Entia Biosciences (ERGO) 10-Q 2011 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period ended September 30, 2011

[  ]	TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______.

Commission File Number:  000-52864

Total Nutraceutical Solutions, Inc.

 (Exact name of Registrant as specified in its charter)

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

80 Columbia St., 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 has submitted electronically and posted on its corporate Website, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 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 [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 November 14, 2011, 61,976,757 shares of the registrant's common stock, par value $0.001 per share, were outstanding.

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II – OTHER INFORMATION		21
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.	[Removed and Reserved]	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
SIGNATURES		23

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PART I – FINANCIAL INFORMATION

Item1. Financial Statements

TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
				September 30, 2011		December 31, 2010
				(Unaudited)
Assets
Current Assets:
	Cash		$	7,971	$	65,061
	Accounts receivable, net			44,107		10,469
	Inventory, net			179,535		177,098
	Prepaid expenses			12,884		37,814
	Current maturities of lease receivable			4,635		11,861
	Other current assets			11,158		14,950
		Total Current Assets		260,289		317,253
Property and Equipment, net				35,916		43,217
Patents and license, net				109,140		80,994
Lease receivable, net of current maturities				-		1,078
Total Assets			$	405,345	$	442,542
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
	Accounts payable and accrued expenses		$	290,596	$	183,973
	Accrued compensation - officer			246,426		157,028
	Short-term convertible notes payable, net of discount-related party			43,750		25,000
	Short-term convertible notes payable, net of discount			190,038		170,000
	Notes payable			3,949		14,744
		Total Current Liabilities		774,760		550,745
Long Term Liabilities:
	Convertible notes payable, net of discount			-		196,950
		Total Long Term Liabilities		-		196,950
Total Liabilities				774,760		747,695
Stockholders' Equity (Deficit)
	Preferred stock, $0.001 par value, 5,000,000 shares authorized,
		Series A preferred stock, 350,000 and zero shares designated,
		respectively, 41,500 and zero shares issued and outstanding,
		respectively, aggregate liquidation value of $207,500
		and zero, respectively		42		-
	Common stock, $0.001 par value, 150,000,000 shares authorized,
		61,976,757 and  58,362,470 shares issued and outstanding,
		respectively		62,178		58,363
	Additional paid-in capital			2,981,542		1,959,462
	Deferred compensation			(5,000)		(9,704)
	Accumulated deficit			(3,408,177)		(2,313,274)
		Total Stockholders' Equity (Deficit)		(369,415)		(305,153)
Total Liabilities and Stockholders' Equity (Deficit)			$	405,345	$	442,542
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
			Three months	Three Months	Nine Months	Nine Months
			Ending	Ending	Ending	Ending
			September 30, 2011	September 30, 2010	September 30, 2011	September 30, 2010
REVENUES			$ 108,566	$ 96,705	$ 309,309	$ 295,737
COST OF GOODS SOLD			15,128	39,644	100,744	123,343
GROSS PROFIT			93,437	57,061	208,564	172,394
OPERATING EXPENSES
	Advertising and promotion		11,419	17,170	82,110	161,037
	Sales commissions		-	2,084	-	18,449
	Consulting fees - officer		30,000	30,000	90,000	90,000
	Professional fees		30,986	26,625	133,460	89,705
	Consulting fees		45,057	247,445	358,703	331,673
	Impairment of intangible asset		-	-	106,642	-
	General and administrative		101,318	94,918	377,820	220,525
		Total Operating Expenses	218,780	418,243	1,148,735	911,389
LOSS FROM OPERATIONS			(125,343)	(361,182)	(940,171)	(738,995)
OTHER (INCOME) EXPENSES
	Interest income		-	(2,475)	(192)	(3,128)
	Interest expense		75,451	70,142	233,766	186,310
	Gain on disposal of product line		-	-	(78,842)	-
		Total Other Expense	75,451	67,667	154,732	183,182
LOSS BEFORE TAXES			(200,793)	(428,849)	(1,094,903)	(922,177)
INCOME TAXES			-	-	-	-
NET LOSS			$ (200,793)	$ (428,849)	$ (1,094,903)	$ (922,177)
NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:		$ (0.00)	$ (0.01)	$ (0.02)	$ (0.02)
	Weighted common shares outstanding
		- basic and diluted	61,976,757	52,773,270	61,490,495	52,268,870
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE INTERIM PERIOD ENDED SEPTEMBER 30, 2011
(UNAUDITED)
										Total
						Additional				Stockholders'
		Preferred Stock		Common Stock		Paid	Deferred	Accumulated		Equity
		Shares	Amount	Shares	Amount	In Capital	Compensation	Deficit		(Deficit)
Balance - December 31, 2010		-	-	58,362,470	58,363	1,959,462	(9,704)	(2,313,274)		(305,153)
Conversion of note payable into preferred stock		21,500	22			107,478				107,500
Issuance of preferred stock for cash		20,000	20			99,980				100,000
Issuance of warrants in connection with
	convertible notes payable					45,937				45,937
Beneficial conversion feature in connection with
	convertible note payable					167,030				167,030
Issuance of common stock for license agreement				1,000,000	1,000	99,000				100,000
Issuance of common stock for services				2,000,000	2,000	208,000				210,000
Issuance of common stock and warrants for cash				614,287	815	42,385				43,200
Stock compensation						206,655				206,655
Issuance of warrants for services						45,615	(42,844)			2,771
Amortization of deferred compensation							47,548			47,548
Net loss								(1,094,903)		(1,094,903)
Balance -September 30, 2011		41,500	42	61,976,757	62,178	2,981,542	(5,000)	(3,408,177)	$	(369,415)
See accompanying notes to the financial statements.

