Conversion value of notes payable
      and interest to common stock
              
              $
              174,463
              
              
              $
              471,375Payment of accounts payable and
      accrued expenses with common stock
              
              $
              14,552
              
              
              $
              -Common shares issued for
      acquisition
              
              $
              10,518,213
              
              
              $
              -





NOTE 5
- INCOME TAXES




In July
2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income
Taxes, and Interpretation of FASB Statement” No. 109(“FIN 48”). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in a
company’s financial statements and prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in an income tax return. FIN 48
also provides guidance in derecognition, classification, interest and penalties,
accounting in interim periods, disclosures and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The adoption of FIN 48 did
not have a significant effect on the Company’s unaudited condensed consolidated
financial statements.





For the
years ended December 31, 2007 and 2006, the temporary differences between book
income and taxable income consisted of the deferred compensation. 
Computation of any deferred tax asset is computed by multiplying these temporary
differences by the approximate applicable tax rate of 38.5 percent.  The
Amacore Group has had continued operating losses since inception and the
prospect for utilization is remote therefore, no deferred tax liabilities or
assets have been recorded.







31





Income
taxes for the years ended December 31, 2007 and 2006 differs from the amounts
computed by applying the effective income tax rate of 38.5 percent to income
before income taxes as a result of the following:




2007
              
              
              2006Computed tax (benefit) expense at
      the statutory rate of 38.5%
              
              $
              8,153,119
              
              
              $
              (587,000
              )Change in deferred tax
      valuation
              
              
              (8,153,119
              )
              
              
              587,000Current income tax expense
      (benefit)
              
              $
              -
              
              
              $
              -






Temporary differences that give
      rise to deferred tax assets and
  liabilities:




2007
              
              
              2006Deferred tax
      assets:Net operating loss
      carryforward
              
              $
              27,502,170
              
              
              $
              20,487,000Allowance for sales
      returns
              
              
              7,516
              
              
              
              -Reserve for commission
      reversal
              
              
              4,275
              
              
              
              -Provision for litigation
      costs
              
              
              1,170,796
              
              
              
              -Gross deferred tax
      asset
              
              
              28,684,758
              
              
              
              20,487,000Deferred tax
      liabilities:Depreciation of fixed
      assets
              
              
              44,638
              
              
              
              -Gross deferred tax
      liability
              
              
              44,638
              
              
              
              -Deferred tax asset -
      net
              
              
              28,640,119
              
              
              
              20,487,000Valuation
      allowance
              
              
              (28,640,119
              )
              
              
              (20,487,000
              )Net Deferred tax
      asset
              
              $
              -
              
              
              $
              -






As of
December 31, 2007, realization of the Company’s net deferred tax assets of
approximately $28,640,119 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, 2007
was $8,153,119.





The
Company has a total of $63,333,482 of net operating losses available to be
offset against future taxable income and that begin to expire between 2011 and
2027.





NOTE 6
- DUE TO (FROM) STOCKHOLDERS/EMPLOYEES





Due to
stockholders/officers included the following:





2007
              
              
              2006Receivables
              
              $
              (9,133
              )
              
              $
              -Deferred
      Compensation
              
              
              602,344
              
              
              
              970,753Net due
              
              $
              593,211
              
              
              $
              970,753








NOTE 7
- ACCOUNTS RECEIVABLE, NET




Accounts
receivable, net consist of the following:





2007
              
              
              2006Accounts
      receivable
              
              
              470,049
              
              
              $
              54,756Less allowance for uncollectible
      accounts
              
              
              -
              
              
              
              -Total
              
              
              470,049
              
              
              $
              54,756









32











For the
years ended December 31, 2007 and 2006, amounts expensed to bad debt were $0 and
$5,167, respectively.








NOTE 8
– FIXED ASSETS, NET





Fixed
assets, net of accumulated depreciation, consist of the following:





2007
              
              
              2006Furniture &
      Equipment
              
              $
              503,470
              
              
              $
              105,893Printing
      Equipment
              
              
              7,341
              
              
              
              -Leasehold
      Improvements
              
              
              39,932
              
              
              
              -550,743
              
              
              
              105,893Less accumulated
      depreciation
              
              
              (132,387
              )
              
              
              (84,780
              )Total
              
              $
              418,356
              
              
              $
              21,113







Depreciation
expense for the years ended December 31, 2007 and 2006 was $47,607 and $7,496,
respectively.








NOTE
9 – INTANGIBLE ASSETS, NET





2007
              
              
              2006Software
              
              $
              625,000
              
              
              $
              -Website development
      costs
              
              
              83,250
              
              
              
              -708,250
              
              
              
              -Less accumulated
      amortization
              
              
              (41,164
              )
              
              
              -$
              667,086
              
              
              $
              -




Amortization
expense for the years ended December 31, 2007 and 2006 was $41,164 and $0,
respectively.  The below table details the estimated amortization
expense for each of the next five (5) fiscal years.





2008
              
              $
              65,4462009
              
              
              178,5332010
              
              
              175,0642011
              
              
              113,0872012
              
              
              -$
              532,130





NOTE 10 -
UNALLOCATED ASSETS





As of
December 31, 2007, unallocated assets of $13,566,020 pertain to intangible
assets acquired as part of the acquisition of LifeGuard. The Company is in the
process of obtaining fair market values with respect to all such assets and will
reallocate to the appropriate asset categories when completed.













33

















NOTE 11
- NOTES AND LOANS PAYABLE





Notes and
loans payable consist of the following as of December 31, 2007 and
2006:





2007
              
              
              2006Promisory notes payable to
      investors and shareholders; bearing interest ranging from 8% to 10% per
      annum; due through December 2006; currently in
    default
              
              $
              532,500
              
              
              $
              532,500Convertible promisory notes
      payable to investors and shareholders; bearing interest ranging from 8% to
      10% per annum; due through December 2006; currently in
      default
              
              
              122,000
              
              
              
              702,000Promisory notes payable to
      investors and shareholders; bearing interest ranging from 8% to 10% per
      annum; due through June 2008
              
              
              40,000
              
              
              
              175,000Convertible promisory notes
      payable to investors and shareholders; bearing interest ranging from 8% to
      10% per annum; due through December 2007
              
              
              357,000
              
              
              
              392,500Promisory notes payable to
      investors and shareholders; bearing interest of 1.53% per annum; due
      through June 2004, increasing to 15% thereafter, currently in
      default
              
              
              114,950
              
              
              
              114,950Revolving consumer credit
      cards
              
              
              228,557
              
              
              
              -Promissory notes payable to
      related parties (at call @ 0% int pa)
              
              
              19,523
              
              
              
              -Total notes and loans
      payable
              
              $
              1,414,530
              
              
              $
              1,916,950










As of
December 31, 2007 and December 31, 2006, all notes and loans payable were
classified as current maturities.








NOTE
12—PREFERRED STOCK





In August
2004, the Company raised a total of $602,000 from the sale of (a) 86 shares of
Mandatory Convertible Series C, six percent (6%) Cumulative, Preferred Stock,
par value $0.001 per share (Series C Preferred Stock) and (b) detachable
warrants to acquire 400,000 shares of Class A common stock at a strike price of
$2.40 per share over a term of five years (the Warrants).





Each
share of Series C Preferred Stock was to be converted at any time until July 30,
2006, when conversion became mandatory. At the time of conversion, each share
would have been deemed to have a value of $10,000 and convertible into Class A
common stock at the lesser of $2.88 per common share or seventy-five percent
(75%) of the lowest closing bid price during the five days immediately prior to
the conversion. As part of the agreements with these two entities, the Company
agreed to register shares which were issuable upon the conversion of the
Warrants and the Series C Preferred Stock. In addition, for each share of Series
C Preferred Stock purchased by them, they had the right to purchase up to one
percent (1) of the issuances of equity securities issued under subsequent
funding transactions.





The
embedded conversion feature on the Series C Preferred Stock and the Warrants
were required to be carried separately as derivative liabilities because
physical or net-share settlement under these contracts is not within the control
of the Company. Further, since proceeds from the sale of Series C Preferred
Stock and Warrants were less than the fair values of the embedded conversion
feature of the Series C Preferred Stock ($1,071,782) and the Warrants
($976,000), the amount received was allocated to the embedded conversion
feature, immediately followed by charges to derivative instrument expense in the
amounts of $0 and $976,000 to increase the derivative instruments to fair
value.








