UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

~~Annual Report Pursuant to Section 13 or 15~~(d)Mark ~~of the Securities Exchange Act of 1934~~One)

~~For~~[ ~~the~~X ~~fiscal~~] ~~year~~Annual ~~ended~~Report ~~December~~Pursuant ~~31,~~to ~~2010~~Section 13 or 15(d) of The Securities Exchange Act of 1934

~~VITAMIN~~For ~~BLUE~~the Fiscal Year Ended December 31, ~~INC.~~ 2012

~~(Exact~~[ ~~name~~] ofTransition ~~Registrant~~Report asPursuant ~~specified~~to inSection ~~its~~13 ~~charter~~or 15(d) of The Securities Exchange Act of 1934

Delaware	33-0858127
(State of incorporation)	(IRS Employer Identification Number)
1005 West 18th Street
Costa Mesa, CA 92627	92627
(Address of principal executive offices)	(Zip Code)

For the transition period from _______________ to _______________

Commission File Number: 000-54247

Vitamin Blue, Inc.

(Exact name of registrant as specified in its charter)

Delaware	33-0858127
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1005 West 18th Street, Costa Mesa, California 92627

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (949) 645-4592

Securities registered pursuant to Section 12(b) of the Act: ~~Common stock, $0.0001 par value per share~~

~~Indicate by checkmark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes __ No X~~None

~~Indicate~~Securities byregistered ~~checkmark if registrant is not required to file reports~~ pursuant to Section ~~13 or Section 15~~12(dg) of the Act~~. Yes [X] No~~:

~~Indicate~~Common by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)Stock, ~~and (2) has been subject to such filing requirements for the past 90 days~~$0. ~~[X] Yes No~~0001 [par ]value

Indicate by ~~checkmark~~check ~~whether~~mark if the registrant ~~has~~is ~~submitted~~a ~~electronically~~well-known ~~and~~seasoned ~~posted on its corporate Website~~issuer, ifas ~~any,~~defined ~~every~~in ~~Interactive Data File required to be submitted and posted pursuant to~~ Rule 405 of ~~Regulation S-T (§232.405 of this chapter) during~~ the ~~preceding~~Securities ~~12 months (or for such shorter period that the registrant was required to submit and post such files)~~Act. Yes [ ] No [ X ]

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent filers pursuant to Item 405 of Regulation S-K~~ is not ~~contained~~required ~~herein,~~to ~~and~~file ~~will~~reports ~~not~~pursuant ~~be contained,~~ to ~~the~~Section ~~best~~13 ~~of the Registrant’s knowledge, in definitive proxy~~ or ~~information~~Section ~~statements~~15(d) ~~incorporated by reference in Part III~~ of ~~this~~the ~~Form~~Act. Yes ~~10-K~~[ ] No ~~or any amendment to this Form 10-K.~~ [ X ]

Indicate by check mark whether the registrant: (1) ishas afiled ~~large~~all ~~accelerated~~reports ~~filer,~~required anto ~~accelerated~~be ~~filer,~~filed aby ~~non-accelerated~~Section ~~filer,~~13 or a15(d) ~~small~~of ~~reporting~~the ~~company.~~Securities ~~See~~Exchange ~~definition~~Act of ~~“large~~1934during ~~accelerated~~the ~~filer”,~~preceding ~~“accelerated~~12 ~~filer”~~months (or for such shorter period that the registrant was required to file such reports), and ~~“smaller~~(2) ~~reporting~~has ~~company”~~been insubject ~~Rule~~to ~~12b-2~~such offiling requirements for the ~~Exchange~~past ~~Act~~90 days. Yes [ X ] No [ ]

~~Large~~Indicate ~~accelerated~~by ~~filer~~check [mark ]if ~~Accelerated~~disclosure ~~filer~~of [delinquent ]filers ~~Non~~pursuant to Item 405 of Regulation S-~~accelerated~~K ~~filer~~is [not ]contained ~~Smaller~~herein, ~~reporting~~and ~~company~~will ~~[X]~~not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this

~~(Do not check if smaller reporting company)~~Form 10-K. [ ]

Indicate by ~~checkmark~~check mark whether the registrant is a ~~shell~~large ~~company~~accelerated ~~(as~~filer, ~~defined~~an inaccelerated ~~Rule~~filer, ~~12b~~a non-2accelerated offiler, ~~the~~or ~~Securities~~a ~~Act). Yes No~~smaller ~~[X]~~reporting company.

AsLarge ~~the~~accelerated ~~Registrant’s~~filer ~~common~~[ ~~stock~~] ~~did~~Accelerated ~~not~~filer ~~trade~~[ ~~publicly~~] inNon-accelerated ~~2010,~~filer ~~there~~[ is] noSmaller ~~aggregate~~reporting ~~market~~company ~~value~~[X] ~~of the voting Common Stock held by non-affiliates on June 30, 2010~~ (~~the~~Do ~~last~~not ~~business~~check ~~day~~if ofa ~~our~~smaller ~~most~~reporting ~~recently completed second fiscal quarter~~company).

AsIndicate ofby ~~May~~check ~~23,~~mark ~~2011,~~whether the ~~Registrant~~registrant ~~had~~is ~~526,525,000~~a ~~shares~~shell company (as defined in Rule 12b-2 of ~~Common~~the ~~Stock~~Exchange ~~outstanding~~Act). Yes [ ] No [ X ]

The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing sales price, or the average bid and asked price on such stock, as of June 30, 2012, the last business day of the registrant’s most recently completed fiscal year, was $-0-. Shares of the registrant’s common stock held by each executive officer and director and by each entity or person that, to the registrant’s knowledge, owned 10% or more of registrant’s outstanding common stock as June 30, 2012 have been excluded in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding as of April 12, 2013 was 575,445,000.

DOCUMENTS INCORPORATED BY REFERENCE

A description of "Documents Incorporated by Reference" is contained in Part IV, Item 15.

VITAMIN BLUE, INC.

TABLE OF CONTENTS

PART I		Page
Item 1. Business	3
Item 1.	Business	3
Item 2. Properties	18
Item 1A.	Risk Factors	8
Item 3. Legal Proceedings	19
Item 1B.	Unresolved Staff Comments	13
PART II
Item 2.	Properties	13
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	19
Item 3.	Legal Proceedings	13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.	21
Item 4.	Mine Safety Disclosures	13
Item 8. Financial Statements and Supplementary Data	24
PART II
Item 9A. Controls & Procedures	24
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
PART III
Item 6.	Selected Financial Data	15
Item 10. Directors, Executive Officers and Corporate Governance	25
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 11. Executive Compensation.	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 8.	Financial Statements and Supplementary Data	18
Item 13. Certain Relationships and Related Transactions, and Director Independence	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 14. Principal Accountant Fees and Services	29
Item 9A.	Controls and Procedures	19
PART IV
Item 9B	Other Information	19
Item 15. Exhibits and Financial Statement Schedules	30
PART III
Signatures	31
Item 10.	Directors, Executive Officers and Corporate Governance	19
Item 11.	Executive Compensation	20
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	21
Item 13.	Certain Relationships and Related Transactions and Director Independence	22
Item 14.	Principal Accounting Fees and Services	23
PART IV
Item 15.	Exhibits, Financial Statement Schedules.	24
	Signatures	36

PART I

~~ITEM~~Item 1. ~~BUSINESS~~ Business.

Our Company

Vitamin Blue, Inc. (“Vitamin Blue” or the “Company”), was incorporated in Delaware on May 25, 1999, under the name Under The Influence, Inc., our name was changed to Vitamin Blue, Inc., by amendment to the Certificate of Incorporation effective on May 3, 2007. Our principal executive offices are located at 1005 West 18th Street, Costa Mesa, CA 92627 and our telephone number is (949) 645-4592. ~~This~~We ~~area~~are ofan ~~California~~innovative iswater ~~the~~boardsports company ~~hub~~based ofin ~~the~~Costa ~~surfing industry. Vitamin Blue~~Mesa, ~~Inc~~California. ~~designs,~~We ~~manufactures~~design, manufacture and ~~distributes~~distribute ~~surf~~water boardsports wear (~~board shorts~~boardshorts, t-shirts and fleece jackets) and ~~surfing~~water boardsports accessories (~~surf~~board ~~boards~~ bags, ~~roof~~paddle ~~rack~~bags ~~pad~~ and ~~surf~~rack ~~backpacks~~pads). Our Company is focused on becoming a ~~board~~water ~~sport~~ boardsports brand of long-term excellence by ~~its~~our commitment to ~~producing~~exceeding ~~innovative~~our customers' expectations in producing products of the highest quality and athletic performance, and continuing to develop a good reputation with ~~its~~our ~~retailers~~retail partners to deliver on time. We are an authentic source for unique, functional and diverse ~~surf~~water boardsports products.

In pursuing a strategy of building and maintaining a strong foundation at the core ~~surf~~water boardsports market level, we ~~have~~distribute ~~began~~products ~~the~~to ~~important~~surfboard ~~first~~and ~~step~~standup inpaddleboard ~~this~~manufacturers ~~strategy~~and bysurf and ~~distributing~~standup ~~product~~paddle toshops, ~~surfboard~~which ~~manufacturers~~they ~~and~~in ~~surf~~turn ~~shops~~resell to retail customers. Terms of such sales are payment in full for the products within thirty (30) from date of delivery. We intend to leverage this foundation by expanding product offerings and increasing brand penetration into the mainstream. ~~Our~~ ~~product~~We ~~distribution~~plan ~~will~~on ~~extend~~expanding distribution into specialty stores and department stores. In order to maintain long-term brand awareness we ~~will~~intend ~~continue~~ to stay true to our ~~surfing~~water boardsports roots as an authentic source for ~~surf~~water boardsports products. byWe ~~supporting~~also ~~the~~plan ~~core~~to ofsupport ~~the~~competitions ~~sport~~ through ~~sponsorship~~sponsoring of athletes, ~~competitions~~in ~~and~~order ~~other~~to ~~grassroots~~create ~~activities, thereby maintaining~~ a ~~strong~~visible foundation in the ~~surf~~water boardsports industry..

Our primary focus is on water boardsports wear and water boardsports accessories. We ~~manufacturer~~manufacture most of our ~~surfing~~water boardsports accessories and nearly all of our ~~surf~~water boardsports wear in-house. Only the manufacturing of some ~~surfboard~~board bags and the sewing of board shorts (~~surf~~ trunks) are outsourced.

Overview of Our Businesses

~~Vitamin~~We ~~Blue~~are an innovative water boardsports company based in Costa Mesa, ~~Inc~~California. ~~designs,~~We ~~manufactures~~design, manufacture and ~~distributes~~distribute ~~surf~~water boardsports wear and ~~surfing~~water boardsports accessories. ~~Our~~ ~~Company~~We isare focused on becoming a ~~board~~water ~~sport~~ boardsports brand of long-term excellence by ~~its~~our commitment to ~~producing~~exceeding ~~innovative~~our customers' expectations in producing products of the highest quality and athletic performance, and continuing to develop a good reputation with ~~its~~our ~~retailers~~retail partners to deliver on time. Vitamin Blue, ~~Inc.~~ is an authentic source for unique, functional and diverse ~~surf~~water boardsports products.

In pursuing a strategy of building and maintaining a strong foundation at the core ~~surf~~water boardsport market level, we have began the important first step in this strategy by distributing product to surfboard and standup paddleboard manufacturers and surf and standup paddle shops. We intend to leverage this foundation by expanding product offerings and increasing brand penetration into the mainstream. Our product distribution will extend into specialty stores and department stores. In order to maintain long-term brand awareness, Vitamin Blue, ~~Inc.~~intends ~~will continue~~ to stay true to its ~~surfing~~water boardsports roots as an authentic source for ~~surf~~water boardsports products by supporting the core of the sport through sponsorship of athletes, competitions and other grassroots activities, thereby maintaining a strong foundation in the ~~surf~~water boardsports industry.

We manufacturer most of our ~~surfing~~water boardsports accessories and nearly all of ~~its~~our ~~surf~~water boardsports wear in-house. Only the manufacturing of ~~surfboard~~some board bags and the sewing of board shorts (~~surf~~ trunks) are outsourced.

The primary focus of Vitamin Blue ~~(the “Company”)~~ is ~~surf~~water boardsports wear and ~~surfing~~water boardsports accessories. The Company began operations in 1999 and is located in Costa Mesa, Orange County, California, the epicenter of ~~board~~boardsports ~~sports~~ culture.

Vitamin Blue has launched product lines annually beginning in the summer of 2000. The Company has concentrated its sales and marketing efforts throughout California, into northern Baja California (Mexico), Hawaii and Eastern states. Initial distribution has centered on surfboard and standup paddleboard manufacturers and surf and standup paddle shops (the core water boardsports market).

Our strategy is to build brand recognition in the core water boardsports market with the aim of enhancing long-term growth potential. We intend to leverage the brand by expanding product offerings that appeal to boardsport participants and increasing brand penetration into the mainstream to attract those who affiliate themselves with the action sports lifestyle. We plan to extend our distribution to include specialty stores and department stores. Vitamin Blue will maintain its image by staying true to its water boardsports roots through the sponsorship of athletes, competitions, and other grassroots activities.

~~Vitamin~~Industry Blue has launched product lines annually beginning in the summer of 2000. The Company has concentrated its sales and marketing efforts along the entire coastline of California, into northern Baja California (Mexico), Hawaii and the Eastern coastline. Initial distribution has centered on surfboard manufacturers and surf shops (the core surf market).Overview

~~Vitamin~~Management ~~Blue’s~~is ~~strategy~~of isthe toopinion ~~build~~that ~~brand~~the ~~recognition~~surf inindustry has shown growth for the ~~core~~previous ~~surf~~five ~~market~~years, ~~with~~according to the ~~aim~~most ofrecent ~~enhancing~~2010 ~~long-term~~Surf ~~growth~~Industry ~~potential~~Manufacturers Association (SIMA) Distribution Study (available at http://www.sima.com). Sales ~~The~~are ~~Company~~expected ~~intends~~to grow steadily over the next several years. Anticipated market growth can be attributed to ~~leverage~~a number of factors. Outdoor, individual extreme action sports among the ~~brand~~general bypopulation ~~expanding~~have ~~product~~become ~~offerings~~increasingly popular. We believe that ~~appeal~~much toof ~~board~~the ~~sport~~increase ~~participants~~in ~~and~~popularity ~~increasing~~is ~~brand~~from ~~penetration~~shifting ~~into~~demographics, as the ~~mainstream~~teenage topopulation ~~attract~~grows ~~those~~faster ~~who~~than ~~affiliate~~the ~~themselves~~rest of the population. Additionally, with the ~~action~~overall ~~sports~~population ~~lifestyle.~~pursuing ~~Distribution~~a ~~will~~more ~~extend~~physically toactive ~~include~~lifestyle, ~~specialty~~it ~~stores~~is ~~and~~not ~~department~~uncommon ~~stores.~~for ~~Vitamin~~an ~~Blue~~entire ~~will~~family ~~maintain~~living ~~its~~in ~~image~~or bynear ~~staying~~water ~~true~~communities to ~~its~~engage ~~surfing~~in ~~roots~~water ~~through~~boardsports ~~the~~together. Water ~~sponsorship~~boardsports ofhas ~~athletes,~~attracted ~~competitions~~new comers, from young sons and ~~other~~daughters ~~grassroots~~to ~~activities~~middle aged fathers and mothers.

~~INDUSTRY~~Historically, ~~OVERVIEW~~the most frequent buyers of water boardsports wear and water boardsports accessories were teenage and young adult males. However, in recent years, the market has expanded to include water boardsports wear for teenage girls, women, children and toddlers.

In the United States, surf/skate sales for 2008 exceeded $7.2 billion. Approximately, 17 percent of sales ($2.4 billion) occurred in the west coast. The surf industry had shown substantial growth of 10 percent for the previous five years. Source: 2010 Surf Industry Manufacturers Association (SIMA) Distribution study. Sales are expected to grow steadily over the next several years. Strong market growth can be attributed to a number of factors including the all time high popularity level of outdoor, individual extreme action sports among the general population, and benefits from shifting demographics, as the teenage population will grow faster than the rest of the population. With over half of the world’s population under 25 years old, it is the largest teen population in history. In addition, with the overall population pursuing a more physically active lifestyle than ever before, it is not uncommon for an entire family living in or near beach communities to surf together. This sport has attracted new comers, from young sons and daughters to middle aged fathers and mothers.

Historically, the most frequent buyers of surf wear and surfing accessories were teenage and young adult males. However, in recent years, the market has expanded to include surf wear for teenage girls, women, children and toddlers.

The first evidence of surfing was in 1500 in Hawaii, when Polynesians arrived. Surfing became a well-known sport in 1912, when surf Olympian Duke Kahanamoku introduced the activity around the world. After World War II, surfboards were created from styrofoam, polyester resin and fiberglass. The new materials contributed to the growth of the sport.

In the late 1950’s and early 1960’s, surfing grew more popular with television shows like ABC’s Wide World of Sports and movies such as Endless Summer, Gidget and Beach Blanket Bingo. In recent years, surfing has become one of the fastest growing sports in the United States.

