Thinspace Technology (THNS) 10-Q 2010 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010

Commission file number 001-15751

 VANITY EVENTS HOLDING, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-2114545
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

43 West 33rd Street, Suite 600

New York, NY 10001

(Address of principal executive offices)

(212) 695-9619

 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.0001 Par Value Per Share

Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes £      NoR

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes £      NoR

Indicate by check mark 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), and (2) has been subject to such filing requirements for the past 90 days.  YesR      No£

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £      NoR

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.   (Check one):

  Large accelerated filer £               Accelerated filer £             Non-accelerated filer   £            

Smaller Reporting Company R

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes £      NoR

Number of shares of common stock outstanding as of August 17, 2010 was 64,239,807.

1

VANITY EVENTS HOLDING, INC.

2010 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	[Reserved]	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
SIGNATURES		22

2

PART I

ITEM 1. FINANCIAL STATEMENTS

FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
	Page
Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009	4
Condensed Consolidated Statements of Operations for the three months ended June 30, 2010 and 2009 (unaudited)	5
Condensed Consolidated Statements of Operations for the six months ended June 30, 2010 and 2009 (unaudited)	6
Condensed Consolidated Statement of Stockholders’ (Deficit) Equity for the period from January 1, 2008 through June 30, 2010 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the six months June 30, 2010 and 2009 (unaudited)	8
Notes to Condensed Consolidated Financial Statements (unaudited)	9

3

VANITY EVENTS HOLDING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2010 (unaudited)			December 31, 2009
CURRENT ASSETS
Cash and cash equivalents	$	64		$	1,363,993
Accounts receivable, net		11,685			49,133
Inventory		-			17,593
Prepaid expenses and other current assets		26,182			10,143
TOTAL CURRENT ASSETS		37,931			1,440,862
OTHER ASSETS		29,536			4,996
PROPERTY AND EQUIPMENT		97,408			83,435
Less: Accumulated Depreciation and Amortization		(14,473	)		(9,526	)
PROPERTY AND EQUIPMENT, NET		82,935			73,909
TOTAL ASSETS	$	150,402		$	1,519,767
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
CURRENT LIABILITIES
Bank overdraft	$	4,028		$	-
Accounts payable and accrued expenses		529,461			183,933
Derivative liability		52,029			-
Convertible note payable		3,562			-
Loans payable		50,000			-
TOTAL CURRENT LIABILITIES		639,080		$	183,933
LONG-TERM LIABILITIES
Loans payable-shareholders		-			129,271
TOTAL LONG-TERM LIABILITIES		-			129,271
TOTAL LIABILITIES		639,080			313,204
STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock authorized 50,000,000 shares, $.0001 par value; None issued and outstanding.		-			-
Common stock authorized 350,000,000 shares, $.0001 par value; 52,739,807 and 38,349,807 shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively.		5,274			3,835
Additional paid in capital		3,959,626			3,562,165
Deposit for capital stock		215,000			250,000
Accumulated deficit		(4,051,154	)		(2,609,437	)
		128,746			1,206,563
Due from related parties/shareholders		(617,424	)		-
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY		(488,678	)		1,206,563
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	150,402		$	1,519,767

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

4

VANITY EVENTS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	For the Three Months Ended
	June 30, 2010			June 30, 2009
REVENUE	$	18,431		$	92
TOTAL COST OF GOODS SOLD		9,262			-
GROSS PROFIT		9,169			92
OPERATING EXPENSES
Payroll expense		349,779			-
Selling, general and administrative		190,994			50,577
Depreciation and amortization		4,947			-
TOTAL OPERATING EXPENSES		545,720			50,577
	��
LOSS FROM OPERATIONS		(536,551	)		(50,485	)
OTHER INCOME (EXPENSE)
Interest Expense		(22,317	)		-
Gain on change in Fair Value of Derivative Liability		16,726			-
		(5,591	)		-
LOSS BEFORE PROVISION FOR INCOME TAXES		(542,142	)		(50,485	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(542,142	)	$	(50,485	)
BASIC & DILUTED LOSS PER SHARE	$	(0.01	)	$	(0.00	)
WEIGHTED AVERAGE SHARES OUTSTANDING		48,172,251			27,369,807

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

5

VANITY EVENTS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	For the Six Months Ended
	June 30, 2010			June 30, 2009
REVENUE	$	46,755		$	1,592
TOTAL COST OF GOODS SOLD		28,779			-
GROSS PROFIT		17,976			1,592
OPERATING EXPENSES
Bad debt expense		37,577			-
Payroll Expense		775,282			-
Selling, general and administrative		636,296			61,436
Depreciation and amortization		4,947			-
TOTAL OPERATING EXPENSES		1,454,102			61,436
LOSS FROM OPERATIONS		(1,436,126	)		(59,844	)
OTHER INCOME (EXPENSE)
Interest Expense		(22,317	)		-
Gain on change in Fair Value of Derivative Liability		16,726			-
		(5,591	)		-
LOSS BEFORE PROVISION FOR INCOME TAXES		(1,441,717	)		(59,844	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(1,441,717	)	$	(59,844	)
BASIC & DILUTED LOSS PER SHARE	$	(0.03	)	$	(0.00	)
WEIGHTED AVERAGE SHARES OUTSTANDING		48,172,251			27,369,807

