Table of
Contents


UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  FORM
10-K/A
 (Amendment
No. 3 )
 
  (Mark
One)
 x
              ANNUAL REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
  FOR
THE YEAR ENDED DECEMBER 31, 2007
   ̈
              TRANSITION REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES AND EXCHANGE
  ACT
  COMMISSION
FILE NUMBER: 333-132028
  
 ENSURAPET,
INC.
 (Small
Business Issuer in its Charter)
  
 NEVADA
              
              13-4303483(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification
      No.)540
      West Golden Circle, Suite 304
                SANTA
      ANA, CALIFORNIA
              
              92705(Address
      of principal executive offices)
              
              (Zip
      Code)
  Issuer’s
Telephone Number: (877) 440-7387
  Securities
registered pursuant to Section 12(b) of the Act: None
 Securities
registered pursuant to Section 12(g) of the Act: None
  COMMON
STOCK, PAR VALUE $.001
 (Title
of each class)
  
  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 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90
days.    Yes  x    No   ̈
  Check if
disclosure of delinquent filers in response to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of issuer’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K/A or any amendment to this
Form 10-K/A.  x
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
  Large
      accelerated filer     ̈
              Accelerated
      filer     ̈Non-accelerated
      filer     ̈
              Smaller
      reporting company    x(Do
      not check if a smaller reporting company)
  Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the Exchange Act).    Yes   ̈    No  x
  Number of
shares of the issuer’s common stock, par value $.001, outstanding as of
December 31, 2007, reflecting all post material events through the date of
this filing, which was reported in an 8-K filing with the SEC on March 25,
2008: 27,562,724 shares.
  State the
issuer’s revenues for its most recent fiscal year: Loss of
$(6,791,049)
  The
aggregate market value of the common equity held by non-affiliates of the
Registrant on April 18, 2008 was $12,574,500 based on a closing price of
$1.01 as reported on the Over the Counter Bulletin board as of the date
herein.
  Documents
incorporated by reference: none
  Transitional
Small Business Disclosure Format    YES   ̈    NO  x
   EXPLANATORY
NOTE:
 This
Amendment No. 3 on Form 10-K/A is filed for the following reason: toinclude
the disclosures required by Item 307 of Regulation S-K and amend theauditor's
opinion so to opine on the 12/31/06 balance sheet and relatedstatements
since inception 7/20/2005. There are no changes to the originalForm 10-K
other than those outlined in the above paragraph. Except asrequired
to reflect the changes noted above, this Amendment No. 3 on Form10-K/A
does not attempt to modify or update any other disclosures set forthin our
Original Form 10-K. Furthermore, this Amendment No. 3 on Form 10-K/Adoes not
purport to provide a general update or discussion of any otherdevelopments
of the Company subsequent to the filing of the Original Form10-K.
  
 Table of
Contents
  ENSURAPET, INC. AND SUBSIDIARIES
  TABLE
OF CONTENTS TO FORM 10-K/A
  Page
                NumbersForward-Looking
    Statements
              
              1Definitions of Certain Measures of
      Usage of theEnsurapet
      Beneficial Resource Centers
              
              1PART IItem 1.
              
              Business
              
              2Item 1A.
              
              Risk
      Factors
              
              6Item 1B.
              
              Unresolved Staff
    Comments
              
              8Item 2.
              
              Properties
              
              8Item 3.
              
              Legal
      Proceedings
              
              8Item 4.
              
              Submission of Matters to a Vote of Security
      Holders
              
              8PART IIItem 5.
              
              Market for
      Registrant’s Common Equity, Related Stockholder Matters and Issuers
      Purchases of Equity Securities
              
              9Item 6.
              
              Selected
      Financial Data
              
              11Item 7.
              
              Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
              
              12Item 7A.
              
              Quantitative and Qualitative Disclosures about Market
      Risk
              
              17Item 8.
              
              Financial Statements and Supplementary
      Data
              
              17xCondensed
      Consolidated Balance Sheets
              
              18xCondensed
      Consolidated Statements of Income
              
              20xCondensed
      Consolidated Statements of Cash Flows
              
              21xNotes
      to Condensed Consolidated Financial Statements
              
              24Item 9.
              
              Changes in and Disagreements with Accountants
      on Accounting and Financial Disclosure
              
              29Item 9A.
              
              Evaluation
      of Disclosure Controls and Procedures
              
              29Item 9B.
              
              Other
      Information
              
              30PART IIIItem 10.
              
              Directors,
      Executive Officers, Promoters and Control Persons of the Registrant;
      Compliance with Section 16(A) of the Exchange
      Act
              
              31Item 11.
              
              Executive
      Compensation
              
              32Item 12.
              
              Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
              
              33Item 13.
              
              Certain
      Relationships and Related Transactions
              
              34Item 14
              
              Principal
      Accounting Fees and Services
              
              35Item 15.
              
              Exhibits
              
              36Signatures
              
              37Index to
      Exhibits
              
              38
  
  Table of
Contents
  FORWARD-LOOKING STATEMENTS
  This
Annual Report on Form 10-K/A contains both historical and forward-looking
statements. All statements, other than statements of historical fact, are or may
be forward-looking statements. For example, statements concerning projections,
predictions, expectations, estimates or forecasts and statements that describe
our objectives, future performance, plans or goals are, or may be,
forward-looking statements. These forward-looking statements reflect
management’s current expectations concerning future results and events and can
generally be identified by the use of expressions such as “may,” “will,”
“should,” “could,” “would,” “likely,” “predict,” “potential,” “continue,”
“future,” “estimate,” “believe,” “expect,” “anticipate,” “intend,” “plan,”
“foresee,” and other similar words or phrases, as well as statements in the
future tense.
  Forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be different from
any future results, performance and achievements expressed or implied by these
statements. The following important risks and uncertainties could affect our
future results, causing those results to differ materially from those expressed
in our forward-looking statements:
  •
              
              the
      failure to achieve sufficient levels of usage of our public
      portals;
  •
              
              the
      inability to successfully deploy new or updated applications or
      services;
  •
              
              the
      inability to successfully sell our pet health insurance
      products;
  •
              
              the
      anticipated benefits from acquisitions not being fully realized or not
      being realized within the expected time
frames;
  •
              
              the
      inability to attract and retain qualified
  personnel;
  •
              
              general
      economic, business or regulatory conditions affecting the pet healthcare,
      information technology and Internet industries being less favorable than
      expected; and
  •
              
              the
      Risk Factors described in Item 1A of this Annual
    Report.
  These
factors are not necessarily all of the important factors that could cause actual
results to differ materially from those expressed in any of our forward-looking
statements. Other factors, including unknown or unpredictable ones could also
have material adverse effects on our future results.
  The
forward-looking statements included in this Annual Report on Form 10-K/A are
made only as of the date of this Annual Report. We expressly disclaim any intent
or obligation to update any forward-looking statements to reflect subsequent
events or circumstances.
  DEFINITIONS OF CERTAIN MEASURES
  In this
Annual Report, we provide information regarding usage of the Vsurance Beneficial
Resource Centers that we have determined using internal technology that
identifies and monitors usage by individual computers. As used in this Annual
Report:
  •
              
              A
      “unique user” or “unique visitor” during any calendar month is an
      individual computer that accesses a Vsurance Beneficial Resource Center
      website during the course of such calendar month, as determined by our
      tracking technology.
  •
              
              A
      “page view” is a web page that is sent to the browser of a computer upon a
      request made by such computer and received by a server in Vsurance
      Resource Network. The number of “page views” is not limited by its number
      of unique users or visitors. Accordingly, each unique user or visitor may
      generate multiple page views.
  •
              
              With
      respect to any given time period, “aggregate page views” are the total
      number of “page views” during such time period on all of the web sites in
      the network of Beneficial Resource
Centers.
  •
              
              Third
      party services that measure usage of Internet sites may provide different
      usage statistics than those reported by our internal tracking technology.
      These discrepancies may occur as a result of differences in methodologies
      applied and differences in measurement periods. For example, third party
      services typically apply their own proprietary methods of calculating
      usage, which may include surveying users and estimating site usage based
      on surveys, rather than based upon our tracking
  technology.
   1
  Table of
Contents
  PART I
  Item 1.
              Business
  General
Information
  Ensurapet,
Inc. is a Nevada corporation that was incorporated on July 26, 2005. We are
a development stage company. We were created to provide beneficial pet and horse
resource centers—VetpetMD,
Spot the Pet, and Purrfect Pet Club—via the worldwide web in order to
sell pet merchandise as an online affiliate of a leading pet retailer, lost and
found registration services (Pet ID tags), global positioning system
technologies to locate lost pets and horses, and lastly liability, life, and
health insurance policies to cover property damage and veterinary expenses from
and on pets and horses in the United States, United Kingdom and in other pet and
horse concentrated countries.
  Our
classes of stock include both preferred and common. We are presently authorized
to issue 500,000,000 shares of $.001 par value common stock and 100,000
preferred stock class “D” par value $.001. Our common stock under the symbol
“EPTI” is listed, traded and quoted on the NASDAQ Over-the-Counter Bulletin
Board (OTCBB: symbol EPTI) . All common stock shares are equal to each other
with respect to liquidation and dividend rights. Holders of voting shares are
entitled to one vote for each share they own at any shareholders’ meeting.
Holders of shares of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefore,
and upon liquidation are entitled to participate pro-rata in a distribution of
assets available for such a distribution to shareholders. There are no
conversion rights, pre-emptive or other subscription rights or privileges with
respect to common shares.
  Our
executive offices which we operate from are located at 540 N Golden Circle,
Suite 304, Santa Ana, California 92705 and our telephone number is 877-440-7387.
Our computer technology division is based in Canton, Ohio.
  We make
available free of charge at www.ensurapet.com (in the “Investor Relations”
section) links to materials we file with, or furnish to, the U.S. Securities and
Exchange Commission, or SEC, including our Annual Reports on Form 10-KSB, Form
10-K, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K, and
amendments to those reports, as soon as reasonably practicable after we
electronically file such materials with, or furnish them to, the
SEC.
  Overview
of Our Businesses
  We are a
leading provider of pet health information services to pet owners,
veterinarians, animal healthcare professionals, and pet service providers, which
includes life and health insurance for pets, horses, and other companion animals
through our public online portals. The online animal healthcare information,
decision-support applications, communications services, and insurance
applications that we provide:
  •
              
              enable
      pet owners to obtain detailed information on a particular disease or
      condition, analyze symptoms, locate veterinarians, store their pet’s
      healthcare information, receive periodic e-newsletter featuring
      Dr. Carol, and participate in online communities with pet owners and
      veterinarians;
  •
              
              make
      it easier for veterinarians, technicians, and pet service professionals to
      access clinical reference sources, stay abreast of the latest news, learn
      about treatment options, and communicate with peers;
  and
  •
              
              enable
      pet owners, veterinarians, insurance agents, employer and employer/group
      organizations to provide their employees and members with access to our
      pet life and health insurance plans for companion animals which provide
      them with benefits so they can make better treatment
    choices.
  The
Ensurapet Beneficial Resource Centers consist of the public portals that we own,
such as www.VetpetMD.com. These along with our other pet owner portals help
owners take an active role in managing their pet’s health by providing objective
healthcare and lifestyle information.
  Ensurapet
through its companion pet and horse-owner beneficial resource centers provides
services and sells tangible products to build a company owned database of
emails. From this database we shall educate, inform which will lead to the
online sale of pet insurance products (life, liability and health). The
objective is to reduce the cost of acquiring a policyholder. We sell products,
services and/or provide online services to pet owners, to establish an online
relationship with pet owners.
  Our
Online Services
  Overview
  Our
content and services are making our public portals among the leading online
companion animal health destinations for pet owners, veterinarians, technicians,
and other animal service providers. These websites are 100% owned by
Ensurapet.
   2
  Table of
Contents
  Portal
      Site
              
              Descriptionwww.ensurapet.com
              
              Our
      main directional landing pagewww.vetpetmd.com
              
              Our
      flagship pet owner portal features Dr. Carol and the pet clinic where more
      than 1,000 illnesses are cataloged as a reference source. This site offers
      daily news articles that are written by animal/veterinary journalists and
      reviewed by our professional staff/partners. We look to expand this
      website in 2007 and incorporate an online pet pharmacy.www.purrfectpetclub.com
              
              Our
      living with pets portal provides humorous and fun content including online
      shopping to more than 10,000 products.www.spotthepet.com
              
              Our
      pet locater portal provides ID tag registration for our pet with 24 hour 7
      days a week monitoring. We look to provide in either early 2009 or late
      2010 a GPS pet collar for your dog or cat.www.purrfectpetinsurance.com
              
              Is a
      life and health insurance site for owners of dogs and cats who want to
      insure against loss and veterinary expenses. Our pet insurance policies
      are the first plan to provide the coverage for life guarantee. Liability
      coverage should be available summer 2008 and form part of our plan
      coverage. By adding liability to every plan will make our policies the
      first and only pet coverage to do so in the United
  States.www.purrfecthorseinsurance.com
              
