~~FORM~~Securities ~~10-Q~~and Exchange Commission

~~SECURITIES~~ Washington, ~~AND EXCHANGE COMMISSION~~D.C.

~~WASHINGTON,~~ FORM ~~D.C. 20549~~10Q

~~[X]~~ (Mark One)

x QUARTERLY REPORT ~~PURSUANT~~UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2010

[o TRANSITION ]REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~TRANSITION~~For ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for~~ the transition period from ~~__________________~~ to ~~__________________~~

~~Commission File Number 0~~000-52907

~~VITAMINSPICE~~ (Commission file number)

~~(Exact Name of registrant as specified in its charter)~~VitaminSpice

~~Wyoming~~ (Exact name of small business issuer as specified in its charter)

20-5776355

Wyoming	20-5776355
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

~~(State~~996 orOld ~~other~~Eagle ~~Jurisdiction~~School ofRoad, Suite 1102

~~I.R.S.~~Wayne, ~~Employer Identi-~~Pennsylvania 19087

~~Incorporation~~ (Address orof ~~Organization~~principal executive offices)

~~fication No.)~~_____________________________________________

~~996~~(Former ~~Old~~Address ~~Eagle~~of ~~School~~principal ~~Road,~~executive ~~Suite~~offices) ~~1102,~~(Zip ~~Wayne, Pennsylvania 19087~~Code)

~~(Address~~484 of367 ~~Principal Executive Offices)(Zip Code)~~7401

(~~610)~~Registrant's ~~994-1657~~telephone number, including area code)

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

~~Indicate~~State ~~by check mark whether~~ the ~~registrant~~number ~~(i)~~of ~~has~~shares ~~filed~~outstanding ~~all~~of ~~reports~~each ~~required to be filed by Section 13, or 15(d)~~ of the ~~Securities~~issuer's ~~Exchange~~classes ~~Act~~ of ~~1934~~common ~~during~~equity, ~~the~~as ~~preceding 12 months (~~of ~~for such shorter period that~~ the ~~Registrant~~latest ~~was~~practicable ~~required to file such reports) and (ii) has been subject to such filing requirements for the past 90 days~~date. ~~Yes X No .~~

~~Indicate~~139,564,664 byshares ~~check~~of ~~mark~~Common ~~whether~~Stock, ~~the~~no ~~registrant~~par ~~has~~value, ~~submitted~~were ~~electronically~~issued and ~~posted on its corporate Web site~~outstanding, ifas ~~any, every Interactive Data File required to be submitted and posted pursuant to Rule 405~~ of ~~Regulation~~August ~~S-T~~31, ~~(§ 232~~2010.~~405~~ Of ~~of this chapter) during the preceding 12 months (or for such shorter period~~ that ~~the~~amount, ~~registrant~~125,388,629 ~~was~~are ~~required~~subject to ~~submit~~restriction and ~~post~~14,176,035 ~~such~~are ~~files). Yes x~~free ~~No ¨~~ trading.

~~Indicate~~Transitional bySmall ~~check~~Business ~~mark~~Disclosure ~~whether~~Format the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (~~Check~~check one): Yes o No x

~~Large~~Indicate ~~accelerated~~if ~~filer~~the oregistrant ~~Accelerated~~is ~~filer~~a oshell ~~Non-accelerated filer o Smaller reporting~~ company þ (Doas ~~not~~defined ~~check~~in ifRule a12b-2 ~~smaller~~of ~~reporting~~the ~~company~~Exchange Act). Yes o No x

~~Indicate~~PART byI. ~~check~~FINANCIAL ~~mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.~~INFORMATION

~~Yes No __X____~~ Item 1. Financial Statements

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Common Stock, no par value

127,079,752

Title of Class

Number of Shares outstanding at March 31, 2010

Page

Part I.

Financial Information

Item 1.

Condensed Consolidated Financial Statements and Notes to

Consolidated financial statements

(a)

Condensed Consolidated Balance Sheets as of March 31, 2010 and

December 31, 2009

(b)

Condensed Consolidated Statements of Operations for the Three

Months Ended march 31, 2010 and 2009

(c)

Condensed Consolidated Statements of Cash Flows for the Three

Months Ended March 31, 2010 and 2009

(d)

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and

Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4T.

Controls and Procedures

Part II.

Other Information

Item 1.

Legal Proceedings

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

(Removed and Reserved)

Item 5.

Other Information

Item 6.

Exhibits

Signatures

CERTIFICATIONS

Exhibit 31 - Management certification

Exhibit 32 - Sarbanes-Oxley Act

PART I FINANCIAL INFORMATION

VITAMINSPICE
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET

	June 30,			December 31,
	2010			2009
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	-		$	19,423
Accounts receivable-trade		491			-
Prepaid Interest		19,031			-
Due from officer		14,181			14,181
Inventory		10,790			10,790
TOTAL CURRENT ASSETS		44,493			44,394
TOTAL ASSETS	$	44,493		$	44,394

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accrued interest	$	655		$	-
Shareholder advances		-			-
Accounts payable and Accrued liabilities		65,812			35,267
Derivative liability-options and warrants		10,415,991			9,169,433
Convertible notes payable-related party		48,000			48,000
Notes payable		133,000			-
Accrued interest-related party		3,074			1,116
TOTAL CURRENT LIABILITIES	$	10,666,532		$	9,253,816
TOTAL LIABILITIES		10,666,532			9,253,816
STOCKHOLDERS' DEFICIT
Preferred stock, no par value, unlimited number of
shares authorized; no shares issued and outstanding		-			-
Common stock, no par value, unlimited number of
shares authorized; 127,079,752 and 139,564,664
shares issued and outstanding		1,585,255			938,985
Accumulated deficit		(12,207,294	)		(10,148,407	)

TOTAL STOCKHOLDERS DEFICIT		(10,622,039	)		(9,209,422	)

TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT	$	44,493		$	44,394

General

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of consolidated financial position, results of operations, cash flow, and stockholders' equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2009. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the quarter ended March 31, 2010 are not necessarily indicative of the results that can be expected for the year ending December 31, 2010.