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

6

VANITY EVENTS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ (DEFICIT) EQUITY

UNAUDITED

	Common Stock					Additional Paid-In		Deposit for Capital			Due from Related Parties/			Accumulated
	Shares		Amount		Capital			Stock			Shareholders			Deficit			Total
Balance at January 1, 2008, adjusted for recapitalization		26,869,807	$	2,687		$	745,813	$	-		$	-		$	(747,881	)	$	619
Issuance of common stock for legal fees		500,000		50			9,950		-			-			-			10,000
Net loss for the year ended December 31, 2008															(314,085	)		(314,085	)
Balance at December 31, 2008		27,369,807		2,737			755,763		-			-			(1,061,966	)		(303,466	)
Issuance of common stock for cash		10,980,000		1,098			2,806,402		-			-			-			2,807,500
Deposit for Capital Stock									250,000						-			250,000
Net loss for the year ended December 31, 2009															(1,547,471	)		(1,547,471	)
Balance at December 31, 2009		38,349,807		3,835			3,562,165		250,000			-			(2,609,437	)		1,206,563
Issuance of common stock for cash		1,000,000		100			14,900					-						15,000
Issuance of common stock for services rendered		12,390,000		1,239			132,661											133,900
Deposit for Capital Stock									215,000									215,000
Issuance of Stock for Prior Deposits		1,000,000		100			249,900		(250,000	)								-
Due from Related Party/Shareholders												(617,424	)					(617,424	)
Net Loss for the period ended June 30, 2010															(1,441,717	)		(1,441,717	)
Balance at June 30, 2010		52,739,807	$	5,274		$	3,959,626	$	215,000		$	(617,424	)	$	(4,051,154	)	$	(488,678	)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements .

7

VANITY EVENTS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	For the Six Months Ended
	June 30, 2010			June 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,441,717	)	$	(59,844	)
Issuance of common shares for services		133,900			-
Depreciation and amortization		4,947			-
Bad debt expense		37,577			-
Amortization of debt discounts		22,317			-
Gain on change in fair value of derivative liability		(16,726	)		-
CHANGES IN OPERATING ASSETS AND LIABILITIES
Accounts receivable		(129	)		-
Inventory and inventory writeoff		(17,593	)		-
Prepaid expenses and other current assets		(12,434	)		-
Accounts payable and accrued expenses		345,528			1,894
NET CASH USED IN OPERATING ACTIVITIES		(944,330	)		(57,950	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets, software, and licenses		(6,932	)		-
NET CASH USED IN INVESTING ACTIVITIES		(6,932	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft		4,028			-
(Repayment) proceeds from loans payable-shareholders, net		(129,271	)		-
Proceeds from issuance of convertible debenture		50,000			-
Proceeds (repayment) from notes payable, net		50,000			76,025
Proceeds from issuance of common stock		15,000			-
Deposit for Capital Stock		215,000			-
Due from Related Parties/Shareholders		(617,424	)		-
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(412,667	)		76,025
NET (DECREASE) INCREASE IN CASH		(1,363,929	)		18,076
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD		1,363,993			3,520
CASH AND CASH EQUIVALENTS END OF PERIOD	$	64		$	21,596
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid during the period for income tax:	$	-		$	-
Cash paid during the period for interest	$	-		$	-
Non-Cash Investing and Financing Activities:
Property and equipment acquired in exchange for Due from Related Parties/Shareholders	$	7,041		$	-
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements .

8

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(unaudited)

NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND LIQUIDITY AND MANAGEMENT’S PLANS

Nature of Operations

VANITY EVENTS HOLDING, INC.  (the “Company” or “Vanity” or “We” or “Our”), was organized as a Delaware Corporation on August 25, 2004, and is a holding company with expanding lines of business. Utilizing the acquired trademark of America’s Cleaning Company™, Vanity has now established a cleaning company offering a full range of residential and commercial cleaning services as its only operating business at June 30, 2010.  This company intends to expand its reach through national franchising. In addition, the Company also plans to again in the future seek out, license, develop, promote, and bring to market various innovative consumer and commercial products.

The Company’s wholly-owned subsidiaries include Vanity Events, Inc.; America’s Cleaning Company; and Vanity Licensing, Inc.  For the fiscal year 2009, the only active subsidiary of the Company was Vanity Events, Inc. The Company's cleaning services were performed out of a division of Vanity Events, Inc. which used the name America's Cleaning Company™.  There was only one set of books maintained at December 31, 2009, which was for our sole operating business, cleaning services business and the Company.  Effective January 1, 2010, the Company is maintaining a separate general ledger for Vanity Events, Inc. and America’s Cleaning Company’s operations.

