UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , D.C. 20549
FORM 10-Q/A
(Amendment No. 1 2)
 
(Mark One)
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTER ENDED MARCH 31, 2008
 
o
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)
 
Issuers 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   o
 
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 o
 
Accelerated filer  o
 
 
 
 
Non-accelerated filer   o
 
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   o     No   x
 
Number of shares of the issuers common stock, par value $.001, outstanding as of March 31, 2008: 29,762,750 shares.
 
 
EXPLANATORY NOTE:
This Amendment No. 2 on Form 10-Q/A is filed for the following reason: to include the disclosures required by Item 307 of Regulation S-K. There are no changes to the original Form 10-Q other than those outlined in the above paragraph. Except as required to reflect the changes noted above, this Amendment No. 2 on Form 10-Q/A does not attempt to modify or update any other disclosures set forth in our Original Form 10-Q. Furthermore, this Amendment No. 2 on Form 10-Q/A does not purport to provide a general update or discussion of any other developments of the Company subsequent to the filing of the Original Form 10-Q.
 
 
 
ENSURAPET, INC. AND SUBSIDIARIES
 
TABLE OF CONTENTS TO FORM 10-Q
 
         
       
Page
Numbers
 
   
   
     
     
     
     
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
2
 
FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q 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 and other filings with the Securities and Exchange Commission;
 
 
•
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 Quarterly 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-Q are made only as of the date of this Quarterly Report. We expressly disclaim any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.
 
3
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
 
(A Development Stage Company)
 
Consolidated Balance Sheet
 
March 31, 2008 and December 31, 2007
 
 
ASSETS
 
Unaudited
March 31, 2008
   
Audited
December 31, 2007
 
Current Assets
           
Cash and cash equivalents
  $ 23,565     $ 15,757  
Commissions receivable
    751       751  
Prepaid expenses
    —       —  
                 
Total Current Assets
    24,316       16,508  
         
Fixed Assets
               
Property and equipment - net
    37,391       43,957  
                 
Other Assets
               
Software
    91,660       122,214  
Trademarks
    25,576       25,576  
Vet MD data base
    105,000       105,000  
Goodwill
    —       —  
Insurance Agency Licenses
    —       —  
      222,236       252,790  
Total Assets
  $ 283,943     $ 313,255  
 
See accompanying notes to financial statements
4
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
 
(A Development Stage Company)
 
Consolidated Balance Sheet
 
March 31, 2008 and December 31, 2007
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
   
Unaudited
March 31, 2008
     
Audited
December 31, 2007
 
 
 
 
   
 
 
Current Liabilities
               
Accounts payable
 
$
167,145
   
$
132,765
 
Accounts payable - in dispute
   
1,201,880
     
1,201,880
 
Line of Credit
   
45,233
     
48,001
 
Note payable
   
—
     
—
 
Accrued interest
   
—
     
—
 
Accrued wages
   
24,573
     
24,573
 
Shareholder advances
   
324,503
     
334,737
 
Loan extension fee payable
   
—
     
—
 
Current portion of long-term debt
   
1,263,875
     
1,263,875
 
Total Current Liabilities
   
3,027,209
     
3,005,831
 
     
Long-term Debt
               
Note payable
   
1,000,000
     
1,000,000
 
     
Stockholders’ Equity
               
Stock subscriptions receivable
   
(4,778,962
)
   
—
 
Preferred stock
   
100
     
12,810
 
Common stock
   
29,762
     
3,112
 
Additional paid in capital
   
13,113,280
     
8,223,220
 
Deficit accumulated during the development stage
   
(12,107,446
)
   
(11,931,718
)
Total Stockholders’ Equity
   
(3,743,266
)
   
(3,692,576
)
Total Liabilities and Stockholders’ Equity
 
$
283,943
   
$
313,255
 
 
See accompanying notes to financial statements
5
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
 
(A Development Stage Company)
 
Consolidated Statements of Income
 
For the Quarter Ending March 31, 2008 and the Year ending December 31, 2007 and From July 20, 2005 (Inception) through March 31, 2008
 
     
Unaudited
2008
     
Audited
2007
     
Since
Inception
 
   
 