VITAMINSPICE

VITAMINSPICE
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS

													FROM INCEPTION
	Three Months Ended						Six Months Ended						(Februeary 25,
	June 30,						June 30,						2008 -
	2010			2009			2010			2009			June 30, 2010

REVENUES	$	-		$	-		$	901		$	-		$	901

COST OF GOODS SOLD		-			1,641			410			2,161			410

GROSS PROFIT		-			(1,641	)		491			(2,161	)		(410	)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Stock options and warrants expense		623,279			-			1,246,558			25,605			10,415,991
General and administrative		26,793			1,323			423,552			3,887			801,537
Compensation expense		118,152			205			380,212			605			977,038
Research and development		-			903			-			6,882			3,045

TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		768,224			2,431			2,050,322			36,979			12,197,611

NET OPERATING LOSS		(768,224	)		(4,072	)		(2,049,831	)		(39,140	)		(12,198,021	)

OTHER INCOME (EXPENSE)
Interest expense								9,056						3,568
Interest expense-related party														2,076
Total other income (expense)		-			-			9,056			-			5,644

NET LOSS	$	(768,224	)	$	(4,072	)	$	(2,058,887	)	$	(39,140	)	$	(12,203,665	)

LOSS PER COMMON SHARE-BASIC	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.00	)

BASIC WEIGHTED AVERAGE SHARES OUTSTANDING		131,241,389			125,434,846			128,338,118			125,434,846

(A Development Stage Company)

Condensed Balance Sheets

ASSETS

Unaudited

Audited

As of

March 31,

December 31,

2010

2009

Current Assets

Cash and cash equivalents

35,014

19,423

Accounts receivable - trade

491

Prepaid Interest

23,437

Receivable from Officer

14,181

Inventory

10,790

Total Current Assets

83,913

44,394

Total Assets

83,913

44,394

LIABILITIES AND STOCKHOLDERS DEFICIT

Current Liabilities

Accrued Interest

705

Shareholder advances

4,000

Accounts payable and accrued liabilities

65,812

35,267

Derivative Liability - options and warrants

9,792,712

9,169,433

Convertible notes payable - related party

48,000

Notes payable

85,000

Accrued interest - related party

2,076

1,116

Total Current Liabilities

9,969,335

9,253,816

Total Liabilities

9,969,335

9,253,816

Stockholders' deficit (Note B)

Preferred stock, no par value, unlimited number of

shares authorized; no shares issued and outstanding

Common stock, no par value, unlimited number of

shares authorized; 127,079,752 and 124,925,099

shares issued and outstanding

1,520,148

938,985

Accumulated Deficit

(11,434,540)

(10,148,407)

Total Stockholders' Deficit

(9,914,392)

(9,209,422)

Total Liabilities and stockholders deficit

83,913

44,394

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

VITAMINSPICE

VITAMINSPICE
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)

							FROM INCEPTION
	Six Months Ended,						(Februeary 25,
	June 30,						2008 -
	2010			2009			June 30, 2010

Cash Flows from Operating Activities:
Net loss	$	(2,058,887	)	$	(39,140	)	$	(12,203,665	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Due from officer								14,181
Inventory								10,790

Changes in assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities		30,545			39,140			65,812
(Increase) decrease in accounts receivable		(491	)					(491	)
(Increase) in prepaid interest		(19,031	)					(19,031	)
Increase in accrued interest		3,613						3,613
(Increase) in derivative liability		1,246,558						10,363,537
Net cash used by operating activities		(797,693	)		39,140			(1,765,254	)

Cash Flows from Financing Activities:
Issuance of Stock for cash		75,000						506,980
Stock issued for services		540,020						1,047,720
Issuance of Stock for interest and prepaid interest		26,250						26,250
Proceeds from notes payable		133,000						133,000
Proceeds from shareholder advance		4,000						4,000
Proceeds from convertible note payable – related party								48,000
Issuance of shares - reverse acquisition								(696	)
Net cash provided by financing activities		778,270						1,765,254

Net increase (decrease) in cash		(19,423	)		-			-
Cash, at beginning of period		19,423			-			-
Cash, at end of period		-			-			-

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest					-
Income taxes					-

Supplemental Schedule of Non-cash Investing and Financing Activities:
Issuance of stock for debt conversion					1,696,411

(A Development Stage Company)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

FROM INCEPTION

FOR THE THREE

ON FEBRUARY 25,

MONTHS ENDED

2008 THROUGH

MARCH 31,

MARCH 31

2010

2009

2010

REVENUES

901

Cost of Goods sold

410

Gross Margin

491

EXPENSES

Stock options and warrants expense

623,279

9,792,712

General and administrative

396,759

25,147

774,744

Compensation expense

262,060

4,582

858,886

Research and development

3,045

Total operating expenses

1,282,098

29,729

11,429,387

NET OPERATING LOSS

(1,281,606)

(29,729)

(11,428,896)

OTHER INCOME (EXPENSE)

Interest expense

(3,508)

3,568

Interest expense – related party

(960)

(2,076)

Total other income (expense)

(4,528)

(5,644)

NET LOSS

(1,286,134)

(29,729)

(11,434,540)

LOSS PER COMMON

SHARE - BASIC

(.01)

(.00)

Basic weighted average

shares outstanding

125,434,846

73,733,658

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

VITAMINSPICE

(A Development Stage Company)

~~CONDENSED~~NOTES ~~STATEMENTS~~TO OFUNAUDITED ~~CASH FLOWS~~CONDENSED

~~(Unaudited)~~FINANCIAL STATEMENTS

~~FOR~~June ~~THE~~30, ~~THREE~~2010

~~FOR~~NOTE ~~THE~~1 ~~THREE~~– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FROM INCEPTION

MONTHS ENDED

(February 25, 2008)

March 31,

MARCH 31,

through

2010

2009

Cash Flows from Operating Activities:

Net loss

(1,286,134)

$ (29,729)

(11,434,540)

Adjustments to reconcile net loss to net cash

used by operating activities:

Due from officer

3,670

14,181

Inventory

(495)

10,790

Changes in assets and liabilities:

Increase (decrease) in accounts payable and accrued liabilities

30,545

65,812

(Increase) decrease in accounts receivable

(491)

(Increase) in prepaid interest

(23,437)

Increase in accrued interest

705

Increase in accrued interest – related party

960

2,076

(Increase) in Derivative Liabilities

623,279

9,792,712

Net cash provided (used) by operating activities

(654,573)

(26,554)

(1,622,134)

Cash flows from investing activities:

Net cash used by investing activities

Cash Flows from Financing Activities:

Issuance of Stock for cash

75,000

147,000

506,980

Stock issued for services

479,913

987,613

Issuance of Stock for interest and prepaid interest

26,250

Proceeds from notes payable

85,000

Proceeds from shareholder advance

4,000

Proceeds from convertible note payable – related party

48,000

Issuance of shares - reverse acquisition

(696)

Net cash provided by financing activities

670,164

147,000

1,657,148

Net increase (decrease) in cash

15,591

120,446

35,014

Cash, at beginning of period

19,423

Cash, at end of period

35,014

120,446

35,014

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Interest

Income taxes

Supplemental Schedule of Non-cash Investing and Financing Activities:

Issuance of stock for technology right

Offering costs

1,099

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

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

March 31, 2010

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Business

~~Vitamin~~The ~~Spice~~Company was incorporated in Wyoming on October 18, 2006 inunder ~~Wyoming~~the ~~and~~name ~~acquired~~Qualsec. VitaminSpice LLC (“VitaminSpice”) was organized in April 25, 2008 as a Delaware limited liability company. All the operations are carried out through VitaminSpice ~~LLC,~~ which was acquired in a reverse acquisition on September 28, 2009. The acquisition is accounted for as a reverse acquisition in which VitaminSpice is deemed to be the accounting acquiror. The name of the Company was changed to VitaminSpice by the filing of a Certificate of Name Change filed with the Wyoming Secretary of State on October 26, 2009. The Company, combines proprietary blends of premium herbs and spices with essential ~~vitamin~~vitamins, minerals, nutrients, and antioxidants. ~~Our~~The Company’s formulations contain from 17% ~~and~~to 84% of the Recommended Daily Intake (RDI) of certain essential vitamins, minerals, nutrients, and antioxidants with no bitterness or aftertaste,. The ~~the~~ Company offers premium savory spices that enliven the palate and invigorate health through a proprietary micro-encapsulation process.