In addition, the Company decided during the second quarter of 2010 to temporarily pull back on its products operations in order to focus its efforts on America’s Cleaning Company and the Company’s franchising efforts.

Reverse Merger

On April 2, 2008, the Company, formerly known as Map V Acquisition, Inc., a Delaware corporation entered into a Share Exchange Agreement with Vanity Holding Group, Inc. (“Vanity Group”) and Vanity Group’s then shareholders whereby we agreed to acquire all of the issued and outstanding shares of the common stock of Vanity Group.  As consideration for the acquisition of the shares of Vanity Group, the Company has agreed to issue an aggregate of 21,392,109 shares (with the 1.7118 to 1 share of stock split effect) of its common stock, $0.0001 par value (the “Common Stock”) to the Vanity Group Shareholders.  Upon consummation of the acquisition, Vanity Group became a wholly-owned subsidiary of the Company.  Subsequent to the completion of the reverse merger acquisition, we filed a Certificate of Amendment with the Delaware Secretary of State changing its name from Map V Acquisition, Inc. to Vanity Events Holding, Inc. (“Vanity” or the “Company”) in 2008.

The acquisition is accounted for as a “reverse merger”, since the stockholders of Vanity Group owned majority of the Company’s common stock immediately following the transaction and their management has assumed operational, management and governance control. The reverse merger transaction is recorded as a recapitalization of Vanity Group pursuant to which Vanity Group is treated as the surviving and continuing entity although Vanity or the Company is the legal acquirer rather than a business combination.  The Company did not recognize goodwill or any intangible assets in connection with this transaction.  Accordingly, the Company’s historical financial statements are those of Vanity Group.

Effective with the reverse merger, all previously outstanding common stock owned by Vanity Group’s shareholders were exchanged for the Company’s common stock. The value of the Company’s common stock that was issued to Vanity Group’s shareholders was the historical cost of the Company’s net tangible assets, which did not differ materially from its fair value.

All references to common stock, share and per share amounts have been retroactively restated to reflect the reverse merger as if the transaction had taken place as of the beginning of the earliest period presented.

Liquidity and Management’s Plans

The accompanying 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, the Company incurred a loss from operations of $542,142 and $1,441,717 for the three and six months ended June 30, 2010, respectively. Of the three and six months ended June 30, 2010 loss, $37,073 and $77,904 were from America’s Cleaning Company and the remaining was from Vanity. Additionally, the Company had negative cash flows from operations since date of inception and has a stockholders’ deficit of $4,051,154 as of June 30, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s continued existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset

9

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all.  In the event that the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K . The results for the three and six months ended June 30, 2010, are not necessarily indicative of the results to be expected for the full year ending December 31, 2010.

The condensed consolidated balance sheet as at December 31, 2009 has been derived from the audited financial statements at that date but do not include all disclosures required by the accounting principles generally accepted in the United States of America.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, accounts receivable allowance, fair value of investments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, deemed value of common stock for the purpose of determining stock-based compensation, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

The Company’s board of directors determines the fair market value of the Company’s common stock in the absence of a public market for these shares.

Principles of Consolidation

The consolidated financial statements include the accounts of Vanity Holdings, Inc., Vanity Events, Inc. and America’s Cleaning Company.  All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain amounts in prior year’s consolidated financial statements and the related notes have been reclassified to conform to current period’s presentation. These reclassifications have no effect on previously reported results of operations.

Revenue Recognition

The Company recognizes revenue from product or service sales in accordance with ASC 605 “Revenue Recognition”.  Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists (through written sales documentation); (2) delivery has occurred (through delivery into customer’s tanks and acceptance); (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of

10

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

the products delivered and the collectability of those amounts. Provisions for estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded, although we have not experienced any such items to date and do not expect any significant provisions in the future. We have no discount, rebate or warranty programs. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product or service has been delivered / rendered or no refund will be required. Payments received in advance are deferred until revenue recognition is appropriate. We have no post-delivery obligations or bill and hold related to our products / services.

Accounts Receivable

Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. Allowance for doubtful accounts of accounts receivable was $37,577 of which $0 was from America’s Cleaning Company as of June 30, 2010.

Cost of Goods Sold

Cost of sales includes cost of products or outsourced services, direct wages, other direct costs and shipping costs.

Impairment of Long-Lived Assets

The Company follows ASC 360, "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted discounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived assets and certain identifiable intangibles will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultim ate disposition of the asset.  ASC 360 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less disposal costs.

Cash and Cash Equivalents

The Company considers cash and cash equivalents to consist of cash on hand and investments having an original maturity of 90 days or less that are readily convertible into cash are considered to be cash equivalents. As of June 30, 2010, the Company had $64 in cash and cash equivalents, and a bank overdraft of $4,028.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of their short maturities.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2010:

Six Months Ended  June 30, 2010
	Debt Derivative
Balance, January 1, 2010	$	-
Total (gains) losses:
Initial fair value of debt derivative debenture issuance		68,755
Mark-to-market at June 30, 2010:
- Embedded debt derivative		(16,726	)
Transfers in and/or out of Level 3
Balance, June 30, 2010		52,029
Net gain for the period included in earnings relating to the derivative liabilities held at June 30, 2010	$	16,726

11

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

Loss Per Share

The computation of loss per share is based on the weighted average number of common shares outstanding during the period presented. Diluted loss per common share is the same as basic loss per common share as there are no potentially dilutive securities outstanding (options and warrants).