              A
      health insurance site for owners of non-racing horses, i.e. the family
      horse. This coverage should be available either late 2008 or early
      2009.
  Technology
Infrastructure
  Our
Internet based services are delivered through websites designed to address the
life and health issues of companion animals for their owners, veterinarians,
technicians, and other animal service providers with easy to use interfaces,
search functions, and navigation capabilities. We use customized content
management and publishing technology to develop, edit, publish, manage,
organize, and optimize the content for our websites. The insurance product
specific site deploys dot-net technology that provides policyholders with
complete access and account management capabilities, such as, coverage changes
or deletions, policy cancellations, and claims processing. Our development and
engineering costs totaled $24,225 in 2007, $565,434 in 2006 and $0 in
2005.
  Continued
development of our technology infrastructure is critical to our success. Our
development team works closely with marketing and administration to create not
only valuable content but interactive tools, and other applications for use
across all of our portals that improve our content management
capabilities.
  Competition
  The
Internet portal markets which we participate in are intensely competitive,
continually evolving and in some cases subject to rapid change. Some of our
competitors have greater financial, technical, marketing and other resources
than we do and some are better known than we are. We cannot provide assurance
that we will be able to compete successfully against these organizations. Since
there are no substantial barriers to entry into the markets in which we
participate, we expect that additional competitors will continue to enter these
markets. With that said, the pet insurance market remains minimally competitive
with an estimated 9 insurance providers. The barriers to entry in providing this
product from licensing to capital/surplus should slow entry of competitors.
Further, since we provide both the Internet portal markets and the insurance
product we are uniquely position in the marketplace unlike any of our
competitors.
   3
  Table of
Contents
  Other
Information
  Employees
  As of
December 31, 2007, we had approximately 4 employees. None of our employees
are covered by a collective bargaining agreement, and we believe our employee
relations are good.
  Intellectual
Property
  We rely
upon a combination of trade secret, copyright and trademark laws, license
agreements, confidentiality procedures, employee and client nondisclosure
agreements and technical measures to protect the intellectual property used in
our business.
  We use
trademarks, trade names and service marks for pet healthcare information
services and technology solutions, including Ensurapet, VetpetMD TM, Spot the Pet
TM , Purrfect Pet Insurance TM , Purrfect Horse Insurance TM , and Purrfect Pet
Club TM . We also use other registered and unregistered trademarks and service
marks for our various products and services. In addition to our trademark
registrations and applications, we have registered the domain names that either
are or may be relevant to conducting our business names, including
“vetpetmd.com,” “ensurapet.com,” and “spotthepet.com,.”
  Government
Regulation
  Introduction
  This
section of the Annual Report contains a description of laws and regulations
applicable to us, either directly or through their effect on our veterinary and
insurance industry customers. Both existing and future laws and regulations
affecting the veterinary care, information technology, insurance, and Internet
industries could create unexpected liabilities for us, cause us to incur
additional costs and restrict our operations. Many of the laws that affect, us
and particularly those applying to insurance and veterinary care, are very
complex and may be subject to varying interpretations by courts and other
governmental authorities. We cannot provide assurance that we will be able to
accurately anticipate the application of these laws and regulations to our
operations.
  Insurance
Regulation
  The sale
and solicitation of pet health insurance is highly regulated by the individual
State Insurance Departments. Coverage is written on a property casualty insurer
since pets are viewed as property even thought it is a health and replacement
(life) insurance plan. We presently issue policies on a Surplus Lines Insurance
Company authorized in the State of Michigan. The Insurance Agency has two
licensed agents two of these agents are licensed in all states. Policies are
issued through a group/association—The Purrfect Pet Club—with certificates of
coverage issued to pet owners. The advantage is the regulatory unitary treatment
state regulators usually afford these programs which allow members throughout
the United States to insure their pet.
  Consumer
Protection Regulation
  General. Advertising
and promotional activities presented to visitors on our websites are subject to
federal and state consumer protection laws that regulate unfair and deceptive
practices. We are also subject to various other federal and state consumer
protection laws, including the ones described below. Further, we are subject to
insurance marketing laws by the Department of Insurance within each
state.
  CAN-SPAM
Act. On January 1, 2004, the Controlling the Assault of
Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, became
effective. The CAN-SPAM Act regulates commercial emails, provides a right on the
part of the recipient to request the sender to stop sending messages, and
establishes penalties for the sending of email messages that are intended to
deceive the recipient as to source or content. Under the CAN-SPAM Act, senders
of commercial emails (and other persons who initiate those emails) are required
to make sure that those emails do not contain false or misleading transmission
information. Commercial emails are required to include a valid return email
address and other subject heading information so that the sender and the
Internet location from which the message has been sent are accurately
identified. Recipients must be furnished with an electronic method of informing
the sender of the recipient’s decision to not receive further commercial emails.
In addition, the email must include a postal address of the sender and notice
that the email is an advertisement. The CAN-SPAM Act may apply to the
e-newsletters that our public portals distribute to members and to some of our
other commercial email communications. However, there may be additional FTC
regulations indicating that our e-newsletters are outside the scope of the
CAN-SPAM Act. At this time, we are applying the CAN-SPAM requirements to these
email communications, and believe that our email practices comply with the
requirements of the CAN-SPAM Act. Many states have also enacted anti-spam laws.
The CAN-SPAM Act preempts many of these statutes. To the extent that these laws
are not preempted, we believe that our email practices comply with these
laws.
   4
  Table of
Contents
  Regulation of
Advertisements Sent by Fax. Section 227 of the Communications
Act, which codifies the provisions of the Telephone Consumer Protection Act of
1991 (or TCPA), prohibits the transmission of an “unsolicited advertisement” via
facsimile to a third party without the consent of that third party. An
“unsolicited advertisement” is defined broadly to include any material
advertising the commercial availability or quality of any property, goods or
services. In 2005, the Junk Fax Prevention Act (or JFPA) was signed into law,
which codified a previous interpretation of the TCPA by the Federal
Communications Commission (or FCC) that a commercial fax is not “unsolicited” if
the transmitting entity has an “established business relationship,” as defined
by the JFPA and applicable FCC regulations, with the recipient.
  On
April 5, 2006, the FCC issued its final rules under the JFPA. The rules
became effective on August 1, 2006. In the rules, the FCC confirmed that
transactional faxes are permitted. It defined a transactional fax as one that
facilitates, completes or confirms the commercial transaction that the recipient
has previously agreed to enter into with the sender. The FCC stated that these
faxes are not advertisements that are prohibited by the TCPA. The FCC recognized
that, if a transactional fax has a de minimis amount of advertising information
on it, that alone does not convert a transactional fax into an unsolicited
advertisement.
  In
addressing the so-called “EBR exemption” to the TCPA’s prohibition on
unsolicited facsimile advertisements, the FCC adopted the JFPA’s definition of
an “established business relationship” or “EBR,” which includes a voluntary
two-way communication between a person and a business. The FCC rules make clear
that, if the person made an inquiry or application to a sender, it must be about
a product or service offered by the entity for it to qualify as an EBR. The FCC
rules also do not prohibit faxed communications that contain only information,
such as news articles, updates or other similar general
information.
  States
from time to time have enacted, or have attempted to enact, their own
requirements pertaining to the transmission of commercial faxes. These state
requirements often, but not always, track the terms of the TCPA, the JFPA, and
the FCC’s regulations. To the extent state commercial fax requirements have
conflicted with federal requirements, they have to date been successfully
challenged. We cannot predict the outcome of the FCC’s future rulemaking
proceedings, the extent to which states may successfully enact more restrictive
commercial fax laws in the future, or the outcomes of any judicial challenges to
those laws.
  COPPA. The
Children’s Online Privacy Protection Act, or COPPA, applies to operators of
commercial websites and online services directed to U.S. children under the
age of 13 that collect personal information from children, and to operators of
general audience sites with actual knowledge that they are collecting
information from U.S. children under the age of 13. Our sites are not
directed at children and our general audience site,vsurance/vetpetMD, states
that no one under the applicable age is entitled to use the site. In addition,
we employ a kick-out procedure whereby users identifying themselves as being
under the age of 13 during the registration process are not allowed to register
for the site’s member only services, such as message boards and live chat
events. COPPA, however, can be applied broadly and is subject to interpretation
by courts and other governmental authorities. The failure to accurately
anticipate the application or interpretation of this law could create liability
for us, result in adverse publicity and negatively affect our
business.
  Regulation of
Contests and Sweepstakes. We may conduct contests and sweepstakes in
some of our marketing channels. The federal Deceptive Mail Prevention and
Enforcement Act and some state prize, gift or sweepstakes statutes may apply to
these promotions. We believe that we will be in compliance with any applicable
law or regulation when and if we run these promotions.
  FACTA. In
an effort to reduce the risk of identity theft from the improper disposal of
consumer information, Congress recently passed the Fair and Accurate Credit
Transactions Act (or FACTA) which requires businesses to take reasonable
measures to prevent unauthorized access to such information. FACTA’s disposal
standards are flexible and allow businesses discretion in determining what
measures are reasonable based upon the sensitivity of the information, the costs
and benefits of different disposal methods and relevant changes in technology.
We believe that we are in compliance with FACTA.
  Data Protection
Regulation. With the recent increase in publicity regarding data
breaches resulting in improper dissemination of consumer information, many
states have passed laws regulating the actions that a business must take if it
experiences a data breach, such as prompt disclosure to affected customers.
Generally, these laws are limited to electronic data and make some exemptions
for smaller breaches. Congress has also been considering similar federal
legislation relating to data breaches. The FTC has also prosecuted some data
breach cases as unfair and/or deceptive acts or practices under the Federal
Trade Commission Act. We intend to continue to comprehensively protect all
consumer data and to comply with all applicable laws regarding the protection of
this data.
   5
  Table of
Contents
  Other Consumer
Protection Regulation. The FTC and many state attorneys general are
applying federal and state consumer protection laws to require that the online
collection, use and dissemination of data, and the presentation of Web site
content, comply with certain standards for notice, choice, security and access.
Courts may also adopt these developing standards. In many cases, the specific
limitations imposed by these standards are subject to interpretation by courts
and other governmental authorities. We believe that we are in compliance with
these consumer protection standards, but a determination by a state or federal
agency or court that any of our practices do not meet these standards could
result in liability and adversely affect our business. New interpretations of
these standards could also require us to incur additional costs and restrict our
business operations.
  Item 1A.
              Risk
      Factors
  This
section describes circumstances or events that could have a negative effect on
our financial results or operations or that could change, for the worse,
existing trends in some or all of our businesses. The occurrence of one or more
of the circumstances or events described below could have a material adverse
effect on our financial condition, results of operations and cash flows or on
the trading prices of the Common Stock that we have issued or securities we may
issue in the future. We have also included a detailed discussion of risks and
uncertainties arising from governmental regulation of our businesses, one of the
most significant risks we face, in the section “Business — Governmental
Regulation” above. The risks and uncertainties described in this Annual Report
are not the only ones facing us. Additional risks and uncertainties that are not
currently known to us or that we currently believe are immaterial may also
adversely affect our business and operations.
  We
have incurred and may continue to incur losses
  Our
operating results have been impacted significantly due to the loan with Samir
Financial and may continue to do so in the future as the need for capital
continues. Our net loss for 2007 totaled $(6,791,049). Many companies with
business plans based on providing pet health insurance have failed to be
profitable and some have ceased operations. Even if demand for users exists, we
cannot assure you that our business will be profitable.
  In
addition and while a veterinary health care expenses exceed $18 billion yearly
as reported by the American Veterinary Medical Association (AVMA) with 2% of the
135 million dog and cat owners insuring their pets as reported by the
American Animal Hospital Association (AAHA), our online businesses, specifically
VetpetMD have a limited operating history and participate in a new market even
though its management collectively has over 30 years experience in the pet
insurance industry.
  We
have a significant financial indebtedness
  On
December 15, 2005, we executed a Loan and Security Agreement with Samir
Financial, LLC (the “Lender”) for $4,000,000. This loan was due in full at the
end of twelve months (December 14, 2006). We were unable to pay off this loan at
that time. Samir Financial has agreed to extend the loan until June 15,
2007 in exchange for a $500,000 extension fee. At December 31, 2006, we had
not paid the extension fee. A portion of the fee was paid – $200,000 – in
January 2007; however, a balance of $300,000 remains outstanding. The loan
payoff at June 15, 2007, will be $5,000,000. Security for this loan is all
company assets and a controlling stock position if the loan were to be in
default.
  On
April 9, 2008, the lender entered into an agreement with the Company and
forgave $4,000,000 in exchange for 3,000,000 restricted common shares. Further,
the Company shall repay then lender $1,000,000 on or before July 9, 2008
and the remaining balance of $1,000,000 will remain on the books as a liability
for a period of 14 months paid as follows: the first payment shall be due and
payable on July 1, 2009; the second payment shall be due and payable on
October 1, 2009; with subsequent payments due and payable. The lender will
not charge the company any interest (non-interest bearing loan). The Company
shall make quarterly payments to the lender of $250,000 on the dates shown
above. The three million restricted shares of the company’s common stock shall
be subject to SEC Rule 144 restrictions as well as an executed 12 month lock up
agreement.
  If
we are unable to provide content and services that attract and retain users to
The Beneficial Resource Center Network on a consistent basis, our advertising
and sponsorship revenue could be reduce, but more importantly, the database of
pet owners who would be potential policyholders could be greatly
reduced
  Users
ofThe Beneficial Resource
Center Network have numerous other online and offline sources of pet
healthcare information services. Our ability to compete for user traffic on our
public portals depends upon our ability to make available a variety of pet
health and veterinary content, decision-support applications and other services
that meet the needs of a variety of types users, including pet owners,
veterinarians, technicians, and other pet service professionals, with a variety
of reasons for seeking information. Our ability to do so depends, in turn,
on:
  •
              
              our
      ability to hire and retain qualified authors, journalists and independent
      writers;
   6
  Table of
Contents
  •
              
              our
      ability to license quality content from third
      parties; and
  •
              
              our
      ability to monitor and respond to increases and decreases in user interest
      in specific topics.
  We cannot
assure you that we will be able to continue to develop or acquire needed
content, applications and tools at a reasonable cost. In addition, since
consumer users of our public portals may be attracted toThe Beneficial Resource Center
Network as a result of a specific condition or for a specific purpose, it
is difficult for us to predict the rate at which they will return to the public
portals. Because we generate revenue by, among other things other than through
the sale of pet insurance plans, selling sponsorships of specific pages,
sections or events onVetpetMD, a decline in user traffic levels or a reduction in the number
of pages viewed by users could cause our revenue to decrease and could have a
material adverse effect on our results of operations.
  Risks
Related to Use of the Internet and to Our Technological
Infrastructure
  Our
Internet-based services are dependent on the development and maintenance of the
Internet infrastructure
  Our
ability to deliver our Internet-based services is dependent on the development
and maintenance of the infrastructure of the Internet by third parties. This
includes maintenance of a reliable network backbone with the necessary speed,
data capacity and security, as well as timely development of complementary
products such as high-speed modems, for providing reliable Internet access and
services. The Internet has experienced, and is likely to continue to experience,
significant growth in the number of users and the amount of traffic. If the
Internet continues to experience increased usage, the Internet infrastructure
may be unable to support the demands placed on it. In addition, the reliability
and performance of the Internet may be harmed by increased usage or by
denial-of-service attacks.
  The
Internet has experienced a variety of outages and other delays as a result of
damages to portions of its infrastructure, and it could face outages and delays
in the future. These outages and delays could reduce the level of Internet usage
as well as the availability of the Internet to us for delivery of our
Internet-based services. In addition, customers who utilize our Web-based
services depend on Internet service providers, online service providers and
other Web site operators for access to our Web sites. All of these providers
have experienced significant outages in the past and could experience outages,
delays and other difficulties in the future due to system failures unrelated to
our systems. Any significant interruptions in our services or increases in
response time could result in a loss of potential or existing users of and
advertisers and sponsors on our Web sites and, if sustained or repeated, could
reduce the attractiveness of our services.
  We
rely on bandwidth providers, data center providers, other third parties and our
own systems for key aspects of the process of providing products and services to
our users, and any failure or interruption in the services provided by these
third parties or our own systems could harm our business
  Our online
services are designed to operate 24 hours a day, seven days a week, without
interruption. However, we have experienced and expect that we will in the future
experience interruptions and delays in services and availability from time to
time. We rely on internal systems as well as third-party vendors, including data
center providers and bandwidth providers, to provide our online services. We do
not maintain redundant systems or facilities for some of these services. In the
event of a catastrophic event with respect to one or more of these systems or
facilities, we may experience an extended period of system unavailability, which
could negatively impact our relationship with users. To operate without
interruption, both we and our service providers must guard against:
  •
              
              damage
      from fire, power loss and other natural
  disasters;
  •
              
              communications
      failures;
  •
              
              software
      and hardware errors, failures and
crashes;
  •
              
              security
      breaches, computer viruses and similar disruptive
      problems; and
  •
              
