Entia Biosciences (ERGO) 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended June 30, 2010.
[  ]	Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from _______ to _______.

000-52864

(Commission file number)

Total Nutraceutical Solutions, Inc.

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

Nevada	26-0561199
(State or other jurisdiction	(IRS Employer
of incorporation or organization)	Identification No.)

PO Box 910, Stevenson, WA 98648

 (Address of principal executive offices)

(509) 427-5132

 (Registrant’s telephone number)

__________________________

 (Former name, former address and former fiscal year, if changed since last report)

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.   Yes [X]  No [  ]

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ]  No [X]

On August 20, 2010, 52,012,470 shares of the registrant's common stock, par value $.001 per share, were outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II – OTHER INFORMATION		22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Submission of Matters to a Vote of Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
SIGNATURES		23

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PART I – FINANCIAL INFORMATION

Item1. Financial Statements

Total Nutraceutical Solutions, Inc.

June 30, 2010 and 2009

Index to Consolidated Financial Statements

Contents

Page(s)

Consolidated Bala nce Sheets at June 30, 2010 (Unaudited) and December 31, 2009

4

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010 and 2009 (Unaudited)

5

Consolidated Statement of Stockholders’ Equity for the Interim Period Ended June 30, 2010 (Unaudited)

6

Consolida ted Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 (Unaudited)

7

Notes to the Consolidated Financial Statements (Unaudited)