Financial Reporting

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses are recognized as they are incurred.

Use of Estimates

The Company’s significant estimates include reserves for slow moving inventory, allowance for doubtful accounts and accrued vacation pay. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While the Company believes that such estimates are fair when considered in conjunction with the financial statements taken as a whole, the actual amounts of such estimates, when known, will vary from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

reporting period. While the Company believes that such estimates are fair when considered in conjunction with the financial statements taken as a whole, the actual amounts of such estimates, when known, will vary from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

Cash and Cash Equivalents

Cash and cash equivalents include all interest-bearing deposits or investments with original maturities of three months or less.

Inventory

Inventory is valued at cost, using the first-in, first-out (FIFO) method of accounting. All inventory at the periods presented consists of raw materials.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances at one financial institution, of which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures up to $100,000 on account balances. The company has not experienced any losses in such accounts.

VITAMIN SPICE AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

Fair value of financial instruments

The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts ~~the Company would realize in a current market exchange or from future earnings or cash flows.~~

The Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.7

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

the Company would realize in a current market exchange or from future earnings or cash flows.

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

·● Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; ·● Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable or the asset or liability other than quoted prices, either directly or indirectly including inputs in markets that are not considered to be active; ·● Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

Income taxes

The Company accounts for income taxes using SFAS No. 109, "Accounting for Income Taxes," which requires recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company determine whether the benefits of the Company’s tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. The provisions of FIN 48 also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure. The Company did not have any unrecognized tax benefits and there was no effect on the financial condition or results of operations as a result of implementing FIN 48. The Company does not have any interest and penalties in the statement of operations for the three months ended March 31, 2010 and 2009.

7VITAMINSPICE

~~VITAMIN~~(A ~~SPICE~~Development ~~AND~~Stage ~~SUBSIDIARY~~Company)

NOTES TO ~~CONSOLIDATED~~UNAUDITED ~~FINANCIAL STATEMENTS~~CONDENSED

~~MARCH~~FINANCIAL ~~31, 2010~~STATEMENTS

June 30, 2010

In May 2007, the FASB issued FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (“the FSP”). The FSP provides guidance about how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under the FSP, a tax position could be effectively settled on completion of examination by a taxing authority if the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

Accounts Receivable

The Company extends credit to its customers in the normal course of business. Further, the Company regularly reviews outstanding receivables, and provides estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company also performs ongoing credit evaluations of customers’ financial condition. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations.

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company also performs ongoing credit evaluations of customers’ financial condition. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Machinery and equipment are depreciated over 10 years. Furniture and fixtures are depreciated over 10 years. Accelerated methods of depreciation are generally used for income tax purposes. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. The Company performs ongoing evaluations of the estimated useful lives of the property and equipment for depreciation purposes. The estimated useful lives are determined and continually evaluated based on the period over which services are expected to be rendered by the asset. Maintenance and repairs are expensed as incurred.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

Other Intangible Assets

Acquired intangible assets are separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the Company’s intent to do so.

VITAMIN SPICE AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

Revenue Recognition

The Company recognizes revenue in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” (“SAB No. 104”). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The Company also follows the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables ("EITF Issue No. 00-21"), in arrangements with multiple deliverables.

The Company recognizes revenues when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.

The Company receives revenue for services and maintenance agreements. Milestone payments are recognized as revenue upon achievement of contract-specified events and when there are no remaining performance obligations. Revenues from monthly video streaming agreements, as well as equipment maintenance, are recorded when earned. Operating equipment lease revenues are recorded as they become due from customers. Revenues from equipment sales and installation are recognized when equipment delivery and installation have occurred, and when collectability is reasonably assured.

~~remaining~~In ~~performance~~certain ~~obligations.~~cases, ~~Revenues~~the ~~from~~Company ~~monthly~~enters ~~video~~into ~~streaming~~ agreements, aswith ~~well~~customers asthat ~~equipment~~involve ~~maintenance,~~the ~~are~~delivery ~~recorded~~of ~~when~~more ~~earned.~~than ~~Operating~~one ~~equipment~~product ~~lease~~or ~~revenues~~service. Revenue ~~are~~for ~~recorded~~such asarrangements ~~they~~is ~~become~~allocated ~~due~~to ~~from~~the ~~customers. Revenues~~separate ~~from~~units ~~equipment~~of ~~sales~~accounting ~~and~~using ~~installation~~the ~~are~~relative ~~recognized~~fair ~~when~~value ~~equipment~~method ~~delivery~~in ~~and~~accordance ~~installation~~with ~~have~~EITF ~~occurred,~~Issue ~~and~~No. ~~when~~00-21. ~~collectability~~The delivered item(s) is ~~reasonably~~considered ~~assured.~~a

In certain cases, the Company enters into agreements with customers that involve the delivery of more than one product or service. Revenue for such arrangements is allocated to the separate units of accounting using the relative fair value method in accordance with EITF Issue No. 00-21. The delivered item(s) is considered a separate unit of accounting if all of the following criteria are met: (1) the delivered item(s) has value to the customer on a standalone basis, (2) there is objective and reliable evidence of the fair value of the undelivered item(s) and (3) if the arrangement includes a general right of return, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. If all the conditions above are met and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on their relative fair values.11

Explicit return rights are not offered to customers; however, the Company may accept returns in limited circumstances. There have been no returns through March 31, 2010. Therefore, a sales return allowance has not been established since management believes returns will be insignificant.VITAMINSPICE

~~Advertising~~(A ~~Expense~~Development Stage Company)

~~The~~NOTES ~~Company~~TO ~~follows~~UNAUDITED the provisions of Statement of Position (SOP) 93-7, “Reporting on Advertising Costs,” in accounting for advertising costs. Advertising costs are charged to expense as incurred and are included ($1,695 for 2010 and $4,035 for 2009) in general and administrative expenses in the accompanying financial statements.CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

separate unit of accounting if all of the following criteria are met: (1) the delivered item(s) has value to the customer on a standalone basis, (2) there is objective and reliable evidence of the fair value of the undelivered item(s) and (3) if the arrangement includes a general right of return, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. If all the conditions above are met and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on their relative fair values.

Explicit return rights are not offered to customers; however, the Company may accept returns in limited circumstances. There have been no returns through June 30, 2010. Therefore, a sales return allowance has not been established since management believes returns will be insignificant.