34





As a
result of the aforementioned allocation, the Series C Preferred Stock had no
initial carrying value, but it was to be accreted to its redemption value of
$860,000 through periodic charges to retained earnings over the period through
the redemption date. Accretions on the Series C Preferred Stock amounted to
$590,781 and $453,498
during the years ended December 31, 2007 and 2006, respectively.





In July
2006, pursuant to a Preferred Stock Purchase and Exchange Agreement with VICIS
Capital Master Fund (Vicis), The Company exchanged 86 shares of its Series C
Preferred Stock held by Vicis and having a maturity date of July 30, 2006, for
86 shares of a newly-created six (6) percent Series D Mandatory Convertible
Preferred Stock, convertible into Class A common stock of the Company at a price
of $.01 per share and having a maturity date of July 15, 2011 (Series D
Preferred Stock). In addition, Vicis purchased for approximately $840,000, 84
shares of a newly-created six (6) percent Series E Mandatory Convertible
Preferred Stock, convertible into Class A Common Stock of the Company at a price
of $.02 per share and having a maturity date of July 15, 2011 (Series E
Preferred Stock). Holders of such preferred stock series may be converted into
the Company’s Class A common stock at their respective convertible prices at any
time after July 11, 2008.





The
Company at its option may call for redemption of all  the Series E
Preferred Stock at any time, provided (a) the closing trading price of the Class
A common stock exceeds $0.50 per share (as quoted on the principal exchange,
including for this purpose, the Nasdaq National Market on which it is then
listed, or if it is not so listed, the closing bid price per share for such
stock, as reported by Nasdaq, the OTC Bulletin Board, the National Quotation
Bureau, Incorporated or other similar service which regularly reports closing
bid quotations for such stock) for 15 trading days during any 20-trading day
period; and (b) there is at the time of the call for redemption by the
Corporation, and has been for the period specified in (a) above preceding such
call, an effective registration statement covering the resale of the shares of
Class A common stock underlying the Series E Preferred Stock. The Company shall
effect any redemption of the Series E Preferred Stock by paying in cash in
exchange for each share of Series E Preferred Stock to be redeemed a sum equal
to 150% of the stated value of such shares of Series E Preferred Stock plus all
accruing dividends accrued but unpaid thereon, whether or not declared, with
respect to such share.





On
January 30, 2007 and March 28, 2007, the Company issued 75 shares and 150
shares, respectively, of its Series D Preferred Stock to Vicis for $750,000 and
$1,500,000, respectively. The shares of Series D Preferred Stock, which are
convertible into common stock of the Company at a conversion price of $0.01 per
share at any time after January 31, 2009 and March 28, 2009,
respectively.





In
January 2007, the Company raised $750,000 by issuing another 75 shares of Series
D Preferred Stock to Vicis; another $1,500,000 by issuing an additional 150
shares of the Series D Preferred Stock  to Vicis, and
on April 1, 2007, raised $3,300,000 through the issuance of a mandatory
convertible promissory note to Vicis, which, along with accrued interest of four
(4) percent, was converted into 331.1 shares of Series D Preferred Stock on May
1, 2007.  The Company has the right to redeem ninety (90) percent of
the 331.1 shares during the period ending December 31, 2007.





Series D
Preferred Stock and Series E Preferred Stock are entitled to receive dividends
payable on their respective stated values 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 of the Corporation legally available for the payment of
dividends.  The accumulation of unpaid dividends shall bear interest
at a rate of six (6) percent per annum.  Series D and Series E accrued
dividends and accrued interest on accrued dividends were $352,715 and $75,600,
respectively and $7,361 and $2,796, respectively, as of December 31,
2007.





In
connection with Series D Preferrec Stock and Series E Preferred Stock
issuances, the Company recorded an aggregate beneficial conversion feature of
$6,410,000 associated with Series D Preferred Stock and $970,000 associated with
Series E Preferred Stock.  The resulting discounts are accounted for
as a return to the preferred shareholders over the minimum period from the date
of issuance to the date at which the preferred shareholders can exercise the
conversion feature, using the effective yield method. Accretion recognized as of
December 31, 2007 and December 31, 2006 was $174,666 and $19,013,
respectively.





In
November 2007, the Company issued 300 shares of its Series G Mandatory
Convertible Preferred Stock to (Series G Preferred Stock) Vicis for
$3,000,000.  Shares of Series G Preferred Stock, which have a
maturity date of July 15, 2011, and are convertible into Class A common stock of
the Company at a conversion price equal to $5.00. Series G Preferred Stock is
entitled to receive dividends payable on the stated value of the Series G
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 of the Corporation legally available for the payment of
dividends.  The accumulation of unpaid dividends shall bear interest
at a rate of six percent (6%) per annum.  Accrued dividends
and accrued interest on accrued dividends was $41,425 and $0, respectively, as
of December 31, 2007.





Upon the
second anniversary of the issuance of the Series G Preferred Stock, if the
current market price is less than the conversion price of $5.00, the Series G
Preferred Stock conversion price shall be reduced, but in no event increased, to
such market price.  If the conversion price is reduced below $1.50 as
a result of the aforementioned, the Company may at its option elect to call for
redemption all the shares of Series G Preferred Stock outstanding at price equal
to one hundred fifty percent (150%) of the stated value of such share less all
dividends paid thereon.





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 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.





35











NOTE
13 - COMMON STOCK




In
December 2007, the Company received approval from its shareholders, to increase
its authorized shares from one billion (1,000,000,000) shares to one billion
five hundred million (1,500,000,000) shares. The authorized shares for its Class
A common stock was increased from eight hundred sixty million (860,000,000)
shares to one billion three hundred sixty million (1,360,000,000) shares; the
authorized shares for its Class B common stock remained at one-hundred twenty
million (120,000,000) shares and the authorized shares for its preferred stock
remained at twenty million (20,000,000) shares.  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.











NOTE
14 - WARRANTS




During
the years ended December 31, 2007 and 2006, the Company issued warrants to
purchase an aggregate of 24,165,000 and 13,949,000 shares of common stock,
respectively.  At December 31, 2007 there were 20,452,850 and 7,965,000
warrants outstanding to purchase Class A and Class B common stock, respectively,
exercisable at varying prices through 2012.  The following table summarizes
this warrant activity:





Class A
      Warrants2007
              
              
              2006Warrants
              
              
              Weighted
                Average
                Exercise
      Price
              
              
              Warrants
              
              
              Weighted
                Average
                Exercise
    PriceWarrants outstanding, beginning of
      year
              
              
              5,147,000
              
              
              $
              0.48
              
              
              
              3,092,428
              
              
              $
              1.00Warrants
    issued
              
              
              17,700,000
              
              
              
              0.27
              
              
              
              9,749,000
              
              
              
              0.06Warrants cancelled or
      expired
              
              
              (588,400
              )
              
              
              0.25
              
              
              
              (369,428
              )
              
              
              2.57Warrants
      exercised
              
              
              (1,805,750
              )
              
              
              0.02
              
              
              
              (7,325,000
              )
              
              
              0.01Warrants outstanding, end of
      year
              
              
              20,452,850
              
              
              $
              0.35
              
              
              
              5,147,000
              
              
              $
              0.48Class B
      Warrants2007
              
              
              2006Warrants
              
              
              Weighted
                Average
                Exercise
      Price
              
              
              Warrants
              
              
              Weighted
                Average
                Exercise
    PriceWarrants outstanding, beginning of
      year
              
              
              5,700,000
              
              
              $
              0.09
              
              
              
              1,500,000
              
              
              $
              0.16Warrants
    issued
              
              
              6,465,000
              
              
              
              0.50
              
              
              
              4,200,000
              
              
              
              0.01Warrants cancelled or
      expired
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Warrants
      exercised
              
              
              (4,200,000
              )
              
              
              0.01
              
              
              
              -
              
              
              
              -Warrants outstanding, end of
      year
              
              
              7,965,000
              
              
              $
              0.44
              
              
              
              5,700,000
              
              
              $
              0.05








36





The
following table summarizes both Class A and Class B outstanding warrants as of
December 31, 2007; all warrants are immediately exercisable:





Exercisable and Outstanding
      WarrantsExercise
    Price
              
              
              Number of
                Warrants
              
              
              Weighted Average
                Remaining
                Contractual Life in
                Years$
              0.01
              
              
              
              762,850
              
              
              
              2.38$
              0.03
              
              
              
              6,000,000
              
              
              