8-18

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
				June 30, 2010		December 31, 2009
				(Unaudited)
Assets			&nb sp;
Current Assets
	Cash		$	109,655	$	48,141
	Accounts receivable			46,017		3,362
	Inventory			354,258		342,253
	Prepaid expenses			50,866		31,418
	Current maturities of lease receivable			12,726		11,328
	Notes receivable - related party			62,185		-
	Other current assets			882		-
		Total Current Assets		636,589		436,502
Property and Equipment
	Property and equipment			38,328		20,712
	Accumulated depreciation			(4,514)		(2,290)
		Property and Equipment, net		33,814		18,422
Patents acquired and patents pending				62,242		35,984
Lease receivable, net of current maturities				6,523		12,237
Total Assets			$	739,168	$	503,145
Liabilities and Stockholders' Equity
Current Liabilities:
	Accounts payable		$	129,045	$	111,347
	Accounts payable - officer			53,979		10,000
	Note payable, net of discount			48,718		-
	Note payable			4,231		16,703
		Total Current Liabilities		235,973		138,050
Long Term Liabilities:
	Convertible notes payable - related party, net of discount			12,500		-
	Convertible notes payable, net of discount			187,000		-
		Total Long Term Liabilities		199,500		-
Total Liabilities				435,473		138,050
Stockholders' Equity
	Preferred stock, $.001 par value, 5,000,000 shares authorized,
		none issued or outstanding		-		-
	Common stock, $.001 par value, 70,000,000 shares authorized,
		52,012,470 shares issued and outstanding		52,013		52,013
	Additional paid-in capital			1,576,539		1,148,009
	Deferred compensation			(16,905)		(20,303)
	Accumulated deficit			(1,307,952)		(814,624)
		Total Stockholders' Equity		303,695		365,095
Total Liabilities and Stockholders' Equity			$	739,168	$	503,145
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
					Three Months			Three Months			Six Months			Six Months
					Ended			Ended			Ended			Ended
					June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
REVENUES		$	174,134		$	-		$	199,032		$	-
COST OF GOODS SOLD					64,193			-			83,699			-
GROSS PROFIT					109,941			-			115,333			-
OPERATING EXPENSES
	Advertising and promotion				127,045			4,360			143,867			15,755
	Sales commissions				6,400			-			16,365			-
	Professional fees				27,638			12,400			63,080			33,991
	Consulting fees				37,986			38,435			84,228			96,507
	Consulting fee - officer				30,000			-			60,000			-
	General and administrative				74,517			31,982			125,606			91,389
		Total Operating Expenses			303,586			87,177			493,146			237,642
LOSS FROM OPERATIONS					(193,645)			(87,177)			(377,813)			(237,642)
OTHER (INCOME) EXPENSES				&nbs p;
	Interest income				(376)			(1,307)			(653)			(1,307)
	Interest expense				73,252			-			116,168			-
	Other income				-			-			-			(883)
		Total Other (Income) Expense			72,876			(1,307)			115,515			(2,190)
LOSS BEFORE TAXE S					(266,521)			(85,870)			(493,328)			(235,452)
INCOME TAXES					-			-			-			-
NET LOSS				$	(266,521)		$	(85,870)		$	(493,328)		$	(235,452)
NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:			$	(0.01)		$	(0.00)		$	(0.01)		$	(0.00)
	Weighted common shares  outstanding
		- basic and diluted			52,012,470			50,853,803			52,012,470			50,447,230
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE INTERIM PERIOD ENDED JUNE 30, 2010
(UNAUDITED)
		Common				Additional						Total
		Stock		Par		Paid		Deferred		Accumulated		Stockholders'
		Shares		Value		In Capital		Compensation		Deficit		Equity
										&nb sp;
Balance - December 31, 2008		49,673,750	$	49,674	$	510,776	$	-	$	(120,170)	$	440,280
Shares issued for cash in February 2009,
	net of offering costs of $15,000	600,000		600		104,430						105,030
Warrants issued in connection with the
	sale of common shares in February 2009					29,970						29,970
Issuance of warrants for future services in February 2009						8,360		(8,360)				-
Issuance of warrants for future services in April 2009						8,530		(8,530)				-
Shares issued for agreement in March 2009		720		1		179						180
Shares issued for cash in June 2009,
	net of offering costs of $47,068	1,638,000		1,638		265,112	& nbsp;					266,750
Warrants issued in connection with the
	sale of common shares in June 2009					95,682						95,682
Issuance of warrants for future services in July 2009						21,250		(21,250)				-
Issuance of warrants for future services in September 2009						4,250		(4,250)				-
Shares issued for cash in September 2009		100,000		100		24,900						25,000
Warrants issued for future services in October 2009						9,570		(9,570)				-
Warrants issued for future services in December 2009						15,000		(7,500)				7,500
Issuance of warrants in connection
	with convertible note payable in December 2009					22,200						22,200
Beneficial conversion feature in connection
	with convertible note payable in December 2009					27,800						27,800
Amortization of deferred compensation								39,157				39,157
Net loss										(694,454)		(694,454)
Balance - December 31, 2009		52,012,470		52,013		1,148,009		(20,303)		(814,624)		365,095
Issuance of warrants in connection with short-term
	convertible note payable issued in January 2010					49,200						49,200
Beneficial conversion feature in connection with short-term
	convertible note payable issued in January 2010					50,800&n bsp;			;			50,800
Issuance of warrants in connection with
	convertible note payable issued in February 2010					74,550						74,550
Beneficial conversion feature in connection with
	convertible note payable issued in February 2010					75,450						75,450
Issuance of warrants in connection with
	convertible note payable issued in March 2010					78,000						78,000
Beneficial conversion feature in connection with
	convertible note payable issued in March 2010					78,000						78,000
Issuance of warrants for future services in January						18,750		(18,750)				-
Amortization of deferred compensation in 1st quarter								13,741				13,741
Issuance of warrants for future services in June						3,780		(3,780)
Amortization of deferred compensation in 2nd quarter								12,187				12,187
Net loss										(493,328)		(493,328)
Balance - June 30, 2010		52,012,470	$	52,013	$	1,576,539	$	(16,905)	$	(1,307,952)	$	303,695
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
							Six Months		Six Months
							Ended		Ended
							June 30, 2010		June 30, 2009
							(Unaudited)		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			��			$	(493,328)	$	(235,452)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation						2,224		343
	Amortization of discount on short-term convertible note payable				&nbs p;		48,718		-
	Amortization of discount on convertible notes payable - related parties						12,500		-
	Amortization of discount on convertible notes payable						43,000		-
	Stock-based compensation				& nbsp;		25,928		6,125
	Changes in operating assets and liabilities:
		Accounts receivable					(42,655)		-
		Inventory					(12,005)		(10,500)
		Prepaid expenses					(19,448)		13,925
		Other current assets					(882)		(1,692)
		Accounts payable					17,698		23,060
		Related party payable					43,979		-
NET CASH USED IN OPERATING ACTIVITIES							(374,271)		(204,191)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Note receivable						(62,185)		(135,000)
	Purchase of furniture and equipment						(17,616)		(3,960)
	Patents acquired and patents pending			& nbsp;			(26,258)		-
	Lease receivable						9,036		(26,835)
	Payment of lease receivable						(4,720)		-
NET CASH USED IN INVESTING ACTIVITIES							(101,743)		(165,795)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from convertible notes payable						100,000		-
	Repayment of note payable						(12,472)		(12,335)
	Proceeds from convertible notes payable						450,000		-
	Payable t o related party						-		(14,058)
	Proceeds from sale of common stock, net of offering cost						-		497,612
NET CASH PROVIDED BY FINANCING ACTIVITIES							537,528		471,219
NET CHANGE IN CASH			;				61,514		101,233
						& nbsp;
Cash at beginning of period							48,141		273,171
Cash at end of period						$	109,655	$	374,404
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
	Interest paid					$	575	$	383
	Taxes paid					$	-	$	-
								&nbs p;
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOWS FINANCING
	AND INVESTING ACTIVITIED:
	Warrants issued for future services					$	22,530	$	-
See accompanying notes to the financial statements.

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 Total Nutraceutical Solutions, Inc.

June 30, 2010 and 2009

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1 - ORGANIZATION AND OPERATIONS

Generic Marketing Services, Inc. (“Generic Marketing Services”) was incorporated on July 19, 2007 under the laws of the State of Nevada.  The company was incorporated as a subsidiary of Basic Services, Inc. (“Basic Services”), a Nevada corporation.   On December 31, 2007, Basic Services decided to spin off its subsidia ry.  On October 8, 2008, Generic Marketing Services filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its corporate name from Generic Marketing Services, Inc. to “Total Nutraceutical Solutions, Inc.” (“TNS” or the “Company”).  The Company engages in the distribution of organic nutraceutical products in the United States of America.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full year.  These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2009 and notes thereto contained in the information as part of the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2010.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the 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.