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TOTAL NUTRACEUTICAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
				Nine Months		Nine Months
				Ended		Ended
				September 30, 2011		September 30, 2010
				(Unaudited)		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$	(1,094,903)	$	(922,177)
Adjustments to reconcile net loss to net cash
	used in operating activities:
	Gain on disposal of product line			(78,842)		-
	Bad debt expense			2,059		-
	Depreciation			11,009		4,502
	Impairment of intangible asset			106,642		-
	Amortization of discount on convertible notes			222,933		166,011
	Stock-based compensation			467,131		244,531
	Changes in operating assets and liabilities:
		Accounts receivable		(11,433)		(64,969)
		Inventory		(23,501)		(2,451)
		Prepaid expenses		24,930		(178)
		Other current assets		3,792		(3,137)
		Accounts payable and accrued expenses		95,045		75,469
		Accrued compensation - officer		89,398		97,661
NET CASH USED IN OPERATING ACTIVITIES				(185,740)		(404,738)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Note Receivable			-		(62,500)
	Purchase of furniture and equipment			(3,708)		(29,808)
	Acquisition of patents and patents pending, net			(34,789)		(34,198)
	Collections on lease receivable			8,304		14,538
	Payments of lease receivable			-		(7,552)
NET CASH USED IN INVESTING ACTIVITIES				(30,193)		(119,520)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from issuance of common stock, preferred stock and warrants			143,200		-
	Proceeds from convertible notes payable short-term			-		100,000
	Proceeds from note payable			26,438		4,796
	Repayment of note payable			(10,795)		(17,633)
	Proceeds from convertible notes payable long-term			-		450,000
NET CASH PROVIDED BY FINANCING ACTIVITIES				158,843		537,163
NET CHANGE IN CASH				(57,090)		12,905
Cash at beginning of period				65,061		48,141
Cash at end of period			$	7,971	$	61,046
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
	Interest paid		$	1,674	$	485
	Taxes paid		$	-	$	-
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOWS FINANCING
	AND INVESTING ACTIVITIES:
	Stock issued for license		$	100,000
	Conversion of notes payable to preferred stock		$	107,500	$	-
	Warrants issued for services		$	45,615	$	26,480
See accompanying notes to the financial statements.

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Total Nutraceutical Solutions, Inc.

September 30, 2011 and 2010

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1 - ORGANIZATION AND OPERATIONS

Generic Marketing Services, Inc. was incorporated on July 19, 2007 under the laws of the State of Nevada as a subsidiary of Basic Services, Inc., also a Nevada corporation.   On December 31, 2007, Basic Services spun off Generic Marketing Services.  On October 8, 2008, Generic Marketing Services changed its name to Total Nutraceutical Solutions, Inc. (TNS, the Company, us, we, or our).  We engage in the distribution of organic dietary supplement nutraceutical products in the United States of America.

Effective May 27, 2011, we sold our Equisano dietary supplement product line and related rights, as defined, to an unrelated party.  Under the terms of the sale, we transferred our Equisano inventory to the purchaser, and negotiated the extension and conversion of notes payable into Series A preferred stock with a note holder as described in Note 6.  In addition, we are to receive cash consideration of $18,000 in connection with the sale.  The product line did not represent a reportable segment, operating segment, or asset group, and as such is not presented as discontinued operations in the consolidated financial statements.