Income Taxes

The Company accounts for income taxes using the asset and liability method described in Accounting Standard Codification 740 (“ASC 740”) the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax basis of the Company’s assets and liabilities at the enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Recent Accounting Pronouncements

In March 2010, the FASB issued new accounting guidance, under ASC Topic 605 on Revenue Recognition.  This standard provides that the milestone method is a valid application of the proportional performance model for revenue recognition if the milestones are substantive and there is substantive uncertainty about whether the milestones will be achieved.  Determining whether a milestone is substantive requires judgment that should be made at the inception of the arrangement.  To meet the definition of a substantive milestone, the consideration earned by achieving the milestone (1) would have to be commensurate with either the level of effort required to achieve the milestone or the enhancement in the value of the item delivered, (2) would have to relate solely to past performance, and (3) should be reasonable rel ative to all deliverables and payment terms in the arrangement.  No bifurcation of an individual milestone is allowed and there can be more than one milestone in an arrangement.  The standard is effective for interim and annual periods beginning on or after June 15, 2010.  The Company is currently evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements.

In February 2010 the FASB issued Update No. 2010-09 “Subsequent Events (Topic 855)” (“2010-09”). 2010-09 clarifies the interaction of Accounting Standards Codification 855 “Subsequent Events” (“Topic 855”) with guidance issued by the Securities and Exchange Commission (the “SEC”) as well as the intended breadth of the reissuance disclosure provision related to subsequent events found in paragraph 855-10-50-4 in Topic 855. This update is effective for annual or interim periods ending after June 15, 2010. Management is currently evaluating whether these changes will have any material impact on its financial position, results of operations or cash flows.

In February 2010 the FASB issued Update No. 2010-08 “Technical Corrections to Various Topics” (“2010-08”). 2010-08 represents technical corrections to SEC paragraphs within various sections of the Codification. Management is currently evaluating whether these changes will have any material impact on its financial position, results of operations or cash flows.

In January 2010 the FASB issued Update No. 2010-06 “Fair Value Measurements and Disclosures—Improving Disclosures about Fair Value Measurements” (“2010-06”). 2010-06 requires new disclosures regarding significant transfers between Level 1 and Level 2 fair value measurements, and disclosures regarding purchases, sales, issuances and settlements, on a gross basis, for Level 3 fair value measurements. 2010-06 also calls for further disaggregation of all assets and liabilities based on line items shown in the statement of financial position. This amendment is effective for fiscal years beginning after December 15, 2010 and interim periods within those fiscal years. The Company is currently evaluating whether adoption of this standard will have a material impact on its financial position, results of operations or cash flows.

In January 2010 the FASB issued Update No. 2010-05 “Compensation—Stock Compensation—Escrowed Share Arrangements and Presumption of Compensation” (“2010-05”). 2010-05 re-asserts that the Staff of the Securities Exchange Commission (the “SEC Staff”) has stated the presumption that for certain shareholders escrowed share represent a compensatory arrangement. 2010-05 further clarifies the criteria required to be met to establish a position different from the SEC Staff’s position. The Company does not believe this pronouncement will have any material impact on its financial position, results of operations or cash flows.

In January 2010 the FASB issued Update No. 2010-04 “Accounting for Various Topics—Technical Corrections to SEC Paragraphs” (“2010-04”). 2010-04 represents technical corrections to SEC paragraphs within various sections of the Codification. Management is currently evaluating whether these changes will have any material impact on its financial position, results of operations or cash flows.

In January 2010 the FASB issued Update No. 2010-02 “Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope

12

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

Clarification” (“2010-02”) an update of ASC 810 “Consolidation.” 2010-02 clarifies the scope of ASC 810 with respect to decreases in ownership in a subsidiary to those of a subsidiary or group of assets that are a business or nonprofit, a subsidiary that is transferred to an equity method investee or joint venture, and an exchange of a group of assets that constitutes a business or nonprofit activity to a non-controlling interest including an equity method investee or a joint venture. Management, does not expect adoption of this standard to have any material impact on its financial position, results of operations or operating cash flows. Management does not intend to decrease its ownership in any of its wholly-owned subsidiaries.

In January 2010 the FASB issued Update No. 2010-01 “Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force” (“2010-03”) an update of ASC 505 “Equity.” 2010-03 clarifies the treatment of stock distributions as dividends to shareholders and their affect on the computation of earnings per shares. Management does not expect adoption of this standard to have any material impact on its financial position, results of operations or operating cash flows.  