In the beginning, the only surfing accessory available was a surfboard. Surfing apparel was extremely bulky and made from inflexible material such as canvas. Early surf manufacturers ~~included~~include, among others, Hang Ten, Birdwell Beach Britches, and Kanvas by Katin. Today’s competitors in the surf industry include ~~Quiksilver (ZQK)~~Quicksilver, Billabong ~~Intl (AU:BBG)~~International, Volcom Inc ~~(VLCM)~~., and Hurley, a division of Nike ~~(NKE) among others~~. Today’s, surf companies typically offer a complete line of casual apparel for every season of the year. A line of surfing accessory products is also offered.

We believe that opportunities for growth exist in the water boardsport industry over the next several years due to shifting demographics. For example, the teenage population, or the “Generation Y” group, is growing faster than the rest of the population. We further believe that this group is an important demographic to target because it is a major participant in the action sports, such as surfing, and it has influence on fashion trends for older consumers such as Generation X-ers (persons born between 1965 and 1976) and Baby Boomers (1946 through 1964).

Our Strategy

Our goal is to develop the Vitamin Blue brand into a leader in the water boardsport industry by offering innovative quality products and service, timely delivery, aggressive grassroots marketing and word-of-mouth and digital and print advertising.

The key points of our strategy are the following:

Continue to build a water boardsport brand of long-term excellence for the Vitamin Blue name.

Vitamin Blue management intends to present the water boardsport industry with an excellent image by offering superior quality products and customer service. Branding the Vitamin Blue name and image will involve traditional marketing methods, such as core consumer magazines, trade magazines, trade shows, promotional goods, and sponsorship of top-performing athletes. Also, management will strive to create a positive consumer experience by offering water boardsport products known for their functionality, athletic performance, longevity and value.

Concentrate on Five Main Value Chain Elements: Product, Quality, Image, Distribution, and Delivery.

Product. The main thrust of Vitamin Blue’s strategy will revolve around the fashion, function and performance of our products. Putting a product on the market that does not perform its function properly can lead to a rapid demise of a company. In order to ensure that all product designs from Vitamin Blue meet the demands for which they are intended, we will use water boardsport enthusiasts to assist in the design of our water boardsport wear and water boardsport accessory products.

Quality. From the very beginning, Vitamin Blue has made quality a priority. The Company does not intend to be a low-cost producer, but rather a leader in quality. These attributes stem directly from the quality that is built into every pair of board shorts, t-shirt, fleece, board bag, paddle bag, roof rack pads and other items marketed by the Company.

~~The~~Image. Vitamin ~~surf/skate~~Blue ~~market~~is inbased ~~the~~on ~~United~~water ~~States~~boardsports, isyet innone ~~excess~~ of ~~$7.2~~its ~~billion~~revenue ~~annually~~comes from boards. ~~The~~ ~~industry~~Rather, ~~has~~the ~~taken~~Company ~~its~~intends ~~casual~~to ~~clothing~~serve both the boardsport participant and ~~innovative~~those ~~surf~~who ~~products~~affiliate ~~across~~themselves with the ~~globe~~action sports lifestyle by cultivating the water boardsport image with its uniquely designed and colorful water boardsport wear.

~~Opportunities~~Distribution. Vitamin ~~for~~Blue ~~growth~~is ~~exist~~in ~~over~~ the ~~next~~process ~~several~~of ~~years~~cultivating ~~due~~a tovariety ~~shifting~~of ~~demographics;~~future ~~the~~distribution ~~teenage~~channels. ~~population,~~This ~~the~~includes ~~“Generation~~specialty Y”shops ~~group~~and department stores, iswhich ~~growing~~we ~~faster~~believe ~~than~~will ~~the~~make ~~rest~~our ofproducts ~~the~~more ~~population~~available to as many consumers as possible. ~~With~~Currently, ~~over~~we ~~half~~distribute our product through the ~~world’s~~core ~~population~~distribution ~~under~~channels 25consisting ~~years~~of ~~old,~~surfboard itand ~~will~~standup bepaddleboard ~~the~~manufacturers ~~largest~~and ~~teen~~surf ~~population~~and instandup ~~history~~paddle shops. ~~This~~We ~~group~~do isnot anhave ~~important~~any ~~demographic~~distribution toagreements ~~target~~and ~~because~~all itsales isare afinal. ~~major~~Typically, ~~participant~~all insales ~~the~~to ~~action~~a ~~sports~~new (icustomers are “cash on delivery.~~e.,~~” Terms ~~surfing)~~of ~~market~~sales ~~and~~for itestablished ~~has~~customers ~~influence~~are onpayment ~~fashion~~in ~~trends~~full for ~~older~~the ~~consumers~~products ~~such~~within asthirty ~~Gen-Xers~~ (~~persons~~30) ~~born~~from ~~between~~date ~~1965~~of ~~and~~delivery. ~~1976)~~The ~~and~~recipient ~~Baby~~owners ~~Boomers~~of ~~(1946~~the ~~through~~business ~~1964)~~are responsible for all payments.

~~COMPANY~~Delivery. We ~~STRATEGY~~intend to cultivate a variety of distribution channels in order to make our products available to a large group of consumers. However, we do not plan of developing low-end channels such as mass merchandisers and membership club stores, which we believe might diminish the quality and image of our products and brand name. We believe that is difficult to sell product at full price when consumers can purchase it in discount outlets.

Vitamin Blue intends to become a brand of long-term excellence and a leader in the surf industry by offering innovative quality products, exceptional service, timely delivery, aggressive grassroots marketing, word-of-mouth and print advertising.

The key points of the Company’s strategy are:

1) Continue to Build a Surf Brand of Long-Term Excellence for the Vitamin Blue Name

Vitamin Blue management will present the surf industry with an excellent image by offering superior quality products and customer service. Branding the Company’s name and image will employ traditional marketing methods such as core consumer magazines, trade magazines, trade shows, promotional goods, and sponsorship of top-performing athletes as well as more aggressive grassroots marketing strategies.

Finally, and most importantly, the Company will create a positive consumer experience by offering surf products known for their functionality, athletic performance, longevity and value.

2) Concentrate on Five Main Value Chain Elements: Product, Quality, Image, Distribution, and Delivery.

Product. The main thrust of Vitamin Blue’s strategy will revolve around the fashion, function and performance of their products. Putting a product on the market that does not perform its function properly can lead to a rapid demise of the company. Therefore, in order to ensure that all product designs from Vitamin Blue meet the demands for which they are intended, surfers assist in the design of the surf wear and surfing accessory products.

Quality. From the very beginning, Vitamin Blue has made quality a priority. The Company does not intend to be a low-cost producer, but rather a leader in quality. These attributes stem directly from the quality that is built into every pair of board shorts, t-shirt, fleece, surfboard bag, roof rack pads and other items marketed by the Company.

Image. Effectively, surfing only takes place in coastal communities throughout the world. Yet, the surfing image can be seen in schools, malls and backyards in every different nook and cranny across North America as well as other places throughout the world.

Vitamin Blue is based on surfing, yet none of its revenue comes from surfboards. Rather, the Company intends to serve both the board sport participant and those who affiliate themselves with the action sports lifestyle by cultivating the surfer image with its uniquely designed and colorful surf wear.

Distribution. Vitamin Blue is in the process of cultivating a variety of distribution channels (i.e., Specialty Shops, Department Stores) to make its product available to as many consumers as possible. Currently, it distributes its product through the core distribution channels, surfboard manufacturers and surf shops.

DISTRIBUTION CHANNELS

Vitamin Blue will cultivate a variety of distribution channels in order to make its products available to a large group of consumers. However, the Company will steer clear of low-end channels (i.e., mass merchandisers and membership club stores) so as not to diminish the quality and image of the products and brand name. It is difficult to sell product at full price when consumers can purchase it in discount outlets.

The primary distribution efforts will focus on retail outlets in North America (U.S., Canada, and Mexico). As the Company continues to successfully grow, future plans are to penetrate Europe with an emphasis on France, United Kingdom, Spain, Italy, and Germany. Finally, Vitamin Blue will continue to build on the success of its expansion by penetrating parts of other markets such as Japan and Australia.

There are ~~four~~three types of retail outlets that Vitamin Blue intends to market to: surfboard and standup paddleboard manufacturers, surf ~~shops,~~and ~~specialty~~standup ~~stores~~paddle shops, and ~~department~~e-commerce ~~stores~~partners.

Surfboard and Standup Paddleboard Manufacturers

This retail outlet generally consists of single shops, where ~~surfboards~~boards are designed, manufactured and marketed. These shops are located in or near ~~beach~~water communities. This distribution channel is focused on the central ~~surf~~water boardsport market~~. They~~ ~~are~~and ~~the~~represents a genuine source for ~~surfing~~water boardsport accessories. Gaining and maintaining a presence within ~~this~~water ~~group~~boardsport manufacturers is one of the cornerstones to building long-term brand recognition in the core ~~surf~~water boardsport market. Among Vitamin Blue’s business relationships are ~~world-renowned~~water ~~surfboard~~boardsport manufacturers such as Bing ~~Hap~~& Jacobs, ~~Bing~~ Surfboards, Bark ~~Boards~~Paddleboards, ~~and~~Infinity ~~Ron House Shapes~~Surfboards, Dewey Weber, ~~Stewart~~and ~~Surfboards,~~King’s Paddle Sports. Vitamin Blue distributes ~~surfing~~water boardsports accessories through ~~this~~direct ~~retail~~sales ~~outlet~~to these stores.

Surf and standup Paddle Shops

This distribution channel typically consists of single to multiple retail outlets, located in or near ~~beach~~water communities, focused on the central ~~surf~~boardsport market. Surf and Standup Paddle shops are an authentic retail source for complete lines of ~~surf~~water boardsport wear and ~~surfing~~water boardsport accessory products. Gaining and maintaining a presence within this segment is also ~~one~~a ~~of the~~ cornerstones to building long-term brand recognition in the core ~~surf~~water boardsport market. ~~Business~~We ~~relationships from coast to coast~~ have ~~been~~ established ~~through this~~ distribution ~~channel.~~relationships ~~Some~~with ~~include~~the ~~Freeline~~following ~~Design~~retail (Santa Cruz, California), The Frog House (Newport Beach, California), Infinity Surfboards (Dana Point, California), Legends Surf (Carlsbad, California), Hi-Tech Surf Sports (Maui, Hawaii), Second Wind Sail and Surf (Maui, Hawaii), Hawaiian Island Surf and Sport (Maui, Hawaii) Kennedy Surfboards (Woodland Hills, California), Malibu Surf Shack, (Malibu, California), E.T. Surf (Hermosa Beach, California), Spyder (Hermosa Beach, California), Costa Azul (Laguna Beach, California), Icons of Surf (San Clemente, California), Encinitas Surfboards (Encinitas, California), Nor Easter Surf Shop (Scituate, Massachusetts), Air & Speed Surf Shop (Montauk, New York), Xtreme Surf & Sport (East Northport, New York), and Marsh’s Surf Shop (Atlantic Beach, North Carolina). Vitamin Blue distributes its complete line of products from surf wear to surfing accessories through this outlet.outlets:

6● Freeline Design (Santa Cruz, California) ● The Frog House (Newport Beach, California) ● Infinity Surfboards (Dana Point, California) ● Legends SUP (Carlsbad, California) ● Hi-Tech Surf Sports (Maui, Hawaii) ● Second Wind Sail and Surf (Maui, Hawaii) ● Hawaiian Island Surf and Sport (Maui, Hawaii) ● Kennedy Surfboards (Woodland Hills, California) ● Malibu Surf Shack, (Malibu, California) ● E.T. Surf (Hermosa Beach, California) ● Spyder (Hermosa Beach, California) ● Icons of Surf (San Clemente, California) ● Encinitas Surfboards (Encinitas, California) ● Nor Easter Surf Shop (Scituate, Massachusetts) ● Air & Speed Surf Shop (Montauk, New York) ● Marsh’s Surf Shop (Atlantic Beach, North Carolina).

We distribute our complete line of products, from water boardsports wear to water boardsports accessories, through this distribution channel with direct sales to these stores. .

There are two types of retail outlets that Vitamin Blue intends to market to in the future: specialty stores and department stores:

Specialty Stores

~~Consisting~~Specialty ofstores are typically single, regional and national ~~stores,~~outlets ~~this type of retail outlet is~~ generally located inthroughout orNorth ~~near~~America ~~beach~~in ~~or resort communities,~~ shopping centers and shopping malls. This distribution channel emphasizes the mainstream market, those who affiliate themselves with the action sports lifestyle. ~~Make~~Specialty upstore ~~of this type of~~ retail ~~outlet~~outlets isare primarily tourist/vacation shops, sporting good stores ~~(i.e.,~~such as the Sports Chalet, ~~Inc-SPCHB)~~ or regional and national retail stores ~~(i.e.,~~such as Pacific Sunwear of California~~-PSUN~~ and Zumiez ~~Inc-ZUMZ)~~. ~~Vitamin~~We ~~Blue~~intend ~~intends~~ to use this type of retail outlet to distribute ~~its~~water ~~surf~~boardsports wear with direct sales to these stores.

Department Stores

This type of retail outlet generally has stores located within shopping malls nationwide. Such stores may include Bloomingdale’s, Macy’s, Saks Fifth Avenue, and Nordstrom. This distribution channel also concentrates on the mainstream market, those who affiliate themselves with the action sports lifestyle. Vitamin Blue intends to sell its ~~surf~~water boardsports wear through this type of retail outlet.

Delivery. Vitamin Blue has set itself apart from the crowd by ensuring timely delivery of its products to retailers so they can sell them. The Company has developed a reputation for on-time delivery that allows it to continue developing existing relationships and to cultivate new business relationships with new distributors.

Vitamin Blue ~~believes~~has ~~that~~a ~~continuous~~primary ~~focus~~objective onto ~~these~~ensure ~~five~~timely ~~specific~~delivery ~~competencies~~of ~~will~~products ~~enable~~to itretailers. We tobelieve ~~gain~~that ~~and~~we ~~maintain~~have developed a ~~leadership~~reputation ~~position~~for inon-time ~~the~~delivery ~~surf~~that ~~industry,~~allows asus ~~well~~to ascontinue ~~make~~developing ~~significant~~existing ~~inroads~~relationships ~~into~~and ~~the~~to ~~mainstream~~cultivate ~~clothing~~new ~~industry~~business relationships with new distributors.

3)Vitamin ~~Continue~~Blue believes that continuous focus on these five specific competencies will enable it to ~~Establish~~gain and ~~Maintain~~maintain ~~Longstanding~~a ~~Relationships~~leadership ~~with~~position ~~Surfboard~~in ~~Manufacturers~~the ~~and~~water ~~Surf~~boardsports ~~Shops~~industry, ~~and~~as ~~Expand~~well ~~Product~~as ~~Distribution~~make ~~into~~significant ~~Specialty~~inroads ~~Stores~~into ~~and~~the ~~Department~~mainstream ~~Stores~~clothing industry.

~~Vitamin~~● ~~Blue~~Continue isto ~~currently~~Establish ~~executing~~and onMaintain ~~its~~Longstanding ~~strategy~~Relationships ~~to establish business relationships~~ with ~~surfboard~~Surfboard ~~manufacturers~~ and ~~surf~~Standup ~~shops~~Paddleboard ~~thereby~~Manufacturers ~~enabling~~and ~~the~~Surf ~~company to raise~~ and ~~maintain~~Standup ~~awareness~~Paddle ofShops ~~the brand. Our objectives are to secure a market presence at this core level~~ and ~~leverage~~Expand ~~this~~Product ~~strong~~Distribution ~~foundation~~ into ~~the~~Specialty ~~mainstream~~Stores ~~clothing industry through specialty stores~~ and ~~department~~Department ~~stores~~Stores.

4)Vitamin ~~Continue~~Blue is currently executing on its strategy to establish business relationships with surfboard and standup paddleboard manufacturers and surf and standup paddle shops thereby enabling the ~~Aggressive~~company ~~Grassroots~~to ~~Marketing~~raise ~~Strategy~~and maintain awareness of the brand. Our objectives are to secure a market presence at this core level and leverage this strong foundation into the mainstream clothing industry through specialty stores and department stores.

To● ~~initiate~~Continue ~~presence in~~ the ~~industry,~~Aggressive ~~Vitamin~~Grassroots ~~Blue~~Marketing ~~has relied on aggressive grassroots marketing~~Strategy. One of the most successful efforts has been performed by the Company’s street teams, which have blanketed coastal community traffic signs with Vitamin Blue stickers, thereby transforming these signs into advertising billboards. In addition, the Company sponsors a team of up-and-coming professional surfers, numerous surf competitions, beginner surf camps, surf clubs, and high school surf teams.

5)To ~~Build~~initiate presence in the ~~Business~~industry, ~~Infrastructure~~Vitamin ~~Necessary~~Blue tohas ~~Support~~relied on aggressive grassroots marketing. In addition, the Company’s ~~Planned~~sponsors ~~Growth~~a team of up-and-coming professional water boarsports participants and numerous water boardsports competitions.

●	Build the Business Infrastructure Necessary to Support the Company’s Planned Growth.

Vitamin Blue has developed a business model that can accommodate the exceptional growth and serve its expanding customer base. The Company will continue to invest in its infrastructure by securing intelligent and tenacious management, sales and staff personnel. It is believed that the development of this infrastructure will allow Vitamin Blue to continue to effectively manage its rapidly growing business operations.