              other
      potential interruptions.
  Any
disruption in the network access or co-location services provided by these
third-party providers or any failure of or by these third-party providers or our
own systems to handle current or higher volume of use could significantly harm
our business. We exercise little control over these third-party vendors, which
increases our vulnerability to problems with services they provide.
  Any
errors, failures, interruptions or delays experienced in connection with these
third-party technologies and information services or our own systems could
negatively impact our relationships with users and adversely affect our brand
and our business and could expose us to liabilities to third parties. Although
we maintain insurance for our business, the coverage under our policies may not
be adequate to compensate us for all losses that may occur. In addition, we
cannot provide assurance that we will continue to be able to obtain adequate
insurance coverage at an acceptable cost.
   7
  Table of
Contents
  Implementation
of additions to or changes in hardware and software platforms used to deliver
our online services may result in performance problems and may not provide the
additional functionality that was expected
  From time
to time, we implement additions to or changes in the hardware and software
platforms we use for providing our online services. During and after the
implementation of additions or changes, a platform may not perform as expected,
which could result in interruptions in operations, an increase in response time
or an inability to track performance metrics. In addition, in connection with
integrating acquired businesses, we may move their operations to our hardware
and software platforms or make other changes, any of which could result in
interruptions in those operations. Any significant interruption in our ability
to operate any of our online services could have an adverse effect on our
relationships with users and clients and, as a result, on our financial results.
We rely on a combination of purchasing, licensing, internal development, and
acquisitions to develop our hardware and software platforms. Our implementation
of additions to or changes in these platforms may cost more than originally
expected, may take longer than originally expected, and may require more testing
than originally anticipated. In addition, we cannot provide assurance that
additions to or changes in these platforms will provide the additional
functionality and other benefits that were originally expected.
  If
the systems we use to provide online portals experience security breaches or are
otherwise perceived to be insecure, our business could suffer
  We retain
and transmit confidential information, including personal health records, in the
processing centers and other facilities we use to provide online services. It is
critical that these facilities and infrastructure remain secure and be perceived
by the marketplace as secure. A security breach could damage our reputation or
result in liability. We may be required to expend significant capital and other
resources to protect against security breaches and hackers or to alleviate
problems caused by breaches. Despite the implementation of security measures,
this infrastructure or other systems that we interface with, including the
Internet and related systems, may be vulnerable to physical break-ins, hackers,
improper employee or contractor access, computer viruses, programming errors,
denial-of-service attacks or other attacks by third parties or similar
disruptive problems. Any compromise of our security, whether as a result of our
own systems or the systems that they interface with, could reduce demand for our
services and could subject us to legal claims from our clients and users,
including for breach of contract or breach of warranty.
  Item 1B.
              Unresolved
      Staff Comments
  None
  Item 2.
              Properties
  Our
executive offices which we operate from are located at 540 N Golden Circle,
Suite 304, Santa Ana, California 92705 and our telephone number is 877-440-7387.
We have a two year lease at the Theme Building $4,885.80 per month. Our computer
technology division is based in Canton, Ohio. We believe that our offices and
other facilities are in, general, in good operating condition and adequate for
our current operations and that additional leased space can be obtained on
acceptable terms if needed.
  Item 3.
              Legal
      Proceedings
  There is a
case #070C014621B involving Kathy Ranson seller of Animal-ID in the First
Judicial Court in the State of Nevada. The Company plans to contest and seek to
have the judgment set-aside in the amount of $210,000.00 based on fraud and
failure to deliver assets unencumbered as described in the Purchase
Agreement.
  Item 4.
              Submission
      of Matters to a Vote of Security
Holders
  During the
year of 2007, the following matters were submitted to a vote of security holders
of Ensurapet: First: four members were elected to the Company’s Board of
Directors to hold office until the Company’s Annual Meeting of Stockholders in
2008 or until his successor is duly elected and qualified; Second; the
appointment of Lawrence Scharfman, CPA as the Company’s independent certified
public accountants was ratified; Third; the appointment of W. Russell Smith, III
as Chairman and CEO was ratified; Fourth; the amendment to the Articles of
Incorporation to increase the authorized shares of common stock to 500,000,000,
par value $.001 and establish a class of preferred shares with non-dilutive
voting rights, recognized as class “D” totaling 100,000, par value $.001, was
ratified; and Lastly; enacted a one for eighty reverse stock split, to be
effective as of the filing of an amendment to the Company’s Articles of
Incorporation with the Nevada Secretary of State.
   8
  Table of
Contents
  Furthermore,
on January 31, 2008, which has been determined to be a material event and
reflected in this 10-K/A the following matters were submitted to a vote if
security holders of Ensurapet: First; the name of the Company was changed from
Vsurance to Ensurapet, Inc., was ratified; Second; enacted a one for one
thousand reverse stock split, to be effective as of the filing of an amendment
to the Company’s Articles of Incorporation with the Nevada Secretary of State
was ratified; Third; adopt prior board resolutions wherein amendments to the
Articles of Incorporation had been filed with the Nevada Secretary of State to
establish a preferred E and F stock class (pursuant to Board Resolution on
November 28, 2007 the Board amended its Articles of Incorporation on
December 20, 2007 so that the Company was authorized to issue 21,100,000
shares of preferred stock, $0.001 par value. The articles of December 20,
2007 authorized 20,000,000 class E preferred shares; was ratified; and Pursuant
to Board Resolution on December 27, 2007 the Board amended its articles of
Incorporation on January 11, 2008 so that the Company was authorized to
issue 1,000,000 class F preferred shares) was ratified; and Lastly, adopt
pursuant to Board Resolution of December 21, 2007 the exchange of
12,450,000 common shares for 12,450,000 preferred class E shares was
ratified.
  PART II
  Item 5.
              Market
      for Registrant’s Common equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
  Our common
stock is traded in the National Association of Securities Dealers Inter-dealer
Quotation System over-the-counter bulletin board market (the “OTCBB) and can be
accessed under the symbol “EPTI.OB” We began trading on the OTCBB on
February 27, 2008. On April 18, 2008 the high and low bid quotation
for our common stock, representing inter-dealer quotations, without adjustment
for retail markup, markdown or commission (and may not represent actual
transactions) was $1.01.
  At
December 31, 2007, there were 12,810,000 preferred shares and 3,112,750
common shares; however, after reflecting all material events through the date of
this filing inclusive of capitalization restructure, there are, which was
reported in an 8-K filing with the SEC on March 25, 2008, 27,562,724 shares
of our common stock of issued and outstanding and there were 880 shareholders of
record of the Company’s common stock. The number of record holders was
determined from the records of our transfer agent and an estimate of the number
of beneficial owners of common and preferred stock whose shares are held in the
names of various security brokers, dealers, and registered clearing
agencies.
  Dividend
Policy
  We may
never pay any dividends to our shareholders. We did not declare any dividends
for the year ended December 31, 2007. Our Board of Directors does not
intend to distribute dividends in the near future. The declaration, payment and
amount of any future dividends will be made at the discretion of the Board of
Directors, and will depend upon, among other things, the results of our
operations, cash flows and financial condition, operating and capital
requirements, and other factors as the Board of Directors considers relevant.
There is no assurance that future dividends will be paid, and if dividends are
paid, there is no assurance with respect to the amount of any such
dividend.
  Recent
sales of unregistered securities
  We
disclosed in our registration statement (SEC File number 333-132028), a schedule
of securities as part of our process in the valuation of privately held
securities issued as compensation. We continued to value stock related matters
on a going forward bases using a similar format. The following represent the
transactions that involved securities.
  January
2007 Life Cycle Stage (Eleventh Development Period)—Share value was established
at $0.75 to $1.00.
  An
experienced marketing professional and the Company in the immediate need to
generate product sales and Company awareness engaged an individual to provide an
array of marketing services and expertise for a three year period (January 10,
2007 through January 10, 2010) in exchange for 1,000,000 shares of common
stock, pursuant to Regulation Rule S8, in lieu of cash payments. These services
included targeted database e-mailings; web based and televised product
commercial consulting (television marketing); ARCA race team sponsorship
procurement; internet marketing (web-based partnerships); and administration
efficiency analysis of all marketing program costs. Given the financial
condition of the Company, Samir Financial Loan Maturity, limited cash, and going
concern rendered in the audit report it is the opinion of Management that all
efforts to improve sales must be undertaken... especially those
experts willing to accept stock as payment in lieu of cash. The stock was
discounted $0.25 due to the going concern risk from the registration offering
price of $1.00 to $0.75; furthermore, these services were valued at $750,000
which equated to an annual cost of $250,000 or $20,833 per month. This is based
on a 50 hours per month devoted to the company at an hourly cost of $417
inclusive of out-of-pocket expenses.
  9
  Table of
Contents
  Pursuant
to an effective registration statement three independent groups subscribed to
15 million common shares under a Promissory Note, wherein payment shall be
tendered on or before July 25, 2007. The subscriber is an accredited
investor and these shares are for their company’s designated
holdings.
  Pursuant
to an effective registration statement combined with a Convertible
Security & Promissory Note an individual loaned the Company $500,000
less prepaid promissory note closing fees of $50,000 which netted the Company
$450,000; wherein 500,000 shares of common stock would serve as collateral for
this 12-month loan. This loan can be converted at the option of the lender at
anytime before 1-year provided the 30-day average stock trading price is greater
than or equal to $1.50. At maturity the loan must be repaid in either cash or
stock provided the average trading price is more than $1.00; otherwise the
repayment must be made in cash as a true debt instrument with all shares being
returned to the Company.
  Pursuant
to an effective registration statement combined with a Convertible
Security & Promissory Note an individual loaned the Company $300,000
less prepaid promissory note closing fees of $50,000 which netted the Company
$250,000; wherein 300,000 shares of common stock would serve as collateral for
this 12-month loan. This loan can be converted at the option of the lender at
anytime before 1-year provided the 30-day average stock trading price is greater
than or equal to $1.50. At maturity the loan must be repaid in either cash or
stock provided the average trading price is more than $1.00; otherwise the
repayment must be made in cash as a true debt instrument with all shares being
returned to the Company. The lender on or about May 2007 converted this note
into stock; therefore, the debt is no longer a liability to the
Company.
  April
2007 Life Cycle Stage (Eleventh Development Period)—Share value was established
at $0.50 to $1.00.
  In an
effort to raise sufficient capital to retire the Samir Financial debt, which was
past due, several consultants were engaged in exchange for services.
Seventy-five thousand (75,000) class A preferred stock shares were issued
and were valued at $7,500; Eighty thousand (80,000) class C preferred
shares were issued and valued at $80,000; Five million (5,000,000) class C
preferred C were issued and valued at $500,000; Twelve thousand
(12,000) class C preferred shares were issued and valued at $12,000; 2,810
common shares valued and 13,000 common shares were issued to retire debt valued
at $1 per share. Further 100,000,000 million common shares were sold on a
note at $1 per share to the Pennington Alexander Group (PAG) which is due
July 15, 2007. The firm “PAG” defaulted on its investment and the
transaction—stock subscription receivable—was voided.
  July
2007 Life Cycle Stage (Thirteenth Development Period)
  On
July 11, 2007, the Company pursuant to: Section 14(c) of the Exchange
Act of 1934, as amended enacted a one for eighty (1:80) reverse stock
split, to be effective as of the filing of an amendment to the Company’s
Articles of Incorporation with the Nevada Secretary of State. The Company
believed that the Reverse Split was in the Company’s best interests, principally
because it may increase the trading price of the Common Stock and it reduced the
capital structure which might enable the Company to raise capital in order to
repay the Samir Financial loan. At this time—July 11, 2007—there were
66,109,190 shares of common stock issued and outstanding. The immediate
effect of the Reverse Split will be to reduce the number of presently issued and
outstanding shares of Common Stock from approximately 66,109,190 to
approximately up to 826,365. Further, the preferred stock classes A and B
received a one-for-sixty five (1:65) reverse stock split and preferred
class C received a one-to-five (1:5) reverse stock split with all shares
being converted and reissued as common stock. The Company, after this Reverse
Split and conversion of all preferred stock to common, had just one class of
equity stock—common—and the new issued and outstanding shares totaled
65,021,976.
  September
2007 Life Cycle Stage (Sixteenth Development Period)- Share value was
established at $0.67.
  On
September 1, 2007, the Company entered into an investment banking agreement
with The October Fund on a best efforts basis to raise $4.5 million in capital
in exchange for 6,750,000 commons shares. The October Fund would further, on a
best efforts basis, raise additional capital to retire the Samir Financial loan
in exchange for these shares as well. The Company planned to make payments of
$250,000 dollars per 5 quarters toward the reduction of this liability—Samir
Financial—with a single payment of $750,000 in the 6th quarter
and a final payment of $3,300,000 in the 8th
quarter. On receipt of final payment the Company intended to get a full
satisfaction of the outstanding debt from Samir Financial. At that time this
repayment schedule and settlement had not been accepted by the lender and there
was no guarantee that it would be accepted. The October Fund invested a total of
$350,000 under this agreement before the stock market became unstable (volatile)
in November 2007. On Jan 31, 2008 this agreement was canceled and a new
agreement was entered into. These shares were 234,500 paid at $0.67 and the
remaining 6,515,500 were reversed January 31, 2008 (material event) by
1,000 to 6,516. These shares formed part of the new agreement and are considered
canceled / treasury stock.
  10
  Table of
Contents
   December
2007 Life Cycle Stage (Nineteenth Development Period)
  On
December 21, 2007, pursuant to the Loan and Security Agreement with Samir
Financial the Company re-classed those common shares—12,450,000—pledged as
collateral for the loan to preferred class E in order to remain in compliance
with the aforementioned loan. These preferred class E shares convert 1:1 thereby
making the fully diluted quantity unchanged. There was no consideration given by
the Company for this transaction. The Company had previously converted all
preferred shares to common with the understanding that Standart Capital would be
providing the necessary funding in order to repay the loan. When this did not
occur the Company restored the collateralized stock as provided in the loan and
security agreement.
  January
2008 Life Cycle Stage (Twenty Development Period)- Share value was established
at $0.0015.
  The stock
market value collapsed in what management believes was due to short selling of
its securities in the public market. This volatility combined with the
significant financial indebtedness with Samir Financial for practical matters
bankrupted the Company. As a result the Company on January 29, 2008,
authorized and issued 60,000,000 common shares of the company’s common stock
valued at $0.0015 to W. Russell Smith, III Chairman and CEO. These shares were
issued in order to retain him in this capacity as Chairman and CEO. The company
did not have sufficient operating capital run the company nor the ability to pay
compensation. If the Company lost this vital person, the guarantor of the Samir
loan, and key man as designated by the Key Man life insurance which has been
assigned as collateral to Samir Financial all shareholders, investors and
participants would loose their entire investment by virtue of the immediate
foreclosure by the lender. In exchange for these shares Mr. Smith continued
on as Chief Executive Officer; continue to personally guarantee the Samir loan;
and continue to develop the company’s business model and the successful
turnaround of all operations including the repayment of the Samir Financial
debt.
  On
January 31, 2008, the Company entered into a revised and new investment
banking agreement with The October Fund on a best efforts basis to raise $4.9
million in capital in exchange for 2,200,000 commons shares. The agreement
combined deliverables on the part of the company—policy sales—with capital
investments as follows: $2 million in exchange for 1,463,414 common shares;
$500,000 on or before November 7, 2008 in exchange for 248,780 common
shares and annualized gross written premiums in-force of $1 million; $1,000,000
on or before January 5, 2009 in exchange for 243,903 common shares with the
addition of 5,000 new pet insurance policies; and $1,400,000 on or before
April 5, 2009 in exchange for 243,903 common shares with the addition of
8,000 new pet insurance policies. This transaction will be reflected in the 1
st
quarter 10-Q for the period ending March 31, 2008.
  March
2008 Life Cycle Stage (Twenty Second Development Period) – Share value was
established at $0.002
  Authorized
by the Company on December 27, 2007, 260,000 preferred class “F” shares
were issued to Taylor Financial in exchange for management turnaround services.
With the delivery of a viable turnaround plan—material event—and acceptance on
or about March 15, 2008, the Company issued the preferred class F shares
which were immediately converted into 13,000,000 common shares.
  Authorized
by the Company on December 27, 2007, 2,000,000 common shares were issued in
exchange for turnaround and going forward services from the Board of Directors
and legal counsel valued at $4,000. With the delivery of a viable turnaround
plan—material event—and acceptance on or about March 15, 2008, the Company
issued these shares. This transaction will be reflected in the 1st quarter
10-Q for the period ending March 31, 2008.
  Item 6.
              Selected
      Financial Data
  The
following selected consolidated financial data should be read in conjunction
with “Management’s Discussion and Analysis of Financial Condition and Results of
operations” and with the consolidated financial statements and notes thereto,
which are included elsewhere in the Annual Report.
  ASSETS
              
              December 31, 2007
              
              
              December 31, 2006Fixed
      AssetsProperty
      and equipment - net
              
              
              43,957
              
              
              
              129,286Other
      Assets
   11
  Table of
Contents
  ASSETS
              
              December 31, 2007
              
              
              December 31, 2006Software
              
              
              122,214
              
              
              
              460,434Trademarks
              
              
              25,576
              
              
              
              22,390Vet
      MD data base
              
              
              105,000
              
              
              
              105,000Goodwill
              
              
              0
              
              
              
              415,000Insurance
      Agency Licenses
              
              
              —
              
              
              
              —252,790
              
              
              
              1,002,824
  The
development and deployment of our public portals—The Beneficial Resource Center
Network—is represented by the investment in assets in 2006. Software
decreased from $460,434 to $122,214 as a result of amortization; furthermore,
the pet medical database remained unchanged since it had not been fully deployed
on the system with all of its features; however, in 2008 as the VetpetMD
database becomes deployed these cost will then be amortized in accordance with
GAAP.
  LIABILITIES
              
              December 31, 2007
              
              
              December 31, 2006Current
      LiabilitiesAccounts
      payable
              
              $
              132,758
              
              
              $
              578,656Accounts
      payable - in dispute
              
              
              1,201,880
              
              
              