On March 26, 2010 we entered into a Profit Sharing Agreement or Direct Marketing Affiliates Project (DMAP) with American Charter & Marketing LLC (ACM) and Delta Group Investments Limited (DGI), with the primary focus of undertaking a direct mail marketing campaign designed to sell nutraceutical products developed and manufactured by TNS.  We acted as Managing Affiliate.  DGI provided $300,000 in the form of a loan, as starting capital for the project.   The net profits of the DMAP project were to be shared with 25% going to the Company, 25% to DGI, 25% to ACM and 25% as a return on the initial loan.  This agreement was terminated effective February 17, 2011.

While the Company is attempting to generate sufficient revenues, our cash position may not be sufficient to support our daily operations.  Management intends to raise additional funds by way of a public 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 we believe in the viability of our strategy to generate revenues and in our 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 our ability to generate sufficient revenues.

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The accompanying consolidated 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, 2010 and notes thereto contained in the  Company’s Annual Report on Form 10-K filed with the SEC on May 18, 2011.

The consolidated financial statements include the accounts of the Company and the accounts of the DMAP for the period from March 26, 2010 (inception) through February 17, 2011.  All inter-company balances and transactions have been eliminated.

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Use of estimates

The preparation of financial statements in conformity with U.S. GAAP 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.

Inventory

Inventory, which consists primarily of raw materials to be used in the production of our dietary supplement products, is stated at the lower of cost or market using the weighted average cost method. We regularly review our inventory on hand and, when necessary, record a provision for excess or obsolete inventory.  The inventory reserve was $149,602 at both September 30, 2011 and December 31 2010.

Discount on convertible notes payable

We allocate the proceeds received from convertible notes between convertible notes payable and warrants, if applicable. The resulting discount for warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible note payable. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debt instrument.  The amortization is recorded as interest expense on the consolidated statement of operations.

Derivatives embedded in certain debt securities

We evaluate financial instruments for freestanding or embedded derivatives.  Derivative instruments that have been separated from the host contract and do not qualify for hedge accounting are recorded at fair value with changes in value recognized as other income (expense) in the consolidated statements of operations.

Fair value of financial instruments

We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

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	Unobservable inputs where there is little or no market data, which require the reporting entity to develop its ownassumptions.

The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued officer’s compensation, approximate their fair values because of the short maturity of these instruments.  Our lease receivable, notes payable and convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to TNS for similar financial arrangements.

We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis. Consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at the reporting date, nor any gains or losses reported in the consolidated 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.

Revenue recognition

We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectibility of amounts is reasonably assured.

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Revenues from the sale of products, including shipping and handling fees but excluding statutory taxes collected from customers, as applicable, are recognized when shipment has occurred. We sell our consumer products directly to customers utilizing network marketing programs, direct mail order, internet marketing and commission sales people and indirectly through resellers.  We also sell our ingredients directly to manufacturers of cosmetic and nutraceutical products indirectly through resellers.  Persuasive evidence of an arrangement is demonstrated via order and invoice, product delivery is evidenced by a bill of lading from the third party carrier and title transfers upon shipment, the sales price to the customer is fixed upon acceptance of the order and there is no separate sales rebate, discount, or volume incentive.

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

We account for all transactions in which goods or services are the consideration received for the issuance of equity instruments 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 is complete or the date on which it is probable that performance will occur.  Currently such transactions are primarily awards of warrants to purchase common stock.

The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The assumptions used to determine the fair value of our warrants are as follows:

· The expected life of warrants issued represents the period of time the warrants are expected to be outstanding.

· The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant.

· 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 warrant.

· The expected dividend yield is zero based on our current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the warrant.

Net loss per common share

Basic and diluted net loss per share has been computed by dividing our net loss by the weighted average number of common shares issued and outstanding. Potential common shares related to Series A convertible preferred stock, options and warrants to purchase our common stock as well as debt which is convertible into common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share for 2011 and 2010. The following table presents a reconciliation of basic and diluted loss per share:

	For the three months ending September 30,		For the nine months ending September 30
	2011	2010	2011	2010
Numerator:
Net loss applicable to common shareholders	$ (200,793)	$ (428,849)	$       (1,094,903)	$          (922,177)
Denominator:
Weighted-average common shares outstanding	61,976,757	52,773,270	61,490,495	52,268,870
Basic and diluted net loss per share	$ (0.00)	$ (0.01)	$ (0.02)	$ (0.02)
Common stock warrants	16,897,474	7,625,800	16,897,474	7,625,800
Series A convertible preferred stock	4,150,000	-	2,150,000	-
Convertible debt including interest	5,378,646	2,788,750	5,378,646	2,788,750
Excluded dilutive securities	26,426,120	10,414,550	24,426,120	10,414,550

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Reclassifications 

Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation.

Segments

We have determined that we operate in one segment for financial reporting purposes.