Fiscal year end

The Company elected July 31 as its initial fiscal year end date upon its formation.  On November 11, 2008, the Company changed its fiscal year end date from July 31 to Dec ember 31.

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts receivable

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts.  Allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable.  The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.  The allowance for doubtful accounts was zero at June 30, 2010 and December 31, 2009.  Bad debt expense is included in general and administrative expenses, if any.

Outstanding account balances are reviewed individually for collectability.  Account balances are charged off against allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The Company does not have any off-balance-sheet credit exposure to its customers.

Inventory

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The Company values its inventory, consisting of purchased raw materials and finished goods, at the lower of cost or market.  Cost is determined on the First-in and First-out (“FIFO”) method.  The Company regularly reviews its inventory on hand and, when necessary, records a provision for excess or obsolete inventory based primarily on current selling price.  The Company determined that there was no inventory obsolescence as of June 30, 2010 or December 31, 2009.

Property and equipment

Property and equipment are recorded at cost.  Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of three (3) or five (5) years.  Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Patents acquired and patents pending

The Company has adopted the guidelines as set out in subtopic 350-30 of the FASB Accounting Standards Codification (“Subtopic 350-30”) for patents.  Under the requirements as set out in Subtopic 350-30, the Company amortizes the costs of acquired patents over their remaining legal lives, estimated useful lives, or the term of the contract, whichever is shorter.  All internally developed process costs incurr ed to the point when a patent application is to be filed are expensed as incurred and classified as research and development costs.  Patent application costs, generally legal costs, thereafter incurred, are capitalized pending disposition of the individual patent application, and are subsequently either amortized based on the initial patent life granted, generally fifteen (15) to twenty (20) years for domestic patents and five (5) to twenty (20) years for foreign patents, or expensed if the patent application is rejected.  The costs of defending and maintaining patents are expensed as incurred.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

Impairment of long-lived assets

The Company follows paragraph 360-10-35-17 of the FASB Accounting Sta ndards Codification for its long-lived assets. The Company’s long-lived assets, which include property and equipment, patents acquired and patents pending are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remai ning estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.  The Company determined that there were no impairments of long-lived assets as of June 30, 2010 or December 31, 2009.

Lease receivable

The Company follows paragraph 840-30-35-23 of the FASB Accounting Standards Codification and amortizes the unearned income and initial direct costs on a direct financing lease to income over the term of the lease to produce a constant periodic rate of return on the net investment in the lease.

Discount on convertible notes payable

The Company follows subtopic 470-20 of the FASB Accounting Standards Codification (“Subtopic 470-20”) “Debt with Conversion and Other Options,” when accounting for convertible notes payable. The Company allocates the proceeds received between convertible notes payable and warrants, if applicable. The resulting warrants discount from the face amount of the convertible notes payable is amortized using the effective interest method over the life of the debt instruments. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible notes payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature needs to be recorded as a discount to the convertible notes payable. The beneficial conversion feature discount needs to be amortized using the effective interest method over the life of the debt instruments.  

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (“U.S. GAAP”),

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and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued officer’s compensation, approximate their fair values because of the short maturity of these instruments.  The Company’s lease receivable, note payable and convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be availab le to the Company for similar financial arrangements at June 30, 2010 and December 31, 2009.

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at June 30, 2010 or December 31, 2009, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the interim periods ended June 30, 2010 or 2009.

Revenue recognition

The Company foll ows the guidance of paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company recognizes its revenue from sales contracts with customers with revenues being generated upon the shipment of product.  Persuasive evidence of an arrangement is demonstrated via invoice, product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from the trucking company or third party carrier and title transfers upon shipment, b ased on free on board (“FOB”) warehouse; the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.

Shipping and handling costs

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification.  While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as incurred.

Advertising costs

Adverti sing costs are expensed as incurred.

Equity instruments issued to parties other than employees for acquiring goods or services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section 505-50-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance i s complete or the date on which it is probable that performance will occur.

The fair value of each option/warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for stock options and warrants are as follows:

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· The expected life of options/warrants granted is derived from paragraph 718-10-S99-1 of the FASB Accounting Standards Codification and represents the period of time the options are expected to be outstanding.

· The expected volatility is based on a combination of the historical volatility of comparable companies’ stock over the contractual life of the options.

· The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option/warrant.

· The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.

The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.  Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option/warrant exercises.