   
 
   
 
 
Revenues
 
$
20,876
   
$
47,848
   
$
72,743
 
Marketing expenses
   
3,834
     
160,862
     
462,332
 
General and administrative expenses
   
192,770
     
6,116,355
     
11,156,176
 
Income (loss) before taxes
   
(175,728
)
   
(6,229,369
)
   
(11,545,765
)
       
Other Income/Expense
                       
Abandonment loss
   
—
     
561,680
     
561,680
 
Provision for taxes
   
—
     
—
     
—
 
NET INCOME (LOSS)
 
$
(175,728
)
 
$
(6,791,049
)
 
$
(12,107,445
)
                         
Earnings Per Share
                       
Basic
 
$
(0.03
)
 
$
(3,747.82
)
       
Average Shares Outstanding
   
6,437,750
     
1,812
         
 
 
See accompanying notes to financial statements      
6
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
 
(A Development Stage Company)
 
Consolidated Statements of Cash Flow
 
For the Quarter Ending March 31, 2008 and the Year ending December 31, 2007 and From July 20, 2005 (Inception) through March 31, 2008
 
     
Unaudited
2008
     
Audited
2007
     
Since
Inception
 
Cash Flows From/For Operating Activities
                       
Net Income (Loss)
 
$
(175,728
)
 
$
(6,791,049
)
 
$
(12,107,445
)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
                       
Depreciation
   
6,566
     
95,329
     
113,719
 
Amortization
   
30,554
     
338,220
     
590,962
 
Stock issued for services
   
4,000
     
1,740,500
     
2,096,338
 
Interest accrual
   
—
     
2,506,518
     
2,506,518
 
Abandonment loss
   
—
     
561,680
     
561,680
 
Increase in Commissions receivable
   
—
     
274
     
(751
)
Increase in Prepaid Expenses
   
—
     
496,666
     
—
 
(Decrease) Increase in Accounts payable
   
34,380
     
755,989
     
1,369,023
 
Increase in Accrued interest
   
—
     
(58,333
)
   
23,014
 
Increase in Accrued wages
   
—
     
24,573
     
24,573
 
Increase in Loan extension fee payable
   
—
     
(500,000
)
   
—
 
Net Cash Used in Operation Activities
   
(100,228
)
   
(829,633
)
   
(4,822,369
)
Cash Flows For Investing Activities
                       
Purchase of Fixed assets
   
—
     
(10,000
)
   
(150,610
)
Software costs
   
—
     
—
     
(660,122
)
Trademarks
   
—
     
—
     
(22,390
)
Investment Animal ID
   
—
     
—
     
(250,000
)
Vet MD data base
   
—
     
—
     
(105,000
)
Net Cash Used in Investing Activities
   
—
     
(10,000
)
   
(1,188,122
)
Cash Flows From Financing Activities
                       
Proceeds from Line of credit
   
(2,768
)
   
(1,172
)
   
45,233
 
Proceeds from Shareholder advances
   
(10,234
)
   
(334,737
)
   
(344,971
)
Payments on Long term debt
   
—
     
(11,225
)
   
(11,225
)
Proceeds from Notes Payable
   
—
     
50,000
     
4,281,986
 
Proceeds from Stock subscriptions
   
121,038
     
430,477
     
551,515
 
Sale of Capital Stock
   
—
     
615,000
     
1,511,518
 
Net Cash From Financing Activities
   
108,036
     
748,343
     
6,034,056
 
                         
Net Increase (Decrease) in Cash and Cash Equivalents
   
7,808
     
(91,290
)
   
23,565
 
Cash and Cash Equivalents - Beginning
   
15,757
     
107,047
     
—
 
Cash and Cash Equivalents - Ending
 
$
23,565
   
$
15,757
     
23,565
 
                         
 
See accompanying notes to financial statements
7
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
 
(A Development Stage Company)
 