7Water Boardsports Wear for Men and Women

~~Surf~~Product designs are developed to appeal to preferences of active water boardsport enthusiast. Innovative designs, active fabrics, and quality are combined with fashion, functionality and athletic performance. The Company has distinguished its water boardsports wear ~~for~~line ~~Men~~with the use of high-quality quick drying fabrics, triple stitching along the seams, Velcro® and ~~Women~~Lycra® closing board shorts (trunks).

~~Product~~Vitamin ~~designs~~Blue ~~are~~offers ~~developed~~T-Shirts tomade ~~appeal to preferences~~ of ~~active surfers. Innovative designs, active fabrics, and~~ quality ~~are~~100% ~~combined~~heavy ~~with fashion, functionality and athletic performance~~cotton. The ~~Company~~shirts ~~has~~are ~~distinguished~~made ~~its~~loose ~~surf~~fitting ~~wear~~and ~~line~~offered ~~with~~in ~~the~~a ~~use~~variety of ~~high-quality~~colors ~~quick~~with ~~drying~~various ~~fabrics,~~water ~~triple~~boardsports ~~stitching~~graphics ~~along the seams, Velcro® and Lycra® closing board shorts (surf trunks), and a unique design feature called the “key safe”~~depicted. We ~~The~~also ~~key~~offer ~~safe~~pullover ishooded afleece ~~small~~made ~~Velcro® pocket on the back inner waistband~~ of ~~the~~80% ~~shorts~~cotton ~~that~~and ~~provides~~20% ~~safe key storage during surfing, wake boarding, swimming, etc~~polyester.

T-Shirts made of quality 100% heavy cotton are offered. The shirts are made loose fitting and offered in a variety of colors with various surf graphics depicted.

Pullover hooded fleece made of 80% cotton and 20% polyester is also offered.

~~Surfing Accessories~~6

Water Boardsports Accessories

Included among these products are:

● ~~Surfboard~~Board Travel Bags, which offer ~~surfboard~~board protection and can be used daily or for long distance surf trips.

● ~~Surf~~Water boardsport Gear Travel Bags, which are duffle bags used to carry ~~surfing~~water boardsports essentials on ~~surf~~ trips.

● ~~Surf~~Paddle ~~Backpacks~~Bags, which are ~~specially,~~used ~~designed~~to ~~wet~~protect ~~bag backpacks for wetsuit storage~~paddles.

● Roof-Rack Pads, used on existing car roof racks for ~~surfboard~~board protection and security on daily surf outings.

Operations and Manufacturing

~~Another essential competency for~~ Vitamin Blue ~~is in operations. Vitamin Blue~~ conducts design, marketing, distribution and nearly all manufacturing in-house for all of its products. Our President, Frank D. Ornelas, designs all products distributed and manufactured by Vitamin Blue. Vitamin Blue manufacturing activities and capabilities include cutting, sewing and silk-screening. The sewing of board shorts (~~surf~~ trunks) and the manufacturing of some ~~surfboard~~board bags are the only functions outsourced. By outsourcing these two product categories, Vitamin Blue only engages in its core ~~competencies~~products. ~~The~~We ~~Company~~strive ~~continually improves its processes~~ to ~~excel~~continuously onimprove the design quality and timely delivery of ~~its~~our products.

Sales and Marketing

The Company’s marketing programs share a coherent vision in promoting its image and products to consumers and wholesale accounts. Key elements of Vitamin Blue’s public relations and advertising efforts include:

·● Digital and Print advertising (i.e., Eastern Surf Magazine, Bliss Magazine, Standupzone.com)

·● Trade Shows (Surf Expo) · Industry – Specific events sponsorship (Water Boardsport Contests)

·● ~~Industry~~Promotional ~~– Specific events sponsorship (Surf Contests and Surf Camps)~~goods

· Promotional goods

KEY RELATIONSHIPS

The Company believes that establishing, building and maintaining longstanding relationships with surfboard manufacturers and surf shops through innovative quality products and exceptional service are critical to its success in building long-term brand growth. To strengthen its execution capabilities and increase brand name awareness, Vitamin Blue is actively pursuing strategic business and marketing alliances with select partners.

Competition

We are subject to significant competition that could impact our ability to gain market share, win business and increase the price of our products. We face strong competition from a wide variety of firms, including large, retail box or discount as well as small businesses.

Quicksilver, Inc., (ZQK) a publicly traded company based in Huntington Beach, California, is a manufacturer of surf wear and surfing accessories. The company’s products are carried in surf shops, specialty stores, department stores and its own Boardriders Club stores throughout the world. This company is managed and operated by surfers, and generates approximately $2 billion in sales annually.

Billabong Intl, (AU:BGG) publicly trades on the Australian Stock Exchange, however, it is based in Irvine, California. The company manufactures surf wear and surfing accessories for boys, men, and girls. In 1983, Bob Hurley purchased the licensing rights to market Billabong in North America. He was instrumental in bringing the company to its current level of success. In 1999, Mr. Hurley relinquished the license and began his own company, Hurley. Billabong is run by surfers and generates over $1 billion annually in revenue.

Hurley, based in Costa Mesa, California, manufactures surf wear and surfing accessories for boys, men and girls. The Company is managed and operated by a surfer, Bob Hurley. In February 2002, Hurley was purchased by Nike, Inc. (NKE). Terms of the transaction were not disclosed.

Volcom Inc., (VLMC) a publicly traded company located in Costa Mesa, California, manufactures young men’s and young women’s clothing and accessories. The company’s products are carried in board sports retailers, specialty stores and department stores. Volcom produces over $300 million in sales annually. The company was founded by surfers and is managed by surfers.

Vitamin Blue has taken a very assertive stance and has earned an entry position in the ~~surf~~water boardsports industry. By currently distributing its products to surfboard and standup paddleboard manufacturers and surf and standup paddle shops, Vitamin Blue has initiated the steps necessary in building long-term brand awareness. Since 1999 the company has experienced positive sales growth each year.

~~Regulation~~7

~~None~~Government Regulation

9We are subject to certain federal, state and local laws and regulations affecting our business and products, particularly those promulgated by the Federal Trade Commission and the Consumer Products Safety Commission. These regulations relate principally to product labeling, licensing requirements, product safety and labor and workplace rules. Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations. We believe that we are in substantial compliance with those currently existing regulations, as well as applicable federal, state and local laws.

Employees

As of December 31, ~~2010~~2012, we had ~~neither~~two ~~full~~part-time employees ~~nor~~and ~~any~~one ~~part~~full-time ~~employees~~employee, ~~other than~~ Frank D. Ornelas, our President and Chief Executive Officer.

~~FORWARD~~Item ~~LOOKING~~1A. Risk ~~STATEMENTS - CAUTIONARY FACTORS~~Factors

Certain statements in this report on Form 10-K contain "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These statements are typically identified by their inclusion of phrases such as "the Company anticipates", or "the Company believes", or other phrases of similar meaning. These forward-looking statements involve risks and uncertainties and other factors that may cause the actual results, performance or achievements to differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Except for the historical information and statements contained in this Report, the matters and items set forth in this Report are forward looking statements that involve uncertainties and risks some of which are discussed at appropriate points in the Report and are also summarized as follows:

Additional risks and uncertainties not currently known or deemed to be immaterial also may materially adversely affect the business, financial condition and/or operating results.

RISK FACTORS

Our business, industry and common stock are subject to numerous risks and uncertainties. Any of the following risks, if realized, could materially and adversely affect our revenues, operating results, profitability, financial condition, prospects for future development, growth and overall business, as well as the value of our common stock.

INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE, SUBJECT TO NUMEROUS AND SUBSTANTIAL RISKS, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY AND MANY OF WHICH CANNOT BE REASONABLE ASCERTAINED OR QUANTIFIED AT THIS TIME. THE SHARES ARE SUITABLE ONLY AS AN INVESTMENT FOR THOSE WHO ARE ABLE TO AFFORD A COMPLETE LOSS OF THEIR INVESTMENT. THEREFORE, PROSPECTIVE SUBSCRIBERS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS ~~RELATING~~TOGETHER TOWITH ~~THE~~ALL ~~PROPOSED~~OTHER ~~ACTIVITIES~~INFORMATION OFCONTAINED ~~THE~~IN ~~COMPANY~~THIS ~~AND~~REPORT ~~THE~~BEFORE ~~PURCHASE~~DECIDING ~~OF ITS SHARES, INCLUDING BUT NOT LIMITED~~ TO, ~~THOSE~~INVEST ~~CERTAIN~~IN ~~RISK~~OUR ~~FACTORS~~COMMON ~~DISCUSSED BELOW, AND SHOULD CONSULT THEIR LEGAL, TAX AND BUSINESS ADVISORS~~STOCK.

THE RISK FACTORS HEREINAFTER SET FORTH IN THIS SECTION ARE NOT INTENDED TO BE A COMPLETE LIST OF THE RISKS RELATING TO AN INVESTMENT IN THE SHARES. THERE ARE CONTAINED THROUGHOUT THIS REPORT OTHER RISK FACTORS IMPACTING UPON YOUR INVESTMENT DECISION.

Any investment in our common stock involves a high degree of risk. Prospective investors should carefully consider the following information about these risks, together with the other information contained in this Report, before they decide whether to buy any shares. If any of the following risks occur, the business, and the results of operations and financial condition, would likely suffer.

10We have limited operating history and results; prior losses and no independent operations.

We have a limited operating history that has resulted in operating losses. The ~~risks~~accumulated ~~and~~net ~~uncertainties~~losses ~~described~~since ~~below~~inception ~~are~~on ~~not~~May ~~the~~25, ~~only~~1999 ~~ones~~to weDecember ~~face. Additional~~31, ~~risks~~2012 ~~and~~have ~~uncertainties~~amounted to $762,146. There ~~including~~can ~~those~~be ~~not~~no ~~presently~~assurance ~~known~~as to uswhen or ~~that~~whether we ~~presently~~will ~~deem~~be ~~immaterial,~~able ~~may~~to ~~also~~achieve ~~result~~sustained inand ~~decreased~~growing ~~revenue,~~operating ~~increased~~revenues. Or ~~expenses~~if operating revenues are achieved, orthere ~~other~~can ~~events~~be ~~that~~no ~~could~~assurance ~~result~~they incan abe ~~decline~~sustained. For inadditional ~~the~~information ~~price~~please ofrefer ~~the~~to ~~common~~our ~~stock~~financial statements with notes that appear elsewhere in this Report.

WeRisks ~~have~~Related ~~limited~~to ~~operating~~Our ~~history and results; prior losses and no independent operations~~Business

~~The~~If ~~accumulated~~our ~~net~~operations ~~losses~~are ~~since~~not ~~inception~~sufficient ~~on May 25, 1999~~ to ~~December~~sustain ~~31,~~our ~~2010~~business ~~have~~and ~~amounted~~possible tofuture ~~$431~~expansion,~~442. There~~ ~~can be no assurance as to when or whether~~ we ~~will~~may behave ~~able~~ to ~~achieve~~seek ~~sustained and growing operating revenues. Or if operating revenues are achieved, there can be no assurance they can be sustained. For~~ additional ~~information please refer to our financial statements with notes that appear elsewhere in this Report~~funding.

RISKS RELATED TO OUR BUSINESS

We can give no assurance that a sufficient level of sales will be attained by us in our operations within the foreseeable future, which will enable us to fund our business and undertake our expansion plans. We may face unbudgeted costs, delays and difficulties’ executing our business plan, as is frequently encountered by similarly situated companies. We are aware that there may be changes in economic, regulatory or competitive conditions that may lead to increased costs. All of these factors may culminate in circumstances that could make funds generated by our operations insufficient to fund our cash requirements for the next twelve months and beyond. We may determine that it is in our best interests to expand more rapidly than currently intended, in which case we will need additional financing.

The Company may in the future be required to pursue additional securities offerings publicly or privately to finance unanticipated capital costs and working capital needs and potential expansion. These offerings may be made from time-to-time over an indefinite period and will result in a dilution of the shareholders’ interest prior to the offering. Operations thereafter may depend upon the level of business revenues and the continued availability of investment capital. If operating revenues are insufficient to continue the Company’s operations, additional funds will have to be raised through loans or other financing, and there can be no assurance that any such financing will be obtained on favorable terms, if at all.

The Company shall have the right to issue, in the aggregate, a number of shares equal to the difference between the number of issued and outstanding shares and the number of shares authorized by its Certificate of Incorporation.

Any new issuance of equity stock of the Company will have the effect of diluting the percentage interest of a shareholder for purposes of allocations of equity and distributions.

Additional financing may not be available when needed or may not be available on terms acceptable to us. If additional funds are raised by issuing equity securities, stockholders may incur dilution. If adequate financing is not available, we may be required to delay, scale back or eliminate one or more of our product development programs or otherwise limit the development and marketing of our products, which could materially and adversely affect our business, results of operation and financial condition.

11Our Independent Registered Accountants’ Report states that there is a substantial doubt that we will be able to continue as a going concern.

Our Independent Registered Accountants’ Report states that there is a substantial doubt that we will be able to continue as a going concern

Our independent registered public accountants, state in their audit report, that the Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion.

Our future operating results are likely to fluctuate.

Our quarterly and annual operating revenues, expenses and operating results may fluctuate due to a variety of factors, many of which are beyond our control, including:

·● The timing of orders from, and shipments to, significant customers ·● The timing of new product introductions by us or our competitors ·● Variations in the mix of products sold by us or our competitors ·● The timely payment of our invoices ·● Possible decreases in average selling prices of our products in response to competitive pressures ·● Market acceptance for new lines of our products ·● Fluctuations in general economic conditions

Due to all of the foregoing factors, we do not believe that period-to-period comparisons of our historical results of operations are indications of future performance. Furthermore, it is possible that in some future quarters our results of operations may fall below the expectations of securities analysis and investors. In such event, the price of our stock, when trading and listed, will likely be materially and adversely affected.

We are and will continue to be dependent upon key personnel.

We depend to a significant extent upon our President, Frank D. Ornelas and we will depend upon new and additional senior management, sales and marketing personnel. The competition for such personnel is intense. Our growth and future success will depend to a large extent on our ability to attract and retain highly qualified personnel. We do not have employment agreements with our President. The loss of our President or the inability to hire or retain qualified personnel could have a material adverse effect upon our business and operating results. In addition, if we are unable to hire additional personnel as needed, we may not be able to adequately manage our operations or implement our plans for expansion growth. We may not be able to attract and retain the qualified personnel necessary for the development of our business which would have a material adverse effect on our business, products and services and our business operating results, and financial condition.

Our sole officer and director is not covered by an employment contract and he can terminate his relationship with us at any time. He is not subject to non-competition agreements which would survive termination of employment. We do not have “key person” insurance coverage for the loss of any of Mr. Ornelas.

Our operations have been and will continue to be dependent on the efforts of Frank D. Ornelas, our President, Chief Executive Officer, Secretary and Treasurer and the sole member of our Board of Directors; The development of our products and services, as well as the development of improvements to our products and services is dependent on retaining the services of qualified personnel who were involved in the development of our products and services. The loss of key management, the inability to secure or retain such key personnel with unique knowledge of our products and services and the technology and programming employed as part of our products and services, or an inability to attract and retain sufficient numbers of other qualified personnel would adversely affect our business, products, and services and could have a material adverse effect on our business, operating results, and financial condition.

129

Our Sole Officer has no experience in managing a public company.

Our sole officer has no previous experience in managing a public company, and we do not have any employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

We are subject to substantial competition.

We are subject to significant competition that could harm our ability to win business and increase the price pressure on our products. We face strong competition from a wide variety of firms, including large, firms. Most of our competitors have considerably greater financial, marketing and technological resources than we do, which may make it difficult to win new mandates and we may not be able to compete successfully. Certain competitors operate larger facilities and have longer operating histories and presence in key markets, greater name recognition and larger customer bases. As a result, these competitors may be able to adapt more quickly changes in customer requirements. They may also be able to devote greater resources to the promotion and sale of their products. Moreover, we may not have sufficient resources to undertake the continuing research and development necessary to remain competitive.

We expect to make, strategic acquisitions and investments, and these activities involve risks and uncertainties.

In pursuing our business strategies, we continually review, evaluate and consider potential investments and acquisitions. In evaluating such transactions, we are required to make difficult judgments regarding the value of business opportunities, technologies and other assets, and the risks and cost of potential liabilities. Furthermore, acquisitions and investments involve certain other risks and uncertainties, including the difficulty in integrating newly-acquired businesses, the challenges in achieving strategic objectives and other benefits expected from acquisitions or investments, the diversion of our attention and resources from our operations and other initiatives, the potential impairment of acquired assets and the potential loss of key employees of the acquired businesses.

Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability.

We are subject to income taxes in the United States. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Furthermore, changes in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax expense and profitability. Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and accruals. Additionally, changes in the geographic mix of our sales could also impact our tax liabilities and affect our income tax expense and profitability.

Risks Related to our Common Stock

Currently, there is noa limited public market for our Common Stock, and there can be no assurance that ~~any~~an active public market will ~~ever~~ develop or that our common stock will continue to be quoted for trading and, even if quoted, it will probably be subject to significant price fluctuations.