              0Line
      of Credit
              
              
              48,001
              
              
              
              49,173Note
      payable
              
              
              0
              
              
              
              4,025,000Accrued
      interest
              
              
              0
              
              
              
              58,333Accrued
      wages
              
              
              24,573
              
              
              
              0Shareholder
      advances
              
              
              334,737
              
              
              
              0Loan
      extension fee payable
              
              
              0
              
              
              
              500,000Current
      portion of long-term debt
              
              
              1,263,875
              
              
              
              55,000Total
      Current Liabilities
              
              
              3,005,831
              
              
              
              5,266,162
  The most
significant liability is our loan to the lender—Samir Financial—who provided
the development capital. On April 9, 2008, the loan amounted to $6,000,000
and Samir accepted 3,000,000 common shares as payment of $4,000,000 and carried
the remaining balance on an interest free note. The Company further re-classed
certain payables which were due key inside shareholders as liabilities in
dispute. This reclassification occurred because it is the Company’s position
that these debts are contingent liabilities by virtue of upcoming stock
settlements not yet recorded but discussed and due to vendors’ failure to
deliver assets and services billed. The current portion of long-term debt above
the monies due Samir Financial of $1,000,000 are $263,875. This amount
represents the lawsuit with Animal-ID that will be disputed by the
Company—remedy being having the judgment ($225,100) set-aside—and two nominal
shareholder loans. Our objective in 2008 is to raise sufficient equity based
capital in order to run a profitable operation so that sufficient earnings will
be available to repay these liabilities. It is unknown if we will be able to do
so and there is no guarantee that management will be able to raise capital at
all.
  Item 7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
  Management’s
Discussion and Analysis of Consolidated Results of Financial Condition and
Results of Operations (“MD&A”) contains forward-looking statements that
involve risk and uncertainties. Please see “Forward-Looking Statements” for a
discussion of the uncertainties, risks, and assumptions associated with these
statements. The results of operations for the periods reflected herein are not
necessarily indicative of results that may be expected for future periods, and
our actual results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including but not
limited to those listed under “Risk Factors” and included elsewhere in this
Annual Report. Further historic disclosures can be found on Form 10-QSB for
September 30, 2007, 10-KSB for December 31, 2006, and in the 2006
registration statement (SEC File number 333-132028).
  Overview
  MD&A
is a supplement to our consolidated financial statements and notes thereto
included elsewhere in this Annual Report, and are provided to enhance your
understanding of our results of operations and financial condition. Our MD&A
is organized as follows:
  •
              
              Introduction. This
      section provides a general description of our company, background
      information on certain trends, strategies and other matters discussed in
      the MD&A, a description of the basis for presentation of our financial
      statements, a summary discussion of our plan of operations, and a
      discussion on our acquisition.
   12
  Table of
Contents
  •
              
              Critical Accounting Policies
      and Estimates. This section discusses those accounting policies
      that are considered important to the evaluation and reporting of our
      financial condition and results of operations, and whose application
      requires us to exercise subjective and often complex judgments in making
      estimated and assumptions.
  •
              
              Results of Operation.
      This section provides our analysis and outlook for the significant line
      items on our statement of operations, as well as other information that we
      deem meaningful to understand our results of
  operations.
  •
              
              Liquidity and Capital
      Resources. This section provides an analysis of our liquidity and
      cash flows, as well as a discussion of our commitments that existed as of
      December 31, 2007.
  •
              
              Recent Accounting
      Pronouncements. This section provides a summary of the most recent
      authoritative accounting standards and guidance that have either been
      recently adopted by our company or may be adopted in the
      future.
  Introduction
  Our
Company
  We are a
provider of pet health information services to pet owners, veterinarians, animal
healthcare professionals, and pet service providers, which includes life and
health insurance for pets, horses, and other companion animals through our
public online portals. We are organizing our business into these two operating
segments as follows; however, since we remained a development stage company at
December 31, 2007, we have represented the business as one operating
segment at this time:
  •
              
              Online and Other
      Services. The Ensurapet Beneficial Resource Centers consist of the
      public portals that we own, such as www.VetpetMD.com. These along with our
      other pet/animal owner portals help owners take an active role in managing
      their pet’s health by providing objective healthcare and lifestyle
      information. Our public portals generate revenue primarily through the
      sale of advertising and sponsorship products from Petsmart® as
      an affiliate.
  •
              
              Insurance Services. We
      sell several pet health insurance plans for dogs and cats that provide
      reimbursement of veterinary expenses incurred to treat an illness or
      injury and on some policies routine/preventive care treatment such as
      vaccinations: Protect 1, Protect 2, Protect 3, and Protect 4 all of which
      provided an accidental life insurance policy with an endorsement for death
      due to an illness. We are authorized to underwrite a pet replacement
      (life) insurance plan for dogs and cats with death benefit limits ranging
      from $1,000 to $10,000. We have not yet introduced this product to the
      marketplace but look to do so in late
2007.
  Background
Information on Certain Trends and Strategies
  Several
key trends in the pet healthcare and Internet industries are influencing the use
of pet/animal healthcare information services of the types we provide or are
developing. Those trends, and the strategies we have developed in response, are
described briefly below:
  Use of the Internet by pet owners
and veterinarians. The Internet has emerged as a major communications
medium and has already fundamentally changed many sectors of the economy,
including the marketing and sales of financial services, travel, and
entertainment, among others. The Internet is also changing the pet/animal
healthcare industry and has transformed how pet/animal owners and veterinarians
find and utilize healthcare information. Since pet owners presently assume all
of the financial responsibility veterinary costs, which are presently rising,
the Internet serves as a valuable resource by providing them with immediate
access to searchable and dynamic interactive content to check symptoms, assess
risks, understand diseases, find veterinarians and evaluate treatment options.
The Internet has also become a primary source of information for veterinarians
seeking to improve clinical practice and is growing relative to traditional
information sources, such as conferences, meetings and offline
journals.
  Increased Online Marketing and
Education Spending for Pet Healthcare Products. Pharmaceutical,
biotechnology and medical device companies spend large amounts each year
marketing their products and educating pet owners and veterinarians about them,
however, only a small portion of this amount is currently spent on online
services. We believe that these companies, which look to be and comprise the
majority of our advertisers and sponsors, are becoming increasingly aware of the
effectiveness of the Internet relative to traditional media in providing health,
clinical and product-related information to pet owners and veterinarians, and
this increasing awareness will result in increasing demand for our
services.
  Changes in the Veterinary Profession
with Pet Insurance. Ten years ago, there were two companies selling pet
health insurance; at the present time there are more than nine companies. In
2002 less than 0.5% of pet-owning households carried insurance; today 2% of
households have insured animals, which is more than double the number of pets
from 2002. The American Pet Products Manufactures
   13
  Table of
Contents
  Association
(APPMA) in 2002 reported that the pet insurance industry revenues were $80
million; by 2010 APPMA projects the revenues to reach $500 million which a much
larger market for growth given the fact that there are more than
135 million dog and cat owners in the United States.
  Basis
of Presentation
  Ensurapet,
Inc. is a Nevada corporation formerly known as Vsurance, Inc., that was
incorporated on July 26, 2005. We are a development stage company. We were
created to provide beneficial pet and horse resource centers—VetpetMD, Spot the Pet, and
Purrfect Pet Club—via the worldwide web in order to sell pet merchandise
as an online affiliate of a leading pet retailer, lost and found registration
services (Pet ID tags), global positioning system technologies to locate lost
pets and horses, and lastly liability, life, and health insurance policies to
cover property damage and veterinary expenses from and on pets and horses in the
United States, United Kingdom and in other pet and horse concentrated countries.
At December 31, 2007, there were 12,810,000 preferred shares and 3,112,750
common shares; however, after reflecting all material events through the date of
this filing inclusive of capitalization restructure, there are, which was
reported in an 8-K filing with the SEC on March 25, 2008, 27,662,724 shares
issued and outstanding, which was as follows: 27,562,724 common shares of the
500,000,000 authorized and 100,000 preferred class D shares of the 100,000
authorized. On July 27, 2007 the Company enacted a one for eighty reverse
stock split. A further subsequent stock reverse of one for one-thousand, which
was deemed material for this filing took place, on January 31, 2008.
Additionally the Samir Financial debt was reduced and $4,000,000 was taken as
repayment in the form of 3,000,000 restricted common shares with a 12-month
lock-up. These material events have all been reflected in this
presentation.
  Acquisitions
  The
Animal-ID acquisition which occurred during 2006 and reported in that periods
annual report has been and will again be in litigation. The position of the
Company is that the asset being the software was never delivered in its entirety
to Ensurapet. It was determined that the sellers did not possess the all of the
rights and that a key module was not owned by the sellers. The This acquisition
resulted in a case #070C014621B involving one of the sellers, Kathy Ranson
seller of Animal-ID in the First Judicial Court in the State of Nevada. The
Company plans to contest and seek to have the judgment set-aside in the amount
of $210,000.00 based on fraud and failure to deliver assets unencumbered as
described in the Purchase Agreement.
  Plan
of Operations
  We
commenced operations June 2006 on a small scale as our public portals were under
initial development. At that time the VetpetMD portal—www.vetpetmd.com—since the
site was made public has had: 274,812 site hits; 46,241 page views; and
established 6,605 visits of which 3,316 were unique visitors. The pet insurance
site—www.purrfectinsurance.com—since going live has had: 858,418 site hits;
203,134 page views; and established 14,727 visits of which 8,171 were unique
visitors. Our main home page—www.vsurance.com—delivered similar results: 559,125
site hits; 296,747 page views; and established 18,637 visits of which 8,964 were
unique visitors. From this visitation we have 493 policyholders with annual
written premium in excess of $30,000. As we ended the year our network of
associations, employer groups, and insurance brokerage partnerships continued to
grow. We acquired more than 90 relationships and had the potential to reach more
than 30 million members who are potential pet owners. Company resources to
capitalize on these achievements were stifled by the need to raise capital in
order to repay the large indebtedness due Samir Financial.
  In 2008
and 2009, our plan is to: increase traffic to our public portals; expand
VetpetMD to include an online pharmacy; grow our pet insurance sales through the
introduction of our kennel coverage program, caring vet program, retail in-store
offer, and expand our group/association network. In order to build traffic and
ramp up policy sales will require further capital; therefore, we have engaged
JPC Capital Partners and Wakabayashi Fund LLC to raise $5 million or more in
capital. Additionally, since our stock is quoted on the OTCBB we need to
increase investor awareness and deliver returns for shareholders. DME Capital
has been engaged—March 2008—to act as the Company’s public relations “IR
Firm.”
  Our
continuation as a going concern depends upon our ability to increase website
traffic, ramp up policy sales while obtaining further capital wherein the near
term payment to Samir Financial can be made. This is the overall objective of
this operating year and the one to follow.
  Critical
Accounting Policies and Estimates
  Our
MD&A is based upon our consolidated financial statements and notes to
consolidated financial statements, which were prepared in conformity with
U.S. generally accepted accounting principles. The preparation of the
consolidated financial statements requires us to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and
accompanying notes. We base our estimates on historical experience, current
business factors, and various other assumptions that we believe are
necessary
   14
  Table of
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  to
consider to form a basis for making judgments about the carrying values of
assets and liabilities and disclosure of contingent assets and liabilities. We
are subject to uncertainties such as the impact of future events, economic and
political factors, and changes in our business environment; therefore, actual
results could differ from these estimates. Accordingly, the accounting estimates
used in preparation of our financial statements will change as new events occur,
as more experience is acquired, as additional information is obtained and as our
operating environment changes. Changes in estimates are made when circumstances
warrant. Such changes in estimates and refinements in estimation methodologies
are reflected in reported results of operations; if material, the effects of
changes in estimates are disclosed in the notes to our consolidated financial
statements.
  We
evaluate our estimates on an ongoing basis, including those related to revenue
recognition, the allowance for doubtful accounts, the carrying value of prepaid
advertising, policy acquisition costs, the carrying value of long-lived assets
(including goodwill and intangible assets), the amortization period of
long-lived assets (excluding goodwill), the carrying value, capitalization and
amortization of software and website development costs, the provision for income
taxes and related deferred tax accounts, certain accrued expenses and
contingencies.
  We believe
the following reflects our critical accounting policies and our more significant
judgments and estimates used in the preparation of our consolidated financial
statements:
  •
              
              Revenue
      Recognition. Revenue from advertising is recognized as advertisements are
      delivered. Revenue from sponsorship arrangements, content syndication and
      distribution arrangements, and licenses of pet healthcare management tools
      and public portals are recognized along with the revenue from the sale of
      pet health insurance policies are recognized on an accrual basis
      accounting.
  •
              
              Long-Lived
      Assets. Long-lived assets consist of property, software, and equipment,
      goodwill, if any and other intangible assets. Goodwill and other
      intangible assets could arise from acquisitions, specifically Animal-ID
      which was in escrow at December 31, 2006; however, this amount which
      had been recorded as goodwill was written off December 31, 2007, due
      to the litigation. The amount assigned to intangible assets is subjective
      and based on our estimates of the future benefit of the intangible assets
      using accepted valuation techniques, such as discounted cash flow and
      replacement cost models. Our long-lived assets, excluding goodwill, are
      amortized over their estimated useful lives, which we determined based on
      the consideration of several factors including the period of time the
      asset is expected to remain in service. We evaluate the carrying value and
      remaining useful lives of long-lived assets, excluding goodwill, whenever
      indicators of impairment are present. We will evaluate the carrying value
      of goodwill annually, and whenever indicators of impairment are present.
      We will use a discounted cash flow approach to determine the fair value of
      goodwill.
  •
              