Collaborative arrangement – profit sharing agreement

The Company adopted subtopic 808-10 of the FASB Accounting Standards Codification which applies to participants in collaborative arrangements that are conducted without the creation of a separate legal entity for the arrangement. The scope of this Issue does not include arrangements for which the accounting is specifically addressed within the scope of other authoritative accounting literature. To the extent that an arrangement is within the scope of other authoritative accounting literature, the arrangement should be accounted for in accordance with the relevant provisions of that literature rather than the guidance in this Issue. The scope of this Issue is not limited to specific industries, such as the biotechnology and pharmaceutical industries or arrangements that involve intellectual property. This Issue does not address recognition matters related to these arrangements, such as determining the appropriate units of accounting, the appropriate recognition requirements for a given unit of accounting, or when the recognition criteria are met. Sinc e, the participants in the arrangement with TNS, Direct Marketing Affiliates Project (DMAP), with American Charter & Marketing LLC (ACM) and Delta Group Investments Limited (DGI) operate without a separate entity, TNS should recognize its proportional share of DMAP’s statement of operations provided that all participants share proportional risk and rewards, however, in its DMAP arrangement, DGI's loan was guaranteed by TNS and ACM's risk is its sales people's time only and its incremental cost is insignificant and TNS has all the risk when DMAP incurs net losses from operations and should consolidate 100% of DMAP operations without reclassifying the noncontrolling interest holders proportional shares in the net loss from DMAP operations as the other two (2) participants did not contribute any capital to DMAP.

Income taxes

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires 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 tax assets and liabilities are based on the differences 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.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recog nized in the consolidated statements of income and comprehensive income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”).  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also prov ides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Commitments and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

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Net loss per common share

Net loss per common share is computed pursuant to paragraph of 260-10-45-10 of the FASB Accounting Standards Codification.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.  Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period to reflect the potential dilution.

The following table shows the weighted-average number of potentially o utstanding dilutive shares excluded from the diluted net loss per share calculation for the interim periods ended June 30, 2010 and 2009 as they were anti-dilutive.

	Weighted average number of potentially outstanding dilutive shares
	For the three months ended June 30, 2010		For the three months ended June 30, 2009		For the six months ended June 30, 2010		For the six months ended June 30, 2009
Warrants issued, exercisable and outstanding in connection with the sale of common stock from August 2008 through October 2008		2,650,000		2,650,000		2,650,000		2,650,000
Warrants issued, exercisable and outstanding in connection with the sale of common stock on February 3, 2009		660,000		660,000		660,000		660,000
Warrants issued, exercisable and outstanding as compensation on February 3, 2009		50,000		50,000	& nbsp;	50,000		50,000
Warrants issued, exercisable and outstanding as compensation on April 1, 2009		50,000		50,000		50,000		50,000
Warrants issued, exercisable and outstanding in connection with the sale of common stock June 9, 2009		1,801,800		1,801,800		1,801,800&nbs p;		1,801,800
Warrants issued, exercisable and outstanding as compensation from June 2009 to September 2009		150,000		-		150,000	&n bsp;	-
Warrants issued, exercisable and outstanding as compensation from October 1, 2009, to December 31, 2009		169,000		-		169,000		-
Convertible notes payable issued on December 30, 2009 maturing on December 31, 2011 with 6.0% interest per annum, convertible to common shares at $.20 per share		250,000		-		250,000		-
Warrants issued, exercisable and outstanding in connection with the issuance of Convertible notes payable on December 30, 2009		250,000		-		250,000		-
Warrants issued, exercisable and outstanding as compensation on January 1, 2010		125,000		-		125,000		-
Convertible notes payable issued on January 12, 2010, February 18, 2010 and March 26, 2010, convertible to common shares		2,450,000		-		2,450,000		-

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Warrants issued, exercisable and outstanding in connection with the issuance of Convertible notes payable on January 12, 2010, February 18, 2010 and March 31, 2010	1,850,000	-	1,850,000	-
Interests accrued on convertible notes payable, convertible to common shares	53,424	-	53,424	-
Warrants issued, exercisable and outstanding as compensation from April 2010 to June 2010	27,000	-	27,000	-
Total potentially outstanding dilutive shares	10,536,224	5,211,800	10,536,224	5,211,800

Cash flows reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether th ey stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Reclassifications

Certain reclassifications have been made in our fiscal 2009 financial statements to conform to current year’s presentation of financial information.

Recently issued accounting pronouncements

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01 “Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share (“EPS”)).  Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting Standards codification.  The amendments in this Update also provide a technical correction to the Accounting Standards Codification.  The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary.  That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders.  It also indicates that the proportional interest of each shareholder remains the same, and is a key factor to consider in determining whether a distribution is a stock dividend.

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-02 “Consolidation Topic 810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification”, which provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to the following:

1.

A subsidiary or group of assets that is a business or nonprofit activity

2.

A subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture

3.

An exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).

The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the following transactions even if they involve businesses:

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1.

Sales of in substance real estate.  Entities should apply the sale of real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment) and 976-605 (Retail/Land) to such transactions.

2.

Conveyances of oil and gas mineral rights.  Entities should apply the mineral property conveyance and related transactions guidance in Subtopic 932-360 (Oil and Gas-Property, Plant, and Equipment) to such transactions.

If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership is addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10.

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

NOTE 2 – GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $1,307,952 at June 30, 2010 and had a net loss and cash used in operations of $493,328 and $374,271 at June 30, 2010, respectively.