              4.24$
              0.05
              
              
              
              15,000
              
              
              
              0.16$
              0.10
              
              
              
              350,000
              
              
              
              3.32$
              0.15
              
              
              
              200,000
              
              
              
              1.55$
              0.16
              
              
              
              2,375,000
              
              
              
              2.35$
              0.21
              
              
              
              200,000
              
              
              
              0.22$
              0.30
              
              
              
              3,700,000
              
              
              
              4.23$
              0.32
              
              
              
              50,000
              
              
              
              4.71$
              0.50
              
              
              
              13,465,000
              
              
              
              4.93$
              1.25
              
              
              
              900,000
              
              
              
              2.21$
              2.40
              
              
              
              400,000
              
              
              
              1.6128,417,850





During
2007, the Company issued 24,165,000 warrants to directors, employees and
consultants for services.  The warrants were valued using the
Black-Scholes Option Model with a volatility ranging between 223% and 245%, a
risk free interest rate ranging between 3.49% and 4.52% and a life of five years
and a zero dividend rate.  This resulted in a compensation expense of
approximately $7,838,850 for the year ended December 31,
2007.  Black-Scholes Option Model assumptions used to value warrants
issued during the year ended December 31, 2006 include a volatility of 249%, a
risk free interest rate of 5.10%, a life of five years and a zero dividend
rate.  This resulted in a compensation expense of $206,000 for the
year ended December 31, 2006.  All warrants issued during 2007 and 2007
were immediately exercisable; and, accordingly, the compensation expense was
recognized at the date of issuance.





The total
intrinsic value of warrants exercised during the year ended December 31,
2007 and December 31, 2006 was $2,263,338 and $2,361,000,
respectively.  The total intrinsic value of warrants outstanding as of
December 31, 2007 and December 31, 2007 was $4,372,404 and $91,428,
respectively.








NOTE
15 - EARNINGS (LOSS) 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 shareholders 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. Convertible debt and warrants, officer, employee and
non-employee stock options that are considered potentially dilutive are included
in the fully diluted shares calculation.





The
following is the computation of basic and diluted net earnings (loss) per common
share for the years ended December 31, 2007 and 2006:





2007
              
              
              2006Numerator:Net loss
              
              $
              (21,230,186
              )
              
              $
              (1,736,247
              )Less preferred stock dividend and
      accretions
              
              
              (590,781
              )
              
              
              (453,498
              )Net loss applicable to common
      stockholders
              
              $
              (21,820,967
              )
              
              $
              (2,189,745
              )Denominator:Weighted average basic and fully
      diluted shares outstanding
              
              
              119,654,979
              
              
              
              68,306,991Net earnings per common share -
      basic and diluted$
              (0.18
              )
              
              $
              (0.03
              )









37





During
the years ended 2007 and 2006, 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. There is no difference between the dividend rights
and earnings allocation of Class A and Class B common stock.  As of
December 31, 2007 and December 31, 2006, 28,417,850 and 10,874,000,
respectively, of warrants that were exercisable have been excluded as they were
anti-dilutive.







NOTE
16 - STOCK OPTION PLAN AND OTHER EQUITY AWARDS





The 1997
Stock Option Plan (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 (including officers),
directors, independent contractors and consultants to The Amacore Group. 
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 Amacore Group 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 Amacore Group or a subsidiary of The Amacore Group, 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, 2007 and 2006, no options have been granted under the
Plan.





Equity
Awards Issued





The
following tables detail the equity awards that were granted during 2007 and 2006
for various purposes, such as employment compensation and for goods and
services. The Company’s equity awards consist of both common stock and warrants
to purchase common stock. All warrants are exercisable immediately upon date of
grant.  In the event warrants are exercised, the Company will issue
the corresponding authorized and available common stock.  The
contractual term of the warrants issued during the years ended December 31, 2007
and December 31, 2006, was five (5) years.





2007Grant Date
                  Award Type
                  
                  Number of Securities
                    or Underlying
                    Equity
      Awards
                  
                  
                  Grant Date Fair
                    Value of Stock(1)
                    and Equity Awards
      (2)1/15/2007
                  Class A
    Common
                  
                  
                  3,000,000
                  
                  
                  $
                  105,0004/12//2007
                  Class A
    Common
                  
                  
                  60,000
                  
                  
                  
                  17,9006/27/2007
                  Class A
    Common
                  
                  
                  200,000
                  
                  
                  
                  60,0009/1/2007
                  Class A
    Common
                  
                  
                  35,000
                  
                  
                  
                  12,6009/27/2007
                  Class A
    Common
                  
                  
                  100,000
                  
                  
                  
                  41,00010/1/2007
                  Class A
    Common
                  
                  
                  1,000,000
                  
                  
                  
                  490,00012/6/2007
                  Class A
    Common
                  
                  
                  1,000,000
                  
                  
                  
                  500,0005,395,000
                  
                  
                  
                  1,226,5001/31/2007
                  Class B
    Common
                  
                  
                  20,500,000
                  
                  
                  
                  3,075,00012/6/2007
                  Class B
    Common
                  
                  
                  2,000,000
                  
                  
                  
                  1,000,00022,500,000
                  
                  
                  
                  4,075,0003/26/2007
                  Class A
      Warrants
                  
                  
                  10,525,000
                  
                  
                  
                  1,207,50012/6/2007
                  Class A
      Warrants
                  
                  
                  7,000,000
                  
                  
                  
                  3,430,0009/30/2007
                  Class A
      Warrants
                  
                  
                  175,000
                  
                  
                  
                  33,50017,700,000
                  
                  
                  
                  4,671,00012/6/2007
                  Class B
      Warrants
                  
                  
                  6,465,000
                  
                  
                  
                  3,167,850Total equity
      awards
                  
                  
                  52,060,000
                  
                  
                  $
                  13,140,350





38




















2006Grant Date
                Award Type
                
                Number of
      Securities
                  or Underlying
                  Equity
    Awards
                
                
                Grant Date Fair
                  Value of Stock (1)
                  and Equity Awards
      (2)5/6/2006
                Class A
      Warrants
                
                
                9,749,000
                
                
                $
                134,7926/30/2006
                Class B
      Warrants
                
                
                4,200,000
                
                
                
                71,2086/26/2006
                Class A
    Common
                
                
                2,000,000
                
                
                
                20,0006/27/2006
                Class A
    Common
                
                
                1,000,000
                
                
                
                15,0007/19/2006
                Class A
    Common
                
                
                3,000,000
                
                
                
                84,000Total equity
      awards
                
                
                19,949,000
                
                
                $
                325,000





(1) Fair value of stock awards is based
on share price at grant date and Black-Scholes Option Pricing assumptions. See
assumptions used to value 2007 and 2006 awards at Note 14.





(2) Represents the grant date fairvalue, pursuant to SFAS
123R.See also our
discussion of share-based compensation under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Critical
Accounting Policies".


























39








NOTE
17—FINANCIAL INSTRUMENTS





Fair Value of Financial
Instruments (other than Derivative Financial Instruments)





The
carrying amount of cash, accounts receivable, accounts payable and accrued
expenses approximates fair value because of their short maturity. The carrying
amounts of loans and notes payable approximates fair value based on interest
rates that approximate market interest rates for these instruments.





Derivative Financial
Instruments





The
caption derivative financial instruments consists of (a) the embedded conversion
feature bifurcated from the 7% Convertible Debentures, (b) the embedded
conversion feature bifurcated from the Series C Preferred Stock, (c) the
Warrants issued in connection with the Series C Preferred Stock, and (d) Other
Warrants. (See Note
12—Redeemable Preferred Stock). In June 2006, the Company redeemed the
convertible notes that had been determined to be derivative financial
instruments, which resulted in the recording of a Gain on Extinguishment of Debt
of $493,695. The Company did not enter into any derivative financial instruments
during 2007.