Management does not believe that any recently issues, but not effective, accounting standards, if currently adopted, would have a material effect on the company’s financial position, results of operations or operating cash flows.

NOTE 3 – INVENTORY

Inventories are stated at the lower of cost or market determined by the first-in, first-out (FIFO) method.

As of June 30, 2010, the Company was no longer pursuing its product lines, and accordingly has written off $6,947 in inventory during the six months ended June 30th, 2010.

In addition, the Company has included $24,540 of promotional products as prepaid expenses and other current assets at June 30th, 2010.

	June 30, 2010		December 31, 2009
Inventory	$	0	$	17,593

NOTE 4 – CONVERTIBLE DEBENTURE AND NOTES PAYABLE

CONVERTIBLE DEBENTURE

On June 4, 2010, the Company issued a $50,000 Convertible Debenture (the “Convertible Note”) that matures on June 4, 2011. The debenture bears interest at a rate of 10% per annum and will be convertible into the Company’s common stock at any time at the holder’s option, into common stock at the conversion rate of the lesser of i) 70% of the average closing bid price of the Company’s common stock during the five trading days immediately preceding conversion as quoted by Bloomberg, LP; or ii) the average of the closing bid price during the five trading days prior to conversion.

The Company has identified the embedded derivatives related to the Convertible Note entered into on June 4, 2010.  These embedded derivatives included certain conversion features.  The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the Convertible Note and to fair value as of each subsequent balance sheet date.  At the inception of the Convertible Note, the Company determined a fair value of $68,755 on the embedded derivative.  The fair value of the embedded derivative was determined using the Black Scholes Option Pricing Model based on the following assumptions:  

Dividend yield:	-0-	%
Volatility	302.04	%
Risk free rate:	0.34	%

The initial fair value of the embedded debt derivative of $68,755 was allocated as a debt discount up to the proceeds of the Convertible Note ($50,000) with the remainder ($18,755) charged to current period operations as interest expense.

During the six months ended June 30, 2010, the Company amortized $3,562 to current period operations as interest expense.

At June 30, 2010 and December 31, 2009, Convertible Note balance consisted as the following:

13

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

	June 30, 2010		December 31, 2009
$50,000 10% Convertible Note (Dated June 4, 2010), net of unamortized discount of $ 46,438 and $0, respectively	$	3,562	$	-
	$	3,562	$	-

NOTES PAYABLE

On June 11th and June 22nd, 2010, the Company received monies from an accredited investor, as a non-interest-bearing loan, without formal loan agreements and terms. The amounts received were $25,000 each, and were loaned as a favor to the Company.

NOTE 5 – DERIVATIVE LIABILITY

As described in Note 4 above Company's debt derivative consists of embedded derivatives related to the 10% Convertible Debenture issued June 4, 2010.  The embedded derivatives included certain conversion features.  The accounting treatment of derivative financial instruments required that the Company record the derivatives at their fair values as of the inception date of the Convertible Promissory Note (estimated at $68,755) and at fair value as of each subsequent balance sheet date.  Any change in fair value was recorded as non-operating, non-cash income or expense at each reporting date.  If the fair value of the derivatives was higher at the subsequent balance sheet date, the Company recorded a non-operating, non-cash charge.  If the fair value of the derivatives was lower at the sub sequent balance sheet date, the Company recorded non-operating, non-cash gain.  

The Company recorded a gain on change in fair value of debt derivative of $16,726 for the six months ended June 30, 2010.

At June 30, 2010, the conversion-related derivatives were valued using the Black Scholes Option Pricing Model, with the following assumptions:

Dividend yield:	-0-	%
Volatility	304.09	%
Risk free rate:	0.32	%

As of the date of the financial statements the debt derivative valued at $52,029, and has been classified as a current liability.

NOTE 6 – RELATED PARTY TRANSACTIONS

At December 31, 2009, the Company had a loan payable due to shareholders of $129,271. As of March 31st, 2010, the Company had loan receivables due from related parties / shareholders in the amount of $794,500, as a result of a Note issued by the Company which was executed in April 2010 under the direction of the Company’s former CEO, Steven Y. Moskowitz, without proper approval of the Company’s board of directors.  These related parties are or were under the common ownership / control and or management of Steven Y. Moskowitz, where he was an officer and or shareholder. The balance on this lo an was $617,424 as of June 30th, 2010. Effective April 1, 2010, the Note bears an interest rate at 5% per annum on any unpaid balance and the Note is payable upon demand.  As of August 17, 2010, the Company’s loan receivables from this note were $617,424.

The Note issued by the Company under the direction of Mr. Moskowitz was not ratified by a decision of the board of directors.

The Company has accounted for and presented the loans due from related parties / shareholders as a reduction of stockholders’ equity or as a receivable within the stockholders’ equity in accordance with the guidance of ASC 505-10-45.  The Company cannot determine whether it will be able to collect any further monies on this Note as the filing date of this report.  The Company is determining what options it may have in attempting to take action to collect on the note.