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient to support the Company’s daily operations.  Management intends to raise additional funds by way of a p ublic or private offering.  Management believes that the actions presently being taken to generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – INVENTORIES

Inventories at Ju ne 30, 2010 and December 31, 2009 consisted of the following:

	June 30, 2010		December 31, 2009
Raw materials	$	297,274	$	321,229
Finished g oods		56,984		21,024
	$	354,258	$	342,253

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment, stated at cost, less accumulated depreciation at June 30, 2010 and December 31, 2009 consisted of the following:

	Estimated Useful Life (Years)	June 30, 2010			December 31, 2009
Office equipment	3	$	9,364		$	5,261
Production equipment	3 to 5		28,964			15,451
			38,328			20,712
Less accumulated depreciation			(4,514	)		(2,290	)
		$	33,814		$	18,422

NOTE 5 – NOTE PAYABLE

Note payable at June 30, 2010 and December 31, 2009 consisted of the following:

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	June 30, 2010		December 31, 2009
On November 12, 2009 the Company entered into a short term financing agreement of $18,750 for Director’s and Officer’s Insurance.  Repayment is to be paid over nine (9) months, at interest of 5.25% per annum.		4,231		16,703
	$	4,231	$	16,703

NOTE 6 – CONVERTIBLE NOTE PAYABLE

On January 12, 2010, the Company entered into a 6% convertible note payable of $100,000 (“Convertible Note”) with Larry Johnson (the “Payee”) maturing on December 31, 2010. The Payee has the option to convert the outstanding note and interest due to Company restricted common shares at $.20 per share at any time prior to December 31, 2010. In connection with the issuance of the Convertible Note, the Company granted the Payee a warrant to purchase 500,000 common shares exercisable at $0.10 per share expiring five (5) year from the date of issuance.

The relative fair value of the warrant granted, estimated on the date of grant, was $49,200, which was recorded as a discount to the short-term convertible note using the Black-Scholes option-pricing model with the following assumptions:

Expected option life (year)	5.00
Expected volatility	72.67	%
Risk-free interest rate	2.49	%
Dividend yield	0.00	%

After allocating the $49,200, portion of the proceeds to the warrant, the effective conversion price of the short-term convertible note payable was lower than the market price at the date of issuance and per calculation the remaining balance of the net proceeds of $50,800 was allocated to a beneficial conversion feature. The company credited $50,800 to additional paid-in capital and debited the same amount to the discount to the short-term convertible note payable.

Convertible note payable at June 30, 2010 and December 31, 2009 consisted of the following:

	June 30, 2010			December 31, 2009
Convertible note payable
Face amount of convertible note payable	$	100,000		$	-
Discount representing (i) the relative fair value of the warrants issued in connection with the issuance of the short-term convertible note and (ii) the beneficial conversion feature		(100,000	)		-
Accumulated amortization of discount		48,718			-
	$	48,718		$	-

NOTE 7 – CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

On December 30, 2009, the Company entered into two (2) 6% convertible notes payable of $25,000 each, or $50,000 in aggregate (“Convertible Notes”) with (i) Marvin Hausman, M.D., Chief Executive Officer, Director and Stockholder of the Company and (ii) Philip Sobol, a Director of the Company (the “Payees”) maturing on December 31, 2011. Convertible Notes, at the discretion of the Payees, is due and payable in the event that the Company completes a capital fund raising of any amount greater than $250,000.  If the Company completes such a capital fund raising, the Payees shall have 30 days from the close of the fundraising to exercise their right to convert their debt to equity in the form of restricted common stock.  The Payees have the option to convert the outstanding notes and interest due into Company restricted common shares at $.20 per share at any time after the fundraising but prior to December 31, 2011. In connection with the issuance of Convertible Notes, the Company granted the Payees warrants to purchase 250,000 common shares exercisable at $0.10 per share expiring five (5) year from the date of issuance.

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The relative fair value of these warrants granted, estimated on the date of grant, was $22,200, which was originally recorded as a discount to convertible notes payable, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected option life (year)	5.00
Expected volatility	80.52	%
Risk-free interest rate	2.69	%
Dividend yield	0.00	%

After allocating the $22,200, portion of the proceeds to the warrants, the effective conversion price of the convertible notes payable was lower than the market price at the date of issuance and therefore the remaining balance of the net proceeds of $27,800 has been assigned as a beneficial conversion feature of $27,800 which was recorded by crediting $27,800 to additional paid-in capital and debiting the same amount to the discount to the convertible notes payable.

Convertible notes payable – related parties at June 30, 2010 and December 31, 2009 consisted of the following:

	June 30, 2010			December 31, 2009
Convertible note payable – related parties
Face amount of the Convertible note payable – related parties, originated on December 30, 2009, with interest at 6.00% per annum, with principal and interest due December 31, 2011.	$	50,000		$	50,000
Discount representing (i) the relative fair value of the warrants issued of $22,200 and (ii) the beneficial conversion feature of $27,800		(50,000	)		(50,000	)
Accumulated amortization of discount		12,500			-
	$	12,500		$	-

NOTE 8 – CONVERTIBLE NOTES PAYABLE

On March 26, 2010, the Company entered into a 5% convertible note payable of $300,000 (“Convertible Note& #148;) with Delta Group Investments Limited (the “Payee”) maturing on March 26, 2013. The Payee has the option to convert the outstanding note into Company restricted common shares at $.25 per share at any time prior to payment in full of the principal balance of the Convertible Note. The Convertible Note is callable at the option of the Company at the rate of $.25 per share, if the stock closes at $1.00 per share or higher for thirty (30) consecutive trading days. In connection with the issuance of the Convertible Note, the Company granted the Payee warrants to purchase 600,000 common shares exercisable at $0.15 per share expiring three (3) years from the date of issuance.