7%
              
              
              6%Convertible
              
              
              Convertible
              
              
              Series CEmbedded Conversion
      Features:
              
              Debentures
              
              
              Debentures
              
              
              Preferred
              
              
              Sub-TotalFair value
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Fair value
      adjustments:Contract
      inception
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -End of
    period
              
              
              420,401
              
              
              
              155,815
              
              
              
              (1,019,259
              )
              
              
              (443,043
              )Total period (income)
      loss
              
              $
              420,401
              
              
              $
              155,815
              
              
              $
              (1,019,259
              )
              
              $
              (443,043
              )Warrants:
              
              
              
              
              
              
              
              
              OtherWarrants
              
              
              Warrants
              
              
              TotalFair value
              
              
              
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Fair value
      adjustments:Contract
      inception
              
              
              
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -End of
    period
              
              
              
              
              
              
              (16,000
              )
              
              
              (9,850
              )
              
              
              (468,893
              )Total period (income)
      loss
              
              
              
              
              
              $
              (16,000
              )
              
              $
              (9,850
              )
              
              $
              (468,893
              )







NOTE
18 - COMMITMENTS AND CONTINGENCY





The
Amacore Group is committed under several leases of office space through
September 30, 2001.   For the years ended December 31, 2007
and 2006, rent expense was approximately $157,537 and $80,156,
respectively.





The
following is a schedule of future minimum lease payments required under the
Company’s various leased offices.





For Year Ended December
      31,2008
              
              $
              260,9792009
              
              
              223,6232010
              
              
              215,1702011
              
              
              124,039$
              823,811














40








NOTE
19 - LITIGATION AND CONTINGENCIES





As of
December 31, 2007, we were involved in various lawsuits, 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, but cannot be certain.




In
addition to various lawsuits, claims or dispute arising in the ordinary course
of business, on January 9, 2006, the Company was served with a Summons and
Complaint (the Complaint) in an action captioned, "Richard Abrahamson, M.D., Plaintiff vs. The Amacore
Group, Inc., F/K/A Eye Care International, Inc.,
Defendant."  The Complaint, which was filed in The Court of
Common Pleas for Hamilton County, Ohio on December 30, 2005, alleged nonpayment
by the Company of certain promissory notes and sought damages in the amount of
$111,839. The Company believed, at that time, that the plaintiff's records were
in error and proceeded to document to plaintiff's counsel full payment of all
monies due plaintiff under the promissory notes. Plaintiff's counsel and the
Company agreed to extend the Company's time to answer or move with respect to
the Complaint for an indefinite period of time in order to provide plaintiff
with an opportunity to recheck plaintiff's records. It was the Company's belief
that when so rechecked, plaintiff would withdraw the Complaint.




On
February 15, 2007, Plaintiff filed an amended complaint in The Court of Common
Pleas for Hamilton County, Ohio, Case No. A 0511133, captioned, Richard Abrahamson, Plaintiff vs. The Amacore Group,
Inc., F/K/A Eye Care International, Inc. and Clark A. Marcus, Defendants,
alleging breach of promissory notes, breach of oral loan agreements, action on
account of promissory notes and oral agreements, breach of third party
beneficiary contracts, breach of fiduciary duty to issue share certificate upon
gift of share to plaintiff, breach of fiduciary duties and unjust enrichment.
Actual damages alleged are in excess of $3,900,000, not including interest. An
additional $2,400,000 in punitive damages is also claimed. The amended complaint
also asserts the right to recover attorney's fees.




While the
Company is unable to predict the ultimate outcome of the litigation, after
reviewing the amended complaint, the Company believes that neither it nor Mr.
Marcus is liable to the plaintiff; they have defenses to each allegations in the
amended complaint; and intend to vigorously defend their position and advance
appropriate counterclaims.  The ultimate outcome of this litigation
cannot be predicted.  If the outcome is not favorable to the Company,
it would have a material adverse affect on the Company, its cash flows and
financial position.





LifeGuard
is named as a defendant in the matter styled Martex
Software, Inc. vs. LifeGuard Benefit Services, Inc.  This claim is
for an unpaid invoice totaling $442,992.  LifeGuard has consistently
maintained that Martex Software, Inc. submitted an invoice that was grossly
inflated and rendered in bad faith.  LifeGuard never entered into an
agreement to pay Martex Software, Inc. for any time or service past the point of
December 22, 2004.  All invoices up to that point were paid in full by
LifeGuard.  An offer of $75,000 was made in May 2007 to bring to matter to
a close.  This offer was not accepted by Martex Software, Inc.  The
court date for this lawsuit has been schedule for October 2008 with mediation to
begin in September 2008.





LifeGuard
is named as a defendant in the matter styled Planmedica
Healthcare Solutions, LLC vs. Protective Life Insurance Company et
al.  This claim totals $2,400,000 and is against Protective
Life Insurance Company.  Although it was named as a co-defendant,
LifeGuard is vigorously contesting that it should not be a party to this
litigation as it does not have a contract with the
plaintiff.  Management believes that this litigation will not have a
material effect on LifeGuard.





On
January 30, 2008, the Company’s newly formed wholly owned subsidiary, Zurvita,
Inc. (Zurvita) filed for declaratory judgment, Mark
Jarvis and Zurvita, Inc. vs. Ameriplan Corp., asking the court to
determine the rights of Zurvita and its President, Mark Jarvis to market, sell
and compete against AmeriPlan®, a company to which Jarvis was an independent
contractor to for the past 14 years.  AmeriPlan® filed their own
petition with the court and sought to restrain and prevent Jarvis and Zurvita
from soliciting members of Jarvis’s downline sales professionals (and others) to
join Zurvita’s sales force.  On March 27, 2008, after a full
evidentiary hearing, the 192nd Judicial District Court of Dallas County denied
AmeriPlan®’s motion for a temporary injunction against Jarvis and
Zurvita.  The court still has to decide on Zurvita’s petition for
declaratory judgment.  There is a possibility that the court may
declare that Zurvita and Jarvis may be unable to market certain products in
direct competition with AmeriPlan® and therefore restrict Zurvita’s product
range and potential sales. However, given that Jarvis has no contractual
non-compete obligation with AmeriPlan®, Zurvita believes that the court will
resolve this matter in its favor.





While the
Company believes that all the above lawsuits are without merit and will continue
to vigorously defend each suit, the Company has accrued $3,700,000 to cover
potential settlements and judgments,and ongoing legal defense
costs.





NOTE
20 - GOING CONCERN




The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern.  However, the
Company has sustained operating losses in recent years.  Further for the
year ended December 31, 2007, the Company had negative working capital of
$8,149,248, a net loss of $21,820,967 and has incurred substantial losses in
previous years resulting in an accumulated deficit of approximately
$77,099,408.  Although these factors raise substantial doubt about the
ability of the Company to continue as a going concern, the Company has taken
several actions that it believes will allow it to continue as a going concern
through December 31, 2008.  Now that the Company has begun to generate
substantial revenues, we believe that our current cash resources, together with
anticipated revenue, will be sufficient to sustain our current planned
operations for the next 12 months. The Company raised $7 million from Vicis
Capital in two tranches completed in January 2008 and March
2008.  Although management believes that the Company’s current cash
position and anticipated revenue in 2008 will be sufficient to meet its current
levels of operations, 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.  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.







41





NOTE 21
- RELATED PARTY TRANSACTIONS





During
the years ended December 31, 2007 and 2006, the Company had an employment
agreement with its Chief Executive Officer, Clark Marcus (CEO).  The
agreement, which originally had an expiration date of September 20, 1999, was
extended by resolution of the Board of Directors, on February 15, 1996, for a
period of five (5) years, originating upon the date the executive commences to
receive his full compensation, as provided under the terms of the original
employment agreement. On December 6, 2007, the Company entered into a new
employment agreement with Mr. Marcus which provides for an initial employment
term of six (6) years and which is to be extended until Mr. Marcus receives his
full compensation for a consecutive one-year period and continuously thereafter
for the remaining term of his contract.  Employment shall be
automatically extended at the end of the original term for additional six (6)
year terms unless terminated pursuant to the provisions of the employment
agreement. As of December 31, 2007 and 2006, a total of $461,702 and $461,702,
respectively, of deferred compensation was due to Mr. Marcus. The terms of
the employment agreements include annual salary increases and bonuses, to be
determined by the Board of Directors.  In addition, to fringe benefits
afforded to other senior executives, the Company is obligated to pay premiums
for life, travel and accident insurance, with a double indemnity provision, in
the amount of five (5) times Mr. Marcus’  compensation, with the
beneficiary to be designated by the executive.