14

VANITY EVENTS HOLDING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

JUNE 30, 2010

(unaudited)

On May 10th, 2010, Steven Y. Moskowitz resigned from his position as Chief Executive Officer and all other positions he held within the Company and its subsidiaries. In conjunction with Mr. Moskowitz’s resignation, Chief Operating Officer Samuel Wolf assumed the responsibilities of Chief Executive Officer and President of the Company.

On May 12th, 2010, the board of directors elected Stuart Yachnowitz as a director of the Company.

On June 8th, 2010, the Company acquired office equipment, including computers, printers, and desks, in exchange for a $7,041 reduction to loans due from shareholders. As of August 17th, 2010, the loans receivable is $617,424.

On June 11th and June 22nd, 2010, the Company received monies from an accredited investor, as a non-interest-bearing loan, without formal loan agreements and terms. The amounts received were $25,000 each, and were loaned as a favor to the Company.

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 50,000,000 shares of preferred stock, with par value of $0.0001 per share, of which there were none issued and outstanding at June 30, 2010.

Common Stock

The Company is authorized to issue 350,000,000 shares of common stock, with par value of $0.0001 per share.  As of June 30, 2010, there were 52,739,807 shares of common stock issued and outstanding.

Deposit for Capital Stock

Through June 30, 2010, the Company had received $215,000 as deposit for common stock issuance agreements entered with certain investors for which the shares were yet to be issued. Those shares were issued subsequently on August 2nd, 2010. The total shares issued from those transactions were 11,500,000, bringing the total number of common stock shares issued and outstanding to 64,239,807 as of August 17th, 2010.

NOTE 8 – SUBSEQUENT EVENTS

On July 6th, 2010, the Company elected Yoel Goldfeder, Esq. as a director of the Company.

On July 29, 2010, the Company entered into a Securities Purchase Agreement with IIG Management LLC, providing for the sale by the Company to the Investor of a 10% convertible debenture in the principal amount of $120,000. 

As of August 17th, 2010, the Company has 9 full-time employees, including Messrs. Wolf and Goldish.

15

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Statement of Forward Looking Information

In this quarterly report, references to "Vanity Events Holding, Inc.," "Vanity," "the Company," "we," "us," and "our" refer to Vanity Events Holding, Inc. and its wholly owned subsidiaries, Vanity Events, Inc. and America’s Cleaning Company.

Except for the historical information contained herein, some of the statements in this Report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operation," and "Risk Factors." They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These sta tements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors," that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technolo gies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

VANITY RESULTS OF OPERATIONS

Overview

Vanity Group was organized as a Delaware Corporation on August 25, 2004, headquartered in New York, New York, Vanity Events Holding, Inc. is a holding company with expanding lines of business. Utilizing their acquired trademark of America’s Cleaning Company™, Vanity has now established a cleaning company offering a full range of residential and commercial cleaning services. This company will be expanding its reach through national franchising.

THREE MONTHS ENDED JUNE 30, 2010 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2009

This discussion should be read in conjunction with our financial statements included elsewhere in this report. Vanity began active operation on August 25, 2004, and has a fiscal operating year of January 1 to December 31. Except where noted below to be America’s Cleaning Company, all totals belong to Vanity Events, Inc. Vanity Events, Inc. performs product research and serves as the management company for America’s Cleaning Company, in addition to determining the Company’s franchising model and direction. America’s Cleaning Company’s numbers are separated in order to show how the prototype model has performed.

Revenues Vanity had for the three months ended June 30, 2010 were $18,431 of which $18,335 was America’s Cleaning Company, compared to $92 for the Company for the three months ended June 30, 2009. The increase in revenues was primarily a result of increased activity in America’s Cleaning Company operations.

Cost of Sales were $9,262 of which $9,262 was from America’s Cleaning Company for the three months ended June 30, 2010 as compared to $0 for the Company for the three months ended June 30, 2009.  The increase in Cost of Sales was primarily a result of increased activity in Americas Cleaning Company operations.

Payroll Expenses were $349,779 of which $35,921 was from America’s Cleaning Company for the three months ended June 30, 2010 as compared to $0 for the Company for the three months ended June 30, 2009. The increase in Payroll Expense was primarily a result of increased in numbered of salaried employees in the company.

Selling, General and Administrative ("SG&A") expenses consisted primarily of expenses for consulting and professional fees.  For the three months ended June 30, 2010, SG&A was $190,994 of which $9,961 was from America’s Cleaning Company as compared to $50,577 for the Company for the three months ended June 30, 2009. The increase in Selling, General and Administrative costs was primarily a result of consulting and professional fees.

16

Operating Expenses Vanity had $545,720 in operating expenses for the three months ended June 30, 2010 of which $46,145 was from America’s Cleaning Company for the three months ended June 30, 2010 as compared to $50,577 for the Company in operating expenses for the three months ended June 30, 2009. The increase in operating expenses was primarily a result of increased payroll expenses and consulting and professional fees.