AsOur ~~of the filing date of this Report, there has not been any established trading market for our~~ common stock, ~~and there~~ is currently notraded ~~public~~in ~~market~~the ~~whatsoever~~over-the-counter ~~for our common stock. We intend to work with a~~ market ~~maker~~and toincluded ~~file~~on ~~an application with FINRA so as to be able to quote~~ the ~~shares~~OTCBB ofunder ~~our common stock on~~ the ~~OTC~~trading ~~Bulletin~~symbol ~~Board (~~“~~OTCBB~~VTMB”~~) maintained by FINRA~~. ~~There~~Inclusion ~~can~~on bethe noOTCBB ~~assurance~~permits asprice toquotations ~~whether~~for ~~such~~our ~~market~~shares ~~maker~~to ~~will file the application or if that application will~~ be ~~accepted~~published by ~~FINRA. We~~that ~~are not permitted to file such application on our own behalf~~service. If ~~the application is accepted~~However, ~~there~~we ~~can~~do benot noanticipate ~~assurances~~a assubstantial topublic ~~whether~~trading ~~any~~ market ~~for~~in our ~~common~~shares ~~stock~~in ~~will develop or~~ the ~~prices~~immediate ~~at which our common stock will trade~~future. IfThere ~~the~~are ~~application~~no isplans, ~~accepted~~proposals, wearrangements ~~cannot~~or ~~predict~~understandings ~~the~~with ~~extent~~any toperson ~~which~~concerning ~~investor interest in us will result in~~ the development of ana ~~active, liquid~~ trading market~~. Active~~ ~~trading markets generally result~~ in ~~lower~~any ~~price volatility and more efficient execution~~ of ~~buy~~our ~~and sell orders for investors~~securities.

In addition, it is probable that our common stock will not be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades will probably fluctuate significantly. Prices for our common stock will be determined in the market and may be influenced by many factors, including the depth and liquidity of the market for our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these RISK FACTORS, investor perception, and general economic and market conditions. No assurance can be given that an orderly or liquid market will develop for our common stock. Because of the anticipated low price of our common stock, many brokerage firms may not be willing to effect transactions in our common stock.10

Only companies that report their current financial information to the SEC may have their securities included on the OTCBB. Therefore, we must keep current in our filing obligations with the SEC, including periodic and annual reports and the financial statements required thereby. In the event that we become delinquent in our filings or otherwise lose our status as a "reporting issuer," any future quotation of our shares would be jeopardized.

A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Whether stockholders may trade their shares in a particular state is subject to various rules and regulations of that state.

Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.

We are authorized to issue up to 900,000,000 shares of common stock. At present, there are ~~526~~575,~~525~~445,000 shares of our common stock issued and outstanding. Our Board of Directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders. Consequently, our stockholders may experience more dilution in their ownership of our common stocks in the future. As our officers and directors own a significant percentage of our issued and outstanding common stock, any future sales of their shares may result in a decrease in the price of our common stock and the value of our stockholders’ investments. Our sole officer and director, currently owns 510,~~000~~050,000 shares of the total ~~of 526,525,000~~ issued and outstanding shares of our common stock. Collectively, our sole officer and director owns 9688.96% of our total outstanding shares of our common stock.

The possibility of future sales of significant amounts of shares held of our common stock by our officers and directors could decrease the market price of our common stock, if the market does not orderly adjust to the increase in shares of our common stock in the market. In such event, the value of your investment in us will decrease.

IfSales ~~a market develops for our common stock, sales~~ of our common stock in reliance on Rule 144 may reduce prices in that market by a material amount.

~~All~~Most of ~~the~~our outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted securities, those shares may be resold only pursuant to an effective registration statement or pursuant to the requirements of Rule 144 or other applicable exemptions from registration under that Act and as required under applicable state securities laws. Rule 144 provides in essence that an affiliate (i.e., an officer, director, or control person) who has held restricted securities for a prescribed period under certain conditions, may sell every three months, in brokerage transactions, a number of shares that does not exceed 1.0% of the issuer’s outstanding common stock. The alternative average weekly trading volume during the four calendar weeks prior to the sale is not available to our shareholders, as the OTCBB (if and when our common stock is listed thereon) is not an “automated quotation system” and, accordingly, market based volume limitations are not available for securities quoted only on the OTCBB.

~~Any~~Trading ~~trading~~in ~~market~~our ~~that~~shares may ~~develop may~~ be restricted because of state securities “Blue Sky” laws which prohibit trading absent compliance with individual state laws.

These restrictions may make it difficult or impossible to sell our common stock in those states. ~~There is no public market for our common stock and there can be no assurance that any public market will develop in the foreseeable future.~~ Transfers of our common stock may, also, be restricted under the securities laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such laws, our common stock may not be traded in such jurisdictions. Because the shares of our common stock registered hereunder have not been registered for resale under the “Blue Sky” laws of any state, the holders of such shares and persons who desire to purchase such shares in any trading market that might develop in the future, should be aware that there may be significant state “Blue Sky” law restrictions upon the ability of investors to sell and purchasers to purchase such shares. These restrictions prohibit the secondary trading our common stock. Investors should consider the secondary market for our securities to be limited.

We may acquire other companies or product lines.

We may pursue acquisitions that could provide new products or businesses. Future acquisitions may involve the use of significant amounts of cash, potentially dilutive issuances of equity securities, incurrence of debt or amortization of expenses related to good will and other intangible assets.

In addition, acquisitions involve numerous risks, including:

1511

·● Difficulties in the assimilation of the operations, products and personnel of the acquired company. ·● The diversion of management’s attention from other business concerns ·● Risks of entering markets in which we have no or limited prior experience ·● The potential loss of key employees of ours or of the acquired company

We currently have no commitments with respect to any acquisition. In the event that such an acquisition does occur and we are unable to successfully integrate businesses, products, or personnel that we acquire, our business, results of operations and financial condition could be materially adversely affected.

Because our sole officer and director, Frank Ornelas owns 9688.96% of our outstanding common stock, investors may find that corporate decisions controlled by Mr. Ornelas are inconsistent with the interests of other stockholders.

Frank Ornelas, our sole officer and director, controls 9688.96% of our issued and outstanding shares of common stock. Accordingly, in accordance with our Certificate of Incorporation and Bylaws, Mr. Ornelas Is able to control who is elected to our Board of Directors and thus could act, or could have the power to act, as our management. Since Mr. Ornelas is not simply a passive investor, but is also our sole officer, his interests as an executive officer may, at times, be adverse to those of passive investors. Where those conflicts exist, our shareholders will be dependent upon Mr. Ornelas exercising, in a manner fair to all of our shareholders his fiduciary duties as an officer or as a member of our Board of Directors. Also, due to his stock ownership position, Mr. Ornelas will have: (i) the ability to control the outcome of most corporate actions requiring stockholder approval, including amendments to our Certificate of Incorporation; (ii) the ability to control corporate combinations or similar transactions that might benefit minority stockholders which may be rejected by Mr. Ornelas to their detriment, and (iii) control over transactions between him and Mr. Ornelas.

If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report accurately our financial results. This could have a material adverse effect on our share price.

Effective internal controls are necessary for us to provide accurate financial reports. We are in the process of documenting and testing our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes Oxley Act of 2002 and the related rules of the SEC, which require, among other things, our management to assess annually the effectiveness of our internal control over financial reporting and our independent registered public accounting firm to issue a report on that assessment. During the course of this documentation and testing, we may identify significant deficiencies or material weaknesses that we may be unable to remediate before the deadline for those reports.

There can be no assurance that we will maintain adequate controls over our financial processes and reporting in the future or that those controls will be adequate in all cases to uncover inaccurate or misleading financial information that could be reported by members of management. If our controls failed to identify any misreporting of financial information or our management or independent registered public accounting firm were to conclude in their reports that our internal control over financial reporting was not effective, investors could lose confidence in our reported financial information and the trading price of our shares could drop significantly. In addition, we could be subject to sanctions or investigations by the stock exchange upon which our common stock may be listed, the SEC or other regulatory authorities, which would require additional financial and management resources.

Volatility of our stock price could adversely affect stockholders.

The market price of our common stock could fluctuate significantly as a result of:

•● quarterly variations in our operating results; •● cyclical nature of consumer spending; •● interest rate changes; •● changes in the market’s expectations about our operating results; •● our operating results failing to meet the expectation of securities analysts or investors in a particular period; •● changes in financial estimates and recommendations by securities analysts concerning our company or the defense industry in general; •● operating and stock price performance of other companies that investors deem comparable to us; •● news reports relating to trends in our markets; •● changes in laws and regulations affecting our business; •● material announcements by us or our competitors; •● sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; •● general economic and political conditions such as recessions and acts of war or terrorism; and •● other matters discussed in the risk factors.

Fluctuations in the price of our common stock could contribute to the loss of all or part of an investor’s investment in our company.

We currently do not intend to pay dividends on our common stock and consequently your only opportunity to achieve a return on your investment is if the price of common stock appreciates.

We currently do not plan to declare dividends on our common stock in the foreseeable future. Any payment of cash dividends will depend upon our financial condition, capital requirements, earnings and other factors deemed relevant by our board of directors. Agreements governing future indebtedness will likely contain restrictions on our ability to pay cash dividends. Consequently, your only opportunity to achieve a return on your investment in the common stock of our company will be if the market price of our common stock appreciates and you sell your common stock at a profit.

In addition, we intend to retain earnings, if any, to provide funds for the implementation of our business plan. We intend not to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders of our common stock will receive any additional cash, stock or other dividends on their shares of our common stock until we have funds which our Board of Directors determines can be allocated to dividends. Investors that require liquidity should also not invest in our common stock. There is no established trading market and should one develop it will likely be volatile and subject to minimal trading volumes.

Provisions in our certificate of incorporation and bylaws or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our stock.

Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions:

17● provide that only our board of directors shall determine the number of directors and can fill vacancies on the board of directors; ● authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt; ● limit the ability of our stockholders to call special meetings of stockholders; ● Prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● provide that the board of directors is expressly authorized to adopt, amend, or repeal our bylaws; and

• provide that only our board of directors shall determine the number of directors and can fill vacancies on the board of directors; • authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt; • limit the ability of our stockholders to call special meetings of stockholders; • Prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to adopt, amend, or repeal our bylaws; and

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company.

These and other provisions contained in our amended and restated certificate of incorporation and bylaws could delay or discourage transactions involving an actual or potential change in control of us or our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current prices, and may limit the ability of stockholders to remove our current management or approve transactions that our stockholders may deem to be in their best interests and, therefore, could adversely affect the price of our common stock.

Risk Factor Related to Controls and Procedures

~~The~~If ~~Company~~we ~~has~~are ~~limited~~unable ~~segregation of duties amongst its employees with respect~~ to ~~the~~develop ~~Company's preparation~~ and ~~review of the Company's financial statements due to the limited number of employees, which is a material weakness in internal controls, and if the Company fails to~~ maintain an effective system of internal controls, itstockholders ~~may not be able to accurately report its financial results or prevent fraud. As a result, current~~ and ~~potential~~prospective ~~stockholders~~investors ~~could~~may lose confidence in the ~~Company's~~reliability ~~financial reporting which could harm the trading price~~ of ~~the~~our ~~Company's~~financial ~~stock~~reporting.

~~Management~~The Company has ~~found~~limited itsegregation ~~necessary~~of toduties ~~limit~~amongst ~~the~~its ~~Company's~~officers ~~administrative~~and ~~staffing~~employees inwith ~~order~~respect to ~~conserve cash, until~~ the Company's ~~level~~preparation ofand ~~business~~review ~~activity~~of ~~increases. As a result,~~ the Company's ~~and~~financial ~~its~~statements ~~independent~~due ~~public~~to ~~accounting~~the ~~firm~~limited ~~have~~number ~~identified~~of ~~this~~employees, aswhich is a material weakness in ~~the Company's~~ internal controls. ~~The~~If the Company ~~intends~~fails to ~~remedy~~maintain ~~this~~an ~~material~~effective ~~weakness~~system byof ~~hiring~~internal ~~additional employees and reallocating duties~~controls, ~~including~~it ~~responsibilities~~may ~~for~~not ~~financial~~be ~~reporting,~~able ~~among~~to ~~the~~accurately ~~employees~~report asits ~~soon~~financial asresults ~~there~~or ~~are~~prevent ~~sufficient resources available~~fraud. ~~However,~~As ~~until~~a ~~such time~~result, ~~this~~current ~~material weakness will continue to exist. Despite the limited number of administrative employees~~ and ~~limited~~potential ~~segregation~~stockholders ofcould ~~duties,~~lose ~~management~~confidence ~~believes~~in ~~that~~ the Company's ~~administrative~~financial ~~employees~~reporting ~~are~~which ~~capable~~could ofharm ~~following~~the ~~its~~trading ~~disclosure~~price ~~controls and procedures effectively~~of stock.

~~ITEM~~The 2Company and its independent public accounting firm have identified this as a material weakness in the Company's internal controls. ~~PROPERTIES~~The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist.

Item 1B. Unresolved Staff Comments.

This item is not required for a smaller reporting company.

Item 2. Description of Property.

We sublease our facility on a month-to-month basis. We believe that our current facilities are suitable and adequate to meet our current needs. We maintain insurance coverage against losses, including fire, casualty and theft, for each of our locations in amounts we believe to be adequate. Our headquarters are located at: 1005 West 18th Street, Costa Mesa, CA 92627.

18Item 3. Legal Proceedings.

~~ITEM~~There 3.are ~~LEGAL~~no ~~PROCEEDINGS~~material pending legal proceedings to which the company or any subsidiary is a party, or to which any property is subject and, to the best of our knowledge, no such action against us is contemplated or threatened.

WeItem ~~are subject to litigation from time to time arising from our normal course of operations~~4. Mine ~~Currently,~~Safety ~~there are no open litigation matters~~Disclosures.

Not applicable.

PART II

~~ITEM~~Item 5. Market ~~MARKET~~for ~~FOR REGISTRANT~~Registrant’Ss ~~COMMON~~Common ~~EQUITY~~Equity, ~~RELATED~~Related ~~STOCKHOLDER~~Stockholder ~~MATTERS~~Matters ~~AND~~and ~~ISSUER~~Issuer ~~PURCHASES~~Purchases OFof ~~EQUITY~~Equity ~~SECURITIES~~Securities.

~~MARKET~~Our ~~INFORMATION~~common stock was accepted for quotation on the OTCBB on September 5, 2012 under the symbol VTMB. The first reported trade was on December 4, 2012. The highest trade during the fourth quarter of 2012 was $0.75 and the lowest was $0.005. The last reported trade on April 11, 2013 was $0.0065. Because of the limited trading during 2012, we are not including a historical trading table.

~~The~~As ~~Company’s~~of ~~common~~the ~~stock~~date ishereof ~~not~~there ~~publicly~~are ~~traded~~approximately 290 stockholders of record of our common stock.

~~HOLDERS~~Secondary OFtrading ~~COMMON~~of ~~EQUITY~~our shares may be subject to certain state imposed restrictions. Except for the OTCB, we have no immediate plans, proposals, arrangements or understandings with any person concerning the development of a trading market in any of our securities. The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state.

AsPenny ofStock ~~May 23, 2011, the number of record holders of our common shares was 28.~~Rule

~~DIVIDEND~~It ~~INFORMATION~~is unlikely that our securities will be listed on any national or regional exchange or The Nasdaq Stock Market in the foreseeable future. Therefore our shares most likely will be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for broker-dealer transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

ToThe ~~date,~~SEC ~~the~~generally ~~Company~~defines ~~has never paid~~ a ~~dividend.~~penny Westock ~~have no plans~~ to ~~pay~~be any ~~dividends~~equity onsecurity ~~common~~that ~~stock~~has ina ~~the~~market ~~near~~price ~~future~~less than $5.00 Weper ~~intend~~share, subject to ~~retain~~certain ~~all~~exceptions. Rule ~~earnings,~~3a51-1 ifprovides that any, ~~for~~equity ~~the~~security ~~foreseeable~~is ~~future,~~considered ~~for~~to ~~use~~be ina ~~our~~penny ~~business~~stock ~~operations.~~unless that security is:

~~DESCRIPTION~~● OFregistered ~~SECURITIES~~and traded on a national securities exchange meeting specified criteria set by the SEC; ● authorized for quotation on The Nasdaq Stock Market; ● issued by a registered investment company; ● excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or ● exempted from the definition by the SEC.

~~Our~~A ~~authorized~~broker-dealer ~~capital~~who ~~stock~~sells ~~consists~~penny ofstocks 1to ~~billion~~a ~~shares~~person ~~including~~other ~~900~~than ~~million~~an ~~shares~~established ofcustomer ~~common~~or ~~stock,~~accredited ~~par~~investor ~~value~~is $subject to additional sales practice requirements.~~0001~~ An ~~per~~accredited ~~share~~investor ~~and~~is ~~100~~generally ~~million~~defined ~~shares~~as a person with assets in excess of ~~preferred~~$1,000,000, ~~stock~~excluding their principal residence, ~~par~~or ~~value~~annual income exceeding $~~.0001~~200,000, ~~per~~or ~~share~~$300,000 together with their spouse.

~~COMMON~~For ~~STOCK~~transactions covered by these rules, a broker-dealer must make a special suitability determination for the purchase of such securities and must receive the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, a monthly statement must be sent to the client disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock and may affect the ability of stockholders to sell their shares.