Consolidated Statements of Stockholders’ Equity
 
For the Period From July 20, 2005 (Inception) through March 31, 2008
 
   
Preferred
Shares
   
Stock
Amount
   
Common
Shares
   
Stock
Amount
   
Additional
Paid in
Capital
   
Stock
Subscriptions
Receivable
   
Deficit
Accumulated
During the
Development
Stage
   
Total
Stockholders’
Equity
 
Balance July 20, 2005
    —     $ —       —     $ —     $ —     $ —     $ —     $ —  
Sale of shares
    437,650       438       100,000       100       122,005       —       —       122,543  
Stock issued for equipment
    62,500       62       —               438       —       —       500  
Shares issued for services
    3,000,000       3,000       —       —       83,937       —       —       86,937  
Shares issued for software
    750,000       750       —               21,750       —       —       22,500  
Shares 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       —       —       264,900  
Shares issued for Debt conversion
    50,000       50       1,723,230       1,723       722,627       —       —       724,400  
Shares issued for Investment in Animal ID
    205,500       206       249,000       249       164,545       —       —       165,000  
Shares sold
    —       —       95,150       95       49,480       —       —       49,575  
Net 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       —       —       750,000  
Sale of shares
    —       —       15,800,000       15,800       15,599,200       (15,000,000 )     —       615,000  
Net 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       —       128,300  
Shares issued for services
    7,017,000       7,017       900,000       900       866,583       —       —       874,500  
Shares issued for debt
    —       —       16,810       17       16,793       —       —       16,810  
Sale 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 )
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       —       132,177  
 
8
 
                                                 
Net 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       —       170,000  
Cancellation of subscriptions receivable
    —       —       —       —       (115,069,523 )     115,069,523       —       —  
Stock for services
    260,000       260       60,000,000       60,000       55,740       —       —       116,000  
To 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       —       —       4,000,000  
Net 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 )
Conversion of Preferred E to Common
    (12,450,000 )     (12,450 )     12,450,000       12,450       —       —       —       —  
Conversion of Preferred F to Common
    (200,000 )     (200 )     10,000,000       10,000       (9,800 )     —       —       —  
Stock for services
    —       —       2,000,000       2,000       2,000       —       —       4,000  
Retirement of Preferred F
    (60,000 )     (60 )     —       —       60       —       —       —  
Sale of shares
    —       —       2,200,000       2,200       4,897,800       (4,778,962 )     —       121,038  
      100,000     $ 100       29,762,750     $ 29,762     $ 13,113,280     $ (4,778,962 )   $ (11,931,718 )   $ (3,567,538 )
 
See accompanying notes to financial statements
9
 
EnsurApet, Inc. and Subsidiary (formerly Vsurance, Inc. and Subsidiary)
(A Development Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Development Stage Company
 
Ensurapet, 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 and filed a name change on January 31, 2008 to Ensurapet, Inc. Purrfect Pet Insurance Agency, Inc. was incorporated on July 20, 2005, in the State of Ohio. Purrfect 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. Ensurapet is a development stage Company. Ensurapet intends to provide beneficial pet / 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.
 
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 Ensurapet, 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
 
Ensurapet uses the accrual basis of 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 lives
Used Office Equipment
2 Years
Computer Equipment
3 Years
 
10
 
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 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 periods ending March 31, 2008, the year ended December 31 2007, and since inception was $30,554, 338,220 and $590,962 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 2008.
 
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 of this investment down to zero as 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.
 
11
 
NOTE 3 – PROPERTY AND EQUIPMENT
 
Property and equipment are summarized by major classifications as follows:
 
   
September 30, 2007
   
December 31, 2007
 
Equipment
 
$
80,427
   
$
80,427
 
Leasehold Improvements
   
0
     
0
 
Less Accumulated Depreciation
   
(43,036
)
   
(36,470
)
                 
   
$
37,391
   
$
43,957
 
 
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 periods ending March 31, 2008, the year ending December 31, 2007 and since inception was $6,566, $95,329, and $113,719 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 $45,233 and $50,784 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 May 19, 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 March 31, 2008 and December 31, 2007, as restated, was $2,000,000.
 
12
 
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 March 31, 2008 and December 31, 2007 was $38,775.
 
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 March 31, 2008 and December 31, 2007, was $225,100.
 
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 29,760,750 and 3,112,750 share outstanding at March 31, 2008 and December 31, 2007 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 pre 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 September 30, 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 shares outstanding at March 31, 2008 and December 31, 2007.
 