Other Income (Expenses) Vanity had $5,591 in other income (expenses) for the three months ended June 30, 2010 of which $0 was from America’s Cleaning Company for the three months ended June 30, 2010 as compared to $0 for the Company in other income (expenses) for the three months ended June 30, 2009. The increase in other income (expenses) was primarily a result of interest expense on the convertible note payable, amortization of debt discount and the gain on change in fair value of derivative liability.  

Net Loss was $542,142 of which $37,073 was from America’s Cleaning Company for the period ended June 30, 2010, as compared to $50,485 for the Company for the period ended June 30, 2009.  The increase in net loss is principally attributable to payroll expenses and selling, general and administrative cost incurred during the second quarter ended June 30, 2010.

SIX MONTHS ENDED JUNE 30, 2010 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2009

Revenues for the six months ended June 30, 2010 were $46,755 of which $44,772 was from America’s Cleaning Company, compared to $1,592 for the Company for the six months ended June 30, 2009. The increase in revenues was primarily a result of increased activity in America’s Cleaning Company operations.

Cost of Sales were $28,779 of which $20,079 was from America’s Cleaning Company for the six months ended June 30, 2010 as compared to $0 for the Company for the three months ended June 30, 2009.  The increase in Cost of Sales was primarily a result of increased activity in Americas Cleaning Company operations.

Payroll Expenses were $775,282 of which $81,626 was from America’s Cleaning Company for the six months ended June 30, 2010 as compared to $0 for the Company for the six months ended June 30, 2009. The increase in Payroll Expense was primarily a result of increased in numbers of  salaried employees in the company.

Selling, General and Administrative ("SG&A") expenses consisted primarily of expenses for consulting and professional fees.  For the six months ended June 30, 2010, SG & A was $636,296 of which $20,689 was from America’s Cleaning Company as compared to $61,436 for the Company for the six months ended June 30, 2009. The increase in Selling, General and Administrative costs was primarily a result of payroll expenses and consulting and professional fees.

Operating Expenses Vanity had $1,454,102 in operating expenses of which $102,578 was from America’s Cleaning Company for the six months ended June 30, 2010 as compared to $61,436 for the Company in operating expenses for the six months ended June 30, 2009. The increase in operating expenses was primarily a result of increased payroll expenses and consulting and professional fees.

Other Income (Expenses) Vanity had $5,591 in other income (expenses) for the six months ended June 30, 2010 of which $0 was from America’s Cleaning Company for the six months ended June 30, 2010 as compared to $0 for the Company in other income (expenses) for the six months ended June 30, 2009. The increase in other income (expenses) was primarily a result of interest expense on the convertible note payable, amortization of debt discount and the gain on change in fair value of derivative liability.

Net Loss was $1,441,717 of which $77,903 was from America’s Cleaning Company for the period ended June 30, 2010, as compared to $59,844 for the Company for the period ended June 30, 2009.  The increase in net loss is principally attributable to payroll expenses incurred as a result of new employees hired by the Company and selling, general and administrative cost incurred during the six months ended June 30, 2010.

Liquidity and Capital Resources:

As of June 30, 2010, the Company had $64 in cash and cash equivalents as compared to $21,596 as of June 30, 2009 and $1,363,993 as of December 31, 2009.  The decrease from December 31, 2009 was mainly due to payments of a portion of payroll expenses and selling, general, and administrative expenses, in addition to an increase in loans due from related parties / shareholders under the direction of our former director and CEO, Steven Y. Moskowitz without proper approval of the board of directors. These related parties consist of SpongeTech Delivery Systems, Inc.; RM Enterprises International, Ltd.; Flo Weinberg Inc.; and/or any other companies and/or individuals where applicable that Mr. Moskowitz is or was an officer and or shareholder.

Operating Activities For the six months ended June 30, 2010, net cash used in operating activities was $944,330, of which $5,245 was from America’s Cleaning Company, primarily attributable to operations and consulting and professional fees. Net cash used in operating activities for the six months ended June 30, 2009 was $57,950. The increase is primarily attributable to an increase in SG&A costs.

17

Investing Activities For the six months ended June 30, 2010, net cash used in investing activities was $6,932, of which $4,170 was from America’s Cleaning Company, primarily related to the purchase of fixed assets, software and licenses. Net cash used in investing activities for the six months ended June 30, 2009 was $0. The increase is primarily related to the purchase of fixed assets, software and licenses.

Financing Activities Net cash used in financing activities for the six months ended June 30, 2010 was $412,667. The increase in net cashed used in financing activities is primarily attributable to loans made to the company and to repayment of loans made by certain related parties / shareholders, which Steven Y. Moskowitz, our former CEO and director was affiliated at the time without prior ratification by the Company’s board of directors. These related parties are or were under common ownership / control and/or management of Steven Y. Moskowitz, where Steven Y. Moskowitz was an officer and/or shareholder. Net cash provided by financing activities during the six months ended June 30, 2009 was $76,025 and was primarily attributable to advances / procee ds received from the same related parties / shareholders as discussed above.