~~Our~~These ~~common~~requirements ~~stock~~may isbe ~~not~~considered ~~traded~~cumbersome onby ~~any~~broker-dealers and could impact the willingness of a particular broker-dealer to make a market in our shares, or ~~recognized~~they ~~exchange~~could affect the value at which our shares trade. Classification of the shares as penny stocks increases the risk of an investment in our shares.

Holders of common stock are entitled to one vote per share on matters submitted to a vote of stockholders. Holders of common stock do not have cumulative voting rights. Holders of the common stock are entitled to receive dividends as may be declared from time to time by our board of directors out of funds legally available for the payment of dividends, subject to the preferences that apply to any outstanding preferred stock. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and after giving effect to the liquidation preference of any outstanding preferred stock. The common stock has no preemptive or conversion rights and no additional subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable.14

19Rule 144

~~PREFERRED~~All ~~STOCK~~of our outstanding common shares were issued in private transactions and, except for those shares not included in our registration in August 2012, are deemed restricted securities. Rule 144 is the common means for stockholders to resell restricted securities and for affiliates, to sell their securities, either restricted on non restricted (control) shares. Rule 144 was amended, effective February 15, 2008.

~~The~~Under ~~Board of Directors expressly is authorized, subject to limitations prescribed by~~ the ~~Delaware~~amended ~~General~~Rule ~~Corporation Law and the provisions of this Certificate of Incorporation~~144, ~~to provide, by resolution and by filing~~ an ~~amendment~~affiliate ~~to the Certificate~~ of ~~Incorporation~~a ~~pursuant~~company tofiling ~~the~~reports ~~Delaware~~under ~~General Corporation Law, for~~ the ~~issuance~~Exchange ~~from~~Act ~~time~~who tohas ~~time~~held oftheir ~~the~~ shares offor ~~Preferred~~more ~~Stock~~than insix ~~one or more series~~months, tomay ~~establish~~sell ~~from time to time the number of shares to be included~~ in ~~each~~any ~~series,~~three-month ~~and~~period toan ~~fix~~amount ~~the designation, powers, preferences and other rights~~ of ~~the~~ shares ofthat ~~each~~does ~~such~~not ~~series~~exceed ~~and to fix~~ the ~~qualifications,~~greater ~~limitations and restrictions thereon, including, but without limiting the generality~~ of ~~the foregoing, the following~~:

a) the number of shares constituting that series and the distinctive designation of that series;

●	the average weekly trading volume in the common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale, or

●	1% of the shares then outstanding.

b)Sales ~~the~~by ~~dividend~~affiliates ~~rate~~under onRule ~~the~~144 ~~shares~~are ofalso ~~that~~subject ~~series,~~to ~~whether~~certain ~~dividends~~requirements ~~shall~~as beto ~~cumulative,~~the ~~and,~~manner ifof sosale, ~~from~~filing ~~which~~appropriate ~~date~~notice ~~or dates,~~ and the ~~relative~~availability ~~rights~~ of ~~priority,~~current ifpublic ~~any,~~information ofabout ~~payment~~the ~~of dividends on shares of that series;~~issuer.

c)A ~~whether~~non-affiliate ~~that~~stockholder ~~series~~of ~~shall~~a ~~have~~reporting ~~voting~~company ~~rights,~~who inhas ~~addition~~held totheir ~~voting~~shares ~~rights~~for ~~provided~~more bythan ~~law,~~six ~~and~~months, ifmay somake unlimited resales under Rule 144, provided only that the ~~terms~~issuer ofhas ~~such~~available ~~voting~~current ~~rights;~~public information about itself. After a one-year holding period, a non-affiliate may make unlimited sales with no other requirements or limitations.

d)We ~~whether~~cannot ~~that~~predict ~~series~~the ~~shall~~effect ~~have~~any ~~conversion~~future ~~privileges,~~sales ~~and,~~under ifRule ~~so,~~144 ~~the~~may ~~terms~~have ~~and~~on ~~conditions~~the market price of ~~such~~our ~~conversion~~common stock, ~~including~~if ~~provisions~~a market for ~~adjustment~~our ofshares ~~the~~develops, ~~conversion~~but ~~rate~~such insales ~~such~~may ~~events~~have asa ~~the~~substantial ~~Board~~depressing ~~of Directors~~effect ~~shall~~on ~~determine;~~such market price.

e)Dividends whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;Policy

f)We ~~whether~~have ~~that~~never ~~series~~declared ~~shall~~cash ~~have~~dividends aon ~~sinking~~our ~~fund~~common ~~for~~stock, ~~the~~nor ~~redemption~~do orwe ~~purchase~~anticipate ofpaying ~~shares~~any ofdividends ~~that~~on ~~series,~~our ~~and,~~common ifstock ~~so,~~in the ~~terms~~foreseeable ~~and amount of such sinking fund;~~future.

g)Item ~~the~~6. Selected ~~rights~~Financial of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; andData.

h)This ~~any~~item ~~other~~is ~~relative~~not ~~powers,~~required ~~preferences~~for ~~and~~a ~~rights~~smaller ofreporting ~~that series, and qualifications, limitations or restrictions on that series~~company.

InItem ~~the~~7. Management’s ~~event~~Discussion ofand ~~any~~Analysis ~~liquidation, dissolution or winding up~~ of ~~the~~Financial ~~Corporation,~~Condition ~~whether~~and ~~voluntary~~Results ~~or involuntary, the holders~~ of Preferred Stock of each series shall be entitled to receive only such amount or amounts as shall have been fixed by the certificate of designations or by the resolution or resolutions of the Board of Directors providing for the issuance of such seriesOperations.

The ~~Company~~following ~~did~~information ~~not~~should ~~issue~~be ~~any~~read ~~stock~~in ~~options~~conjunction ~~for~~with the ~~years~~financial ~~ended~~statements ~~December~~and ~~31,~~notes ~~2010~~thereto ~~and~~appearing ~~2009~~elsewhere in this Form 10-K.

20Forward Looking and Cautionary Statements

~~EQUITY~~This ~~COMPENSATION~~report ~~PLAN~~contains ~~INFORMATION~~forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will” “should," “expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	0	N/A	0
Equity compensation plans not approved by security holders	0	N/A	0
Total	0	N/A	0

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

Forward Looking Statements

A number of the statements made by the Company in this report may be regarded as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include, among others, statements concerning the Company’s outlook, pricing trends and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.

All predictions as to future results contain a measure of uncertainty and accordingly, actual results could differ materially. Among the factors that could cause a difference are: changes in the general economy; changes in demand for the Company’s products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances.

This discussion and analysis of financial condition and results of operations should be read in conjunction with our Financial Statements and Risk Factors included in this filing.

Overview and Plan of Operation

Results of Operations ~~2010~~2012 Compared to ~~2009~~2011

Total revenues ~~decreased~~increased 23%, or $~~(18~~24,~~870)~~654, to $~~112~~129,~~947~~652 for the year ended December 31, ~~2010~~2012 compared to $~~131~~104,~~817~~498 for the prior year ended December 31, ~~2009~~2011. ~~Revenues~~The ~~decreased~~revenues ~~due~~increase is primarily attributed to increased sales from our website that was operative for the ~~economic~~full ~~recession~~year, particularly the sale of board bags. Generally for 2012, the number of units sold increased and pricing remained stable.

Cost of sales ~~decreased~~increased 1%, or $~~(14~~850,~~897)~~ to $8574,~~581~~153 for the year ended December 31, ~~2010~~2012 compared to $~~100~~73,~~478~~303 for the prior year ended December 31, ~~2009~~2011, primarily related to the increase in revenues and reduction in the purchase of inventory. The gross profit ~~decreased~~increased 75%, or $(323,~~973)~~804, to $2755,~~366~~499 for the year ended December 31, ~~2010~~2012 compared to $31,~~339~~695 for the same period in ~~2009. The~~2011, ~~decrease~~also isdue ~~attributed~~ to athe ~~reduction~~increase in ~~the purchase of inventory due to lower~~ sales.

Operations, including marketing, selling and general and administrative expenses for fiscal 2010 decreased $(4,137) to $122,331 from $126,468 for fiscal 2009. The decrease in operating expenses resulted primarily from less audit and accounting fees incurred in the current period.15

~~Interest~~Operating ~~expense~~expenses, including marketing, selling and general and administrative expenses for fiscal ~~2010~~2012, ~~totaled~~increased 9% or $5614,~~227~~783, anto ~~increase~~$174,351 offrom $44154,~~715~~568 ~~over~~for fiscal ~~2009~~2011. The increase in ~~interest~~operating ~~expense~~expenses resulted primarily from increased ~~borrowing~~business ~~during~~and ~~2010~~selling expenses in the current period.

~~Net~~Interest ~~loss~~expense for fiscal ~~2010~~2012 ~~was~~totaled $~~(157~~95,~~948)~~615, asan ~~compared~~increase toof a$6,940 ~~net~~over ~~loss~~fiscal 2011. The increase in interest expense resulted from increased borrowing during 2012 and from amortization of a $~~(108~~69,~~477)~~907 ~~for~~debt ~~fiscal~~discount ~~2009~~on newly issued convertible promissory notes issued in 2012.

Net loss for fiscal 2012 was $107,026 as compared to a net loss of $223,678 for fiscal 2011.

Liquidity and Capital Resources

At December 31, ~~2010~~2012, we had an accumulated deficit of $~~(431~~762,~~442)~~146, and we expect to incur additional losses in the foreseeable future. While we have funded our operations since inception through investor and related party loans and through collection of our accounts receivable, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us.

As of December 31, ~~2010~~2012, our available balance of cash and cash equivalents was approximately $13,~~830~~940.

We expect to put our present and anticipated capital resources totoward expanding our operations.

~~LIQUIDITY~~Liquidity ~~AND~~and ~~CAPITAL~~Capital ~~RESOURCES~~Resources

To date, the Company has incurred substantial losses, and will require financing for working capital to meet its operating obligations. We anticipate that we will require financing on an ongoing basis for the foreseeable future.

If the Company cannot find sources of additional financing to fund its working capital needs, the Company will be unable to obtain sufficient capital resources to operate our business. We cannot assure you that we will be able to access any financing in sufficient amounts or at all when needed. Our inability to obtain sufficient working capital funding will have an immediate material adverse effect upon our financial condition and our business.

The Company currently has no other significant sources of working capital or cash commitments. However, no assurance can be given that the Company will raise sufficient funds from such financing arrangements, or that Company will ever produce sufficient revenues to sustain its operations, or that a market will develop for its common stock for which a significant amount of the Company’s financing is dependent upon.

22During the year ended December 31, 2012, the Company had a net increase in cash of $2,524. The Company’s principal sources and uses of funds were as follows:

~~During~~Cash used in operating activities. The Company used $65,476 in cash for operating activities for the year ended December 31, ~~2010~~2012 as compared to $71,014 in the ~~Company~~prior ~~had~~year aended December 31, 2011. The 2012 result was primarily due to the $107,026 net ~~increase~~loss inand ~~cash~~a derivative valuation gain of $~~753~~92,383. ~~The~~ Offsetting the cash used by operating activities was $25,329 in contributed services representing unpaid salaries to the Company’s ~~principal~~President ~~sources~~ and ~~uses~~the of$25,906 ~~funds~~increase ~~were~~in asaccrued ~~follows:~~expenses and $23,129 increase in accounts payable.

Cash ~~used~~provided inby ~~operating~~financing activities. ~~The~~Net ~~Company~~cash ~~used~~provided ~~$(44,247)~~ in ~~cash~~financing ~~for~~activities ~~operating~~was ~~activities~~$68,000 for the year ended December 31, ~~2010~~2012, as compared to $~~(12~~72,~~975)~~000 in ~~the~~2011. This ~~prior~~represented ~~year~~$70,000 ~~ended~~in ~~December~~proceeds 31from convertible promissory notes, ~~2009~~partially offset by $2,000 in payments on related party loans payable.

~~Cash~~There ~~provided~~was byno ~~financing~~significant ~~activities.~~impact ~~The~~on the Company’s ~~received~~operations ~~funds~~as ~~from~~a ~~related~~result ~~parties~~of ~~and~~inflation ~~investors~~ for ~~operating~~the ~~expenses~~year ended December 31, 2012.

There was no significant impact on the Company’s operations as a result of inflation for the year ended December 31, 2010.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.

Revenue Recognition

We recognize revenue in accordance with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements” (“SAB 104”). We recognize revenue upon delivery, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. WeShipping ~~record~~terms ~~revenue~~are ~~net~~typically ofFOB ~~estimated~~shipping ~~product~~point ~~returns,~~and ~~which~~we isbill ~~based upon~~ our ~~return~~customers ~~policy,~~for ~~sales~~shipping ~~agreements,~~and ~~management~~handling ~~estimates~~and ofinclude ~~potential~~such ~~future~~amounts ~~product~~in ~~returns,~~sales. ~~which~~We isaccrue ~~based~~for ~~upon~~warranty ~~our return policy~~costs, sales ~~agreements,~~returns ~~management~~and ~~estimates~~other ofallowances ~~potential~~based ~~future~~on ~~product~~our ~~returns~~experience, ~~related~~which totells ~~current~~us ~~period~~we ~~revenue,~~have ~~current~~less ~~economic~~than ~~trends~~$5,000 ~~changes~~per year in ~~customer~~warranty ~~composition~~returns and ~~historical experience~~allowances. Generally, we extend credit to our customers and do not require collateral. We perform ongoing credit evaluations of our customers and historic credit losses have been within our expectations. We do not ~~ship~~make aconsignment ~~product~~sales, ~~until~~nor weinventory ~~have~~sales ~~either~~subject to a ~~purchase~~“buy ~~agreement~~back” or areturn ~~payment~~ arrangement from customers. ~~This~~Accordingly, isour acustomers ~~critical~~do ~~policy,~~not ~~because~~presently wehave ~~want~~a ~~our~~right ~~accounting~~to return unsold products to ~~show~~us ~~only~~outside ~~sales~~of ~~which~~returns isfor ~~“final”~~defective ~~with~~product. Occasionally awe ~~payment~~offer ~~arrangement~~our customers volume incentives on surfboard travel boards.

Our standard policies are set forth below.

●	Shipping terms in Southern California are that we deliver products directly to customers. Elsewhere, our products are shipped FOB shipping point. We recognize revenue when products are shipped.

●	We bill customers for shipping and handling and include such amounts in sales.

●	Our return policy consists of accepting product returns within 30 days of shipment.

●	Occasionally, we offer volume incentives on surfboard travel bags. Customers who informally agree to purchase 100 surfboard travel bags over the course of a year receive a 7 1/2% discount.

Reserve for Obsolete/Excess Inventory

Inventories are stated at the lower of cost or market. We regularly review our inventories and, when required, will write down any excess or obsolete inventory based on factors that may impact the realizable value of our inventory including, but not limited to, market demand, regulatory requirements and significant changes in our cost structure. If ultimate usage varies significantly from expected usage, or other factors arise that are significantly different than those anticipated by management, inventory write-downs or increases in reserves may be required. During the years ended December 31, 2012 and 2011, there were no inventory write downs recorded.

Accounts Receivable

The Company extends credit to its customers, who are located primarily in California. Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its customers’ financial condition. Management reviews accounts receivable on a regular basis, based on contracted terms and how recently payments have been received to determine if any such amounts will potentially be uncollected. The Company includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off. The balances of the allowance account at December 31, ~~2010~~2012 and ~~2009~~2011 are $0 and $0, respectively.

23Derivative Liability

~~Revenue~~ASC ~~Recognition~~Topic 815 provides applicable guidance to the convertible promissory notes issued by the Company in instances where the number into which a note can be converted is not fixed. For example, when a note converts at a discount to market based on the stock price on the date of conversion, ASC Topic 815 requires that the embedded conversion option of the convertible promissory notes be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives under accounting standards, the Company recorded a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company’s stock, and a discount representing the imputed interest associated with the embedded derivative. The discount is amortized over the life of the convertible promissory notes, which resulted in the recognition of $69,907 in interest expense for the year ended December 31, 2012, and the derivative liability is adjusted periodically according to stock price fluctuations. At the time of conversion, any remaining derivative liability will be charged to additional paid-in capital. For purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

The Company recognizes revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.17

Stock price on the valuation date	$	0.1150
Conversion price for the loans	$	0.2935
Dividend yield		0.00	%
Years to Maturity		1
Risk free rate		0.16	%
Expected volatility		394.94	%

The value of the derivative liability at December 31, 2012 and 2011 was $58,562 and $119,991, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.

Going Concern

The audited financial statements included with this Annual Report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the financial statements.

~~ITEM~~Recent 8.Accounting ~~FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.~~Pronouncements

The ~~financial~~company ~~statements~~has ~~and~~evaluated ~~notes~~recent ofaccounting ~~this~~pronouncements ~~Form~~and ~~10-K~~their ~~appear~~adoption ~~after~~has ~~the~~not ~~signature~~had ~~page~~nor is not expected to ~~this~~have ~~Form~~a ~~10-K~~material impact on the company’s financial position or statements..