During
the years ended December 31, 2007 and December 31, 2006, the Company had an
employment agreement with James Koenig, Acting Chief Financial Officer. 
The agreement originally had an expiration date of February 1, 2001.  The
Board of Directors extended this agreement on the same terms as described for
its President and Chief Executive Officer.  As of December 31, 2006,
the Company had accrued deferred compensation of $505,450 for services performed
during the years ended 2006, 2005, 2004 and 2003 by Mr. Koenig.  Mr. Koenig
retired as an officer in early 2007 and as a Board of Director in September
2007.  In February 2007, the Company entered into a six-year
consulting contract with James Koenig, former Chief Financial Officer of the
Company. Terms of the agreement are that Mr. Koenig receives a weekly payment of
$2,100 that represents payment of prior years’ deferred compensation and
receives compensation for any hours worked for the Company.





On
September 13, 2007, the Company entered into a three (3) year employment
agreement with its new Chief Financial Officer, Giuseppe Crisafi.





On
January 15, 2007, the Company entered into a three (3) year employment
agreements with its new President, Jay Shafer, and Senior Vice President of
Sales and Marketing, Guy Norberg.




On May
25,,2007, the Company entered into a three (3) year employment agreement with
its Chief Medical Officer, Jerry Katzman.





On
September 1, 2007 the Company entered into a three (3) year employment agreement
with James F. Reed Jr. and James Mignogna as Senior Vice President of Marketing
and Senior Vice President of Operations, respectively, of the Company and its
JRM division.





In
September 2007, LifeGuard entered into a five (5) year employment agreement with
Ty Bruggemann as its President and Amacore’s Senior Vice-President of LifeGuard
Division.





LifeGuard
markets a membership product which it licenses from DirectMed, a company
thirty-three percent (33%) owned by Ty Bruggemann who is the President of
LifeGuard.   LifeGuard pays DirectMed a branding fee based on the
number of memberships sold.  From the acquisition date of LifeGuard
through December 31, 2007, LifeGuard paid DirectMed $60,370 in branding
fees.  Accounts payable at December 31, 2007 associated with DirectMed
was $535,636. As part of the merger agreement with LifeGuard (See Note 3 - Acquisitions),
the Company paid $615,178 to DirectMed for amounts owed to DirectMed from
LifeGuard.








At
December 31, 2007, LifeGuard had Notes Payable totaling $18,592 (FY2006 $18,592)
to LifeGuard Marketing Corporation, a company fifty (50) percent owned by Ty
Bruggemann.  This note is not accruing interest.





As part
of the acquisition agreement between the Company and JRM, the Company assumed
$287,143 of liabilities of which $159,536 and $69,240 represent personal credit
card balances 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 of JRM is met. The
liabilities are personally guaranteed by both James Reed and James Mignogna and
are recorded within the Company’s notes and loans payable category of the
balance sheet.  As of December 31, 2007, the outstanding balance of
said liabilities was $222,403.





NOTE 22
- SUBSEQUENT EVENTS





On
January 15, 2008 and March 13, 2008, the Company issued 300 shares and 400
shares, respectively, of its Series G Preferred Stock to Vicis for $3,000,000
and $4,000,000, respectively. Terms are identical to the Series G Preferred
Stock terms disclosed in Note 12.








42





On March
31, 2008, the Company received notice to convert a promissory note in the amount
of $350,000 with accrued interest of $53,162 into 4,031,620 shares of Class A
common stock.  As of December 31, 2007, the balance sheet included
principal and accrued interest of $396,181 relating to this promissory
note.





On March
31, 2008, the Company’s acquisition of USHBG, a call center-based marketing
company that engages in the marketing of association membership programs and
health insurance plans to individuals and families throughout the United
States.  USHBG utilizes its proprietary call center software
application (LeadMaster) to connect consumers who are searching online for a
health care quote with sales agents in one of its multiple call
centers.





The
consideration for the acquisition is a combination of cash and
stock.  The agreed value of the acquisition is $14,300,000 and is
payable as follows:





·
            Cash
      at closing $1,140,910


·
            1,800,000
      unregistered shares of our Class A common stock with a deemed value of
      $5.00 per share ($9,000,000
equivalent)


·
            Deferred
      cash of $1,609,090 payable in equal installments quarterly in advance over
      a three year period


·
            Earn
      out equal to $2,550,000, being $850,000 per annum based on USHBG attaining
      an audited net contribution of $2,000,000 (Target Contribution) in each of
      the next three (3) years.  This amount will be reduced if USHBG
      does not achieve the Target Contribution or will be increased if it
      exceeds the Target Contribution..





The
purchase agreement provides for a share adjustment, if necessary, eighteen (18)
months from the acquisition’s effective date.  Within the immediate
preceding thirty (30) day period prior to the share adjustment date if the
Company’s common stock has an average trading price below $5.00 per share,
additional shares of the Company’s common stock will be issued such that the
aggregate number of shares issued under the terms of the merger agreement has a
value equal to the agreed-upon value of $9,000,000.  In the event the
Company’s common stock has an average trading price for the said period of $5.00
or more, no adjustment shall be made to the amount of common stock previously
issued and the previous stock issuance shall be deemed final and not subject to
further adjustment.  However, in the event the average common stock
price is below $1.50 for the said adjustment period, the Company has the right
to effectively unwind the merger and irrevocably transfer 100% of USHBG’s
acquired stock to previous USHBG shareholders.  In addition, the
Company has the right to receive from USHBG shareholders 80% of the Company’s
common stock issued as consideration.





The USHBG
group includes three companies:


·
            US
      Healthcare Plans, Inc, a health benefit discount plan marketing
      company;


·
            On
      The Phone, Inc., a consulting company that receives overrides on all
      Health Care Sales; and


·
            US
      Health Benefits Group, Inc., a health benefit plan marketing
      company.





USHBG’s
largest customer is LifeGuard and USHBG markets LifeGuard’s DirectMed
association membership program, which currently generates approximately
$1,000,000 a month in revenues for LifeGuard, resulting in approximately
$500,000 per month in revenue for USHBG.







43





ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.





We had no
changes in or disagreements with accountants on accounting and accounting
disclosure in 2007 or 2006.





ITEM 8A(T).
CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and
Procedures





Our
management, with the participation of our principal executive and principal
financial officer, evaluatedthe 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-KSB. 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; (ii) provide reasonable assurance that transactions are recorded
as necessary for preparation of our financial statements 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 the 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, 2007 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.  However,
management’s evaluation referred to herein pertains to Amacore (the Parent
Company) and not the newly acquired entities of JRM and LifeGuard as they were
acquired in the latter part of 2007 and management’s evaluation of their
internal controls is currently in process and as a result the Company is not in
position to conclude on its evaluation. Based upon the evaluation, our
management concluded that our internal controls over financial reporting were
not effective as of December 31, 2007 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 the implementation of a new accounting software package
that will have system access restrictions based on management defined user roles
based on job function.  Upon the implementation of this accounting
system that the risk of incomplete and inaccurate reporting of financial
information will be mitigated.





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.







44





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-KSB that materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.





ITEM
8B - OTHER INFORMATION





Not
Applicable.










PART
III








Item
9. Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act.





The
following is a list of our directors and executive officers:




Name
            Age
            PositionClark
      A. Marcus
            66
            Chairman,
      Chief ExecutiveOfficer
      and DirectorJay
      Shafer
            48
            President
      and DirectorGiuseppe
      Crisafi
            38
            Chief
      Financial Officer and DirectorJerry
      Katzman, M.D.
            55
            Chief
      Medical Officer and DirectorArnold
      Finestone
            77
            DirectorWilliam
      H. Koch, M.D.
            69
            DirectorSharon
      Kay Ray
            50
            DirectorArthur
      Yeap
            52
            Director





Clark A.
Marcus, one of our founders, has served as Chairman of the Board and Chief
Executive Officer since September 1993. He also has served as President since
February 1996. Mr. Marcus has been a practicing attorney since 1968 and was
senior partner in the New York law firms of Victor & Marcus and Marcus &
Marcus.





Jay
Shafer was appointed as President in January 2007 and was elected to the Board
of Directors in March 2007. 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.





Giuseppe
(Joe) Crisafi, CPA, was appointed as the Chief Financial Officer and elected to
the Board of Directors in September 2007.  During the period of
January 2007 to September 2007, Mr. Crisafi provided specialist consulting
services to Madison Partners, a public accounting firm in Australia, and has was
Vice President of Finance at Lehman Brothers from 2005 to 2007, ran his own
consulting practice from 2000 to 2005 and was a Director at KPMG from 1990 to
2000.  Crisafi is a seasoned finance professional with over twenty
(20) years international business and M&A experience.  He has his MBA
from Columbia University, and is a Certified Public Accountant and a Chartered
Accountant.