The relative fair value of these warrants granted, estimated on the date of grant, was $78,000, which was recorded as a discount to the convertible note payable, using the Black-Scholes option-pricing model with the following wei ghted-average assumptions:

Expected option life (year)	3.00
Expected volatility	67.63	%
Risk-free interest rate	1.64	%
Dividend yield	0.00	%

After allocating the $78,000, portion of the proceeds to the warrants, an additional $78,000 was allocated to a beneficial conversion feature by crediting additional $78,000 to additional paid-in capital and debiting the same amount to the discount to the convertible notes payable.

On February 18, 2010, the Company entered into two 6% convertible notes payable of $150,000 in aggregate (“Convertible Notes”) with Mark Wolf (the “Payee”) maturing on December 31, 2011. The Payee has the option to convert the outstanding notes and interest due into Company restricted common shares at $.20 per share at any time prior to December 31, 2011. In connection with the issuance of Convertible Notes, the Company granted to the Payee warrants to purchase 750,000 common shares exercisable at $0.10 per share expiring five (5) year from the date of issuance.

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The relative fair value of these warrants granted, estimated on the date of grant, was $74,550, which was recorded as a discount to convertible notes payable, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected option life (year)	5.00
Expected volatility	78.08%
Risk-free interest rate	2.46%
Dividend yield	0.00%

After allocating the $74,550 portion of the proceeds to the warrants, the effective conversion price of the convertible notes payable was lower than the market price at the date of issuance and per calculation the remaining balance of the net proceeds of $75,450 was allocated to a beneficial conversion feature. The company credited the $75,450 to additional paid-in capital and debited the same amoun t to the discount to the convertible notes payable.

Convertible notes payable at June 30, 2010 and December 31, 2009 consisted of the following:

	June 30, 2010			December 31, 2009
Convertible notes payable
Face amount of convertible notes payable	$	450,000		$	-
Discount representing (i) the relative fair value of the warrants issued and (ii) the beneficial conversion features		(306,000	)		-
Accumulated amortization of discount on convertible notes payable		43,000			-
	$	187,000		$	-

NOTE 9 – RELATED PARTY TRANSACTIONS

Consulting services from Chairman and CEO

Consulting services provided by and compensation to the Chairman and CEO were $30,000 and $60,000 and $0 and $0 for the three months and six months ended June 30, 2010 and 2009, respectively.

Due to and due from Related Parties

The Company transferred the $300,000 borrowed from Delta Group Investments Limited (see Note 8) to the Direct Marketing Affiliates Program.  

The Company loaned $62,500 to one of the principals of American Charter Marketing.  The funds were transferred from the Direct Marketing Affiliates Program.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Collaborative arrangement - profit sharing agreement

On March 26, 2010 the Company entered into a Profit Sharing Agreement or Direct Marketing Affiliates Project (DMAP) with American Charter & Marketing LLC (ACM) and Delta Group In vestments Limited (DGI) (jointly, referred to as Participants), with the primary focus of undertaking a direct mail marketing campaign designed to sell Nutraceutical products developed and manufactured by the Company.  The participants agreed that the Company will act as Managing Affiliate.  DGI will provide $300,000 in the form of a loan, as starting capital for the project (see Note 8).   Net profit, if any will be allocated to the participants of DMAP as follows:

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	TNS	DGI	ACM	Repayment of $300,000 Loan (principal and interest )
Until $300K principal and interest has been repaid to DGI	25%	25%	25%	25%
After $300K note is repaid till DGI has received another $300K	33.3%	33.4%	33.3%
There after	45%	10%	45%

Allocation of net profits shall be done on a quarterly basis by TNS, the managing affiliate. DGI and ACM have the option to convert their net profit allocations into shares of common stock of TNS and DGI has the option at any time to convert any portion of the loan principal and interest into TNS shares of common stock at $0.25 per share.

The DMAP can be terminated upon the expiration of the three (3) year term, upon the election to terminate by all of the affiliates or upon 90 day prior notice from any of the affiliates.  Upon termination the property and assets of the association and such cash shall be allocated first to the payment of creditors of the DMAP, for the reserves for contingent or unforeseen liabilities of the association as deemed necessary by TNS as the managing affiliate, then to the repayment of affiliates to the extent of loans made to the DMAP, and finally to the payment of affiliates in respect of their interest in the capital and the profits and losses of the DMAP.  If there are not sufficient funds at the time of the liquidation to repay in full the $300,000 loan from Delta Group plus accrued interest, TNS will be liable for the payment of any shortfall.

The DMAP project is to be in effect for three (3) years from date of execution or when any affiliate gives termination notice.   ;The DMAP agreement contains an option to convert profits into shares of restricted common stock.  