Earnings (loss) per share

Earnings (loss) per share is computed in accordance with SFAS No. 128, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period.

VITAMIN SPICE AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

Stock-based compensation

We use the Black-Scholes option pricing model as our method of valuation for share-based awards. Share-based compensation expense is based on the value of the portion of the stock-based award that will vest during the period, adjusted for expected forfeitures. Our determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, expected stock price volatility over the term of the award and historical and projected exercise behaviors. The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual or updated results differ from our current estimates, such amounts will be recorded in the period estimates are revised. Although the fair value of share-based awards is determined in accordance with authoritative guidance, the Black-Scholes option pricing model requires the input of highly subjective assumptions and other reasonable assumptions could provide differing results. Share-based compensation expense is recognized ratably over the applicable requisite service period, based on the fair value of such share-based awards on the grant date.

The fair value of options and warrants at the date of grant is determined under the Black-Scholes option pricing model. During the three months ended March 31, 2010, the following weighted-average assumptions were used. There were no option grants in the three months ended March 31, 2009:12

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

complex and subjective variables. These variables include, but are not limited to, the expected life of the award, expected stock price volatility over the term of the award and historical and projected exercise behaviors. The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual or updated results differ from our current estimates, such amounts will be recorded in the period estimates are revised. Although the fair value of share-based awards is determined in accordance with authoritative guidance, the Black-Scholes option pricing model requires the input of highly subjective assumptions and other reasonable assumptions could provide differing results. Share-based compensation expense is recognized ratably over the applicable requisite service period, based on the fair value of such share-based awards on the grant date.

The fair value of options and warrants at the date of grant is determined under the Black-Scholes option pricing model. During the three and six months ended June 30, 2010, the following weighted-average assumptions were used. There were no option grants in the three and six months ended June 30, 2009:

Assumptions	2009
Risk-free rate		2.49	%
Quarterly rate of dividends		––
Historical volatility		377.64	%
Expected life	1.5 to 3 years

The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. We do not anticipate declaring dividends in the foreseeable future. Volatility was based on historical data. Our stock price volatility, option lives and expected forfeiture rates involve management’s best estimates at the time of such determination, all of which impact the fair value of the option calculated under the Black-Scholes methodology and, ultimately, the expense that will be recognized over the life of the option.

~~NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS~~13

~~Subsequent Events – Amendments to Certain Recognition and Disclosure Requirements~~VITAMINSPICE

~~ASU 2010-09 amends ASC Subtopic 855-10, “Subsequent Events – Overall”~~ (~~“ASC~~A ~~855-10”)~~Development ~~and~~Stage requires an SEC filer to evaluate subsequent events through the date that the consolidated financials statements are issued but removed the requirement to disclose this date in the notes to the entity’s consolidated financials statements. The amendments are effective upon issuance of the final update and accordingly, the Company ~~has adopted the provisions of ASU 2010-09 during the quarter ended March 31, 2010.~~ )

~~Improvements~~NOTES toTO ~~Financial~~UNAUDITED ~~Reporting by Enterprises Involved with Variable Interest Entities~~CONDENSED

~~ASU 2009-17~~FINANCIAL amends prior guidance to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. ASU 2009-17 requires additional disclosures about the reporting entity’s involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entity’s consolidated financial statements. The provisions of ASU 2009-17 became effective on January 1, 2010 and did not have a significant impact on the Company’s consolidated financial statements. STATEMENTS

11June 30, 2010

~~VITAMIN~~NOTE ~~SPICE~~2 ~~AND~~– ~~SUBSIDIARY~~RECENT ACCOUNTING PRONOUNCEMENTS

~~NOTES~~Recently TOAdopted ~~CONSOLIDATED~~Accounting ~~FINANCIAL STATEMENTS~~Pronouncements

~~MARCH~~In 31January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures,” which amends the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of the assets and liabilities measured under Level 3 of the fair value measurement hierarchy. The guidance is effective for annual and interim reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual and interim periods beginning after December 15, 2010. The Company adopted these amendments in the first quarter of 2010 and the adoption did not have a material impact on the disclosures in the Company’s consolidated financial statements.

~~Fair~~In ~~Value~~June 2009, ~~Measurements~~the FASB issued ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, which changes various aspects of accounting for and ~~Disclosures~~disclosures –of ~~Improving~~interests ~~Disclosures~~in ~~about~~variable ~~Fair~~interest ~~Value~~entities. ~~Measurements~~ASU 2009-17 is effective for interim and annual periods beginning after November 15, 2009. The Company adopted these amendments in the first quarter of 2010 and the adoption did not have a material impact on the Company’s consolidated financial statements.

~~ASU~~In ~~2010-06~~June ~~amends ASC Subtopic 820-10~~2009, ~~“Fair~~the ~~Value~~Financial ~~Measurements~~Accounting ~~and~~Standards ~~Disclosures~~Board ~~– Overall”, and requires reporting entities to disclose~~ (1"FASB") ~~the~~issued ~~amount~~authoritative ofguidance ~~significant~~on ~~transfers~~accounting ~~in and out of Level 1 and Level 2 fair value measurements and describe the reasons~~ for ~~the~~ transfers, ~~and (2) separate information about purchases, sales, issuance and settlements in the reconciliation~~ of ~~fair~~financial ~~value measurements using significant unobservable inputs (Level 3)~~assets. ~~ASU~~ This ~~2010-06~~guidance ~~also~~was ~~requires~~issued ~~reporting entities~~ to ~~provide~~improve ~~fair value measurement disclosures for each class of assets and liabilities and disclose~~ the ~~inputs~~relevance, ~~and~~representational ~~valuation~~faithfulness, ~~techniques for fair value measurements that fall within Levels 2~~ and 3comparability of the ~~fair~~information ~~value~~that ~~hierarchy. These~~a ~~disclosures and clarification are effective for interim and annual~~ reporting ~~periods~~entity ~~beginning~~provides ~~after~~in ~~December~~its ~~15,~~financial ~~2009,~~statements ~~except for the disclosures~~ about ~~purchases,~~a ~~sales,~~transfer ~~issuance,~~of ~~and~~financial ~~settlements~~assets; in the ~~roll~~effects ~~forward~~ of ~~activity~~a intransfer ~~Level~~on 3its ~~fair~~financial ~~value~~position, ~~measurements. Those~~financial ~~disclosures are effective for fiscal years beginning after December 15~~performance, ~~2010~~ and ~~for~~cash ~~interim~~flows; ~~periods within those fiscal years. The provisions of ASU 2010-06 became effective on January 1, 2010~~ and ~~did not have~~ a ~~significant~~transferor's ~~impact~~continuing oninvolvement, ~~the~~if ~~Company’s~~any, ~~consolidated~~in transferred financial ~~statements~~assets. This guidance is

~~Transfers and Servicing (Topic 860) - Accounting for Transfers of Financial Assets~~14