Jerry
Katzman was elected to the Board of Directors in April 2007 and serves as Chief
Medical Officer.  Dr. Katzman is an ophthalmologist and the principal
founder of Eye Care International, Inc., our predecessor.  He served
as its President from 1993 through 1995, before returning to private
practice.  Dr. Katzman has continually worked with the Company in
various consulting capacities since 1995.





Arnold
Finestone has been a member of our Board of Directors since April 2001 and is
the audit committee’s financial expert based on his prior experience as serving
in executive positions with other corporations.  Mr. Finestone is a
business management consultant.  From 1970 to 1988, he was an executive
with Dart & Kraft, Inc., serving as President of its Dartco subsidiary,
which was engaged in marketing and manufacturing high performance engineering
plastics for consumer and industrial uses and Executive Vice President of the
Chemical-Plastics Group from 1970 to 1982.  From 1957 to 1970, he was Vice
President, Director of Planning, Development and Marketing of Foster-Grant, Inc.
Since 1988 to present, Mr. Finestone has served on the Boards of other public
companies as well as worked on business ventures.





William
H. Koch, M.D. has been a member of our Board of Directors since February 1996.
He has been a psychiatrist and child development specialist since 1974. He is
the Founder and Director of Parent and Child Services, Inc., New York City; The
Parent and Child Consultation Services, New York City; and the "School for
Parents." He is a former member of the faculty of the College of Physicians and
Surgeons, New York City, and Special Consultant to Child Protective Services,
New York City. Dr. Koch also is an author, lecturer and consultant.








45





Sharon
Kay Ray, one of our founders, has been a member of our Board of Directors since
inception. Since March 1989, she has served as regional marketing representative
for Novo Nordis Pharmaceuticals, a multi-national pharmaceutical company, and as
a special marketing consultant for a number of public and non-public
corporations.





Arthur
Yeap has been a member of our Board of Directors since April 2001 and also
serves as a member of the audit committee.  Since 1983 Mr. Yeap has been
Chief Executive officer of Novo Group, consultants and manufacturers of customer
audio and video products for professional use.  He also has been a
principal investigator on the staff of the University of California at Berkley,
engaged in research for advanced military and consumer uses for the
Internet.  From 1996 to 1999, he was Director of Marketing, Consumer
Products for ITV Corp.  From 1995 to 1996 Mr. Yeap was Chief Engineer for
WYSIWYG networks.





James L.
Koenig resigned as director in September 2007, but remained as the Company’s
Corporate Secretary. Mr. Koenig had served as a Director since February 2006.
Mr. Koenig was Senior Vice President and Chief Financial Officer from February
1996 until August 2004 and served as Acting Chief Financial Officer from August
2004 to May 2007.  Prior to Joining the Company in December 1994, as
an independent sales agent, he worked in various accounting and management
capacities primarily in the utilities industry.  From 1984 to November
1994, Mr. Koenig was employed by Tampa Electric Company in various executive
capacities ranging from Assistant Controller to Director of Audit Services and
Director of Regulatory Affairs.








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. With respect to the
fiscal year ended December 31, 2007, the Company identified each director,
officer or beneficial owner of more than 10% of our Class A common stock
(reporting persons) that failed to file reports required by Section 16(a) of the
Exchange Act as follows: Clark Marcus (Chief Executive Officer) 5 transactions
and 5 reports not filed, Jay Shafer (President) 3 transactions and 3 reports not
filed, Giuseppe Crisafi (Chief Financial Officer) 2 transactions and 2 reports
not filed, Sharon Kay Ray (Director) 3 transactions and 3 reports not filed,
William Koch (Director) 3 transactions and 3 reports not filed, Arnold Finestone
(Director) 3 transactions and 3 reports not filed, Arthur Yeap (Director) 3
transactions and 3 reports not filed and Jerry Katzman M.D. (Director) 2
transactions and 2 reports not filed. The Company is in the process of working
with such reporting persons in order to assist them in filing all
outstanding reports and encouraging them to file all future reports on
a timely basis.


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
shareholder 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 created
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
will consider candidates for director recommended by our shareholders.
Candidates recommended by shareholders 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 1211 N. Westshore Blvd, #512, Tampa, FL 33607,
Attention: Chairman. All candidate referrals are reviewed by at least one
current board member.





Audit Committee and Audit Committee Financial
Expert





The Board has established an audit committee. Arnold
Finestone and Arthur Yeap are the current members of the Audit Committee. The
Board has determined that Mr. Finestone is the audit committee financial expert
based on his previous experience described above. The audit committee recommends
engagement of our independent auditors, is primarily responsible for approving
the services performed by the independent auditors and for reviewing and
evaluating our accounting principles and our system of internal accounting
controls and has general responsibility in connection with related
matters.  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.








46





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.








ITEM
10. 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”) for our last two fiscal
years ended December 31, 2007 and December 31, 2006.








Name
      and
                principal
      position
              Year
              Base
      Salary
                ($)
              Stock
                Awards
                ($)
      (1)
              Option
                Awards
                ($)
      (2)
              Bonus
                ($)
              All
      Other
                Compensation
                ($)(4)
              Dollar
      Value of total
                compensation
      for the
                covered
      fiscal year ($)Clark
      A. Marcus, Principal Executive Officer
              2007
              707,972
              
              2,000,000
              
              24,361
              2,732,3332006
              615,628
              
              51,000
              
              27,327
              693,955Jay
      Shafer, President
              2007
              336,446
              60,000
              2,015,000
              5,074
              
              2,416,5202006
              -
              
              -
              
              -
              -Giuseppe
      Crisafi,
                Chief
      Financial
                Officer
              2007
              92,308
              14,700
              2,507,850
              3,044
              -
              2,542,9022006
              -
              -
              -
              -
              -
              -




(1)
            Represents the dollar amount recognized for
      financial statement reporting purposes in accordance with SFAS
      123R.  For a discussion of valuation assumptions, see Note 16 to
      the financial statements contained in this Annual Report on Form
      10-KSB.


(2)
            Represents the dollar amount recognized for
      financial statement reporting purposes in accordance with SFAS
      123R.  For a discussion of valuation assumptions, see Note 14 to
      the financial statements contained in this Annual Report on Form
      10-KSB.


(3)
            Mr. Marcus received $594,382 of salaryin 2007.  The balance
      of $113,590 was accrued as deferred compensation.  In
      addition, $320,938 of prior year’s deferred salary was paid in
2007.


(4)
            All other compensation for Mr. Marcus consists of
      car allowance and life insurance premiums.  The car allowance was
      $6,000 yer year and the balance life insurance
      premiums.


(5)
            Mr. Marcus received payments of $387,529 in
      2006.  The balance of $228,099 was accrued as deferred
      compensation.










Narrative Disclosure to Summary Compensation
Table





Clark
Marcus serves as the Company’s Chief Executive Officer pursuant to an employment
agreement which expires December 6, 2013. The agreement provides for a salary of
$707,972 per annum, increased by an amount equal to the greater of fifteen (15)
percent of the prior year's salary or the increase in the consumer price index
for the Tampa, Florida area, plus a bonus beginning at three percent of our
pre-tax profits in any year that our revenues exceed $1,000,000 and increasing
up to seven (7) percent of our pre-tax profits in any year that revenues exceed
$4,000,000. The actual amount paid to Mr. Marcus, excluding an auto allowance of
$6,000, and deferred salary of $320,938, for the year ending December 31, 2007
was $594,382. We may terminate his employment for gross misconduct in the
performance of his duties. If Mr. Marcus' employment is terminated within twelve
(12) months following a change in control, the Company shall pay to Mr. Clark 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. Clark through five (5) full years of compensation from the
date of termination.





Mr.  Marcus
has entered into agreements with us which provide that, for a period of three
(3) years following the termination of his employment, he will not:





·
            engage,
      directly or indirectly, in a business within the United States that
      markets products or services the same as, similar to, or competitive with,
      our products or services, whether fully developed or in the development
      stage.








47








·
            solicit
      or accept business from any entity within the United States which is or
      was a customer of ours during his tenure with us, if such business
      involves one of our products.





·
            solicit
      the employment of, hire or cause any other entity to hire, any of our
      employees.





Jay
Shafer serves as the Company’s President pursuant to an employment agreement
which expires January 15, 2010.  The agreement provides for 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 one (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 two (2)
percent of the Company’s pre-tax profits for all sums over $1,000,000 dollars.
In the event Mr. Shafer’s employment is terminated without cause twelve (12)
months from a change in control, 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 (3) full years of compensation from the date of
termination.