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 September 30, 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 shares outstanding at March 31, 2008, and December 31, 2007.
 
Preferred Stock Class C
 
The Company has 0 and 0 shares outstanding at September 30, 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 March 31, 2008 and December 31, 2007.
 
13
 
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 shares outstanding at March 31, 2008 and December 31, 2007 and 2006.
 
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 1 shares of preferred to one share of common. The shares were converted in the first quarter of 2008. There were 0 shares outstanding at March 31, 2008 and December 31, 2007 as restated.
 
Preferred Stock Class F
 
In the first quarter of 2008 the Board of Directors created a Preferred Stock Class F. The shares have no voting or dividend rights and convert at the holder’s or Company’s discretion to the Company’s common stock at a rate of 1 shares of preferred to fifty common shares. The shares were converted in the first quarter of 2008. There were 0 shares outstanding at March 31, 2008 and December 31, 2007 as restated.
 
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 March 31, 2008 and December 31, 2007 was $38,775.
 
The Company also owed another shareholder and officer $324,503 and $334,737 at March 31, 2008 and December 31, 2007 respectively, 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 (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 – ABANDOMENT 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 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.
 
14
 
Item 2.
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 Quarterly Report. Further historic disclosures can be found on Form 10-K for December 31, 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 Quarterly 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.
 
 
•
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 March 31, 2008.
 
 
•
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 March 31, 2008, 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.
 
15
 
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 . A new report published by Packaged Facts on Pet Insurance in North America, stated that North Americans will take an increasingly strong interest in pet insurance during the next five years, placing sales as high as $1.1 billion in 2012. This forecast is consistent with soaring revenues in the overall pet market due to affluent households and their willingness to spend more on the health and wellness of their beloved furry family members. A conservative estimate in this study indicated revenues of pet insurance were at $248 million in 2007, up 21% from $205 million in 2006. The report further stated that North America is primed for expansion in the pet insurance market.
 
 
For the first time insurance plans are being sold under nationally known pet care brands, including PurinaCare and the American Kennel Club. Helping to drive further interest and awareness, companies are targeting consumers through new distribution channels, such as, direct-to-consumer, veterinarian offices, pet care service providers, supermarkets and insurance agencies. The report went on to say that many new companies have entered the market over the past three years and it’s a sure bet that more well-funded companies will jump on-board in the coming year. Each company has its own version of pet insurance products, ranging from highly customizable plans to greatly simplified ones for a mass market. In the pet insurance spotlight is PurinaCare, AKC, ASPCA, as well as dedicated pet insurance underwriters such as American Pet Insurance Company and SecuriCan, who all appear to be following in the footsteps Kroger who now too provides pet insurance. For further information on this report visit: http://www.packagedfacts.com/Pet-Insurance-1391937/
 
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 March 31, 200, there were 29,862,750 shares issued and outstanding, which was as follows: 29,762,750 common shares of the 500,000,000 authorized and 100,000 preferred class D shares of the 100,000 authorized.
 
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.
 
16
 
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 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.
 
17
 
 
 
•
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 quarter ending 2008 and year ending 2007 we reported a Net Loss of $(175,728) and $(6,791,049) and Basic Earnings per Share of $(0.03) and $(3,747.82) 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 withdrawn its Form “A” application with the Idaho Department of Insurance to purchase of the Universal Life Insurance Company charter. The Company intends, at the direction of legal counsel, to file a new Form A for a new insurance company charter in the State of Arizona which is underway. Further the Company will seek to utilize the expedited NAIC mono-line filing service in the other states. 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 $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 – were $47,848 at December 31, 2007 and $20,876 at March 31, 2008, which represents 43% of last years revenue, primarily as a result of the continuance of pet health insurance plan sales.
 
Operating Expenses – were $6,277,217 at December 31, 2007 and $196,604 at March 31, 2008, which represents 0.4% of last years expenses, primarily as a result of the discontinuance of the amortization of prepaid closing costs and recent settlement of the note payable to Samir Financial (Footnote 4).
 