ASU 2009-16 amends prior accounting guidance to enhance reporting about transfers of financial assets, including securitizations, and where companies have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 eliminates the concept of a “qualifying special-purpose entity” and changes the requirements for derecognizing financial assets. ASU 2009-16 also requires additional disclosures about all continuing involvements with transferred financial assets including information about gains and losses resulting from transfers during the period. The provisions of ASU 2009-16 became effective on January 1, 2010 and did not have a significant impact on the Company’s consolidated financial statements. VITAMINSPICE

~~Accounting~~(A ~~Standards~~Development ~~Not~~Stage ~~Yet Effective~~Company)

~~Revenue~~NOTES ~~Recognition~~TO ~~(Topic~~UNAUDITED ~~605) – Multiple-Deliverable Revenue Arrangements~~ CONDENSED

~~ASU~~FINANCIAL 2009-13 requires the use of the relative selling price method when allocating revenue in these types of arrangements. This method allows a vendor to use its best estimate of selling price if neither vendor specific objective evidence nor third party evidence of selling price exists when evaluating multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. The Company is currently evaluating the impact that this standard update will have on its consolidated financials statements. STATEMENTS

~~Software~~June ~~(Topic~~30, ~~985) – Certain Revenue Arrangements That Include Software Elements~~ 2010

~~ASU~~effective ~~2009-14~~for ~~requires~~fiscal ~~tangible~~years ~~products~~and ~~that~~interim ~~contain~~periods ~~software~~beginning ~~and~~after ~~non-software~~November ~~elements~~15, ~~that~~2009. The ~~work~~adoption ~~together~~of tothis ~~deliver~~statement ~~the~~did ~~products~~not ~~essential~~have ~~functionality~~a tomaterial beeffect ~~evaluated~~on ~~under~~ the ~~accounting~~Company's ~~standard~~consolidated ~~regarding~~financial ~~multiple deliverable arrangements~~statements. ~~This standard~~

~~update~~Recently isIssued ~~effective~~Accounting ~~January 1,~~Pronouncements ~~2011~~Not ~~and~~Yet may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. The Company does not expect that this standard update will have a significant impact on its consolidated financial statements. Adopted

~~Derivatives~~In ~~and~~July ~~Hedging~~2010, the Financial Accounting Standards Board (~~Topic 815~~“FASB”) issued new accounting guidance that will require additional disclosures about the credit quality of loans, lease receivables and other long-term ~~Scope~~receivables ~~Exception~~and ~~Related~~the related allowance for credit losses. Certain additional disclosures in this new accounting guidance will be effective for the Company on December 31, 2010 with certain other additional disclosures that will be effective on March 31, 2011. The Company does not expect the adoption of this new accounting guidance to ~~Embedded~~have ~~Credit~~a ~~Derivatives~~material impact on its consolidated financial statements.

In April 2010, the FASB issued ASU 2010-1113, ~~clarifies~~“Compensation ~~that~~— Stock Compensation (Topic 718) — Effect of Denominating the ~~only~~Exercise ~~form~~Price of ana ~~embedded~~Share-Based ~~credit~~Payment ~~derivative~~Award ~~that~~in isthe ~~exempt~~Currency ~~from~~of ~~embedded~~the ~~derivative~~Market ~~bifurcation~~in ~~requirements~~Which ~~are~~the ~~those~~Underlying ~~that~~Equity ~~relate~~Security Trades.” ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the ~~subordination~~currency of ~~one~~a ~~financial~~market ~~instrument~~in which a substantial portion of the entity’s equity securities trades should not be considered to ~~another.~~contain Asa condition that is not a ~~result~~market, ~~entities~~performance, ~~that~~or ~~have~~service ~~contracts~~condition. ~~containing~~Therefore, an ~~embedded~~entity ~~credit~~would ~~derivative~~not ~~feature~~classify insuch an award as a ~~form~~liability ~~other~~if ~~than~~it ~~such~~otherwise ~~subordination~~qualifies ~~may~~as ~~need~~equity. toThe ~~separately~~amendments ~~account~~in ASU 2010-13 are effective for ~~the~~fiscal ~~embedded~~years, ~~credit~~and ~~derivative~~interim ~~feature.~~periods ~~The~~within ~~provisions~~those offiscal years, beginning on or after December 15, 2010 and are not expected to have a significant impact on the Company’s consolidated financial statements.

12In March 2010, the FASB issued ASU No. 2010-11, “Derivatives and Hedging (Topic 815) — Scope Exception Related to Embedded Credit Derivatives.” ASU 2010-11 clarifies that the only form of an embedded credit derivative that is exempt from embedded derivative bifurcation requirements are those that relate to the subordination of

~~VITAMIN SPICE AND SUBSIDIARY~~15

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~VITAMINSPICE

~~MARCH~~(A ~~31,~~Development ~~2010~~Stage Company)

~~ASU 2010-11~~NOTES ~~will~~TO beUNAUDITED ~~effective on July 1, 2010 and are not expected to have a significant impact on the Company’s consolidated financial statements.~~ CONDENSED

~~Compensation~~FINANCIAL ~~- Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades~~STATEMENTS

~~ASU~~June 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market30, ~~performance, or service condition. Therefore, an entity would not classify such an award as~~ 2010

one financial instrument to another. As a ~~liability~~result, ifentities itthat ~~otherwise~~have ~~qualifies~~contracts ascontaining ~~equity.~~an ~~The~~embedded ~~amendments~~credit derivative feature in ~~ASU~~a ~~2010-13~~form ~~are~~other ~~effective~~than such subordination may need to separately account for ~~fiscal~~the ~~years,~~embedded ~~and~~credit ~~interim~~derivative ~~periods~~feature. ~~within~~The ~~those~~provisions ~~fiscal~~of ~~years,~~ASU ~~beginning~~2010-11 onbecame oreffective ~~after~~on ~~December~~July 151, 2010 and are not expected to have a significant impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements (A Consensus of the FASB Emerging Issues Task Force)”. ASU 2009-14 requires tangible products that contain software and non-software elements that work together to deliver the products essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. The Company does not expect that this standard update will have a significant impact on its consolidated financial statements.

In September 2009, the FASB issued certain amendments as codified in ASC Topic 605-25, “Revenue Recognition; Multiple-Element Arrangements.” These amendments provide clarification on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. An entity is required to allocate revenue in an arrangement using estimated selling prices of deliverables in the absence of vendor-specific objective evidence or third-party evidence of selling price. These amendments also eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. The amendments significantly expand the disclosure requirements for multiple-deliverable revenue arrangements. These provisions are to be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. The Company will adopt the provisions of these amendments in its fiscal year 2011 and is currently evaluating the impact of these amendments to its consolidated financial statements.

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Reclassifications

Certain prior periods' balances have been reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously reported results of operations or stockholders' equity.

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements during the ~~three~~six months ended ~~March~~June 3130, 2010 and 2009, the Company incurred losses from continuing operations of $12,~~281~~058,~~606~~887 and $2939,~~729~~140, respectively.