NOTE 11 – SUBSEQUENT EVENTS

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were no reportable subsequent events to be disclosed.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

We may from time to time make written or oral "forward-looking statements" including statements contained in this report and in other communications, which are made in good faith by us pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements of our plans, objectives, expectations, estimates and intentions, which are subject to change based on various important factors (some of which are beyond the Company's control).  The following factors, in addition to others not listed, could cause our actual results to differ materially from those expressed in forward lookin g statements: the strength of the domestic and local economies in which the Company conducts operations, the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on our suppliers and customers, changes in client needs and consumer spending habits, the impact of competition and technological change on our company, our ability to manage its growth effectively, including its ability to successfully integrate any business which it might acquire, and currency fluctuations. All forward-looking statements in this report are based upon information available to us on the date of this report.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

The fol lowing discussion and analysis should be read in conjunction with our financial statements and the notes thereto appearing in Part I, Item 1.

Overview of Current Operations

Total Nutraceutical Solutions is an emerging nutraceutical company with a focus on discovering, formulating and marketing products composed primarily of organic natural mushrooms that contain bioactive nutrients for potential health benefits.  Mushroom dietary supplements have the nutritional potential to provide multiple health benefits for humans, including providing antioxidants, reducing inflammation, nutritionally supporting cellular and immune system function, promoting healthy joints, increasing stamina, and reducing stress and anxiety.  We develop production and analytic technologies for food and nutritional supplements composed primar ily of mushrooms.  In addition to preventative healthcare formulations and nutritional approaches to a wide variety of human conditions and illnesses, we also develop and acquire nutritional tools and products in the fields of animal husbandry and livestock feeds.

We have developed mushroom based nutraceutical dietary supplement products that are made entirely of naturally occurring dietary substances which are manufactured under contract by a third party, Columbia Nutritional Services, Inc..  We currently market three  natural organic nutraceutical mushroom dietary supplement products, ImmuSANO and GlucoSANO for human consumption and EquiSANO for the equine market.  These naturally occurring dietary substances have not been chemically altered, and we believe these products have both health benefits and mass appeal to people wanting natural and non-toxic nutritional-based healthcare.   ;During the quarter ending June 30, 2010 we initiated sales of a new nutricosmetic product, Gröh which has been designed to nutritionally support  hair follicles and  nail beds.

We market our products directly to the consumer utilizing network marketing programs, including our Direct Marketing Affiliates Project described below, direct mail order, internet marketing, and commission sales people.  We sell directly to consumers our own proprietary formulations of over the counter mushroom based nutraceutical and nutricosmetic products produced by an outside contract manufacturer.  

In March 2010 we entered into a Profit Sharing Agreement with American Charter Marketing , Inc. (ACM) and Delta Group Investments Limited under which we agreed to form an association referred to as the Direct Marketing Affiliates Project (DMAP).  Pursuant to the agreement the parties agree to work together to undertake a direct mail campaign designed to sell certain TNS nutraceutical products for a period of three years, with the day to day management and control of business operations of the association being vested in TNS as the managing affiliate.

One of the affiliates, Delta Group Investments Limited made an initial contribution to the association in the form of a $300,000 loan with interest at 5% per annum.  This loan shall be repaid by the association through allocation of 25% of net profits from the marketing and sale of new TNS nutraceutical products going to repayment of the loan and 25% of net profits going to each affiliate of the association.  Once Delta Group has been repaid the loan with interest, the percentage of allocation shall be shifted so that TNS, ACM and Delta Group shall rece ive equal shares of net profits. Once Delta Group has been repaid the loan with interest and in addition has received $300,000 in net profit allocations, the percentage of allocation shall be shifted so that TNS and ACM shall each receive 45% of the net profits and Delta Group shall receive the remaining 10% of net profits.  Allocation of net profits shall be done on a quarterly basis by the managing affiliate, TNS.  Delta Group and ACM have the

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option to convert their net profit allocations into shares of common stock of TNS and Delta Group has the option at any time to convert any portion of the loan principal and interest into TNS shares of common stock at $0.25 per share.

The marketing association can be terminated upon the expiration of the three year term, upon the election to terminate by all of the affiliates or upon 90 day prior notice from any of the affiliates.  Upon termination the property and assets of the association and such cash shall be allocated first to the payment of creditors of the association, for the reserves for contingent or unforeseen liabilities of the association as deemed necessary by TNS as the managing affiliate, then to the repayment of affiliates to the extent of loans made to the association, and finally to the payment of affiliates in respect of their interest in the capital and the profits and losses of the association.  If there are not sufficient funds at the time of the liquidation to repay in full the $300,000 loan from Delta Group plus accrued interest, TNS will be liable for the payment of any shortfall.

Results of Operations for the qua rter ended June 30, 2010

Our financial statements are now consolidated to include the financial results of the DMAP or Direct Marketing Affiliates Project described above.  During the six months ended June 30, 2010, we had a net loss of $(493,328) versus a $(235,452) net loss for the same period last year,  the increase in the net loss was attributable to an increase in marketing and promotional expenses, and consulting fees as we continue to grow our business. Our total operating expenses increased from $87,177 for the six months ended June 30, 2009 to $303,586 for the three months ended June 30, 2010.  Total liabilities increased from $138,050 on December 31, 2009 to $435,473 on June 30, 2010.  This increase was primarily due to the origination of notes payable during the first quarter in an aggregate face amount of $550,000 without discounts.