Net Income (Loss) – there was a net loss from net income of $(6,791,049) at December 31, 2007 and $(175,728) at March 31, 2008 which represents 4% of last year loss. The decrease is primarily the result of the discontinuance of the amortization of prepaid closing costs and recent settlement of the note payable to Samir Financial (Footnote 4).
 
LIQUIDITY AND CAPITAL RESOURCES
 
As of March 31, 2008 we had total assets of $283,943 of which $23,565 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.
 
18
 
Current Assets
 
Cash – increased from $15,757 at December 31, 2007 to $23,565 at March 31, 2008, an increase of $7,808 primarily as a result of capital investments under the investment banking agreement.
 
Commission receivable – was unchanged from $751 at December 31, 2007 to $751 at March 31, 2008, primarily as a result of the offset of this receivable against future reporting periods for pet health insurance plan sales.
 
Prepaid expenses – was unchanged from $0 at December 31, 2007 to $0 at March 31, 2008, 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 – increased from $16,508 at December 31, 2007 to $24,316 at March 31, 2008, an increase of $7,808 primarily as a result of capital investments under the investment banking agreement.
 
Net Fixed Assets – decreased from $43,857 at December 31, 2007 to $37,391 at March 31, 2008, a decrease of $6,466, primarily as a result of depreciation and no new fixed asset purchases.
 
Other Assets – decreased from $252,790 at December 31, 2007 to $222,236 at March 31, 2008, a decrease of $30,554, primarily as a result of amortization and write-off of the Animal-ID acquisition and no new asset purchases.
 
Liabilities
 
Total Current Liabilities – increased from $3,005,831 at December 31, 2007 to $3,027,209 at March 31, 2008, an increase of $21,3781 primarily as a result of normal operations.
 
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.
 
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 3.
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 4.
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 the United 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.
 
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 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 Chief Executive Officer and Chief Financial Officer, concluded that, as of March 31, 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. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2008.
 
19
 
This quarterly report on Form 10-Q 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 quarterly report on Form 10-Q.
 
There were no changes in our internal control over financial reporting that occurred during the first quarter of 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
This quarterly 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 quarterly 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.
 
20
 
PART II – OTHER INFORMATION
 
Item 1.
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 a purchase agreement. between the parties.
 
Except as disclosed above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
 
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 first quarter of 2008 totaled $(175,728). 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.
 
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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 of The 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;
 
 
•
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 to The 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 on VetpetMD, 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.
 
 
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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.
 
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 2.
Unregistered Sale of Equity 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 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.
 
23

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.
 
The offer and sale of such shares of our common stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act and in Section 4(2) of the Securities Act, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information requested with respect to our company; (d) the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act; and (e) a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.
 
Item 3.
Defaults Upon Senior Securities
 
There were no defaults upon senior securities during the period ended March 31, 2008.
 
Item 4.
Submission of Matters to a Vote of Security Holders
 
On January 31, 2008, which had been determined to be a material event and reflected in the Company’s 10-K for the period ending December 31, 2007, the following matters were submitted to a vote of 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.
 
Item 5.
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.
 
24

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.
 
Item 6.
Exhibits
 
 
     
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.
 
 
 
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ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
ITEM 9A. CONTROLS AND PROCEDURES
 
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 had chosen the COSO framework on which to base its assessment in 2006; 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 and for the period ending March 31, 2008.
 
This quarterly report on Form 10-Q as well as the Company’s annual report on Form 10-Q for the year ending 2007 did 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 quarterly report on Form 10-Q as well as our annual report on Form 10-K.
 
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 quarterly report on Form 10-Q as well as the Company’s annual report on Form 10-Q for the year ending 2007, did 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.
 
26
 
 
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)
     
May November  20, 2008
 
By:
 
/s/ W. RUSSELL SMITH, III
       
W. Russell Smith, III
       
CEO
     
May November 20, 2008
     
/s/ W. RUSSELL SMITH, III
       
W. Russell Smith, III
       
Principal Accounting Officer
 
 
 
27
 
 
ENSURAPET, INC. AND SUBSIDIARIES
 
 
INDEX TO EXHIBITS
 
Exhibit   Description
     
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.
 
 
 
 
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