While the Company is continuing to increase sales, other sources of cash will be necessary for the current year. Management may attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The Company shareholders and officers have continued to advance funds to the Company but there can be no assurance that future advances will be made available.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s existence is dependent upon management’s ability to develop profitable operations and to resolve its liquidity problems. Management anticipates ~~the Company will attain profitable status and improve its liquidity through the continued effort to grow its sales channels.~~

1317

~~VITAMIN SPICE AND SUBSIDIARY~~VITAMINSPICE

~~NOTES~~(A TODevelopment ~~CONSOLIDATED~~Stage ~~FINANCIAL STATEMENTS~~Company)

~~MARCH~~NOTES ~~31,~~TO ~~2010~~UNAUDITED CONDENSED

~~NOTE~~FINANCIAL ~~4 - RELATED PARTY TRANSACTIONS~~STATEMENTS

June 30, 2010

the Company will attain profitable status and improve its liquidity through the continued effort to grow its sales channels.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company has made advances to its Chief Executive Officer of $14,181 during the two years ended December 31, 2009. There were no advances in 2010. There is no agreement for these advances.

NOTE 5 -– OTHER COMMITMENTS AND CONTINGENCIES

The Company has no outstanding commitments or contingencies as of ~~March~~June 3130, 2010.

NOTE 6 -– STOCK OPTION PLANS

The Board of Directors and Majority Shareholders have adopted and approved a stock option plan (the “2006 Plan”) dated the 16th day of October, 2006. The purpose of the Plan is to enable the Company to offer its officers, directors, employees and consultants and advisors performance-based incentives and other equity interests in the Company, thereby attracting, retaining, and rewarding such personnel. There is reserved for issuance under the Plan an aggregate of 666,667 shares of Common Stock, and 66,667 options have been granted. All of such shares may, but need not, be issued pursuant to the exercise of incentive stock options. Options granted under the Plan may be either “incentive stock options,” as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-statutory stock options. In addition, awards of or rights to purchase shares of Common Stock (“Stock Rights”) may be granted under the Plan.

The Board of Directors and Majority Shareholders have adopted and approved a stock option plan (the “2009 Stock Option Plan”) dated the 28th day of September, 2009. This Plan is similar to the 2006 Plan but provides for grants of ~~up to 20,000,000 shares of Common Stock, of which 18,083,000 options have been granted.~~

VITAMINSPICE

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

up to 20,000,000 shares of Common Stock, of which 18,083,000 options have been granted.

An additional options to purchase 3,100,000 shares have been issued under specific grants not made under the above referenced plans, including options for 1,000,000 shares granted in February 2010. These options were valued at $623,279 using Black-Scholes methodology.

NOTE 7 -– COMMON AND PREFERRED STOCK

The Company's articles of incorporation authorize the issuance of an unlimited number of preferred and common stock. No preferred stock is outstanding as of ~~December~~June 3130, ~~2009 and 2008.~~2010

The issuer, formerly known as Qualsec, issued 4,666,667 shares of common stock to its two founders in October 2006. An additional 1,000,000 shares were issued in a Regulation A offering at a price of $.30 per share (all share amounts give effect to a 1-for-30 reverse stock split effected in October, 2009). The original business of Qualsec was not successful, and in August 2009 Qualsec began to seek to acquire another business as a "reverse merger." Qualsec and Vitamin Spice LLC entered into an Agreement and Plan of Reorganization on September 28, 2009 under which all the membership interests of Vitamin Spice were exchanged for an aggregate of 100,000,000 newly issued shares of common stock. On the closing, five holders of the Registrant’s $130,000 in convertible promissory notes issued on March 12, 2008 and May 27, 2008 converted their notes into a total of 15,793,333 shares of common stock, and 50,000 shares were issued to a former officer and director. Immediately following the closing, there were 121,00,000 share of common stock outstanding. five holders of the Registrant’s $130,000 in convertible promissory notes issued on March 12, 2008 and May 27, 2008 converted their notes into a total of 15,793,333 shares of common stock In addition, option holders of the Delaware limited liability company were offered the opportunity to exchange their options for options to purchase shares of the Registrant, on the same ratio as the exchanging members of Vitamin Spice. All of the optionees exchanged and options were issued to purchase an aggregate of 10,164,000 shares at prices ranging from $.01 to $.05 per share. None of these options have been exercised and 1,154,872 have lapsed.

14A offering at a price of $.30 per share (all share amounts give effect to a 1-for-30 reverse stock split effected in October, 2009). The original business of Qualsec was not successful, and in August 2009 Qualsec began to seek to acquire another business as a "reverse merger." Qualsec and Vitamin Spice LLC entered into an Agreement and Plan of Reorganization on September 28, 2009 under which all the membership interests of Vitamin Spice were exchanged for an aggregate of 100,000,000 newly issued shares of common stock. On the closing, five holders of the Registrant’s $130,000 in convertible promissory notes issued on March 12, 2008 and May 27, 2008 converted their notes into a total of 15,793,333 shares of common stock, and 50,000 shares were issued to a former officer and director. Immediately following the closing, there were 121,00,000 shares of common stock outstanding. In addition, option holders of the Delaware limited liability company were offered the opportunity to exchange their options for options to purchase shares of the Registrant, on the same ratio as the exchanging members of Vitamin Spice. All of the optionees exchanged and options were issued to purchase an aggregate of 10,164,000 shares at prices ranging from $.01 to $.05 per share. None of these options have been exercised and 1,154,872 have lapsed.

~~VITAMIN SPICE AND SUBSIDIARY~~19

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~VITAMINSPICE

~~MARCH~~(A ~~31,~~Development ~~2010~~Stage Company)

NOTES TO UNAUDITED CONDENSED

FINANCIAL STATEMENTS

June 30, 2010

The acquisition of VitaminSpice LLC has been accounted for as a reverse acquisition with VitaminSpice deemed to be the accounting acquiror which acquired the Qualsec "shell" by issuing 21,000,000 shares for net liabilities of Qualsec of $696.

The Company sold 824,999 shares in the quarter ended December 31, 2009 for cash of $125,000. WeThe Company also issued 3,000,000 shares for services valued at $.15 per share to two persons and 50,000 shares valued at $.25 per share to another person. WeThe Company issued options to purchase 9,075,000 shares at $.28 per share to one person in connection with his election as a director, issued options to purchase 100,000 shares at a price of $.28 per share to a law firm and issued options to purchase 2,000,000 shares at a price of $.42 per share to a shareholder for general business consulting services. There were 127,079,752 and 124,925,099 shares outstanding as of ~~March~~June 3130, 2010 and December 31, 2009, respectively. The Company issued 250,000 shares for consulting services, valued at $.42 per share, 1,749,653 shares for services valued at $.25 per share, including 1,000,000 shares to a director, 300,000 shares for cash of $75,000, and 105,000 shares for interest and prepaid interest of $26,250 in the quarter ended ~~March~~June 3130, 2010.