~~ITEM~~Off-Balance ~~9A.~~Sheet ~~CONTROLS AND PROCEDURES.~~Arrangements

OnWe ~~January~~have ~~18,~~no ~~2011, the Company filed Form 8~~off-Abalance ~~for~~sheet ~~registration~~arrangements ofthat ~~its~~have ~~Common~~or ~~Stock~~are ~~with~~reasonably ~~the~~likely ~~Securities and Exchange Commission pursuant~~ to ~~Section~~have ~~12(g)~~a ofcurrent ~~the~~or ~~Securities~~future ~~Exchange~~effect ~~Act~~on ofour ~~1934,~~financial ~~as amended~~condition, ~~(the~~changes ~~“Exchange~~in ~~Act”). As~~financial ~~the~~condition, ~~Company~~revenues ~~was~~or ~~not~~expenses, ~~obligated~~results ~~to meet the reporting requirements~~ of ~~the Exchange Act until January 18~~operations, ~~2011~~liquidity, nocapital ~~evaluation~~expenditures ofor ~~the~~capital ~~Company’s~~resources ~~disclosure controls and procedures prior to~~ that ~~date~~ is ~~required. As~~material ~~such,~~to ~~the Company's Chief Executive Officer and Chief Financial Officer have not evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Sec~~stockholders. ~~240.13a-15(e) or 240.15d-15(e)) as of December 31, 2010. The required evaluations will be conducted in the fiscal year ended December 31, 2011.~~

~~This~~Item ~~Annual~~7A. Quantitative ~~Report does not include a report of management's assessment regarding internal control over financial reporting to a transition period established by rules of the Securities~~ and ~~Exchange~~Qualitative ~~Commission~~Disclosures ~~for~~About ~~newly~~Market ~~public companies~~Risk.

24This item is not required for a smaller reporting company.

Item 8. Financial Statements and Supplementary Data.

Financial statements for the fiscal years ended December 31, 2012 and 2011 have been examined to the extent indicated in their reports by HJ Associates & Consultants, LLP, independent certified public accountants and have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to regulations promulgated by the SEC. The aforementioned financial statements are included herein under Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosures and Procedures

As of the end of the period covered by this annual report, our chief executive officer, also acting as principal financial officer, carried out an evaluation of the effectiveness of “disclosure controls and procedures,” as defined in the Securities Exchange Act of 1934, Rules 13a-15(e) and 15-d-15(e). Based upon that evaluation, it was concluded that as of December 31, 2012, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act 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 management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management has concluded that our disclosure controls and procedures are ineffective due to material weaknesses in maintaining sufficient segregation of duties. Due to our size and limited resources, we are unable at this time to implement and maintain proper segregation of duties.

Management’s Annual Report on Internal Control Over Financial Reporting

As the first annual report following the Company becoming a reporting issuer, this annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our Company’s registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies. In the future reports, we will be providing such disclosure.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal controls over financial reporting or in other factors that could materially affect, or would be likely to materially affect, our internal controls over financial reporting subsequent to the date we carried out our evaluation.

Item 9B. Other Information.

Not applicable.

PART III

~~ITEM~~Item 10. ~~DIRECTORS~~ Directors, ~~EXECUTIVE~~Executive ~~OFFICERS~~Officers ~~AND~~and ~~CORPORATE~~Corporate ~~GOVERNANCE~~Governance.

Our board of directors consists of one director. The following table sets forth certain information with respect to each executive officer and director of Vitamin Blue, Inc. following the distribution:

Name	Age	Position
Frank D. Ornelas Veronica C. Ornelas	51 49	President, Treasurer and Director Vice President and Secretary
Frank D. Ornelas	53	President, Treasurer and Director
Veronica C. Ornelas	51	Vice President and Secretary

Frank Ornelas has served as President and Chief Executive Officer of Vitamin Blue since he founded the Company in 1999. Previously from 1983 to 1999, he held different positions in the financial services industry including securities analyst, options and bond trader and stockbroker with various financial firms. Mr. Ornelas received his Bachelors of Science degree in Business Administration from California State University at Long Beach. We believe Mr. Ornelas’ experience in various capacities in the financial services industry and his thirteen years operating Vitamin Blue provides Mr. Ornelas with ample qualifications to serve as a director and to operate the company as its CEO.

Veronica C. Ornelas was elected Vice President and Secretary on December 27, 2010. ~~She~~Since 1989, she has owned and operated Ornelas Graphic Designs, a custom screen printing ~~firm~~business ~~since~~located ~~1989~~in Costa Mesa, California. Ms. Ornelas is the sister of Frank Ornelas, the company’s President and Chief Executive Officer.

Committees of the Board of Directors

The Board of Directors currently does not have any committees and any such functions are carried out by the Board of Directors.

Audit Committee

The functions of the Audit Committee are currently carried out by our Board of Directors.

Director Nominees

We do not have a nominating committee for the Board of Directors.

Nominating Committee

The Company does not have a standing nominating committee or a committee performing similar functions, as the Board of Directors consists of only one member. Due to the Company’s size, it finds it difficult to attract individuals who would be willing to accept membership on the Company’s Board of Directors. Therefore, with only one member of the Board of Directors, the full Board of Directors would participate in nominating candidates to the Board of Directors. The Company did not have an annual meeting of shareholders in the past fiscal year.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

As the Company had no class of securities registered in 2010 under Section 12 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) Forms 3, 4 or 5, as required by Section 16(a) of the Exchange Act were not required to be filed.

Code of Ethics

The Board of Directors adopted a Code of Ethics for its chief executive officer and chief financial officer and this Code of Ethics is filed as Exhibit 14 to this Company’s Report on Form-10-KSB. The Code of Ethics will be provided to any person without charge, upon request. Requests should be directed to the Investor Relations Department at the Company's corporate headquarters.

Compensation of Directors

Our sole director did not receive compensation for his service as a director since inception May 25, 1999.

~~ITEM~~Compliance ~~11. EXECUTIVE~~With ~~COMPENSATION~~Section 16(a) of the Exchange Act

~~The~~Section ~~following~~16(a) ~~table~~of ~~sets~~the ~~forth~~Exchange ~~compensation~~Act ~~information~~requires ~~for~~our ~~services~~directors ~~rendered~~and ~~by certain of our~~ executive officers, inand ~~all~~persons ~~capacities~~who ~~during~~own ~~the~~more ~~last~~than ~~three~~10% ~~completed~~of ~~fiscal~~our ~~years.~~common ~~The~~stock, ~~following~~to ~~information~~file ~~includes~~with the ~~dollar~~SEC ~~value~~initial reports of ~~base~~ownership ~~salaries,~~and ~~bonus~~reports ~~awards,~~of ~~the~~changes ~~number~~in ownership of ~~stock~~our ~~options~~common ~~granted,~~stock and ~~certain~~ other ~~compensation,~~equity ifsecurities. We ~~any,~~believe ~~whether~~that ~~paid~~that orall ~~deferred~~applicable reports were filed during the fiscal year 2012.

Item 11. Executive Compensation.

The following table sets forth compensation information for services rendered by certain executive officers in all capacities during the last three completed fiscal years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted, and certain other compensation, if any, whether paid or deferred.

During the years ended December 31, 2012, 2011 and 2010, Frank Ornelas, the Company’s Chief Executive Officers’ annual salary was $50,000. The Company has also paid for various personal expenses on behalf of Mr. Ornelas in lieu of his salary totaling $24,671 for 2012, $23,687 for 2011 and $21,041 for 2010. The unpaid portion of the Mr. Ornelas’ salary of $25,329 for 2012, $26,313 for 2011 and $28,959 for 2010, has been reflected as capital contributed in accordance with SAB Topic 5T. Mr. Ornelas has agreed to waive the unpaid portions of his past salary.

Summary Compensation Table

Name	Year	Salary		Total Compensation
	Year	Salary		Total
	($)	($)
Name	($)	($)		Compensation
Frank D. Ornelas	~~2010~~2012		2150,~~041~~000		2150,~~041~~000	(1)
President,	~~2009~~2011		2150,~~835~~000		2150,~~835~~000	(2)
Treasurer and	~~2008~~2010		2150,~~637~~000		2150,~~637~~000	(3)
Chief Executive
Officer
Veronica C. Ornelas	~~2010~~2012		0		0
Vice President and	2011		0		0
Secretary	2010		0		0
(1) Contributed services equaled $28,959.
(1) Paid $24,671 in personal expenses on behalf of Mr. Ornelas during 2012 in lieu of direct salary payments – balance of $25,329 was deemed contributed services to the company and has been waived by Mr. Ornelas.
(2) Contributed services equaled $28,165.
(2) Paid $23,687 in personal expenses on behalf of Mr. Ornelas during 2011 in lieu of direct salary payments – balance of $26,313 was deemed contributed services to the company and has been waived by Mr. Ornelas.
(3) Contributed services equaled $28,363.
(3) Paid $21,041 in personal expenses on behalf of Mr. Ornelas during 2010 in lieu of direct salary payments – balance of $28,959 was deemed contributed services to the company and has been waived by Mr. Ornelas.

Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable/Unexercisable	Value of Unexercised In-the-Money Options/SARs at FY-End ($) Exercisable/Unexercisable
None	0	0	0	0 / 0

Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable/Unexercisable	Value of Unexercised In-the-Money Options/SARs at FY-End ($) Exercisable/ Unexercisable

None	0	0	0	0 / 0

Stock Option Grants

The Company did not issue any stock options for the years ended December 31, ~~2010~~2012 and ~~2009~~2011.

~~EMPLOYMENT~~Employment ~~CONTRACTS~~Contracts

We have not entered into any employment agreement or consulting agreement with our sole officer/director.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the vent of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

Plan for Compensating Officers and Directors During the Next 12 Months

We do not have a plan for compensating officers and directors during the next 12 months. It is our intention that if before the end of the next 12 months the Company will start to generate revenue, the Company will then consider whether to provide compensation based on the projection of total revenues to be generated in the following 12 months to the officers but not to the directors of the Company.

~~ITEM~~Item 12. Security ~~SECURITY~~Ownership ~~OWNERSHIP~~of OFCertain ~~CERTAIN~~Beneficial ~~BENEFICIAL~~Owners ~~OWNERS~~and ~~AND~~Management ~~MANAGEMENT~~and ~~AND~~Related ~~RELATED~~Stockholder ~~STOCKHOLDER MATTERS~~Matters.

The following tables set forth certain information regarding the beneficial ownership of our voting securities as of ~~May~~April 2312, ~~2011~~2013 of (i) each person known to us to beneficially own more than 5% of the applicable class of voting securities, (ii) our directors, (iii) and each named executive officer and (iv) all directors and executive officers as a group. As of ~~May~~April 2312, ~~2011~~2013 a total of ~~526~~575,~~525~~445,000 shares of common stock were outstanding. Each share of common stock common stock is entitled to one vote on matters on which holders of common stock are eligible to vote. The column entitled "Percentage of Total Voting Stock" shows the percentage of total voting stock beneficially owned by each listed party.

The number of shares beneficially owned is determined under rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of ~~May~~April 2312, ~~2011~~2013 through the exercise or conversion of any stock option, convertible security, warrant or other right. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person's spouse) with respect to all shares of capital stock listed as owned by that person or entity.

2721

Ownership of Common Stock

Name and Position(s)	Title of Class	~~Common Stock Beneficially Owned~~	~~Percentage~~Common ~~Ownership~~Stock ~~(1)~~Beneficially Owned		Percentage Ownership (1)
Frank D. Ornelas President, Treasurer	Common Stock	510,000,000	96.9%(2)
Frank D. Ornelas President, Treasurer and Chief Executive Officer	Common Stock			510,050,000	88.6	%(2)
and Chief Executive Officer
Veronica C. Ornelas Vice President and Secretary	Common Stock			75,000	.0001	%(2)
Veronica C. Ornelas Vice President and Secretary	Common Stock	75,000	.01%(2)
All directors and executive Officers as a group (1 persons)	Common Stock			510,125,000	88.601	%
All directors and executive Officers as a group (1 persons)	Common Stock	510,075,000	96.9%

(1) Percentage ownership for the Company’s Common Stock is based on 526,525,000 shares of Common Stock outstanding as of May 23, 2011.

(1)	Percentage ownership for the Company’s Common Stock is based on 575,445,000 shares of Common Stock outstanding as of April 12, 2013.

(2)	Total issued and outstanding equals 575,445,000 common stock shares as of April 12, 2013.

~~(2)~~Equity ~~Total~~Compensation ~~issued~~Plan ~~and outstanding equals 526,525,000 common stock shares as of May 23, 2011.~~Information

EQUITY COMPENSATION PLAN INFORMATION

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by security holders	0	N/A	0

Equity compensation plans not approved by security holders	0	N/A	0

Total	0	N/A	0

~~ITEM~~Item 13. Certain ~~CERTAIN~~Relationships ~~RELATIONSHIPS~~and ~~AND~~Related ~~RELATED TRANSACTIONS~~Transactions, ~~AND~~and ~~DIRECTOR~~Director ~~INDEPENDENCE~~Independence.

During the year ended December 31, ~~2010~~2012, ~~Veronica Ornelas~~ the Company’s ~~Vice~~paid ~~President and Secretary, loaned the Company~~ $62,000 ~~for~~towards ~~operating~~the ~~expenses. The~~outstanding ~~Company~~debt ~~also~~owed ~~repaid~~to ~~$1,000~~Veronica inOrnelas ~~previous~~the ~~loans~~Company’s ~~received~~Vice ~~from~~President ~~this~~and ~~related party during the year~~Secretary. During the year ended December 31, ~~2009~~2011, Ms. Ornelas loaned the Company ~~received~~ $32,~~000~~0000 infor ~~loans~~operating ~~from this related party~~expenses. As of December 31, ~~2010~~2012 and ~~2009~~2011, the balance of these related party loans payable was $8,000 and $310,000, respectively. The Company has imputed interest on these loans at the rate of 9% per annum. As of December 31, ~~2010~~2012 and ~~2009~~2011, the balance of accrued interest payable to this related party was $12,~~134~~592 and $~~408~~1,861, respectively.

During the past two fiscal years ~~ended~~we ~~December~~have ~~31,~~subleased ~~2010~~from Ms. Ornelas our principal place of business and ~~2009~~executive offices, ~~Frank~~located ~~Ornelas,~~at ~~the~~1005 ~~Company’s~~West ~~Chief~~18th ~~Executive~~Street, ~~Officer~~Costa Mesa, ~~contributed~~California ~~services~~92627. The facilities are leased on a month-to-month ~~the~~basis ~~Company~~and ~~valued~~consist atof approximately 650 square feet of warehouse space, for which we pay $28565 per month,~~959~~ ~~and~~or $286,~~165,~~786 ~~respectively~~per year.

~~ITEM~~During 14the years ended December 31, 2012, 2011 and 2010, Frank Ornelas, the Company’s Chief Executive Officers’ annual salary was $50,000. The ~~PRINCIPAL~~Company ~~ACCOUNTANT~~paid ~~FEES~~for ~~AND~~various ~~SERVICES~~personal expenses on behalf of Mr. Ornelas in lieu of his salary totaling $24,671 for 2012, $23,687 for 2011 and $21,041 for 2010. The unpaid portion of the Mr. Ornelas’ salary of $25,329 for 2012, $26,313 for 2011 and $28,959 for 2010, has been waived by Mr. Ornelas and recorded as contributed capital.

~~The~~None ~~following~~of ~~table~~our ~~sets~~directors ~~forth~~are ~~fees~~deemed ~~billed~~ to ~~the~~be ~~Company by the Company's~~ independent ~~auditors~~directors. We ~~for~~do ~~the~~not ~~year~~have ~~ended~~a ~~December 31~~compensation, ~~2010 and December 31, 2009 for (i) services rendered for the~~ audit ofor ~~the~~nominating ~~Company's annual financial statements and the review of the Company's quarterly financial statements~~committee, ~~(ii)~~rather ~~services~~those ~~rendered~~functions ~~that~~ are ~~reasonably~~carried ~~related~~out toby the ~~performance~~board ~~of the audit or review of the Company's financial statements that are not reported~~ as ~~Audit~~a ~~Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance~~whole.

SERVICES	2010		2009
Audit Fees	$	21,200	$	27,248
Audit - Related Fees		-0-	$	2,923
Tax fees		-0-		-0-
All Other Fees		-0-		-0-
Total	$	21,200	$	30,171

29Item 14. Principal Accounting Fees and Services.

~~PART~~We IVdo not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. As a result, we do not rely on pre-approval policies and procedures.

~~ITEM~~Audit ~~15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~Fees

Our current auditors, HJ Associates & Consultants, LLP, billed us $34,800 and $25,800 for the audit of our annual financial statements included in this annual report for the years ended December 31, 2012 and 2011, respectively.

Audit Related Fees

For the year ended December 31, 2012 and 2011, there were no fees billed for assurance and related services by HJ Associates & Consultants, LLP relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above.

Tax Fees

For the years ended December 31, 2012 and 2011, no fees were billed by our current auditors HJ Associates & Consultants, LLP for tax compliance, tax advice and tax planning.

We do not use HJ Associates & Consultants, LLP for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage HJ Associates & Consultants, LLP to provide compliance outsourcing services.

The board of directors has considered the nature and amount of fees billed by HJ Associates & Consultants, LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining HJ Associates & Consultants, LLP,s independence.