              Deferred
      Tax Assets. The Company accounts for income taxes under the provisions of
      Statements of Financial Accounting Standards No. 109 “Accounting for
      Income Taxes”, which requires a company to recognize deferred tax assets
      and liabilities for the expected future tax consequences of events that
      have been recognized in a company’s financial statements or tax returns.
      Under this method, deferred tax assets and liabilities are determined
      based on the difference between the financial statement carrying amounts
      and tax bases of assets and liabilities using enacted tax rates. The
      Company has no differences between book and tax
  accounting.
  Results
of Operations
  For the
year ending 2007 and 2006 we reported a Net Loss of $(6,791,049) and
$(4,062,219) and Basic Earnings per Share of $(3,747.82) and $(9,337.87)
respectfully.
  We are a
development stage company because we have not commenced any significant
operations so far with the exception of a minimal number (1,412) of
membership and certificates of insurance to Purrfect Pet Club members that
amounts to more than $100,000 in annualized written premium. The Company’s
wholly-owned reinsurance company “Vsurance Re, Inc” has been incorporated with
the Nevis Office of the Registrar of Companies corporation number C-304999. The
VetpetMD website, Spot the Pet lost and found 24/7 ID program, Purrfect Pet Club
with online pet merchandise sales, and Purrfect Pet Insurance online websites
are operational. The club’s membership base has been expanded and its services,
including pet health/life insurance is now available to more than
30 million people. The Company has submitted a Form “A” application with
the Idaho Department of Insurance to purchase of the Universal Life Insurance
Company charter. There is no assurance that our application will be approved by
the Insurance Department; however, if and when an order was to be given
certifying the terms of the purchase the required disclosures shall be
made.
  On
January 31, 2008, the Company entered into a revised and new investment
banking agreement with The October Fund on a best efforts basis to raise $4.9
million in capital in exchange for 2,200,000 commons shares. The agreement
combined deliverables on the part of the company—policy sales—with capital
investments as follows: $2 million in exchange for 1,463,414 common shares;
$500,000 on or before November 7, 2008 in exchange for 248,780 common
shares and annualized gross written premiums in-force of
   15
  Table of
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  $1
million; $1,000,000 on or before January 5, 2009 in exchange for 243,903
common shares with the addition of 5,000 new pet insurance policies; and
$1,400,000 on or before April 5, 2009 in exchange for 243,903 common shares
with the addition of 8,000 new pet insurance policies. The focus of management
remains on development of the company, online websites/computer operating
systems and the procurement of further capital for operations.
  Revenues—increased from $4,019
at December 31, 2006 to $47,848 at December 31, 2007, an increase of
1,190%, primarily as a result of the commencement of pet health insurance plan
sales.
  Operating Expenses—increased
from $4,066,238 at December 31, 2006 to $6,277,217 at December 31,
2007, an increase of 54%, primarily as a result of the amortization of prepaid
closing costs and the recent settlement of the note payable to Samir Financial
(Footnote 4).
  Net Income (Loss)—Net loss
increased from net income of $(4,062,219) at December 31, 2006 to
$(6,791,049) at December 31, 2007, an increase of 67%, primarily as a
result of the commencement of operations, amortization of loan closing costs,
and recent settlement of the loan with Samir Financial.
  LIQUIDITY
AND CAPITAL RESOURCES
  As of
December 31, 2007 we had total assets of $313,255 of which $15,757 was in
cash. As a result of our current lack of capital and loan obligation to the
Lender, wherein all company assets including cash is pledged as collateral, we
are completely dependent upon further capital implement our business plan;
furthermore, the need for additional capital beyond any immediate offering is
predicated because in order to write insurance policies we must maintain
adequate surplus with state insurance departments. Regulation requires insurers
to limit policy sales to only three times their surplus deposit, for example,
having a surplus deposit of $2,000,000 we could write $6,000,000 in premium
(policy sales). In the event that we cannot raise additional capital and policy
sales exceed our surplus deposit we would have to transfer the risk which is
above our surplus writing ratio to another company. This reinsurance process is
common.
  Current
Assets
  Cash—decreased from $107,047
at December 31, 2006 to $15,757 at December 31, 2007, a decrease of
$91,290 primarily as a result of developing the online resource center websites
and computer operating systems.
  Commission
receivable—increased from $1,025 at December 31, 2006 to $751 at
December 31, 2007, a decrease of $275, primarily as a result of the
commencement of pet health insurance plan sales.
  Prepaid expenses—decreased
from $496,667 at December 31, 2006 to $0 at December 31, 2007, a
decrease of $496,667, primarily as a result of the complete amortization of all
prepaid closing cost with the note payable to Samir Financial (Footnote
4).
  Total Current Assets—decreased
from $604,739 at December 31, 2006 to $16,508 at December 31, 2007, a
decrease of $588,231 primarily as a result of the commencement and launch of
business operations and lack of new incoming capital.
  Net Fixed Assets—decreased
from $129,286 at December 31, 2006 to $43,957 at December 31, 2007, a
decrease of $85,329, primarily as a result of depreciation and no new fixed
asset purchases.
  Other Assets—decreased from
$1,002,824 at December 31, 2006 to $252,790 at December 31, 2007, a
increase of $750,034, primarily as a result of amortization and write-off of the
Animal-ID acquisition and no new asset purchases.
  Liabilities
  Total Current
Liabilities—decreased from $5,266,162 at December 31, 2006 to
$3,005,831 at December 31, 2007, a decrease of $2,260,331, primarily as a
result of the settlement of the note payable to Samir Financial. Further, the
Company has reclassified certain liabilities and views them as contingentices.
In doing so, the adjusted immediate current liabilities at December 31,
2007 are $1,578,851 and $578,851 excluding the payment due Samir Financial
LLC.
  The
Company anticipates that its cash requirements will continue to increase as it
continues to expend substantial resources to build its infrastructure, develop
its business plan and establish its sales and marketing network operations,
customer support and administrative organizations. The Company currently
anticipates that its available cash resources and cash generated from operations
and the recent engagements of investment banking firms, will be sufficient to
meet its presently anticipated working capital and capital expenditure
requirements for the next twelve months. If the Company is unable to maintain
profitability, or seeks further expansion, additional funding will become
necessary. No assurances can be given that either equity or debt financing will
be available.
   16
  Table of
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  Recent
Accounting Pronouncements
  The
Company has generated only minimal revenues to date. This factor among others
including the Note payable that was originally due December 14, 2006, now
settled for a near term payment in July 2008 and stock, raises substantial doubt
about the Company’s ability to continue as a going concern. Management feels the
Company’s continuation as a going concern depends upon its ability to obtain
additional sources of capital and financing. The accompanying consolidated
financial statements do not include any adjustments that may result from the
outcome of this uncertainty.
  Item 7A.
              Quantitative
      and Qualitative Disclosures about Market
Risk
  Interest
Rate Sensitivity
  We have no
investments since we have not capitalized our reinsurance company yet; however,
funds in excess of monthly operating costs are invested in money market accounts
with an FDIC Insured Bank. At which time when we capitalize our reinsurance
company the primary objective of our investment activities will be to preserve
principal and maintain adequate liquidity, while at the same time maximizing the
yield we receive from our investment portfolio in accordance with investment
regulations set forth by the Department of Insurance. This objective will be
accomplished by adherence to our investment policy, which establishes the list
of eligible types of securities and credit requirements for each
investment.
  Item 8.
              Financial
      Statements and Supplementary Data
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Ensurapet
Inc. and Subsidiary
 The Board
of Directors and Stockholders
  We have
audited the Balance sheet s of Ensurapet, Inc and Subsidiary as of
December 31, 2007 and 2006 and  the related statements of
operations, stockholders equity and cash flows for each of the two
years in the period ended December 31, 2007, and from July 20, 2005
(inception) to  December 31, 2007. These statements are
responsibility of Company’s Management. Our responsibility is to express an
opinion on these financial statements based on our audit.
  We
conducted our audit in accordance with 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 misstatements. 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 audit provides a
reasonable basis for our opinion.
  The
Company has had difficulty in generating sufficient cash flow to meet its
obligations and is dependent on management’s ability to develop profitable
operations. These factors, among others may raise substantial doubt about their
ability to continue as a going concern.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Ensurapet, Inc and Subsidiary as of
December 31, 2007 and 2006, and the related statements of
operations, stockholders equity and cash flows for each of the two years in
the period ended December 31, 2007 and from July 20, 2005 (inception) to
December 31, 2007, in conformity with generally accepted accounting
principles.
 /s/
      Lawrence Scharfman, CPALawrence
      Scharfman CPA
  Boynton
Beach, FL
 April 24,
2008
   17
  Table of
Contents
  EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and
Subsidiary)
  (A
Development Stage Company)
  Consolidated
Balance Sheet
  December 31,
2007 and December 31, 2006
  ASSETS
              
              December 31, 2007
              
              
              December 31, 2006Current
      AssetsCash
      and cash equivalents
              
              $
              15,757
              
              
              $
              107,047Commissions
      receivable
              
              
              751
              
              
              
              1,025Prepaid
      expenses
              
              
              —
              
              
              
              496,667Total
      Current Assets
              
              
              16,508
              
              
              
              604,739Fixed
      AssetsProperty
      and equipment - net
              
              
              43,957
              
              
              
              129,286Other
      AssetsSoftware
              
              
              122,214
              
              
              
              460,434Trademarks
              
              
              25,576
              
              
              
              22,390Vet
      MD data base
              
              
              105,000
              
              
              
              105,000Goodwill
              
              
              —
              
              
              
              415,000Insurance
      Agency Licenses
              
              
              —
              
              
              
              —252,790
              
              
              
              1,002,824Total
      Assets
              
              $
              313,255
              
              
              $
              1,736,849
  See
accompanying notes to financial statements
   18
  Table of
Contents
  EnsurApet,
Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
  (A
Development Stage Company)
  Consolidated
Balance Sheet
  December 31,
2007 and December 31, 2006
  LIABILITIES
      AND STOCKHOLDERS’ EQUITY
              
              December 31,
                2007
              
              
              December 31,
                2006Current
      LiabilitiesAccounts
      payable
              
              $
              132,765
              
              
              $
              578,656Accounts
      payable - in dispute
              
              
              1,201,880
              
              
              
              —Line
      of Credit
              
              
              48,001
              
              
              
              49,173Note
      payable
              
              
              —
              
              
              
              4,025,000Accrued
      interest
              
              
              —
              
              
              
              58,333Accrued
      wages
              
              
              24,573
              
              
              
              —Shareholder
      advances
              
              
              334,737
              
              
              
              —Loan
      extension fee payable
              
              
              —
              
              
              
              500,000Current
      portion of long-term debt
              
              
              1,263,875
              
              
              
              55,000Total
      Current Liabilities
              
              
              3,005,831
              
              
              
              5,266,162Long-term
      DebtNote
      payable
              
              
              1,000,000
              
              
              
              175,000Stockholders’
      EquityStock
      subscriptions receivable
              
              
              —
              
              
              
              —Preferred
      stock
              
              
              12,810
              
              
              
              6,991Common
      stock
              
              
              3,112
              
              
              
              3,692Additional
      paid in capital
              
              
              8,223,220
              
              
              
              1,425,672Deficit
      accumulated during the development stage
              
              
              (11,931,718
              )
              
              
              (5,140,668
              )Total
      Stockholders’ Equity
              
              
              (3,692,576
              )
              
              
              (3,704,313
              )Total
      Liabilities and Stockholders’ Equity
              
              $
              313,255
              
              
              $
              1,736,849
  See
accompanying notes to financial statements
   19
  Table of
Contents
  EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and
Subsidiary)
  (A
Development Stage Company)
  Consolidated
Statements of Income
  For
the Years ending December 31, 2007 and 2006
  and
From July 20, 2005 (Inception) through December 31, 2007
  2007
              
              
              2006
              
              
              Since
                InceptionRevenues
              
              $
              47,848
              
              
              $
              4,019
              
              
              $
              51,867Marketing
      expenses
              
              
              160,862
              
              
              
              297,636
              
              
              
              458,498General
      and administrative expenses
              
              
              6,116,355
              
              
              
              3,768,602
              
              
              
              10,963,406Income
      (loss) before taxes
              
              
              (6,229,369
              )
              
              
              (4,062,219
              )
              
              
              (11,370,037
              )Other
      Income/ExpenseAbandonment
      loss
              
              
              561,680
              
              
              
              —
              
              
              
              561,680Provision
      for taxes
              
              
              —
              
              
              
              —
              
              
              
              —NET
      INCOME (LOSS)
              
              $
              (6,791,049
              )
              
              $
              (4,062,219
              )
              
              $
              (11,931,717
              )Earnings
      Per ShareBasic
              
              $
              (3,747.82
              )
              
              $
              (9,337.87
              )Average
      shares outstanding restated for 2007Stock
      reverse splits
              
              
              1,812
              
              
              
              435
  See
accompanying notes to financial statements
   20
  Table of
Contents
  EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and
Subsidiary)
  (A
Development Stage Company)
  Consolidated
Statements of Cash Flow
  For
the Years ending December 31, 2007 and 2006
  and
From July 20, 2005 (Inception) through December 31, 2007
  2007
              
              
              2006
              
              
              Since
                InceptionCash
      Flows From/For Operating ActivitiesNet
      Income (Loss)
              
              $
              (6,791,049
              )
              
              $
              (4,062,219
              )
              
              $
              (11,931,717
              )Adjustments
      to reconcile net income (loss) to net cash provided by (used for)
      operating activitiesDepreciation
              
              
              95,329
              
              
              
              11,574
              
              
              
              107,153Amortization
              
              
              338,220
              
              
              
              219,021
              
              
              
              560,408Stock
      issued for services
              
              
              1,740,500
              
              
              
              264,900
              
              
              
              2,092,338Interest
      accrual
              
              
              2,506,518
              
              
              
              —
              
              
              
              2,506,518Abandonment
      loss
              
              
              561,680
              
              
              
              —
              
              
              
              561,680Increase
      in Commissions receivable
              
              
              274
              
              
              
              (1,025
              )
              
              
              (751
              )Increase
      in Prepaid Expenses
              
              
              496,666
              
              
              
              122,275
              
              
              
              —(Decrease)
      Increase in Accounts payable
              
              
              755,989
              
              
              
              439,921
              
              
              
              1,334,643Increase
      in Accrued interest
              
              
              (58,333
              )
              
              
              58,333
              
              
              
              23,014Increase
      in Accrued wages
              
              
              24,573
              
              
              
              
              
              
              
              24,573Increase
      in Loan extension fee payable
              
              
              (500,000
              )
              
              
              500,000
              
              
              
              —Net
      Cash Used in Operation Activities
              
              
              (829,633
              )
              
              
              (2,447,220
              )
              
              
              (4,722,141
              )Cash
      Flows For Investing ActivitiesPurchase
      of Fixed assets
              
              
              (10,000
              )
              
              
              (140,610
              )
              
              
              (150,610
              )Software
      costs
              
              
              —
              
              
              
              (660,122
              )
              
              
              (660,122
              )Trademarks
              
              
              —
              
              
              
              (22,390
              )
              
              
              (22,390
              )Investment
      Animal ID
              
              
              —
              
              
              
              (250,000
              )
              
              
              (250,000
              )Vet
      MD data base
              
              
              —
              
              
              
              (105,000
              )
              
              
              (105,000
              )Net
      Cash Used in Investing Activities
              
              
              (10,000
              )
              
              
              (1,178,122
              )
              
              
              (1,188,122
              )Cash
      Flows From Financing ActivitiesProceeds
      from Line of credit
              
              
              (1,172
              )
              
              
              49,173
              
              
              
              48,001Proceeds
      from Shareholder advances
              
              
              (334,737
              )
              
              
              —
              
              
              
              (334,737
              )Payments
      on Long term debt
              
              
              (11,225
              )
              
              
              —
              
              
              
              (11,225
              )Proceeds
      from Notes Payable
              
              
              50,000
              
              
              
              2,481,986
              
              
              
              4,281,986Proceeds
      from Stock subscriptions
              
              
              430,477
              
              
              
              —
              
              
              
              430,477Sale
      of Capital Stock
              
              
              615,000
              
              
              
              773,975
              
              
              
              1,511,518Net
      Cash From Financing Activities
              
              
              748,343
              
              
              
              3,305,134
              
              
              
              5,926,020Net
      Increase (Decrease) in Cash and Cash Equivalents
              
              
              (91,290
              )
              
              
              (320,208
              )
              
              
              15,757Cash
      and Cash Equivalents - Beginning
              
              
              107,047
              
              
              
              427,255
              
              
              
              —Cash
      and Cash Equivalents - Ending
              
              $
              15,757
              
              
              $
              107,047
              
              
              
              15,757
  See
accompanying notes to financial statements
   21
  Table of
Contents
  EnsurApet,
Inc. and Subsidary (formerly Vsurance, Inc. and Subsidiary)
  (A
Development Stage Company)
  Consolidated
Statements of Stockholders’ Equity
  For
the Period From July 20, 2005 (Inception) through December 31,
2007
  Preferred
                Shares
              
              
              Stock
                Amount
              
              Common
                Shares
              Stock
                Amount
              Additional
                Paid
      in
                Capital
              
              Stock
                Subscriptions
                Receivable
              
              Deficit
                Accumulated
                During
      the
                Development
                Stage
              
              Total
                Stockholders’
                EquityBalance
      July 20, 2005
              —
              
              
              $
              —
              
              —
              $
              —
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Sale
      of shares
              437,650
              
              
              
              438
              
              100,000
              
              100
              
              122,005
              
              
              —
              
              
              —
              
              
              122,543Stock
      issued for equipment
              62,500
              
              
              
              62
              
              —
              
              
              
              438
              
              
              —
              
              
              —
              
              
              500Shares
      issued for services
              3,000,000
              
              
              
              3,000
              
              —
              
              —
              
              83,937
              
              
              —
              
              
              —
              
              
              86,937Shares
      issued for software
              750,000
              
              
              
              750
              
              —
              
              
              
              21,750
              
              
              —
              
              
              —
              
              
              22,500Shares
      issued for Debt
              1,200,000
              
              
              
              1,200
              
              —
              
              —
              
              (1,200
              )
              
              —
              
              
              —
              
              
              —Net
      loss
              —
              
              
              