Basic loss per common share is computed based upon weighted-average shares outstanding and excludes any potential dilution. Diluted loss per share reflects the potential dilution from the exercise or conversion of all dilutive securities into Common Stock based upon the average market price of common shares outstanding during the period. For the three and six months ended ~~March~~June 3130, 2010 and 2009, no effect has been given to outstanding options, warrants, convertible debentures and convertible preferred stock in the diluted computation, as their effect would be anti-dilutive.

NOTE 8 -– SHAREHOLDER ADVANCES AND NOTES

In the first quarter of 2010 we sold 300,000 shares of common stock for cash of $75,000. WeThe Company also received $4,000 in a non-interest bearing advance from a shareholder; issued a 12% promissory note for $50,000 due in September 2010 with 50,000 common shares as an equity kicker; and issued a note for $35,000 due June 9, 2010 bearing interest consisting of $3,500 and 55,000 shares of common stock. A portion of the shares issued are for interest which would accrue after March 31, 2010 and are therefore accounted as prepaid interest on the balance sheet.

~~NOTE 9 - SUBSEQUENT EVENT~~20

~~Item 2~~VITAMINSPICE

~~MANAGEMENT'S~~(A ~~DISCUSSION~~Development ~~AND~~Stage ~~ANALYSIS~~Company)

~~Background~~NOTES TO UNAUDITED CONDENSED

~~Vitamin~~FINANCIAL Spice LLC, organized in February 2008, is the continuation of a sole proprietorship founded by Edward Bukstel. Until September 28, 2009, when Vitamin Spice LLC went public through a reverse merger with the Company (then known as Qualsec) our activities were limited to developing our business plan, developing our initial vitamin-enriched spices, packaging, preliminary marketing, and raising capital. In the quarter ended December 31, 2009, we concentrated our efforts on marketing our products and in strengthening our board of directors. We entered into important marketing agreements in that quarter with Intersource Enterprises, Fields Texas and American Distribution Company, and developed our website www.vitaminspice.net so that we could sell product directly through that web site. Our marketing efforts began to bear fruit in the first quarter of 2009 in a limited amount of internet sales and by shipping product to retail stores in March 2010. We expect that we will continue to increase sales in the remainder of fiscal 2010. We do not believe we can accurately forecast sales for the year at this time due to our early stage of existence. Increasing sales will depend on consumer acceptance of our products, the success of our marketing efforts and our ability to raise money for working capital.STATEMENTS

15June 30, 2010

~~Period~~as toan ~~Period~~equity ~~comparison~~kicker; and issued a note for $35,000 due June 9, 2010 bearing interest consisting of $3,500 and 55,000 shares of common stock. A portion of the shares issued are for interest which would accrue after June 30, 2010 and are therefore accounted as prepaid interest on the balance sheet.

InNOTE ~~the~~9 ~~2010~~– quarter we accrued interest of $4,528 on $48,000 of convertible promissory notes issued in the quarter ended September 30, 2009 and other notes issued in 2010. We expect that substantially all of the noteholders will convert to common stock in fiscal 2010. LITIGATION

~~Liquidity~~As ~~and~~of ~~Capital~~June ~~Resources~~30, 2010 the Company is not aware of any current of pending litigation which would effect the Company’s operations.

WeNOTE ~~need~~10 a– ~~significant~~SUBSEQUENT amount of cash to fulfill expected orders in fiscal 2010. We expect that the cash need will be from $2 to $5 million depending on sales levels. We are negotiating with various parties for equity or debt placements, but have no arrangement or understanding for obtaining the required cash. . We have no line of credit and we do not believe that we will be able to obtain any line of credit in 2010 due to our stage of development and the state of the credit markets. If we are unable to obtain the required cash, we will not be able to obtain or fill all orders for sales of our products. EVENTS

InOn ~~the~~July ~~first quarter of 2010 we sold 300~~6,~~000~~ ~~shares of common stock for cash of $75,000. We also received $4,000 in a non-interest bearing advance from a shareholder; issued a 12% promissory note for $50,000 due in September~~ 2010 ~~with~~ ~~50,000~~the ~~common~~Company ~~shares~~terminated asits anprior ~~equity~~corporate ~~kicker;~~counsel and ~~issued~~ ashortly ~~note~~thereafter ~~for~~retained ~~$35,000~~the ~~due~~services ~~June 9, 2010 bearing interest consisting~~ of ~~$3,500 and 55,000 shares of common stock. A portion of~~ the ~~shares~~Heimerl ~~issued~~Law ~~are~~Firm ~~for~~to ~~interest~~act ~~which would accrue after March 31, 2010 and are therefore accounted~~ as ~~prepaid~~corporate ~~interest on the balance sheet~~counsel.

The Company has received a demand for repayment of a Promissory Note, in the amount of $11,000, from a lender to the Company. ~~Off-Balance~~The ~~Sheet~~Company ~~Arrangements~~is currently addressing that demand and hopes to achieve a resolution which will have no impact on the Company’s operations.

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. 21

~~Contractual~~Item ~~Obligations~~2. Plan of Operations.

AsThe aCompany’s ~~“smaller~~operations ~~reporting~~have ~~company”~~been aslimited ~~defined~~to bydevelopment ~~Item~~marketing 10 of ~~Regulation~~our ~~S-K~~vitamin related product line. The Company has had sales in the most recent three months ended June 30, 2010 and limited sales in the six months ending June 30, 2010. The Company is ~~not~~seeking to market the Company’s products and secure contracts for same. However, equity funding will be required in order to ~~provide~~develop ~~this~~the ~~information~~contracts required to achieve profitability. Any delay in equity funding may jeopardize continued operations.

~~Forward~~Information ~~Looking~~included ~~Statements~~in this quarterly report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this quarterly report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.

~~Information~~Since ~~included~~the inCompany ~~this~~has ~~annual~~not ~~report includes~~yet ~~forward~~generated ~~looking~~any ~~statements~~material revenues, ~~which~~the ~~can~~Company beis ~~identified~~a bydevelopment ~~the~~stage ~~use~~company as that term is defined in paragraphs 8 and 9 of ~~forward-looking~~SFAS ~~terminology~~No. ~~such~~7. Our asactivities ~~may,~~to ~~expect,~~date ~~anticipate,~~have ~~believe,~~been ~~estimate~~limited to seeking capital; seeking supply contracts, oracquire ~~continue~~limited inventory, ormarket the ~~negative~~Company’s ~~thereof~~products orand ~~other~~development ~~variations~~of ~~thereon~~a orbusiness ~~comparable terminology~~plan. The ~~statements~~Company has included an explanatory paragraph in ~~"Risk~~this ~~Factors"~~report ~~and~~relating ~~other~~to ~~statements~~the ~~and~~uncertainty ~~disclaimers~~of inthe ~~this~~Company ~~registration~~as ~~statement~~a ~~constitute~~going ~~cautionary~~concern, ~~statements~~due ~~identifying~~to ~~important~~our ~~factors~~lack of operating history or current revenues, ~~including~~its ~~risks~~nature as a start up business, management's limited experience and ~~uncertainties~~limited funds. The Company does not believe that conventional financing, ~~relating~~such as bank loans, is available to ~~the~~us ~~forward-looking~~due ~~statements~~to these factors. Management believes that ~~could~~it ~~cause~~will ~~actual~~be ~~results~~able to ~~differ~~raise ~~materially~~the required funds for operations from ~~those~~one ~~reflected~~or more future offerings, in ~~the~~order ~~forward-looking~~to ~~statements~~effectively continue operations.