PART 1V

Item 15. Exhibits, Financial Statement Schedules

(a)

List the following documents filed as part of the report

1. All financial statements schedules required to be filed by Item 8 of this Report

	1.	All financial statements schedules required to be filed by Item 8 of this Report
	2.	Those exhibits required by Item 601 of Regulation S-K (17 CFR 229.601 of this chapter) and by paragraph (b) below.

2. Those exhibits required by Item 601 of Regulation S-K (17 CFR 229.601 of this chapter) and by paragraph (b) below.

(b)

Exhibits

No.	Description
3.1	~~Amended and Restated Certificate of Incorporation (filed with the Commission as Exhibit 3.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.~~	Amended and Restated Certificate of Incorporation (filed with the Commission as Exhibit 3.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
3.2	~~By-laws (filed with the Commission as Exhibit 3.2 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.~~	By-laws (filed with the Commission as Exhibit 3.2 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
4.1	~~Vitamin Blue, Inc. 2010 Stock Incentive Plan (filed with the Commission as Exhibit 4.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.~~	Vitamin Blue, Inc. 2010 Stock Incentive Plan (filed with the Commission as Exhibit 4.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
10.1	Promissory Note dated February 16, 2005 payable to Chester Massey for the principal sum of $60,000 filed as Exhibit 10.1 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.	Promissory Note dated February 16, 2005 payable to Chester Massey for the principal sum of $60,000 filed as Exhibit 10.1 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.2	Promissory Note dated February 16, 2007 payable to Chester Massey for the principal sum of $50,000 filed as Exhibit 10.2 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.	Promissory Note dated February 16, 2007 payable to Chester Massey for the principal sum of $50,000 filed as Exhibit 10.2 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.3	Convertible Promissory Note dated March 17, 2011 payable to James Yeung for the principal sum of $30,000 filed as Exhibit 10.3 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.	Convertible Promissory Note dated March 17, 2011 payable to James Yeung for the principal sum of $30,000 filed as Exhibit 10.3 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.4	Convertible Promissory Note dated March 17, 2011 payable to Carlthon Corp. for the principal sum of $10,000 filed as Exhibit 10.4 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.	Convertible Promissory Note dated March 17, 2011 payable to Carlthon Corp. for the principal sum of $10,000 filed as Exhibit 10.4 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.5	Convertible Promissory Note dated March 17, 2011 payable to Casprey Capital Corp. for the principal sum of $20,000 filed as Exhibit 10.5 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.	Convertible Promissory Note dated March 17, 2011 payable to Casprey Capital Corp. for the principal sum of $20,000 filed as Exhibit 10.5 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
14.	Code of Ethics
14		Code of Ethics filed as Exhibit 14 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
31.1	~~Certification required under Section 302 of the Sarbanes-Oxley Act of 2002.~~	Certification required under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	~~Certification required under Section 906 of the Sarbanes-Oxley Act of 2002.~~	Certification required under Section 906 of the Sarbanes-Oxley Act of 2002.
101 INS		XBRL Instance Document*
101 SCH		XBRL Schema Document*
101 CAL		XBRL Calculation Linkbase Document*
101 DEF		XBRL Definition Linkbase Document*
101 LAB		XBRL Labels Linkbase Document*
101 PRE		XBRL Presentation Linkbase Document*

3024

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.

Vitamin Blue Inc.

By:	/s/ Frank D. Ornelas	Dated:	May 26, 2011
	Frank D. Ornelas
	President, CEO & CFO
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:	/s/Frank D. Ornelas	Dated:	May 26, 2011
	Frank D. Ornelas
	President
	Chief Executive Officer
	Chief Financial Officer
	Director

EXHIBIT INDEX

No.	Description
3.1	Amended and Restated Certificate of Incorporation (filed with the Commission as Exhibit 3.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
3.2	By-laws (filed with the Commission as Exhibit 3.2 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
4.1	Vitamin Blue, Inc. 2010 Stock Incentive Plan (filed with the Commission as Exhibit 4.1 on Form 8-A12G, File No. 000-54247, filed on January 18, 2011 and is incorporated herein by reference.
10.1	Promissory Note dated February 16, 2005 payable to Chester Massey for the principal sum of $60,000 filed as Exhibit 10.1 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.2	Promissory Note dated February 16, 2007 payable to Chester Massey for the principal sum of $50,000 filed as Exhibit 10.2 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.3	Convertible Promissory Note dated March 17, 2011 payable to James Yeung for the principal sum of $30,000 filed as Exhibit 10.3 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.4	Convertible Promissory Note dated March 17, 2011 payable to Carlthon Corp. for the principal sum of $10,000 filed as Exhibit 10.4 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
10.5	Convertible Promissory Note dated March 17, 2011 payable to Casprey Capital Corp. for the principal sum of $20,000 filed as Exhibit 10.5 to the Form 10-K for the fiscal year ended 2009 and is incorporated herein by reference.
14.	Code of Ethics
31.1	Certification required under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification required under Section 906 of the Sarbanes-Oxley Act of 2002.

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Vitamin Blue, Inc.

Costa Mesa, California

We have audited the accompanying balance sheets of Vitamin Blue, Inc. as of December 31, ~~2010~~2012 and ~~2009~~2011, and the related statements of operations, ~~shareholders~~stockholders' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our ~~audit~~audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vitamin Blue, Inc. as of December 31, ~~2010~~2012 and ~~2009~~2011, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ HJ Associates & Consultants, LLP

HJ Associates & Consultants, LLP

Salt Lake City, Utah

~~May~~April 2615, ~~2011~~2013

~~F-1~~25

VITAMIN BLUE, INC.

BALANCE SHEETS

	December 31, 2010			December 31, 2009
	December 31, 2012			December 31, 2011
ASSETS
CURRENT ASSETS
Cash	$	13,~~830~~940		$	1,~~077~~416
Accounts receivable, net		510,~~535~~614			85,~~381~~776
Inventory		1510,~~772~~527			2213,~~703~~041
TOTAL CURRENT ASSETS		23,137			32,161
Prepaid expenses, current		5,400			-
TOTAL CURRENT ASSETS		30,481			20,233
PROPERTY & EQUIPMENT, at cost
Vehicles		21,811			21,811
Machinery & equipment		12,~~020~~420			12,~~020~~420
Office equipment		1,839			1,839
		24,670			24,670
Website Development		4,900			-
Less accumulated depreciation		(24,548	)		(24,432	)
		30,970			26,070
NET PROPERTY AND EQUIPMENT		122			238
Less accumulated depreciation		(25,895	)		(24,792	)
TOTAL ASSETS	$	23,259		$	32,399
NET PROPERTY AND EQUIPMENT		5,075			1,278
LIABILITIES AND SHAREHOLDER'S DEFICIT
OTHER ASSETS
Prepaid expenses, long term		23,000			-
TOTAL ASSETS	$	58,556		$	21,511
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	56107,~~688~~972		$	4484,~~185~~842
Accrued expenses		2334,~~769~~908			1829,~~854~~458
Accrued interest, related party		12,~~134~~592			~~408~~1,861
Accrued interest, other		4580,~~440~~353			3460,~~868~~629
Subscriptions payable		33,050			33,050
Derivative liability		58,562			119,991
Derivative liability		46,133			-
Convertible promissory notes		145,296			110,000
Convertible Promissory Notes		40,000			-
Loans payable		110,000			110,000
Loan payable, related party		8,000			310,000
TOTAL CURRENT LIABILITIES		~~364~~547,~~214~~683			~~244~~526,~~365~~781
SHAREHOLDER'S DEFICIT
SHAREHOLDERS' DEFICIT
Preferred Stock, $0.0001 par value
Preferred Stock, $0.0001 par value 100,000,000 authorized preferred shares; none issued or outstanding		-			-
100,000,000 authorized preferred shares; none issued or outstanding		-			-
Common Stock, $0.0001 par value; 900,000,000 shares authorized 575,445,000 and 526,525,000 shares issued and outstanding, respectively		57,545			52,653
Common Stock, $0.0001 par value;
Additional paid in capital		215,474			97,197
900,000,000 shares authorized
Accumulated deficit		(762,146	)		(655,120	)
510,000,000 and 510,000,000 shares issued and outstanding, respectively		51,000			51,000
TOTAL SHAREHOLDERS' DEFICIT		(489,127	)		(505,270	)
Additional paid in capital		39,487			10,528
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	58,556		$	21,511
Accumulated deficit		(431,442	)		(273,494	)
TOTAL SHAREHOLDER'S DEFICIT		(340,955	)		(211,966	)
TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIT	$	23,259		$	32,399

The accompanying notes are an integral part of these financial statements.

~~F-2~~26

VITAMIN BLUE, INC.

STATEMENTS OF OPERATIONS

	Year Ended
	Years Ended
	December 31, 2010			December 31, 2009
	December 31, 2012			December 31, 2011
REVENUE	$	~~112~~129,~~947~~652		$	~~131~~104,~~817~~998
COST OF SALES		8574,~~581~~153			~~100~~73,~~478~~303
GROSS PROFIT		2755,~~366~~499			31,~~339~~695
OPERATING EXPENSES		~~122~~174,~~331~~351			~~126~~159,~~468~~568
DEPRECIATION EXPENSE		~~116~~286			~~1,369~~244
TOTAL OPERATING EXPENSES		~~122~~174,~~447~~637			~~127~~159,~~837~~812
LOSS FROM OPERATIONS BEFORE OTHER EXPENSES		(95119,~~081~~138	)		(96128,~~498~~117	)
OTHER EXPENSES
Penalties		(~~507~~473	)		(~~467~~537	)
Derivative valuation loss		(6,133	)		-
Derivative valuation gain/(loss)		92,383			(6,349	)
Interest expense		(56,227	)		(11,512	)
Gain on extinguishment of debt		15,817			-
TOTAL OTHER EXPENSES		(62,867	)		(11,979	)
Interest expense		(95,615	)		(88,675	)
LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES		(157,948	)		(108,477	)
TOTAL OTHER EXPENSES		12,112			(95,561	)
LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES		(107,026	)		(223,678	)
Provision for income taxes		-			-
NET LOSS	$	(~~157~~107,~~948~~026	)	$	(~~108~~223,~~477~~678	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.00	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED		~~510~~540,~~000~~494,~~000~~563			~~510~~523,~~000~~014,~~000~~194

The accompanying notes are an integral part of these financial statements.

~~F-3~~27

VITAMIN BLUE, INC.

~~STATEMENTS~~STATEMENT OF SHAREHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, ~~2010 AND 2009~~2012

									Additional
	Preferred Stock				Common stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			~~Deficit~~Defitcit			Total
Balance, December 31, 2008		-	$	-		510,000,000	$	51,000	$	(17,637	)	$	(165,017	)	$	(131,654	)
Contributed services		-		-		-		-		28,165			-			28,165
Net Loss for the year ended December 31, 2009		-		-		-		-		-			(108,477	)		(108,477	)
Balance, December 31, 2009		-		-		510,000,000		51,000		10,528			(273,494	)		(211,966	)
Contributed services		-		-		-		-		28,959			-			28,959
Net Loss for the year ended December 31, 2010		-		-		-		-		-			(157,948	)		(157,948	)
Balance at December 31, 2010		-	$	-		510,000,000	$	51,000	$	39,487		$	(431,442	)	$	(340,955	)
Issuance of shares of common stock for subscriptions payable		-		-		16,525,000		1,653		31,397			-			33,050
Contributed seervices		-		-		-		-		26,313			-			26,313
Net Loss for the year ended December 31, 2011		-		-		-		-		-			(223,678	)		(223,678	)
Balance at December 31, 2011		-		-		526,525,000		52,653		97,197			(655,120	)		(505,270	)
Issuance of common stock for conversion of promissory notes		-		-		28,920,000		2,892		54,948			-			57,840
Issuance of common stock for services at fair value		-		-		20,000,000		2,000		38,000			-			40,000
Contributed seervices		-		-		-		-		25,329			-			25,329
Net Loss for the year ended December 31, 2012		-		-		-		-		-			(107,026	)		(107,026	)
Balance at December 31, 2012		-	$	-		575,445,000	$	57,545	$	215,474		$	(762,146	)	$	(489,127	)

The accompanying notes are an integral part of these financial statements.

~~F-4~~28

VITAMIN BLUE, INC.

STATEMENTS OF CASH FLOWS

	Year Ended
	Years Ended
	December 31, 2010			December 31, 2009
	December 31, 2012			December 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(~~157~~107,~~948~~026	)	$	(~~108~~223,~~477~~678	)
Adjustment to reconcile net loss to net cash used in operating activities
Adjustment to reconcile net loss to net cash
Depreciation		116			1,369
used in operating activities
Bad debt expense		2,286			1,571
Depreciation		1,103			244
Contributed services		28,959			28,165
Bad debt expense		(1,679	)		(426	)
Contributed services		25,329			26,313
Common stock issued for services		(15,817	)		-
Amortization of debt discounts recognized as interest expense		69,907			67,509
Derivative valuation (gain)/loss		(92,383	)		6,349
Changes in Assets and Liabilities
(Increase) Decrease in:
Accounts receivable		~~560~~(3,159	)		~~1,022~~185
Inventory		6,931			30,227
Prepaid expenses		6,700			-
Inventory		2,514			2,731
Increase (Decrease) in:
Accounts payable		1223,~~503~~129			1828,~~436~~154
Accrued expenses		1625,~~213~~906			1421,~~712~~605
Derivative liability		46,133			-
NET CASH USED IN OPERATING ACTIVITIES		(65,476	)		(71,014	)
NET CASH USED IN OPERATING ACTIVITIES		(44,247	)		(12,975	)
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:		-			-
Purchase of warehouse fixed assets		-			(1,400	)
NET CASH USED IN INVESTING ACTIVITIES		-			(1,400	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party loans payable		~~6,000~~-			-5,000
Payments on related party loans payable		(12,000	)		-(3,000	)
Proceeds from loans payable		40,000
Proceeds from convertible promissory notes		70,000			70,000
Proceeds from subscriptions payable		-			10,300
NET CASH PROVIDED BY FINANCING ACTIVITIES		68,000			72,000
NET CASH PROVIDED IN FINANCING ACTIVITIES		45,000			10,300
NET INCREASE/(DECREASE) IN CASH		2,524			(414	)
NET INCREASE/(DECREASE) IN CASH		753			(2,675	)
CASH, BEGINNING OF PERIOD		1,416			1,830
CASH, BEGINNING OF YEAR		1,077			3,752
					-
CASH, END OF YEAR	$	1,830		$	1,077
CASH, END OF PERIOD	$	3,940		$	1,416
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	-		$	-
Taxes paid	$	-		$	-
NON-CASH FINANCING AND INVESTING ACTIVITIES:
During the year ended December 31, 2012, the Company issued 28,920,000 shares of common stock valued at $57,840 in conversion of convertible promissory notes payable. In addition, the Company issued 20,000,000 shares of common stock valued at $40,000 for website development and consulting. During the year ended September 30, 2011, the Company issued 16,525,000 shares of common in settlement of $33,050 in subscriptions payable.

The accompanying notes are an integral part of these financial statements

~~F-5~~29

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2010~~2012 AND ~~2009~~2011

1. ORGANIZATION AND LINE OF BUSINESS

Organization

Vitamin Blue, Inc. (the "Company") was incorporated in the state of Delaware on May 25, 1999. The Company, based in Costa Mesa, California, began operations on June 1, 1999 in designing and selling surfing clothing and accessories.

Line of Business

The Company designs, manufactures and distributes surf-wear and accessories.

Going Concern

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has obtained funds from its shareholder through the period ended December 31, ~~2010~~2012. Management believes this funding will continue, and has also obtained funding from new investors. Management believes the existing shareholders and the prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Vitamin Blue, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Accounts receivable

Revenue Recognition

The Company recognizes revenue ~~when~~upon ~~services are performed~~delivery, ~~and at the time of shipment of products,~~ provided that evidence of an arrangement ~~exists~~exits, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. We record revenue net of estimated product returns, which is based upon our return policy, sales agreements, management estimates of potential future product returns, which is based upon our return policy, sales agreements, management estimates of potential future products returns related to current period revenue, current economic trends, changes in customer composition and historical experience. Generally, we extend credit to our customers and do not require collateral. We perform ongoing credit evaluation of our customers and historic credit losses have been within our expectations. This is a critical policy, because we want our accounting to show only sales which is “final” with a payment arrangement.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Use of Estimates

~~F-6~~Advertising Costs

The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $0 and $250 for the years ended December 31, 2012 and 2011, respectively.

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2010~~2012 AND ~~2009~~2011

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment

Property and equipment are stated at cost, and are depreciated using the straight line and modified accelerated cost recovery system (macrs) method over 3-10 years.

Office equipment	SL	5 Years
Warehouse equipment	SL	5 Years
Vehicle	Macrs	5 Years
Website	SL	3 Years

Depreciation expense for the years ended December 31, ~~2010~~2012 and ~~2009~~2011 was $~~116~~1,103 and $1244,~~369~~ respectively, of which $817 and $0, respectively was included in Cost of Sales.

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, ~~2010~~2012 and ~~2009~~2011, the ~~amounts~~balances reported for cash, inventory, prepaid expenses, accounts payable, ~~and~~ accrued expenses, loans payable and convertible promissory notes payable approximate the fair value because of their short maturities.