Revenues

We generated $174,134 in total revenues for the three months ended June 30, 2010 as compared to no revenues for the same period last year.  Our cost of goods sold was $64,193 for the quarter resulting in a gross profit of $109,941.  Revenues have increased from $24,898 for the quarter ended March 31, 2010, an increase of 600%.  

Going Concern

Our independent auditors have included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Expected purchase or sale of plant and significant equipment

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

Significant changes in the number of employees

As of June 30, 2010, we did not have any employees.  Our Chief Executive Officer, Marvin S. Hausman, M.D. provides employee like services pursuant to a consulting arrangement.  As our operations expand, we anticipate the need to hire employees however, the exact number of employees that would be hired is not quantifiable at this time.

Liquidity and Capital Resources

As of June 30, 2010 we had cash of $109,655 compared to cash of $266,279 as of March 31, 2010 and $48,141 as of December 31, 2009.  We incurred debts in an aggregate principal amount of $550,000 at various rates of interest during the quarter ended March 31, 2010 of which $150,000 plus 6% interest matures on December 31, 2010.  The rest of the debt matures as follows:  $100,000 plus interest at 6% matures on December 31, 2011 and the unpaid balance of $300,000 plus interest at 5%.  The proceeds from this $300,000 convertible promissory note with Delta Group was transferred to the Direct Marketing Affiliates Project and is subject to the Profit Sharing Agreement described above under which the loan shall be repaid on a quarterly basis from net profits generated under the agreement.  The promissory note matures in March 2013.  If ther e are not sufficient funds at the time of the liquidation of the Direct Marketing Affiliates Project to repay in full the $300,000 loan from Delta Group plus accrued interest, TNS will be liable for the payment of any shortfall.  TNS loaned $50,000 at 6% interest per annum on January 15, 2010 to Gary Ballen and American Charter Marketing, Inc., one of the affiliates of the Direct Marketing Affiliates Project, which promissory note matures on September 30, 2010.  On February 25, 2010, TNS also loaned an additional $12,500 to Gary Ballen and American Charter Marketing, Inc also at interest of 6% per annum with the promissory note maturing on June 30, 2010.  To date this second promissory note has not been repaid, but the management is confident that it will be repaid within the next two months.  Given that our CEO Dr. Hausman has been accruing his monthly consulting fee since June 2010 and other consultants to the company are similarly accruing their consulting fees, allowing us to conserve our operating cash. Management believes it has sufficient funds to remain operational through September 2010.

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We anticipate that we will continue to generate losses during the remainder of this fiscal year and therefore, unless we are able to raise capital through equity private placements we may be unable to continue operations in the future.  Additional working capital may also be sought through additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these.  The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought.  

There can be no assurance that additional debt or equity capital will be available to us.  We currently have no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

New Accounting Standards

Please see Note 2 of the Notes to Financial Statements in this quarterly report concerning new accounting standards.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not required

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer who is also our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2010.  Based on that evaluation, our principal executive officer and principal financial officer concluded that the ma terial weaknesses identified in our management report on internal controls and procedures contained in our Form 10-K, Item 9A filed on April 15, 2010 still exist, and therefore our disclosure controls and procedures were not effective as of June 30, 2010.

Changes in Internal Control Over Financial Reporting

As of the end of the quarter ended June 30, 2010, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended June 30, 2010, that materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.

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Part II.  OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, we 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 our business.

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

Item 1A.  Risk Factors

See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and the discussion above in Part I, Item 2, under " Liquidity and Capital Resources.”

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.

Item 5.  Other Information

None.

Item 6.  Exhibits 

Exhibit Number	Description of Exhibit	Filed Herewith	Form	Exhibit	Filing Date
3.1	Articles of Incorporation of Registrant		SB-2	3.1	08/06/2007
3.2	Bylaws of Registrant		SB-2	3.2	08/06/2007
3.3	Amended Articles of Merger Incorporation as currently in effect		8-K	3.3	10/13/2008
10.1	Exclusive Option Agreement dated May 1, 2006, between The Penn State Research Foundation and Northwest Medical Research Inc.		8-K	10.1	09/04/2008
10.2	Assignment Agreement to the Option Agreement, dated July 31, 2008, among The Penn State Research Foundation, Northwest Me dical Research Inc. and Generic Marketing Services, Inc.		8-K	10.2	09/04/2008
10.3	Assignment and Assumption Agreement, dated July 31, 2008, between Northwest Medical Research Inc. and Generic Marketing Services, Inc.		8-K	10.3	09/04/2008
10.4	Form of Common Stock and Warrant Purchase Agreement		8-K	10.1	06/12/2009
				;
10.5	Form of Securities Purchase Agreement		8-K	10.1	09/21/2009

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31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended.	X
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).	X
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).	X

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
	Total Nutraceutical Solutions, Inc.
August 20, 2010	By:	/ s/ Marvin Hausman, M.D.
		Marvin Hausman, M.D. Chief Executive Officer (Principal Executive Officer and Acting Principal Financial and Accounting Officer)

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