Giuseppe
Crisafi serves as the Company’s Chief Financial Officer pursuant to an
employment agreement which expires September 31, 2010.  The agreement
provides for 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 one
(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 of such profits; plus an additional sum equal to two (2)
percent of the Company’s pre-tax profits for all sums over
$1,000,000.  In the event Mr. Crisafi’s employment is terminated
without cause twelve (12)  months from a change in control, the
Company shall pay to Mr. Crisafi 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. Crisafi through three (3)
full years of compensation from the date of termination.





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, 2007.  None of the named executive officers
own stock that has not vested nor has any outstanding equity incentive plan
awards.





Name
              
              Number of
                Securities or
                Underlying
                Unexercised
                Options (#)
                Exercisable
    (1)
              
              Option
      Exercise
                Price
                ($)
              
              Option
                Expiration
                DateClark
Marcus
              
              1,000,000
              
              0.16
              
              5/27/2010Chief Executive
      OfficerJay Shafer
              
              1,000,000
              
              0.30
              
              3/26/2012President
              
              3,500,000
              
              0.50
              
              12/6/2012Giuseppe
      Crisafi
              
              250,000
              
              0.30
              
              3/26/2012Chief Financial
      Officer
              
              4,965,000
              
              0.50
              
              12/6/2012





(1)
            The securities listed in this column consist of
      unexercised warrants awarded to each named executive
      officer.  The warrants are fully vested and immediately
      exercisable upon grant.





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.








48







Compensation
of Directors
 
 Messrs.
Marcus, Shafer, Crisafi, Koenig and Katzman are employees of the Company and are
not paid any separate compensation for serving as directors. They are the only
employees who serve as directors.
 
 The
following table sets forth information concerning the compensation of each
member of our Board of Directors for fiscal year ended December 31, 2007 that is
not a named executive officer.
 
 Name
              Stock
      Awards
                ($)(1)
              Option
      Awards
                ($)(1)
              All
      other compensation ($)
              Total
                ($)James
      Koenig (2)
              75,000
              147,000
              (7)
              243,026
              (3)
              465,026Jerry
      Katzman (4)
              2,000,000
              -
              
              219,903
              (5)
              2,219,903Sharon
      Kay Ray
              -
              222,000
              (6)(7)
              -
              
              222,000William
      Koch
              -
              222,000
              (6)(7)
              -
              
              222,000Arnold
      Finestone
              -
              222,000
              (6)(7)
              -
              
              222,000Arthur
      Yeap
              -
              222,000
              (6)(7)
              -
              
              222,000
 
 (1)
              The
      amounts reflected in this column represent the dollar amount recognized
      for financial statement reporting purposes in accordance with SFAS
      123R.  For a discussion of valuation assumptions, see Note 14 to
      the financial statements contained in this Annual Report on Form
      10-KSB.
 (2)
              The
      amounts reflected for Mr. Koenig represent compensation paid to Mr. Koenig
      for services rendered as Chief Financial Officer through September 2007
      and as Secretary.  Mr. Koenig did not receive separate
      compensation for serving as a director.  Mr. Koenig resigned as
      a director, effective September 14,
2007.
 (3)
              Includes
      salary received as Chief Financial Officer through September 2007 and as
      Secretary in fiscal year ended December 31,
  2007.
 (4)
              The
      amounts reflected for Mr. Katzman represent compensation paid to Mr.
      Koenig for services rendered as Chief Medical Officer of the
      Company.  Mr. Katzman did not receive separate compensation for
      serving as a director.
 (5)
              Includes
      salary of $214,829 and non-incentive cash bonus of $5,074 received as
      Chief Medical Officer in fiscal year ended December 31,
    2007.
 (6)
              On
      March 26, 2007, the Company granted to each non-employee directorwarrants to
      acquire 250,000 shares of its Class A common stock exercisable for five
      years at an exercise price of $0.30 per share.  On December 6,
      2007, the Company granted to each non-employee director warrants to
      acquire 300,000 shares of its Class B common stock exercisable for five
      years at an exercise price of $0.50 per share.  The warrants are
      vested when issued and are immediately
  exercisable.
 (7)
              As
      of the end of our fiscal year ended December 31, 2007, the aggregate
      number of warrants outstanding for each director that is not a that is not
      a named executive officer is as
follows:
 
 Name
              Warrants
      to acquire
                Class
      A common stock
              Warrants
      to acquire
                Class
      B common stockJames
      Koenig
              -0-
              800,000Jerry
      Katzman
              -0-
              -0-Sharon
      Kay Ray
              350,000
              300,000William
      Koch
              300,000
              300,000Arnold
      Finestone
              350,000
              300,000Arthur
      Yeap
              300,000
              300,000




49











ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 The
following table sets forth certain information as of March 31, 2008 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.
 
 Amount
      and Nature
                Of
      Beneficial
                Ownership
      (1)
              
              Percentage
      of Common Stock
                Beneficially
      Owned (2)Name
      (3)
              
              Class
      A
                Common
                Stock
      (4)
              
              Class
      B
                Common
                Stock
              
              As
      a %
                of
      All
                Class
      A
              
              As
      a %
                of
      All
                Class
      BExecutive
      Officers and Directors:Clark
      Marcus (5)
              
              6,331,070
              
              6,331,070
              
              
              5.5%
              
              17.9%Jay
      Shafer (6)
              
              6,250,000
              
              -
              
              
              5.5%
              
              -Giuseppe
      Crisafi (7)
              
              5,250,000
              
              4,965,000
              
              
              4.6%
              
              14.6%Jerry
      Katzman, M.D.
              
              6,000,000
              
              6,000,000
              
              
              5.2%
              
              20.6%Arnold
      Finestone (8)
              
              896,390
              
              500,000
              
              
              0.8%
              
              1.7%William
      Koch (9)
              
              892,548
              
              505,000
              
              
              0.8%
              
              1.7%Sharon
      Kay Ray (10)
              
              924,640
              
              524,640
              
              
              0.8%
              
              1.8%Arthur
      Yeap (11)
              
              879,596
              
              500,000
              
              
              0.8%
              
              1.7%All
      officers and directors as a group (8 persons)
              
              27,424,244
              
              19,325,710
              
              
              20%
              
              39.9%Other
      Beneficial Owners:Patrick
      McInally
              
              15,000,000
              
              -
              
              
              13.6%
              
              -
 
 (1)
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 March 31, 2008.
 
 (2)
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. Each share
of Class B common stock is entitled to five votes per share, as compared to one
vote per share of Class A common stock.  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.  The total number of shares of
Class B common stock outstanding for purposes of calculating percentage
ownership of a person includes the number of shares of Class B common stock
beneficially owned by such person.  As of March 31, 2008, we had
109,736,748 shares of Class A common stock outstanding and 29,069,055 shares of
Class B common stock outstanding, or a total of 138,805,803 shares of common
stock outstanding.
 
 (3)
Unless otherwise indicated, the address for each individual listed in this
column is c/o The Amacore Group, Inc., 1211 North Westshore Boulevard, Suite
512, Tampa, Florida 33607
 
 (4) Each
share of Class B common stock is convertible into one share of Class A common
stock at the holder’s option. Accordingly, the number of shares of Class A
common stock for each person includes the number of shares of Class A common
stock issuable upon conversion of all shares of Class B common stock
beneficially owned by such person (which includes shares of Class B common stock
underlying warrants), if any.
 
 (5) Mr.
Marcus’ Class A and Class B common stock beneficial ownership includes 1,000,000
shares of Class B common stock underlying warrants which are presently
exercisable.
 
 (6) Mr.
Shafer’s beneficial ownership Includes 4,500,000 shares of Class A common stock
underlying warrants which are presently exercisable.
 
 (7) Mr.
Crisafi’s beneficial ownership includes 250,000 shares of Class A common stock
underlying warrants which are presently exercisable and 4,965,000 shares of
Class B common stock underlying warrants which are presently
exercisable.
 
 (8) Mr.
Finestone’s beneficial ownership includes 350,000 shares of Class A common stock
underlying warrants which are presently exercisable and 300,000 shares of Class
B common stock underlying warrants which are presently exercisable.
 
 (9) Mr.
Koch’s beneficial ownership includes 300,000 shares of Class A common stock
underlying warrants which are presently exercisable and 300,000 shares of Class
B common stock underlying warrants which are presently exercisable.
 