Since we have not yet generated any revenues, we are a development stage company as that term is defined in paragraphs 8 and 9 of SFAS No. 7. Our activities to date have been limited to seeking capital; seeking supply contracts and development of a business plan. Our auditors have included an explanatory paragraph in their report on our financial statements as of December 31, 2009 filed within our 10-K, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds. We do not believe that conventional financing, such as bank loans, is available to us due to these factors. We have no bank line of credit available to us. Management believes that it will be able to raise the required funds for operations from one or more future offerings, in order to effect our business plan.

Our future operating results are subject to many facilities, including:

o ● our success in ~~finding~~marketing ~~distributors~~the ~~for~~Company’s ~~our~~ products;

o ● our ability to obtain customers for ~~vitamin-infused~~our products;

o ● the effects of competition;

o ● our ability to obtain additional financing; and

o ● other risks which we identify in future filings with the SEC.

Any or all of our forward looking statements in this annual report and in any other public statement we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this report.22

Any or all of our forward looking statements in this quarterly report and in any other public statement we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this report.

Off-Balance Sheet Arrangements

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4T4. Controls and Procedures.

~~Disclosure~~As ~~Controls~~of June 30, 2010, the Company has only one employee and ~~Procedures~~outsourced most functions. As such, a complete set of internal controls, including segregation of duties, is not possible in an organization of this size. However, we have now implemented limited control procedures surrounding the maintenance of the Company’s accounting and financial systems and the safeguarding of the Company’s assets. Further, all transactions entered into outside the course of the Company’s day to day operations must be approved by the President and C.E.O., Edward Bukstel.

~~Evaluation of disclosure controls and procedures.~~ The Company’s principal executive officer ~~and its principal financial officer~~, based on ~~their~~his evaluation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of ~~March~~the ~~31,~~end ~~2010. Based~~of onthe ~~this~~period ~~evaluation,~~covered ~~our~~by ~~principal~~this ~~executive~~quarterly ~~officer~~report ~~and~~on ~~principal~~Form ~~financial~~10Q ~~officer concluded as of~~ (the “Evaluation Date”) ~~that~~the ~~our~~Company’s disclosure controls and procedures were not effective ~~such~~to ~~that~~provide ~~the~~reasonable ~~information~~assurance ~~relating~~that toinformation the Company, ~~including~~is ~~our consolidated subsidiaries,~~ required to bedisclose ~~disclosed~~ in ~~our SEC~~ reports ~~(i) is recorded, processed, summarized and reported within~~ the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to management, including our principal executive officer/principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

1723

~~Our~~Company ~~management,~~may ~~including~~file ~~our~~or ~~chief~~submit ~~executive~~under ~~officer~~the ~~and~~Exchange ~~chief~~Act ~~financial~~is ~~officer~~recorded, ~~does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system~~processed, nosummarized ~~matter how well conceived~~ and ~~operated,~~reported ~~can~~within ~~provide~~the ~~only~~time ~~reasonable,~~periods ~~not~~specified ~~absolute,~~by ~~assurance that~~ the ~~objectives~~Securities ofExchange ~~the~~Commission ~~control~~rules ~~system~~and ~~are met. Further~~forms, ~~the~~and ~~design of a control system must reflect the fact~~ that ~~there~~such ~~are~~information ~~resource~~is ~~constraints~~accumulated and ~~the~~communicated ~~benefits of controls must be considered relative~~ to ~~their~~management, ~~costs.~~including ~~Due to~~ the ~~inherent~~Company’s ~~limitations~~president ~~in all control systems, no evaluation of controls can provide absolute assurance that all control issues~~ and ~~instances of fraud~~C.E.O., ifas ~~any,~~appropriate ~~within~~to ~~the~~allow ~~Company~~timely ~~have~~decisions ~~been~~regarding ~~detected~~required disclosures.

~~Changes~~The Company has identified deficiencies in the design or operation of the Company’s internal controls. ~~There~~that ~~were~~we noconsider ~~significant~~to ~~changes~~be a material weakness in the effectiveness of the Company’s internal controls pursuant to standards established by the Public Accounting Oversight Board. A “material weakness” is a deficiency, or combination of significant deficiencies, that result in ~~other~~more ~~factors~~than a remote likelihood that ~~could~~a ~~significantly~~material ~~affect~~misstatement of the annual or interim financial statements will not be prevented or detected. Specifically, management has determined that the Company’s ~~internal~~has ~~controls~~an ~~subsequent~~overall lack of segregation of duties as well as a lack of necessary corporate accounting resources related to the ~~date~~financial ofreporting ~~their~~process ~~evaluation~~and accounting functions as the Company does not have any full time accounting personnel.

~~PART~~There ~~II. OTHER~~were ~~INFORMATION~~no significant changes in the Company’s internal controls in the quarter ending June 30, 2010 or in other factors that could significantly affect the Company’s internal controls subsequent to the date of their evaluation.

~~Item~~PART 1II. OTHER INFORMATION

~~LEGAL~~Item ~~PROCEEDINGS - None~~1. Legal Proceedings

~~Item~~As 2of June 30, 2010 the Company is not aware of any current of pending litigation which would effect the Company’s operations.

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSS THEREFROM~~ 24

The Company issued 250,000 shares for consulting services, valued at $.42 per share to one consultant as well as options to purchase 2,000,000 shares at $.40 to a sports marketing firm; 1,499,653 shares for services valued at $.25 per share, including 1,000,000 shares to a director and 499,653 shares to a shareholder; 300,000 shares for cash of $75,000 to three persons, and 105,000 shares for interest and prepaid interest of $26,250 to two persons. No underwriter was involved and the transactions above were all private offerings not involving any public advertising or solicitation.SIGNATURES

~~Item~~Pursuant 3to the requirements 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.

DEFAULTS UPON SENIOR SECURITIES - None

	VITAMINSPICE


	By:	/s/ Edward Bukstel
		Edward Bukstel
		President & C.E.O.

Dated: September 9, 2010

~~Item 4.~~25

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

Item 5.

OTHER INFORMATION - None

Item 6.

EXHIBITS

Exhibit

31, Certification of the Chief Executive and Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003. Filed herewith.

Exhibit 32, Certification of the Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2003. Filed herewith.

SIGNATURES

Pursuant to the requirements 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.

VITAMINSPICE

Date:

May 21, 2010

By: /s/ Ed Bukstel

President and Chief Financial

Officer (chief financial officer

and accounting officer and duly

authorized officer)

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