              —
              
              —
              
              —
              
              —
              
              
              —
              
              
              (1,078,449
              )
              
              (1,078,449
              )Balance
      December 31, 2005
              5,450,150
              
              
              
              5,450
              
              100,000
              
              100
              
              226,930
              
              
              —
              
              
              (1,078,449
              )
              
              (845,969
              )Shares
      converted to common
              (320,000
              )
              
              
              (320
              )
              1,500,000
              
              1,500
              
              (1,180
              )
              
              —
              
              
              —
              
              
              —Shares
      issued for Debt
              600,000
              
              
              
              600
              
              —
              
              —
              
              (600
              )
              
              —
              
              
              —
              
              
              —Shares
      issued for services
              1,005,000
              
              
              
              1,005
              
              25,000
              
              25
              
              263,870
              
              
              —
              
              
              —
              
              
              264,900Shares
      issued for Debt conversion
              50,000
              
              
              
              50
              
              1,723,230
              
              1,723
              
              722,627
              
              
              —
              
              
              —
              
              
              724,400Shares
      issued for Investment in Animal ID
              205,500
              
              
              
              206
              
              249,000
              
              249
              
              164,545
              
              
              —
              
              
              —
              
              
              165,000Shares
      sold
              —
              
              
              
              —
              
              95,150
              
              95
              
              49,480
              
              
              —
              
              
              —
              
              
              49,575Net
      Loss
              —
              
              
              
              —
              
              —
              
              —
              
              —
              
              
              —
              
              
              (4,062,219
              )
              
              (4,062,219
              )Balance
      December 31, 2006
              6,990,650
              
              
              
              6,991
              
              3,692,380
              
              3,692
              
              1,425,672
              
              
              —
              
              
              (5,140,668
              )
              
              (3,704,313
              )Shares
      for services
              —
              
              
              
              —
              
              1,000,000
              
              1,000
              
              749,000
              
              
              —
              
              
              —
              
              
              750,000Sale
      of shares
              —
              
              
              
              —
              
              15,800,000
              
              15,800
              
              15,599,200
              
              
              (15,000,000
              )
              
              —
              
              
              615,000Net
      loss
              —
              
              
              
              —
              
              —
              
              —
              
              —
              
              
              —
              
              
              (1,357,038
              )
              
              (1,357,038
              )Balance
      March 31, 2007
              6,990,650
              
              
              
              6,991
              
              20,492,380
              
              20,492
              
              17,773,872
              
              
              (15,000,000
              )
              
              (6,497,706
              )
              
              (3,696,351
              )Preferred
      shares converted
              (1,800,000
              )
              
              
              (1,800
              )
              9,000,000
              
              9,000
              
              (7,200
              )
              
              —
              
              
              —
              
              
              —Funds
      received from stock subscriptions
              —
              
              
              
              —
              
              —
              
              —
              
              —
              
              
              128,300
              
              
              —
              
              
              128,300Shares
      issued for services
              7,017,000
              
              
              
              7,017
              
              900,000
              
              900
              
              866,583
              
              
              —
              
              
              —
              
              
              874,500Shares
      issued for debt
              —
              
              
              
              —
              
              16,810
              
              17
              
              16,793
              
              
              —
              
              
              —
              
              
              16,810Sale
      of shares
              —
              
              
              
              —
              
              100,000,000
              
              100,000
              
              100,400,000
              
              
              (100,500,000
              )
              
              —
              
              
              —Net
      loss
              —
              
              
              
              —
              
              —
              
              —
              
              —
              
              
              —
              
              
              (2,886,948
              )
              
              (2,886,948
              )Balance
      June 30, 2007
              12,207,650
              
              
              
              12,208
              
              130,409,190
              
              130,409
              
              119,050,048
              
              
              (115,371,700
              )
              
              (9,384,654
              )
              
              (5,563,689
              )
   22
  Table of
Contents
  Conversion
      of Preferred shares and reverse stock split
                (12,107,650
                )
                
                
                (12,108
                )
                (65,208,932
                )
                
                
                (65,209
                )
                
                
                77,317
                
                
                
                —
                
                
                
                —
                
                
                
                —Funds
      received from stock subscriptions
                —
                
                
                
                —
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                132,177
                
                
                
                —
                
                
                
                132,177Net
      loss
                —
                
                
                
                —
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (888,935
                )
                
                
                (888,935
                )Balance
      September 30, 2007
                100,000
                
                
                
                100
                
                65,200,258
                
                
                
                65,200
                
                
                
                119,127,365
                
                
                
                (115,239,523
                )
                
                
                (10,273,589
                )
                
                
                (6,320,447
                )Redemption
      of Common to Preferred E
                12,450,000
                
                
                
                12,450
                
                (12,450,000
                )
                
                
                (12,450
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Funds
      received from stock subscriptions
                —
                
                
                
                —
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                170,000
                
                
                
                —
                
                
                
                170,000Cancellation
      of subscriptions receivable
                —
                
                
                
                —
                
                —
                
                
                
                —
                
                
                
                (115,069,523
                )
                
                
                115,069,523
                
                
                
                —
                
                
                
                —Stock
      for services
                260,000
                
                
                
                260
                
                60,000,000
                
                
                
                60,000
                
                
                
                55,740
                
                
                
                —
                
                
                
                —
                
                
                
                116,000To
      record 1000 to 1 reverse split
                —
                
                
                
                —
                
                (112,637,508
                )
                
                
                (112,638
                )
                
                
                112,638
                
                
                
                —
                
                
                
                —
                
                
                
                —Shares
      issued for debt
                —
                
                
                
                —
                
                3,000,000
                
                
                
                3,000
                
                
                
                3,997,000
                
                
                
                —
                
                
                
                —
                
                
                
                4,000,000Net
      Loss
                —
                
                
                
                —
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (1,658,129
                )
                
                
                (1,658,129
                )Balance
      December 31, 2007
                12,810,000
                
                
                $
                12,810
                
                3,112,750
                
                
                $
                3,112
                
                
                $
                8,223,220
                
                
                $
                —
                
                
                $
                (11,931,718
                )
                
                $
                (3,692,576
                )
  See
      accompanying notes to financial
statements
   23
  Table of
Contents
  EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and
Subsidiary)
 (A
Development Stage Company)
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31,
2007
  NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Development Stage
Company
  Vsurance,
Inc. and wholly owned Subsidiary, Vsurance Insurance Agency, Inc. (the Company)
are development stage companies as defined under Statements of Financial
Accounting Standards No. 7. Vsurance, Inc. was incorporated on
July 26, 2005, in the State of Nevada. Purfect Pet Insurance Agency, Inc.
was incorporated on July 20, 2005, in the State of Ohio. Purfect Pet
Insurance Agency changed its name to Vsurance Insurance Agency, Inc.,
re-domiciled to New Mexico on December 31, 2005, and later re-domiciled to
Arkansas on June 13, 2006. Vsurance is a development stage Company.
Vsurance intends to provide beneficial pet / horse resource centers—VetpetMD, Spot the Pet, and Purfect
Pet Club—via the worldwide web in order to sell pet merchandise as an
online affiliate of a leading pet retailer, lost and found registration services
(Pet ID tags), global positioning system technologies to locate lost pets and
horses, and lastly liability, life, and health insurance policies to cover
property damage and veterinary expenses from and on pets and horses in the
United States, United Kingdom and in other pet and horse concentrated
countries.
  On
January 17, 2006, the Company formed Purrfect Pet Club, a Michigan
corporation. At September 30, 2007 this subsidiary was still
dormant.
  The
consolidated financial statements include the accounts of the Vsurance, Inc.,
Vsurance Insurance Agency and Purrfect Pet Club. All significant inter-company
accounts and transactions have been eliminated in consolidation.
  The
statements reflect the reverse stock splits of July 27, 2007 of 80 to 1 and
the January 31, 2008 of 1,000 to 1. The statements also reflect the
conversion of the Samir Financial loan on April 9, 2008 into a $2,000,000
loan and 3,000,000 shares of common stock valued at $4,000,000.
  Revenue
Recognition
  Vsurance
uses an accrual basis accounting.
  Cash and Cash
Equivalents
  For
purposes of the statement of cash flows, the Company considers all short-term
debt securities purchased with a maturity of three months or less to be cash
equivalents.
  Income
Taxes
  The
Company accounts for income taxes under the provisions of Statements of
Financial Accounting Standards No. 109 “Accounting for Income Taxes”, which
requires a company to recognize deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in a
company’s financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement carrying amounts and tax bases of assets and liabilities
using enacted tax rates. The Company has no differences between book and tax
accounting.
  Property and
Equipment
  Property
and equipment are carried at cost. Maintenance, repairs and renewals are
expensed as incurred. Depreciation of property and equipment is provided for
over their estimated useful life.
  Estimated
      useful livesUsed
      Office Equipment
              
              2
      YearsComputer
      Equipment
              
              3
      Years
   24
  Table of
Contents
  Use of
Estimates
  The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
  Concentration of Credit
Risks
  During
2006 and 2007, the Company had deposits in banks in excess of the FDIC insurance
limit.
  NOTE
2 – OTHER NONCURRENT ASSETS
  Software
  Software
represents internal use insurance operating software and development utilities
software valued on August 20, 2005, at $22,500. The Company in exchange for
745,000 shares of Preferred Class A stock received for internal use
insurance operating software on August 20, 2005, valued at $22,350. The
Company in exchange for 5,000 shares of Preferred Class A stock received
development utilities software valued at $150. During the six months ended
December 31, 2006, the Company spent an additional $660,122 with a third
party vender in continued development of input software for use with the initial
software. The Company capitalizes costs incurred during the application
development stage and amortizes these costs to expense over the software’s
useful life. Costs incurred during the preliminary project stage and costs
incurred during the post-implementation and operation stage are be expensed as
incurred. The Company has begun amortizing these costs. The utilities software
valued at $150 useful life is 1 year. The internal insurance operating software
has a 2 year life. The straight-lined method is used. Amortization for the year
ended December 31, 2007 and 2006, and since inception was $338,220, 219,021
and $560,408 respectively.
  Trademarks
  Trademarks
represent the third party costs in connection with the filing of trademark
applications and related research. The Company evaluates, at least annually, for
potential impairment, this recorded amount, by means of a cash flow analysis in
accordance with SFAS 142.
  Vet MD Data
Base
  Vet MD
Data Base represents third party costs incurred in the development of an
internet based veterinary medicine reference library. These cost will be
amortized over a, to be determined useful life, when placed into service. The
Company hopes to have this data base complete and in service by the end of
2007.
  Goodwill
  On
June 2, 2006 the Company entered into an agreement to purchase 100% of the
outstanding stock of Animal ID LLC for $415,000. The final agreement for the
acquisition was completed on February 2, 2007. The purchase price consists
of $20,000 cash, $165,000 in the Company’s common stock and a note for $230,
000. The upon closing the acquired company had no assets and minimal
liabilities. The entire purchase price represents Goodwill and will be accounted
for in accordance with SFAS 142. At December 31, 2007, management wrote the
balance off an impaired.
  Insurance Agency
Licenses
  Insurance
Agency Licenses represents 102 admitted and surplus lines insurance licenses
assigned to it by a shareholder and a consultant. Due to the difficulty in
valuing these licenses the Company has assigned a carrying value of
$0.
  Prepaid
Expenses
  Prepaid
expenses represent prepaid promotional expenses from a contract entered into in
January 2007. The Company issued 1,000,000 shares of its Common stock for
services valued at $750,000. The services are to be delivered over a three year
period. The prepaid portion of this contract is being amortized over its 36
month life on the straight line basis. The prepaid marketing fees were
determined my management to be of no value in the second quarter of 2007. The
balance of the prepaid fees at that time was written off.
  NOTE
3 – PROPERTY AND EQUIPMENT
  Property
and equipment are summarized by major classifications as follows:
  December 31, 2007
              
              
              December 31, 2006Equipment
              
              $
              80,427
              
              
              $
              66,445Leasehold
      Improvements
              
              
              0
              
              
              
              72,666Less
      Accumulated Depreciation
              
              
              (36,470
              )
              