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured atas fair value on a recurring basis. ASC Topic 820 defines fair value, ~~establishes~~established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 ~~establishes~~established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

·	Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

·	Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

·	Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, ~~2010~~2011:

Total

(Level 1)

(Level 2)

(Level 3)

Assets

Total assets measured at fair value

Derivative Liability

4658,~~133~~562

Total liabilities measured at fair value

4658,~~133~~562

Inventory

Inventories are stated at the lower of cost (first-in, first-out basis) or market. As of December 31, ~~2010~~2012 and ~~2009~~2011, inventory consisted of the following items:

	December31,
	2010		2009
	2012		2011
Raw materials	$	89,~~077~~156	$	9,~~485~~707
Work in process		-		-
Finished goods		71,~~380~~196		123,~~468~~159
Promotional items		~~315~~175		~~750~~175
Total	$	1510,~~772~~527	$	2213,~~703~~041

~~Loss per Share Calculations~~31

Loss per Share dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the years ended December 31, 2010 and 2009, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. A reconciliation of the numerators and denominators used in the computation of loss per share is as follows:

	For the year ended
	December 31,
	2010			2009
(Loss) to common shareholders (Numerator)	$	(157,948	)	$	(108,477	)
Basic and diluted weighted average number of common shares outstanding (Denominator)		510,000,000			510,000,000

Income Taxes

The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. The measurement of deferred tax assets and liabilities is based on provisions of applicable tax law. The measurement of deferred tax

F-7

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2010~~2012 AND ~~2009~~2011

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

~~Income~~Loss ~~Taxes~~per ~~(Continued)~~Share Calculations

~~assets~~ASC isTOPIC ~~reduced~~260, ifLoss ~~necessary,~~per Share dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by adividing ~~valuation~~income ~~allowance~~available ~~based~~to oncommon shareholders by the ~~amount~~weighted-average number of ~~tax~~common ~~benefits~~shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The issuance of common shares for the convertible promissory notes could potentially dilute basic earnings per share. However, ~~based~~the on550,834 ~~available~~and ~~evidence~~98,468,450 isshares of common stock into which the convertible as of December 31, 2012 and 2011, respectively have not ~~expected~~been included in the computation since they would have also been anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the years ended December 31, 2012 and 2011, as the inclusion of any potential shares would have had an anti-dilutive effect due to bethe ~~realized~~Company generating a loss. A reconciliation of the numerators and denominators used in the computation of loss per share is as follows:

	For the year ended
	December 31,
	2012			2011

(Loss) to common shareholders (Numerator)	$	(107,026	)	$	(223,678	)

Basic and diluted weighted average number of common shares outstanding (Denominator)		540,494,563			523,014,194
Basic and diluted loss per share	$	(0.00	)	$	(0.00	)

Income Taxes

Concentrations of Business and Credit Risk

The Company operates in a single industry segment. The Company markets its services to companies and individuals in many industries and geographic locations. The Company’s operations are subject to intense competition in designing and selling surfing clothing and accessories.

Accounts receivable represent financial instruments with potential credit risk. The Company typically offers its customers credit terms. The Company makes periodic evaluations of the credit worthiness of its enterprise customers and other than obtaining deposits pursuant to its policies, it generally does not require collateral. In the event of nonpayment, the Company has the ability to terminate services.

At December 31, ~~2010~~2012, accounts receivable from three customers represented approximately 2354%, ~~17% and 13%, respectively,~~ of total accounts receivable. At December 31, ~~2009~~2011, accounts receivable from these same customers represented approximately 1943%, ~~16% and 13%, respectively,~~ of total accounts receivable. There were no other customers who represented ~~greater than~~ 10% of total accounts receivable at December 31, ~~2010~~2012 and ~~2009~~2011.

For the year ended December 31, ~~2010~~2012, the Company had two customers who represented approximately 1422% ~~and 11%~~, ~~respectively,~~ of total revenues. For the year ended December 31, ~~2009~~2011, the Company had two customers who represented approximately 1230% ~~and 11%~~, ~~respectively,~~ of total revenues. There were no other customers who represented greater than 10% of total revenues for the years ended December 31, ~~2010~~2012 and ~~2009~~2011.

Recently Issued Accounting Pronouncements

Management reviewed accounting pronouncements issued during the year ended December 31, ~~2010~~2012, and adopted the following pronouncements:

The Company adopted ASC 825 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This statement establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. The adoption of this pronouncement did not have a material effect on the financial statements of the Company.

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Pronouncements

The Company adopted ASC 815 "Accounting for Certain Hybrid Financial Instruments". This statement narrows the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principal cash flows. It also allows qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that itself is a derivative financial instrument. The adoption of this pronouncement did not have a material effect on the financial statements of the Company.

3.	CAPITAL STOCK

During the year ended December 31, ~~2010~~2012, the Company issued no28,920,000 shares of common stock. Asat ~~of July, 2009, the founder of the Company approved~~ a ~~one~~price ~~hundred two thousand-for-one stock split~~ of ~~the Company’s issued and outstanding common stock~~$0.0012 Inper ~~accordance~~share ~~with~~for ~~SAB TOPIC 4C,~~ the ~~Company~~conversion ~~has reported the effects~~ of ~~this~~$34,704 ~~stock split retrospectively to the earliest period presented~~ in ~~these~~convertible ~~financial~~promissory ~~statements~~notes. AsThe ofCompany ~~December~~also ~~31,~~issued ~~2010 there were 510~~20,000,000 ~~shares~~share of common stock ~~issued~~at ~~and~~a ~~outstanding.~~price ~~During~~of ~~the year ended December 31, 2009, the Company received~~ $~~10,300~~0.002 ~~from investors~~ for ~~subscriptions~~current ~~payable~~year toand ~~purchase~~on-going ~~5,150,000~~future ~~shares~~services ofthrough ~~common~~December ~~stock~~31, ~~at $0~~2014.~~002 per share.~~

During the year ended December 31, 2011, the Company issued 16,525,000 shares of common stock at a price of $0.002 per share for subscription payables in the amount of $33,050.

4.	RENTAL LEASE

The Company subleases office space on a month-to-month basis. The rent paid for the years ended December 31, ~~2010~~2012 and ~~2009~~2011 was $6,786 and $6,786, respectively.

F-8

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2010 AND 2009

5.	INCOME TAXES

The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006.

Deferred income taxes have been provided by temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, we provide valuation allowances against the deferred tax assets for amounts when the realization is uncertain.

Included in the balance at December 31, ~~2010~~2012, are no tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses. During the years ended December 31, ~~2010~~2012 and ~~2009~~2011, the Company recognized $~~507~~473 and $~~467~~537 in penalties related to unpaid payroll taxes, and $~~998~~1,554 and $~~778~~1,280, respectively, in interest related to these unpaid taxes. These are not considered to be uncertain tax positions because these amounts have not been deducted for tax purposes.

6.	LOANS PAYABLE

~~During~~The ~~the year ended December 31, 2010, the~~ Company received $0 in new loan proceeds for the year ended December 31, 2012. As of December 31, ~~2010~~2012, the principal balance of the Company’s outstanding loans payable ~~was~~were $110,000, which bears interest at the rate of 8% per annum, and are due upon demand. The balance due for the years ended December 31, 2012and 2011, including all accrued and unpaid interest was $171,267 and $162,467, respectively. The loans do not contain any type of conversion feature. The Company intends to retire these loans at a future date through the issuance of shares of common stock at a rate to be agreed upon by both the lenders and the Company at the time the retirement is to be completed. There was no interest paid during the years ended December 31, 2012and 2011, respectively.

7.	RELATED PARTY TRANSACTIONS

During the year ended December 31, ~~2010~~2012, ~~Veronica Ornelas~~ the Company’s ~~Vice~~paid ~~President and Secretary, loaned the Company~~ $62,000 ~~for~~towards ~~operating~~the ~~expenses. The~~outstanding ~~Company~~debt ~~also~~owed ~~repaid~~to $1Veronica Ornelas,~~000~~ inthe ~~previous~~Companies ~~loans~~Vice ~~received~~President ~~from~~and ~~this related party during the year~~Secretary. During the year ended December 31, ~~2009~~2011, Ms. Ornelas loaned the Company ~~received~~ $32,000 infor ~~loans~~operating ~~from this related party~~expenses. As of December 31, ~~2010~~2012 and ~~2009~~2011, the balance of these related party loans payable was $8,000 and $310,000 respectively. The Company has imputed interest on these loans at the rate of 9% per annum. As of December 31, ~~2010~~2012 and ~~2009~~2011, the balance of accrued interest payable to this related party was $12,~~134~~592 and $~~408~~1,861, respectively.

During the years ended December 31, ~~2010~~2012 and ~~2009~~2011, Frank Ornelas, the Company’s Chief Executive ~~Officer~~Officers’ annual salary was $50,000. ~~contributed~~During ~~services~~the toyears ended December 31, 2012 and 2011, the Company ~~valued~~paid atfor various personal expenses on behalf of the CEO totaling $2824,~~959~~671 and $23,687, respectively. The unpaid portion of the CEO’s salary of $25,329 and $2826,~~165~~313, respectively, for the years ended December 31, 2012 and 2011 has been reflected as capital contributed in accordance with SAB 55.

~~8. DEFERRED TAX BENEFIT~~33

At December 31, 2010, the Company had net operating loss carry-forwards of approximately $266,000 which expire at dates that have not been determined. No tax benefit has been reported in the December 31, 2010 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2010 and 2009 due to the following:

F-9

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2010~~2012 AND ~~2009~~2011

8. DEFERRED TAX BENEFIT ~~(Continued)~~

	2010			2009
Book loss	$	(63,179	)	$	(43,391	)
State income taxes		-			(320	)
Meals and entertainment		531			540
Depreciation		-			(8	)
Allowance for doubtful accounts		-			628
Accrued payroll taxes		-			6,472
Contributed services		11,584			11,266
Penalties		203			295
Derivative valuation		18,453			-
Valuation Allowance		32,408			24,518
Income tax expense	$	-		$	-

At December 31, 2012, the Company had net operating loss carry-forwards of approximately $491,000 which begin to expire in the year 2026. No tax benefit has been reported in the December 31, 2012 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

~~Deferred~~The ~~taxes~~income ~~are provided on a liability method whereby deferred~~ tax ~~assets~~provision ~~are~~differs ~~recognized~~from ~~for deductible differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are~~ the ~~difference~~amount ~~between the reported amounts~~ of ~~assets~~income ~~and liabilities and their~~ tax ~~bases.~~determined ~~Deferred tax assets are reduced~~ by aapplying ~~valuation allowance when, in~~ the ~~opinion~~U.S. offederal ~~management,~~income ~~it is more likely than not that some portion or all of the deferred~~ tax ~~assets~~rate ~~will~~to ~~not~~pretax beincome ~~realized.~~from ~~Deferred~~continuing ~~tax~~operations ~~assets and liabilities are adjusted~~ for the ~~effects~~years ofended ~~changes~~December in31, ~~tax~~2012 ~~laws~~ and ~~rates~~2011 ondue to the ~~date of enactment.~~following:

	2012			2011

Book loss	$	(42,800	)	$	(89,500	)
Meals and entertainment		400			400
Contributed services		10,100			10,500
Depreciation		(140	)		(40	)
Allowance for doubtful accounts		(700	)		(200	)
Accrued payroll taxes		4,500			2,100
Related party accrual		300			300
Penalties		200			200
Derivative valuation		(9,000	)		29,500
Gain on extinguishment of debt		(6,300	)		-

Valuation Allowance		43,440			46,740

Income tax expense	$	-		$	-

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax liabilities consist of the following components as of December 31, ~~2010~~2012 and ~~2009~~2011:

	2010			2009
	2012			2011
Deferred tax assets:
NOL carryover	$	~~106~~196,~~250~~400		$	76152,~~823~~900
Allowance for doubtful accounts		~~1,543~~700			~~628~~1,400
Related party accruals		~~454~~1,000			~~163~~700
Accrued payroll taxes		812,~~235~~700			610,~~472~~300
Deferred tax liabilities:
Deferred tax liabilites:
Depreciation		(1180	)		(1440	)
Less Valuation Allowance		(~~116~~210,~~481~~620	)		(84165,~~072~~260	)
Net deferred tax asset	$	-		$	-

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years.34

F-10

VITAMIN BLUE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2010~~2012 AND ~~2009~~2011

8. DEFERRED TAX BENEFIT (Continued)

9. CONVERTIBLE PROMISSORY NOTES

~~During~~Through ~~the year ended~~ December 31, ~~2010~~2012, the Company has received ~~four~~ loans in the form of convertible promissory notes from ~~one~~three ~~individual~~individuals ~~and one corporation~~ in ~~the~~varying amounts ~~of $10,000 each~~ for a total proceeds of $40180,000. The loans bear interest at 8% per annum on the unpaid balance until paid or until default~~, at which time both principal and interest are payable, or the loan can be converted into shares of common stock~~. The convertible promissory notes may be prepaid in full or in part at any time without penalty or premium. Partial prepayments shall be applied to installments due in reverse order of their maturity. Under ASC TOPIC 470, the Company recorded a beneficial conversion cost associated with the convertibility feature of the security that was equal to the value of any discount to market available at the time of conversion. This beneficial conversion cost is recorded at the time the convertible security is first issued and is amortized over the stated terms. An interest expense of $40,000, representing the value of the conversion feature in accordance with ASC TOPIC 470 was recorded during the year ended December 31, 2010.

The ~~holders~~Holders of the ~~convertible promissory~~ notes have the right to convert at any time amounts outstanding under the ~~convertible promissory~~ notes into shares of common stock at a conversion price per share equal to sixty ~~percent~~ (60%) of the average bid and ask price of the common stock for the previous five (5) trading days or if the common stock has not traded in the last thirty (30) business days, then sixty percent (60%) of the price that the Maker’s common stock was last issued to a non-affiliated investor. The ~~holder~~holders may elect payment of the principal of this note, before any repayment of interest. During the year ended December 31, 2012 the holders converted a total of $34,704 in outstanding notes into 28,920,000 shares of the Company’s common stock valued at $57,840. This conversion also resulted in the extinguishment of derivative liabilities valued at $38,953 immediately prior to the conversion. These extinguishments resulted in a gain on extinguishment of debt totaling $15,817. As of December 31, 2012 the total outstanding principal balance of these convertible promissory notes was $145,296.

InASC ~~accordance~~Topic ~~with~~815 ~~accounting~~provides ~~standards~~guidance applicable to the convertible promissory notes issued by the Company in instances where the number into which a note can be converted is not fixed. For example, when a note converts at a discount to market based on the stock price on the date of conversion~~. In such instances~~, ~~accounting~~ASC ~~standards~~Topic 815 requires that the embedded conversion option of the convertible promissory notes be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives under accounting standards, the Company recorded a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company’s stock, and a discount representing the imputed interest associated with the ~~beneficial~~embedded ~~conversion feature~~derivative. The discount is amortized over the life of the convertible promissory notes, which resulted in the recognition of $69,907 in interest expense for the year ended December 31, 2012, and the derivative liability is adjusted periodically according to stock price fluctuations. At the time of conversion, any remaining derivative liability will be charged to additional paid-in capital. For purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows: ~~The value of the liability at December 31, 2010 was $46,133.~~

Stock price on the valuation date		$0.0020
Conversion price for the loans		$0.0012
Dividend yield		0.00%
Years to Maturity		1
Rick free rate		0.29%
Expected volatility		165.77%

The value of the derivative liability at December 31, 2012 and 2011, was $58,562 and $119,991, respectively.

10. SUBSEQUENT EVENTS

Management has evaluated subsequent events ~~pursuant~~according to the requirements of ASC ~~Topic~~TOPIC 855 and ~~identified~~has reported the following ~~subsequent event for disclosure~~:

OnDuring ~~February~~the ~~28,~~first ~~2011~~quarter of 2013, the Company ~~issued~~received 16convertible loans in the amount of $25,~~525,~~000 each from an investor for operating expenses. The loans bear interest at 8% per annum, and the principal and interest are convertible into shares of common stock within one year from the date the funds were received. The shares of common stock are convertible at a rate of 60% of the average bid and asking price of the common stock for ~~subscription~~the ~~payables~~previous five (5) trading days or if in the ~~amount~~common ofstock ~~$33~~has not traded in the last thirty (30) business days,~~050~~ then sixty percent (60%) of the price that the Company’s common stock was last issued to a non-affiliated investor.

~~On, April 12, 2011, the Company received loans in the amount of $10,000 from an individual lender for operating expenses. The loans bears interest at 8% per annum~~35

~~As of January 12, 2011 and March 1, 2011, the Company received a loan in the amount of $10,000 each from a corporate lender for operating expenses. The loan bears interest at 8% per annum~~ SIGNATURES

~~F-11~~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.

	Vitamin Blue, Inc.

	By: /s/ Frank D. Ornelas
	Frank D. Ornelas
	President, C.E.O. and C.F.O
	Principal Financial Officer
	Principal Accounting Officer
	Dated: April 15, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


		April 15, 2013
/s/ Frank D. Ornelas	President, C.E.O., C.F.O. and director
Frank D. Ornelas	Principal Financial Officer
	Principal Accounting Officer

Filing Compare · VITAMIN BLUE, INC.