 (10) Ms.
Ray’s beneficial ownership includes 350,000 shares of Class A common stock
underlying warrants which are presently exercisable and 300,000 shares of Class
B common stock underlying warrants which are presently exercisable.
 
 (11) Mr.
Yeap’s beneficial ownership includes 300,000 shares of Class A common stock
underlying warrants which are presently exercisable and 300,000 shares of Class
B common stock underlying warrants which are presently
exercisable.




50





ITEM 12. 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 executiveofficers;·
            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.





In February 2007, the Company entered into a six-year
consulting contract with James Koenig, former Chief Financial Officer and
Director of the Company. Terms of the agreement are that Mr.
Koenig receives a weekly payment of $2,100 that represents payment of prior
years’ deferred compensation and receives compensation for any hours worked for
the Company.





Mr. Ty Bruggeman serves as our Senior Vice-President –
LifeGuard Division.  Mr. Bruggeman also owns a 33% interest in Direct
Medical Network Solutions Inc. (DirectMed)  LifeGuard markets a
membership product which it licenses from DirectMed.  Pursuant to the
license arrangement, LifeGuard pays DirectMed a branding fee based on the number
of memberships sold.  From the acquisition date of LifeGuard through
December 31, 2007, LifeGuard paid DirectMed $60,370 in branding
fees.  Accounts payable at December 31, 2007 associated with DirectMed
was $535,636.  Also, pursuant to the acquisition agreement between the
Company and LifeGuard, the Company paid $615,178 to DirectMed for amounts owed
to DirectMed by LifeGuard.





Pursuant to the acquisition agreement between the
Company and JRM, the Company assumed $287,143 of liabilities of which $159,536
and $69,240 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 and are recorded
within the Company’s notes and loans payable category of the balance
sheet.  As of December 31, 2007, the outstanding balance of said
liabilities was $222,403.





Director
Independence





During
the year ended December 31, 2007, Clark A. Marcus, James L. Koenig (retired
September 2007), Giuseppe Crisafi (elected in September   2007)
William Koch, M.D., Sharon Kay Ray, Arnold Finestone and Arthur Yeap served as
our directors. We are currently traded on the OTCBB. The OTCBB does not require
that a majority of the Board be independent.











51





Exhibit
                Number
              
              
              Description
              
              Document
      Location2.1
              
              
              Stock
      Purchase Agreement by and among the Registrant, JRM and the owners of the
      equity interests in JRM.
              
              Exhibit
      2.1 to the Current Report on Form 8-K filed on  September 12,
      20072.2
              (a)
              
              Agreement
      and Plan of Merger between the Company, LifeGuard Benefit Services, Inc.
      and LBS Acquisition Corp., dated October 5, 2007
              
              Exhibit
      2.1 to the Current Report on Form 8-K filed on October 15,
      2007(b)
              
              Addendum
      to Agreement and Plan of Merger between the Company, LifeGuard Benefit
      Services, Inc. and LBS Acquisition Corp., dated October 9,
      2007
              
              Exhibit
      2.2 to the Current Report on Form 8-K filed on October 15,
      20072.3
              (a)
              
              Stock
      Purchase Agreement between the Company, US Health Benefits Group, Inc., US
      Healthcare Plans, Inc., On the Phone, Inc. and stockholders, dated March
      31, 2008
              
              Exhibit
      2.1 to the Current Report on Form 8-K filed on April 4,
    2008(b)
              
              Addendum
      to Stock Purchase Agreement between the Company, US Health Benefits Group,
      Inc., US Healthcare Plans, Inc., On the Phone, Inc. and stockholders,
      dated April 3, 2008
              
              Exhibit
      2.2 to the Current Report on Form 8-K filed on April 4,
    20083.1
              
              
              Certificate
      of Incorporation, as amended
              
              Exhibit
      3.1 to the Current Report on Form 8-K filed on January 18,
      20083.2
              
              
              Certificate
      of Designation of Series A Convertible Preferred Stock
              
              Exhibit
      3.3 to Form 10SB12G/A filed on September 18, 20003.3
              
              
              Certificate
      of Designation of Series C Convertible Preferred Stock
              
              Filed
      herewith3.4
              
              
              Certificate
      of Designation of Series D Convertible Preferred Stock
              
              Filed
      herewith3.5
              
              
              Certificate
      of Designation of Series E Convertible Preferred Stock
              
              Filed
      herewith3.6
              
              
              Certificate
      of Designation of Series G Convertible Preferred Stock, as
      amended
              
              Exhibit
      3.1 to the Current Report on Form 8-K filed on January 18,
      20083.7
              
              
              Bylaws
              
              Exhibit
      3.2 to Form 10SB12G filed on November 1, 199910.1
              
              
              1997
      Stock Option Plan
              
              Exhibit
      10.1 to Form 10SB12G filed on November 1, 199910.2
              
              
              Employment
      Agreement with Clark A. Marcus
              
              Filed
      herewith10.3
              
              
              Employment
      Agreement with Giuseppe Crisafi
              
              Filed
      herewith10.4
              
              
              Employment
      Agreement with Jay Shafer
              
              Filed
      herewith14.1
              
              
              Code
      of Business Conduct And Ethics
              
              Exhibit
      14.1 to the Annual Report on Form 10-KSB filed on April 28,
      200521.1
              
              
              Subsidiaries
      of the Company
              
              Filed
      herewith31.1
              
              
              Certification
      of Clark A. Marcus pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
              
              Filed
      herewith31.2
              
              
              Certification
      of Giuseppe Crisafi pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
              
              Filed
      herewith32.1
              
              
              Certifications
      of Clark A. Marcus and Giuseppe Crisafi pursuant to Section 906
      Sarbanes-Oxley Act of 2002.
              
              Filed
      herewith






52





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES





The following table presents fees for professional audit
services performed by our principal accountant, Brimmer, Burek & Keelan LLP
for the audit of our annual financial statements and review of financial
statements included in our quarterly reports on Form 10QSB for our fiscal years
ended December 31, 2007 and 2006, and fees billed for other services rendered by
Brimmer, Burek & Keelan LLP during such years.








2007
              
              
              2006Audit Fees
              
              $
              171,578
              
              
              $
              96,440Tax Fees
              
              
              -
              
              
              
              -All Other
    Fees
              
              
              -
              
              
              
              -Total
              
              $
              171,578
              
              
              $
              96,440








Pre-Aproval
Policy And Procedures





We may
not engage our independent auditors to render any audit or non-audit service
unless our Audit Committee approves the service in advance.





The Audit
Committee has considered whether the provision of the services described above
under the caption "All Other Fees" is compatible with maintaining the auditor's
independence.











53











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:April 15,
      2008
            /s/Clark
      A. MarcusClark
      A. MarcusChief
      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 14th day of
April, 2008 in the capacities indicated.





/s/Clark A.
Marcus


Clark A.
Marcus


Chief
Executive Officer, President and


Director





/s/ Giuseppe
Crisafi


Giuseppe
Crisafi


Chief
Financial Officer,


Principal
Accounting Officer and Director





/s/  William Koch,
M.D


William
Koch, M.D.


Director





/s/  Sharon Kay
Ray


Sharon
Kay Ray


Director





/s/ Arnold
Finestone


Arnold
Finestone


Director





/s/ Arthur
Yeap


Arthur
Yeap


Director





/s/ Jay
Shafer


Jay
Shafer


Director





/s/ Jerry Katzman,
M.D.


Jerry
Katzman, M.D.


Director









54







Exhibit
Index














Exhibit
                Number
              
              
              Description3.3
              
              
              Certificate
      of Designation of Series C Convertible Preferred Stock3.4
              
              
              Certificate
      of Designation of Series D Convertible Preferred Stock3.5
              
              
              Certificate
      of Designation of Series E Convertible Preferred Stock10.2
              
              
              Employment
      Agreement with Clark A. Marcus10.3
              
              
              Employment
      Agreement with Giuseppe Crisafi10.4
              
              
              Employment
      Agreement with Jay Shafer21.1
              
              
              Subsidiaries
      of the Company31.1
              
              
              Certification
      of Clark A. Marcus pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
              
              
              Certification
      of Giuseppe Crisafi pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
              
              
              Certifications
      of Clark A. Marcus and Giuseppe Crisafi pursuant to Section 906
      Sarbanes-Oxley Act of 2002.














55