              
              (11,825
              )$
              43,957
              
              
              $
              129,286
   25
  Table of
Contents
  Lease hold
Improvements were not in service during 2007. The Company abandoned its Little
Rock office at June 30, 2007. The balance of the leasehold improvement was
written off to Abandonment loss.
  Depreciation
expense for the years ended December 31, 2007, 2006, and since inception
was $95,329, $11,574 and $107,153 respectively.
  NOTE
4 – ACCOUNTS PAYABLE IN DISPUTE
  The
balance represents trade payable arising since inception that the Company is
disputing and hope to be able to reduce and satisfy the balance with issues of
the Company’s common stock during 2008.
  NOTE
5 – NOTES PAYABLE
  On
April 17, 2006, the Company borrowed $50,000 under a line of credit
agreement. The loan is due upon demand, unsecured with interest at bank’s prime
plus 2 points. The balance outstanding at September 30, 2007 and
December 31, 2006 was $50,784 and $49,173 respectively.
  On
December 15, 2005, the Company executed a Loan and Security Agreement with
Samir Financial, LLC for $4,000,000. This loan is due in full at the end of
twelve months. All interest and expenses have been prepaid. The stated interest
rate is 30% per annum. The effective interest rate is 129% per annum.
Security is all company assets including un-disbursed funds. Closing fees
totaling $1,250,000 were paid at closing by the company which netted $1,750,000
in proceeds that will be disbursed in accordance with a draw down schedule
($1,750,000 at closing less closing fees of $1,250,000 at closing: $250,000 on
January 31, 2006; $250,000 on February 28, 2006; $250,000 on
March 31, 2006 and $300,000 on April 30, 2006 resulted in net cash
proceeds to the Company of $1,550,000. The closing fees totaling $1,250,000
together with the prepaid interest of $1,200,000 totaling $2,450,000 were all
prepaid at closing thereby netting the Company, from the $4,000,000 loan, the
sum of $1, 550, 000. Fees at closing were; $800,000 closing fee which were
expensed, $100,000 collateral Management fee, $100,000 audit fees, $200,000 good
faith deposit and $50,000 Legal fees and expenses which were all capitalized at
closing since they were non-refundable and represents items which apply to the
live of the loan. The capitalized amounts totaling $450,000 are being amortized
over the twelve month life of the loan using the effective interest rate method.
These items were fully amortized at December 31, 2006.
  In
connection with the above loan the lender has agreed on December 14, 2005
and again on January 31, 2006 to purchase 1,200,000 and 600,000 shares of
Preferred A stock for $500,000 and $300,000 reduction of the loan respectively.
Under the terms of the agreement the shares have been issued to the lender. In
addition the agreement requires the shares to be repurchased by the Company at
the lenders cost and returned to the Company if the loan is not repaid when due
on December 15, 2006. The loan was not repaid timely and the Company has
forfeited its right to compensation for these shares. In December 2006, the
lender agreed verbally to extend the loan for an additional six months for a
$500,000 extension fee. There is still $300,000 of this fee outstanding at
September 30, 2007. This fee is being amortized over the six month
extension period. On September 15, 2007, the principal guarantor of this
loan did hereby forgive, assume, obligate itself, and indemnify the Company for
any and all amounts associated and incurred with this loan above $2,000,000. The
Company has not obtained release from the lender for the amounts assumed by the
principal guarantor; accordingly it will continue to carry the amount on its
books until release is received. On April 9, 2008, the Company entered into
an agreement with the lender to exchange $4,000,000 of the debt was exchanged
for 3,000,000 shares of the Company’s common stock and A new $2,000,000 note due
$1,000,000 due July 9, 2008 and the balance beginning to amortize at the
rate of $250,000 per quarter on July 1, 2009. This transaction was recorded
as of December 31, 2007.
  The
balance of the loan at December 31, 2007, as restated, and
December 31, 2006, was $2,000,000 and $5,541,667 respectively.
  On
December 5, 2006 the Company borrowed $25,000 from a shareholder. The note
is due March 1, 2007 and is at 30% interest. The loan was not repaid on its
due date. The balance outstanding on the loan at December 31, 2007 and 2006
was $38,775 and $25,000 respectively.
  In
connection with the Animal ID purchase the Company issued a $230,000 note
payable to one of the former owners of Animal ID. The note calls for quarterly
payments totaling $55,000 the first year, $70,000 the second year and $75,000
the third year. The note bears interest at 1.5% per month if in default.
The lender received a default judgment on this loan in 2007 for $225, 100. The
balance of the loan at December 31, 2007 and 2006, was $225,100 and
$205,000 respectively.
   26
  Table of
Contents
  NOTE
6 – INCOME TAXES
  The
Company has a net operating loss of approximately $10,000,000 available for
carry-forward of up to twenty (20) years for federal purposes. Pursuant to
Internal Revenue Code Section 382 and the regulations there under, the
amounts of utilizable carryover may be limited as a result of ownership changes
or even eliminated if business continuity requirements are not met. There were
no temporary differences allowing no deferred tax liabilities to
arise.
  NOTE
7 – EQUITY
  Earnings per
share
  The
Company has adopted the provisions of SFAS 128 in the computation of earnings
whereby the convertible Preferred Stock was deemed converted to common stock on
date of issue.
  Common
Stock
  The
Company has 500,000,000 and 250,000,000 shares of common stock authorized with
3,112,750 and 3,692,380 share outstanding at December 31, 2007 and 2006
respectively. The common shares of the Company were reverse split 1 for 80
shares on July 11, 2007. The shares were further reversed split on
January 31, 2008 1,000 to 1. Share values in these statements and footnotes
indicate if they are per or post split shares.
  Preferred Stock
Class A
  The
Company has 8,000,000 shares of $0.001 par value authorized, with 0 and
6,015,150 shares outstanding at December 31, 2007 and December 31,
2006 respectively. The shares have no dividend rights and convert at the
holder’s or the Company’s option to the Company’s Common Stock at the rate of 5
to 1. The shares vote with the common share holders at the same rate as the
conversion rights. The shares have no liquation value, no liquidation rights, no
dividend rights and no redemption rights. It is management’s intent to convert
all shares of Preferred A to common. In connection with the note payable the
lender has agreed on December 14, 2005 and again on January 31, 2006
to purchase 1,200,000 and 600,000 shares of Preferred A stock for a $500,000 and
$300,000 reduction of the loan respectively. Under the terms of the agreement
the shares have been issued to the lender. In addition the agreement requires
the shares to be repurchased by the Company at the lenders cost and returned to
the Company if the loan is not repaid when due on December 15, 2006. The
loan was not repaid timely and the Company has forfeited it right to
compensation for these shares. There were 0 and 6,015,150 shares outstanding at
December 31, 2007 and 2006 respectively.
  Preferred Stock Class
B
  The
Company has 2,000,000 shares of $0.001 par value authorized, with 0 and 975,500
shares outstanding at both December 31, 2007 and December 31, 2006.
The shares have no dividend rights and convert at the holder’s or the Company’s
option to the Company’s Common Stock at the rate of 2 to 1. The shares vote with
the common share holders at the same rate as the conversion rights. The shares
have no liquation value, no liquidation rights, no dividend rights and no
redemption rights. There were 0 and 975,500 shares outstanding at
December 31, 2007 and 2006 respectively.
  Preferred Stock Class
C
  The
Company has 0 and 0 shares outstanding at December 31, 2007 or
December 31, 2006. The shares have no dividend rights and convert at the
holder’s or the Company’s discretion to the Company’s Common Stock at the rate
of 25 to 1. The shares vote with the common share holders at the same rate as
the conversion rights. The shares have no liquation value, no liquidation
rights, no dividend rights and no redemption rights. There were no shares
outstanding at December 31, 2007 and 2006.
  Preferred Stock Class
D
  On
July 11, 2007, the shareholders and Board of Directors created a Preferred
Stock Class D. This class of preferred stock has non-dilutive voting rights, a
par value of $0.001 per share, and 100,000 shares authorized. There were 100,000
and 0 shares outstanding at December 31, 2007 and 2006
respectively.
   27
  Table of
Contents
  Preferred Stock Class
E
  In the
fourth quarter of 2007 the Board of Directors created a Preferred Stock Class E.
The shares have no dividend rights and convert at the holder’s or Company’s
discretion to the Company’s common stock at the rate of 2.2 shares of preferred
to one share of common. The shares were converted in the first quarter of
2008.
  NOTE
8 – RELATED PARTY TRANSACTIONS
  On
December 5, 2006 the Company borrowed $25,000 from a shareholder. The note
was due March 1, 2007 and is at 30% interest. The loan was not repaid on
its due date. The balance of the loan at December 31, 2007 and 2006 was
$38,775 and $25,000.
  The
Company also owed another shareholder and officer $334,737 for funds
advanced.
  The
Company has leased over 4,000 square feet of office space from its President.
The lease was abandoned on June 30, 2007.
  NOTE
9 – OPERATING SEGMENTS
  The
Company organizes its business into three reportable segments: the parent
company (Ensurapet, Inc., f/k/a Vsurance, Inc.), the insurance agency (Vsurance
Insurance Agency, Inc.) and the pet club (Purrfect Pet Club); however, all
assets and expenditures are reported through the parent company (Vsurance) since
operations have not commenced. Therefore, there are no supplemental schedules on
the subsidiary that would breakdown assets, liabilities and operations for each
of these segments.
  NOTE
10 – ABANDONMENT LOSS
  The
Company decided on June 30, 2007, to abandon its Little Rock offices. A
loss of $146,680 was recognized as the estimated cost of this decision. Also, in
the second quarter of 2007 management determined that the prepaid marketing fees
capitalized in the first quarter of 2007 were of no value. The $750,000 of fees
were written off in the first half of 2007. The Company on December 31,
2007 wrote off the balance of Goodwill from Animal ID as fully
impaired.
  NOTE
11 – GOING CONCERN
  The
Company has not generated any revenues or profits to date. This factor among
others including the pass due payables due and the Company’s inability to pay
the extension fee raises substantial doubt about the Company’s ability to
continue as a going concern. Management feels the Company’s continuation as a
going concern depends upon its ability to obtain additional sources of capital
and financing. Management feels it can raise the necessary working capital in
2008 to provide the necessary working capital, repay the delinquent notes
payable. The accompanying financial statements do not include any adjustments
that may result from the outcome of this uncertainty.
  NOTE
12 – SUBSEQUENT EVENTS
  On
January 10, 2008, the Board of Directors awarded 60,000,000 shares of
common stock to the CEO of the Company for services rendered during the most
recent financial crisis. The shares were valued at the market value of the
Company’s stock on the date of issue. Also, on January 15, 2008, the Board
of Directors awarded 260,000 shares of Preferred stock an entity controlled by
the CEO of the Company. These financial statements reflect this
event.
  On
January 31, 2008 the Board of Directors affected a 1000 to 1 reverse split
of common stock. These financial statements reflect this event.
  On
April 9, 2008, the Company entered into an agreement with the lender to
exchange $4,000,000 of the debt was exchanged for 3,000,000 shares of the
Company’s common stock and a new $2,000,000 note due $1,000,000 due July 9, 2008
and the balance beginning to amortize at the rate of $250,000 per quarter on
July 1, 2009. These statements reflect this event.
  On
January 31, 2008, the Company entered into a subscription receivable
agreement for the sale of $4,900,000 of the Company’s common stock. This event
has not been reflected in these statements.
  On
February 1, 2008 all shares of all classes of Preferred stock were
converted to 12,710,000 shares of Common stock. This event has not been
reflected in these statements.
   28
  Table of
Contents
  ITEM 9.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
  None.
  ITEM 9A.
              CONTROLS
      AND PROCEDURES
  Evaluation of Disclosure
      Controls and Procedures
 
 (a)
Evaluation of Disclosure Controls and Procedures.Our Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report. Based on that evaluation, Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures as of
the end of the period covered by this report were effective such that the
information required to be disclosed by us in reports filed under the Securities
Exchange Act of 1934 is (i) recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding
disclosure. A controls system cannot provide absolute assurance, however, that
the objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.
  Our Chief Executive Officer
and Chief Financial Officer is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in theUnited States.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations.  Smaller reporting companies employ fewer individuals and find
it difficult to properly segregate duties.  Often, one or two individuals
control every aspect of the Company’s operation and are in a position to
override any system of internal control.  Additionally, smaller reporting
companies tend to utilize general accounting software packages that lack a
rigorous set of software controls.
  29
  Table of Contents
  Our
Chief Executive Officer
and Chief Financial Officer evaluated the effectiveness of the Company’s
internal control over financial reporting as of September 30, 2008.  In
making this assessment, our Chief Executive Officer and
Chief Financial Officer used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control — Integrated Framework.  Based on this evaluation, our
ChiefExecutive Officer
and Chief Financial Officer, concluded that, as ofSeptember 30, 2008,
our internal control over financial reporting was effective.
  (b)
 Changes in Internal
Control over Financial Reporting.  There were no changes in our
internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during our most recently completed fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
  Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f). Management is required to base its assessment of the
effectiveness of our internal control over financial reporting on a suitable,
recognized control framework, such as the framework developed by the Committee
of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated
Framework, is known as the COSO Report. Our Management has chosen the
COSO framework on which to base its assessment; however, in 2007 this changed
due to insufficient capital.
  The
Company’s chief executive officer—W. Russell Smith—assumed the responsibilities
and activities of the chief financial officer (CFO). Mr. Smith has the knowledge
and skills necessary to prepare financial statements since he possess a MBA with
a five year accountancy degree.  While the CEO performed the financial
statement preparation duties of a CFO the accountability of the insurance
operating accounts was performed by two independent individuals, i.e., Claims
Director for policyholder claim payments and Underwriting Director for
policyholder insurance premium billings. Furthermore, the financial statements
presented in this 10-K were reviewed prior to delivery to the independent public
accounting firm, by Terry Kelley, CPA a PCAOB approved auditor of the firm
Pollard and Kelley. Not until after Mr. Kelley’s review and sign off were the
financial statements delivered to the independent auditor for his audit. Despite
these changes, new procedures and evaluation, our management concluded that even
with these changes in the Internal Controls and Procedures that our internal
control over financial reporting was effective as of December 31,
2007.
  This
annual report on Form 10-K/A 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 Securities and
Exchange Commission that permit us to provide only management’s report in this
annual report on Form 10-K/A.
  These
changes in our internal control over financial reporting that occurred after the
first quarter of 2007, in managements opinion did not materially affect, or are
reasonably likely to materially affect, our internal control over financial
reporting.
  This
annual report does not include an attestation report of the company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management’s report
in this annual report.
  It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of certain events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
  ITEM 9B.
              OTHER
      INFORMATION
  Effective
February 8, 2008, the Board of Directors of Ensurapet, Inc. (the “Company”)
accepted the resignation of J. Matt Lile, III from his position as President of
the Company. To the knowledge of the Board of Directors and executive officers
of the Company, Mr. Lile had no disagreement with the Company on any matter
related to the Company’s operations, policies or practices.
  The
settlement and shareholder lockup agreements executed on April 9, 2008,
with Samir Financial LLC were filed in an 8-K with the SEC on April 17,
2008.
  Accounts
payable in dispute ($1,201,880) are as follows: Animal-ID acquisition note
$225,100; NicoTech Animal-ID software undelivered $12,805.95; Friday Eldridge
Form A legal services provided by former director Mike Pickens $57,464.24; early
stage investor held convertible security $500,000; and early development stage
inside shareholding service providers—Coactive Systems (MIS) $316,509.87 and
Spaner Marketing (Advertising) $90,000,
  Advances
to shareholders ($334,737), are as follows: early development stage inside
shareholding service provider Coactive System (MIS) $165,000 and early
development stage inside shareholding service provider Spaner Marketing
(Advertising) $169,736.77.
  The
forward looking plan of management, of which there is no guarantee or assurance
of achievement, is to raise $5,000,000 in capital for its pet health insurance
operations and $3 million in capital to meet the surplus requirement by
Insurance Department. Inclusive of these capital raises, stock issued in
exchange for services and retirement of debt there will be 30,000,000 common
shares issued and outstanding on a fully diluted basis. There will be only one
class of preferred stock, series D of which 100,000 shall be issued and
outstanding.
   30
  Table of
Contents
  PART III
  Item 10.
              Directors,
      Executive Officers, Promoters and Control Persons of the Registrant;
      Compliance with Section 16(A) of the Exchange
  Act
  The chart
below sets for the composition of our Board of Directors, Advisors, and its
three committees and IT Advisory Council as of 11/1/2006. Directors are elected
for a period of one year and thereafter serve until the stockholders duly elect
their successor. Officers and other employees serve at the will of the Board of
Directors. All of our directors serve until their successors are elected and
qualified by our shareholders, or until their earlier death, retirement,
resignation or removal.
  Board
      Member/Occupation
              
              Board
                Member or
                IT Advisor
              
              
              Audit
              
              
              Leadership
                Development
                &
                Compensation
              
              
              Nominating
                &
                Corporate
                Governance
              
              
              IT
                Advisory
                CouncilMalcolm
      L. Pollard, JD, CPA
                Attorney
      and CPA
                Self
      Practice
              
              
              B
              
              
              
              C
              
              
              
              M
              
              
              
              MW.
      Russell Smith, III
                CEO &
      Chairman
                Ensurapet,
      Inc.
              
              
              B
              
              
              
              M
              
              
              
              C
              
              
              
              M
              
              
              
              CAllen
      A. Hayes, MD, PhD
                Retired
                Independent
      Medical Practitioner
              
              
              B
              
              
              
              M
              
              
              
              M
              
              
              
              CAnn
      Perniciaro
                Fashion
      Designer
                Self
              
              
              B
              
              
              
              
              
              
              
              M
              
              
              
              MBrad
      Green
                Partner
                Coactive
      Systems
              
              
              A
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              MJohn
      Kortis
                Partner
                Coactive
      Systems
              
              
              A
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              M
 
 A = Advisor B = BoardC = Committee chairM = Committee
member
  The
following is a brief description of the business experience of our executive
officers, directors and significant employees:
  Business
Experience of Officers and the Director
  W. Russell Smith, III,CEO &
Chairman since 07/27/05, age 45:
  A licensed
property and casualty insurance broker and reinsurance manager with over 13
years of experience in the pet insurance industry. During this tenure in the
business of insuring household pets (1993 – 2007), Mr. Smith was
instrumental in compiling the actuarial cost necessary in establishing premiums
for the pet insurance policies and claim reporting guidelines to monitor loss
experience. Accomplishments include the establishment of a pet reinsurance
company, development of the computer operating system for pet insurance
companies, cumulative sales growth of annual written premium of pet health
policies on numerous programs to more than $20 million. Further, Mr. Smith
has experience managing public companies. Mr. Smith is an experienced
financial executive with over 13-years in the financial services industry and is
a Summa Cum Laude graduate from Florida Metropolitan University with an MBA in
business/accountancy. He also holds a BA in Business/Finance from Eckerd
College.
  Malcolm L. Pollard, JD, CPA,Director,
Secretary and Treasurer since 8/31/05, age 66:
  •
              
              1990
      to present: Self employed attorney and certified public accountant, Erie
      Pennsylvania. Engaged in a varied practice involving tax, contracts,
      domestic relations, bankruptcy, startup ventures, quality and peer
      reviews, and generalized accounting
practices.
   31
  Table of
Contents
  •
              
              1989
      to 1990: Served as the Divisional Controller and Administrative Manager
      for Great Lakes Evergreen Division of American Nursery Products, Madison,
      Ohio preparing financial reports and handling administrative matters for
      division of major agribusiness.
  Ann Perniciaro,Director since
8/31/05, age
43:
  •
              
              1993
      to present: Self employed fashion designer, Birmingham Michigan. Provide
      fashion, style, and accessorizing advice to customers including the
      development of privately designed clothing products. Customer clientele
      includes not only celebrities, dignitaries, corporate executives, but
      retail labels such as Gucci, Ralph Lauren, and Max
  Mara.
  Allen A. Hayes, MD, PhD,Director since
8/31/05, age
62:
  •
              