The funds used in financing activities as discussed above are far exceed the $330,000 we raised / received during the six months ended June 30, 2010 as compared to $76,025 funds received during the six months ended June 30, 2009, which was primarily due to:

1)   $15,000 proceeds from issuance of 1,000,000 shares of the Company's common stock for cash

2)   $215,000 proceeds from deposit of common stock issuance agreement entered with certain investors for which the shares were yet to be issued.

3)   $50,000 proceeds from the 10% Convertible Note Payable

4)   $50,000 funds received from an accredited investor in financing our operations

CRITICAL ACCOUNTING ESTIMATES

Significant Accounting Policies

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical.  Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this report.

General

The Company’s Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors.  Management believes that the accounting estimates employed an d the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Financial Statements.

Going Concern

The financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. If we were not to continue as a going concern, we would likely not be able to realize on our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. There can be no assurances that we will be successful in generating additional cash from equity or other sources to be used for operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Reverse Merger

The acquisition of Vanity Group was accounted for as a reverse merger whereby Vanity Group is identified as the acquiring entity for accounting purpose.  The reverse merger transaction is recorded as a recapitalization of Vanity Group pursuant to which Vanity Group is treated as the surviving and continuing entity although the Company is the legal acquirer rather than a business combination.  The Company did not recognize goodwill or any intangible assets in connection with this transaction.  Accordingly, the Company’s historical financial statements are those of Vanity Group.

18

Revenue recognition

The Company recognizes revenue from product or services sales in accordance with ASC 605 “Revenue Recognition”.  Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists (through written sales documentation); (2) delivery has occurred (through delivery into customer’s tanks and acceptance); (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured.  Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.  Provisions for estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded, although we have n ot experienced any such items to date and do not expect any significant provisions in the future.  We have no discount, rebate or warranty programs. The Company defers any revenue for which the product or services has not been delivered / rendered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.  Payments received in advance are deferred until revenue recognition is appropriate.  We have no post-delivery obligations related to our products / services.

Impairment of Long-Lived Assets

The Company follows ASC 360, "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted discounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived assets and certain identifiable intangibles will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultim ate disposition of the asset.  ASC 360 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less disposal costs.

Income Taxes

The Company utilizes ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. 

Effect of Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended June 30, 2010 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of June 30, 2010.

19

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

With the participation of our Chief Executive Officer and Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2010 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation and the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of June 30, 2010 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these materia l weaknesses are due to the small size of the Company’s accounting staff.  The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.  

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.

In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the quarter ended June 30, 2010 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the quarter ended June 30, 2010 are fairly stated, in all material respects, in accordance with US GAAP.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, th e realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls

During the fiscal quarter ended June 30, 2010, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting. As of the quarter ended March 31, 2010, the Company identified certain control deficiencies related to the Company’s flow of funds which resulted in Steven Moskowitz, a former officer and director of the Company, making certain loans to other companies with which he was affiliated at the time without prior ratification by the board of directors. Specifically, as of June 30, 2010, the Company had loan receivables totaling $617,424 as a result of a Note issued by the Company which was executed subsequently in April 2010 under the direction of the Company’s former CEO, Steven Moskowit z. As of August 17, 2010, the amounts of such loan receivables were $617,424. The Company’s management has implemented policies requiring all internal directors to periodically review banking statements as well adding automatic alerts regarding various transactions to be sent to internal directors. The Company is also evaluating measures and procedures that can be established to ensure that all such future corporate actions are reviewed and approved by the board of directors in advance. Further, as disclosed in Note 4 to the financial statements, the Company does not currently know whether it will be able to collect any further monies on this Note, and therefore has listed the value of the receivable as a contra-asset account on its financial statements. The Company is determining what options it may have in attempting to take action to collect on the note.

20

 PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, Vanity may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. Vanity is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

 ITEM 1A: RISK FACTORS

There have been no material changes to the risks to our business described in our Annual Report on Form-10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on April 19, 2010.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable. 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable. 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable. 

ITEM 4.

Reserved.

ITEM 5. OTHER INFORMATION.

Not applicable. 

ITEM 6. EXHIBITS

EXHIBIT NO.	DESCRIPTION
31.1	Certificate of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. (filed herewith)
31.2	Certificate of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. (filed herewith)
32.1	Certificate of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. (filed herewith)
32.2	Certificate of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. (filed herewith)

21

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VANITY EVENTS HOLDING, INC.
Date: August 18, 2010	By:	/s/ Samuel Wolf
		Name: Samuel Wolf
		Title: Principal Executive Officer
	By:	/s/ Eliezer Goldish
		Name: Eliezer Goldish
		Title: Principal Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on August 18, 2010, on behalf of the registrant and in the capacities Indicated.

Signature	Title	Date
/s/ Samuel Wolf	Director, Chief Executive Officer and President (Principal Executive Officer)	August 18, 2010
Samuel Wolf
/s/ Eliezer Goldish	Director, Chief Financial Officer and Principal Financial Officer	August 18, 2010
Eliezer Goldish

22