              1995
      to 2000: Under Harold Lasker MD on a part-time basis at South Oaks
      Hospital provided medical services for physically
    challenged.
  •
              
              1997
      to 2000: Independent medical practitioner in sports medicine at Rutgers
      University.
  Item 11.
              Executive
      Compensation
  The
following table sets forth our director and executive officers stock
compensation package at the close of December 31, 2007, annual
compensation, and those participating in the health benefits plan.
  Officer and Director Summary
Table (includes all classes of stock held)
  Name
              
              Heath
                Insurance
              
              Stock Held and Class
              
              Annual
                CompensationAllen
      A. Hayes, MD PhD, Director
              
              No
              
              Common 550,000
              
              $
              0Malcolm
      L. Pollard, JD, CPA, Treasurer & Secretary
              
              No
              
              Common
      600,000
              
              $
              0Ann
      M. Perniciaro, Director
              
              No
              
              Common
      550,000
              
              $
              0W.
      Russell Smith, III, CEO & Director
              
              No
              
              Common
      60,000
              
              $
              100,000
  2007
SUMMARY COMPENSATION TABLE
  Name
      and Principal Position
              Year
              
              Salary ($)
              
              Bonus ($)
              
              Stock
                Awards
                ($)
              
              Option
                Awards
                ($)
              Non-Equity
                Incentive
      Plan
                Compensation
                ($)
              Change
      in
                Pension
                Value
      and
                Nonqualified
                Deferred
                Compensation
                Earnings
                ($)
              
              All
      Other
                Compensation
                ($)
              
              
              Total
                ($)J
      Matt Lile, President
              2007
              
              
              60,000
              
              
              
              
              —
              
              
              
              
              
              
              08
              
              
              
              60,000W.
      Russell Smith, CEO
              2007
              
              
              100,000
              
              
              
              
              —
              
              
              
              
              
              
              08
              
              
              
              100,000Option
      Awards
              Stock
      AwardsName
              Number
      of
                Securities
                Underlying
                Unexercised
                Options
                (#)
              
              Number
      of
                Securities
                Underlying
                Unexercised
                Options
                (#)
              
              Equity
                Incentive
                Plan Awards:
                Number
      of
                Securities
                Underlying
                Unexercised
                Unearned
                Options
                (#)
              
              Option
                Exercise
                Price
                ($)
              
              Option
                Expiration
                Date
              Number of
                Shares
      or
                Units
      of
                Stock That
                Have
      Not
                Vested
                (#)
              Market
                Value of
                Shares or
                Units
      of
                Stock That
                Have
      Not
                Vested
                ($)
              
              Equity Incentive
                Plan
      Awards:
                Number
      of
                Unearned
                Shares,
      Units
                or
      Other
                Rights
      That
                Have
      Not
                Vested
                (#)
              
              
              Equity
                Incentive
                Plan Awards:
                Market
      or
                Payout
      Value
                of
      Unearned
                Shares,
      Units
                or
      Other
                Rights
      That
                Have
      Not
                Vested
                ($)Exercisable
              
              UnexercisableNONE
  2007
OPTION EXERCISES AND STOCK VESTED TABLE
  Name
              
              Option
      Awards
              
              Stock
      AwardsNumber of Shares
                Acquired on Exercise
                (#)
              
              Value Realized
                on
      Exercise
                ($)
              
              Number of Shares
                Acquired on Vesting
                (#)
              
              Value Realized
                on
      Vesting
                ($)NONE
   32
  Table of
Contents
  2007
PENSION BENEFITS TABLE
  Name
              
              Plan Name
              
              Number of Years
                Credited
      Service
                (#)
              
              Present Value
                of Accumulated
                Benefit
                ($)
              
              Payments During Last
                Fiscal
      Year
                ($)NONE
  2007
NONQUALIFIED DEFERRED COMPENSATION TABLE
  Name
              
              Executive Contributions
                in
      Last Fiscal Year
                ($)
              
              Registrant
                Contributions in Last
                Fiscal
      Year
                ($)
              
              Aggregate Earnings
                in
      Last Fiscal Year
                ($)
              
              Aggregate
                Withdrawals /
                Distributions
                ($)
              
              Aggregate Balance at
                Last
      Fiscal Year-End
                ($)NONE
  2007
DIRECTOR COMPENSATION TABLE
  Name
              
              Fees Earned or
                Paid in Cash
                ($)
              
              
              Stock Awards
                ($)
              
              Option Awards
                ($)
              Non-Equity
                Incentive
      Plan
                Compensation
                ($)
              Change
                in
      Pension
                Value
      and
                Nonqualified
                Deferred
                Compensation
                Earnings
                ($)
              All
      Other
                Compensation
                ($)
              
              Total
                ($)Malcolm
      Pollard
              
              
              8,739
              
              
              
              —
              
              
              
              
              
              
              
              8,739Allen
      Hayes
              
              
              6,766
              
              
              
              —
              
              
              
              
              
              
              
              6,766Ann
      Perniciaro
              
              
              8,703
              
              
              
              —
              
              
              
              
              
              
              
              8,703W.
      Russell Smith
              
              
              0
              
              
              
              —
              
              
              
              
              
              
              
              0
  2007
OTHER COMPENSATION TABLE
  Name
              
              Year
              
              Perquisites
                and
      Other
                Personal
                Benefits
                ($)
              
              Tax
                Reimbursements
                ($)
              
              Insurance
                Premiums
                ($)
              
              Company
                Contributions
                to Retirement and
                401(k)
      Plans
                ($)
              
              Severance
                Payments /
                Accruals
                ($)
              
              Change
                in Control
                Payments /
                Accruals
                ($)
              
              Total
                ($)None
  2007
PERQUISITES TABLE
  Name
              
              Year
              
              Personal Use of
                Company
                Car/Parking
              
              Financial Planning/
                Legal
      Fees
              
              Club Dues
              
              Executive Relocation
              
              Total Perquisites and
                Other Personal BenefitsNONE
  Item 12.Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
  The
following tables are as follows: the first table shows the amount of our common
stock beneficially owned by all of our directors and executive officers as a
group as of December 31, 2007. Unless otherwise indicated, beneficial ownership
is direct and the person indicated has sole voting and investment power. As of
December 31, 2007, giving effect to the 1,000 for one reverse stock split, we
had 3,112,750 shares of common stock outstanding.
  Name
      and Address
              
              Title
      of
                Class
              
              Shares
                Beneficially
                Owned(1)
              
              Percent of
                Class(1)Malcolm
      Pollard
                540
      N Golden Cir, Suite 304
                Santa
      Ana, California 92705
                (Director)
              
              Common
              
              600,000
              
              2
              %Ann
      Perniciaro
                540
      N Golden Cir, Suite 304
                Santa
      Ana, California 92705
                (Director)
              
              Common
              
              550,000
              
              1.8
              %Allen
      Hayes
                540
      N Golden Cir, Suite 304
                Santa
      Ana, California 92705
                (Director)
              
              Common
              
              550,000
              
              1.8
              %W.
      Russell Smith, III
                540
      N Golden Cir, Suite 304
                Santa
      Ana, California 92705
                (Director
      & CEO from 8/17/07)
              
              Common
              
              600,000
              
              2
              %
 
 *
              Less
      than 1%.
   33
  Table of
Contents
  Item 13.
              Certain
      Relationships and Related
Transactions
  On
December 5, 2006 the Company borrowed $25,000 from a shareholder. The note
is due March 1, 2007 and is at 30% interest. The loan was not repaid on its
due date. The balance of the loan at December 31, 2006 and 2005 was $25,000
and $0 respectively.
  The
Company has leased over 4,000 square feet of office space from its President.
The lease will begin in 2007 and provides a lease rate at market value. This
transaction was entered into for the benefit of those services being
rendered—establishment of the agent network to PEOs, Associations, Unions, and
Employers—and for extending office space to the company at a discounted rate for
a minimum of five years—set forth in the schedule below—to launch operations of
Ensurapet in exchange for 500,000 shares of Class A preferred stock. Rental
space located in downtown little rock in a historic building on the national
register of some 4,000 plus square feet with adjacent accommodations for
management.
  Lease
      Year
              
              Lease Rate
              
              
              Market
              
              
              Savings/loss to ownerOne
              
              $
              4.00
              
              
              $
              10
              
              
              $
              24,000Two
              
              $
              5.00
              
              
              $
              10
              
              
              $
              20,000Three
              
              $
              6.00
              
              
              $
              10
              
              
              $
              16,000Four
              
              $
              7.00
              
              
              $
              10
              
              
              $
              12,000Five
      – Ten
              
              $
              8.00
              
              
              $
              10
              
              
              $
              8,000Total
      all years
              
              
              
              
              
              
              
              
              
              $
              80,000
  Stock
price of shares based on the registered offering $1.00; however, given the
default status of the Company on the Samir loan and the need to forge ahead with
operations if it is to raise capital the following price per share has been
established for these restricted shares. With only 4,000 shares sold at the
offering price of $1.00 all other common shares issued were promissory notes
that converted that resulted in discounts to as little as $0.31 per share.
Therefore, as a result of further financial deterioration the value of the
shares is $80,000 or $0.16 per share. This property was location was terminated
and the accrued balance of leasehold improvements was written off. To abandon
these Little Rock offices a loss of $146,680 was recognized as the estimated
cost of this decision.
   34
  Table of
Contents
  Item 14.
              Principal
      Accounting Fees and Services
  Lawrence
Scharfman CPA audited the Company’s financial statements for the period for
December 31, 2006 since December 31, 2007. Fees related to services
performed by Lawrence Scharfman CPA were as follows:
  2006Audit
      Fees (1)
              
              $
              25,000Audit-Related
      Fees
              
              
              -0-Tax
      Fees (2)
              
              
              -0-All
      Other Fees (3)
              
              
              -0-Total
              
              $
              25,000
 
 (1)
              Audit
      fees represent fees for professional services provided in connection with
      the audit of our financial statements and review of our quarterly
      financial statements.
 
 (2)
              Tax
      fees principally included tax advice, tax planning and tax return
      preparation.
 
 (3)
              Other
      fees related to registration statement reviews and
    comments.
  Lawrence
Scharfman CPA audited the Company’s financial statements for the period for
December 31, 2007 since December 31, 2006. Fees related to services
performed by Lawrence Scharfman CPA were as follows:
  2007Audit
      Fees (1)
              
              $
              25,000Audit-Related
      Fees
              
              
              -0-Tax
      Fees (2)
              
              
              -0-All
      Other Fees (3)
              
              
              -0-Total
              
              $
              25,000
 
 (1)
              Audit
      fees represent fees for professional services provided in connection with
      the audit of our financial statements and review of our quarterly
      financial statements.
 
 (2)
              Tax
      fees principally included tax advice, tax planning and tax return
      preparation.
 
 (3)
              Other
      fees related to registration statement reviews and
    comments.
  The Board
of Directors has reviewed and discussed with the Company’s management and
independent registered public accounting firm the audited consolidated financial
statements of the Company contained in the Company’s Annual Report on Form
10-K/A for the Company’s 2007 fiscal year. The Board has also discussed with the
auditors the matters required to be discussed pursuant to SAS No. 61
(Codification of Statements on Auditing Standards, AU Section 380), which
includes, among other items, matters related to the conduct of the audit of the
Company’s consolidated financial statements.
  The Board
has received and reviewed the written disclosures and the letter from the
independent registered public accounting firm required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), and
has discussed with its auditors its independence from the Company. The Board has
considered whether the provision of services other than audit services is
compatible with maintaining auditor independence.
  Based on
the review and discussions referred to above, the Board approved the inclusion
of the audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-K/A for its 2007 fiscal year for filing with the
SEC.
  The Board
pre-approved all fees described above.
   35
  Table of
Contents
  Item 15.
              Exhibits
  3.1
              
              —Articles
      of Incorporation (1)3.1 (b)
              
              —Amendment
      to the Articles of Incorporation (1)3.2
              
              —Bylaws (1)3.3
              
              —Certificate
      of Designation of Preferences, Rights and Limitations of Series D
      Convertible Preferred Stock (6)4.1
              
              —Form
      of Common Stock Certificate (1)10.1
              
              —Escrow
      Agreement (1)10.2
              
              —Loan
      and Security Agreement Settlement by and between Samir Financial, L.L.C.,
      and Vsurance, Inc. (2)10.3
              
              —Attachments
      to Loan and Security Agreement (4)10.4
              
              —Guarantee
      of Russell Smith III (4)23.1
              
              Consent
      of Independent Registered Public Accounting Firm (6)31.1
              
              Certification
      of the Chairman, President and Chief Executive Officer pursuant to Rule
      13a-14(a) promulgated under the Securities Exchange Act of 1934, as
      amended. (6)31.2
              
              Certification
      of the Executive Vice President and Chief Financial Officer pursuant to
      Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as
      amended. (6)32.1
              
              Certification
      of Chairman, President and Chief Executive Officer, pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002. (6)32.2
              
              Certification
      of Executive Vice President and Chief Financial Officer, pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002. (6)99.1
              
              —Subscription
      Agreement (3)99.2
              
              Securities
      Purchase Agreement (5)
 
 (1)
              Previously
      filed as an Exhibit to Vsurance’s registration statement on Form SB-2
      filed with the Securities and Exchange Commission on February 24,
      2006.
 
 (2)
              Previously
      filed as Exhibit 10.2 Vsurance’s registration statement on Form SB-2/A
      filed with the Securities and Exchange Commission on May 30,
      2006.
 
 (3)
              Previously
      filed as an Exhibit 99.1 Vsurance’s registration statement on Form SB-2/A
      filed with the Securities and Exchange Commission on June 23,
      2006.
 
 (4)
              Previously
      filed as an Exhibit to Vsurance’s registration statement on Form SB-2/A
      filed with the Securities and Exchange Commission on September 22,
      2006.
 
 (5)
              Previously
      filed as an Exhibit to Vsurance’s registration statement on Form SB-2/A
      filed with the Securities and Exchange Commission on October 13,
      2006.
 
 (6)
              Filed
      herein.
   36
  Table of
Contents
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
  (Date)
              
              
              
              ENSURAPET,
      INC.(Registrant)November 20,
      2008
              
              By:
              
              /s/
      W. RUSSELL SMITH, IIIW.
      Russell Smith, IIICEONovember 20,
      2008
              
              
              
              /s/
      W. RUSSELL SMITH, IIIW.
      Russell Smith, IIIExecutive
      Vice President and Chief Financial
Officer
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
  /s/
      W. RUSSELL SMITH, III
              
              November
      20, 2008W.
      Russell Smith, III
                CEO,
      Executive Vice President and Chief Financial Officer/s/
      Malcolm L. Pollard, JD, CPA
              
              November
      20, 2008Malcolm
      L. Pollard, JD, CPA
                Director,
      Secretary/s/
      Ann M. Perniciaro
              
              November
      20, 2008Ann
      M. Perniciaro
                Director/s/
      Allen A. Hayes, MD PhD\
              
              November
      20, 2008Allen
      A. Hayes, MD PhD
                Director
   37
  Table of
Contents
  ENSURAPET, INC. AND SUBSIDIARIES
  INDEX
TO EXHIBITS
  Exhibit
              
              Description3.3
              
              Certificate
      of Designation of Preferences, Rights and Limitations of Series D
      Convertible Preferred Stock23.1
              
              Consent
      of Independent Registered Public Accounting Firm.31.1
              
              Certification
      of the Chairman, President and Chief Executive Officer pursuant to
      Rule 13a-14(a) promulgated under the Securities Exchange Act of
      1934, as amended.31.2
              
              Certification
      of the Executive Vice President and Chief Financial Officer pursuant to
      Rule 13a-14(a) promulgated under the Securities Exchange Act of
      1934, as amended.32.1
              
              Certification
      of Chairman, President and Chief Executive Officer, pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Certification
      of Executive Vice President and Chief Financial Officer, pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.