Recently issued accounting pronouncements

From time to time, new accounting guidance is issued by the Financial Accounting Standards Board that we adopt as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our financial statements.

NOTE 3 – INVENTORY

Inventory consists of the following:

	September 30, 2011	December 31, 2010
Raw Materials	$ 310,441	$ 293,391
Finished Goods	18,696	33,309
	329,137	326,700
Less:  reserve for excess and obsolete inventory	(149,602)	(149,602)
	$ 179,535	$ 177,098

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	September 30, 2011	December 31, 2010
Office equipment	$ 23,072	$ 19,364
Production equipment	30,964	30,964
Leasehold improvements	2,192	2,192
	56,228	52,520
Less:  accumulated depreciation	(20,312)	(9,303)
	$ 35,916	$ 43,217

NOTE 5 – NOTE PAYABLE

Note payable consists of the following:

	September 30, 2011		December 31, 2010
On July 26, 2011 we entered into a short term financing agreement for principal of $4,903 for director’s and officer’s insurance.  Payments are due monthly, with interest at 7.85% per annum.	$	3,949	$	12,300
On August 11, 2010 we entered into a short term financing agreement for principal of $4,796 for property insurance.  Payments are due monthly, with interest at 9.65% per annum. This note was paid in full in June 2011.		-		2,444
	$	3,949	$	14,744

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NOTE 6 – SHORT-TERM CONVERTIBLE NOTE PAYABLE

In January and February 2010, the Company received $250,000 from issuing 6% unsecured convertible notes.  The notes are convertible into shares of the Company's common stock at a price of $0.20 per share.  Warrants to purchase 1,250,000 shares of common stock at an exercise price of $0.10 were issued with the notes.  One $100,000 note matured on December 31, 2010, and notes with principal of $100,000 and $50,000 mature on December 31, 2011.

Under an agreement with the note holder and an unrelated entity for the sale of the Equisano dietary supplement product line, on May 27, 2011 the Company negotiated an extension of the term of the $50,000 note to June 30, 2012.  Under the same agreement, the $100,000 note that matured on December 31, 2010 was cancelled and the $100,000 note that was scheduled to mature on December 31, 2011 was converted into Series A preferred stock.

Proceeds from the notes were originally allocated between the notes and warrants on a relative fair value basis.  The total value originally allocated to the warrants was $123,750.  In addition, the beneficial conversion feature related to the notes was determined to be $126,250.  As a result, the discount on the notes totaled $250,000, and is being amortized over term of the notes.  The unamortized debt discount on the cancelled and converted notes was written off to the gain on disposal of product line during 2011.  Amortization of debt discount of approximately $7,181 and $41,712 was recorded for the three months and nine months ended September 30, 2011, and amortization of debt discount of approximately $45,641 and $131,035 was recorded for the three months and nine months ended September 30, 2010.  The balance of the convertible note payable, net of unamortized discount, was $42,820 at September 30, 2011, and is reported as a current liability on the accompanying consolidated balance sheets.

NOTE 7 – CONVERTIBLE NOTES PAYABLE - RELATED PARTY

On December 30, 2009, the Company received $50,000 from issuing a 6% unsecured convertible note due on December 31, 2011, jointly to the Company's CEO and one of the Company's Directors.  The note is convertible into shares of the Company's common stock at a price of $0.20 per share.  Warrants to purchase 250,000 shares of common stock at an exercise price of $0.10 were issued with the note.

Proceeds from the note were allocated between the note and warrants on a relative fair value basis.  The total value allocated to the warrants was $22,200.  In addition, the beneficial conversion feature related to the note was determined to be $27,800.  As a result, the discount on the note totaled $50,000, and is being amortized over term of the note.  Amortization of debt discount of approximately $6,250, $18,750, $6,250 and $18,750 was recorded for the three months and nine months ended September 30, 2011 and 2010, respectively.  The balance of the convertible note payable – related party, net of unamortized discount, was $43,750 at September 30, 2011, and is reported as a current liability on the accompanying consolidated balance sheets.

NOTE 8 – CONVERTIBLE NOTES PAYABLE

On March 26, 2010, the Company received $300,000 from issuing a 5% unsecured convertible note due on March 26, 2012.  The note was convertible into shares of the Company's common stock at a price of $0.25 per share.  Warrants to purchase 600,000 shares of common stock at an exercise price of $0.15 were issued with the note.

On January 26, 2011, the Company and the note holder agreed to cancel the original note.  Concurrently, the Company issued a replacement 5% convertible note with principal of $312,500 due on June 30, 2012.  The $312,500 note is convertible into shares of the Company's common stock at a price of $0.06 per share.  Warrants to purchase 600,000 shares of common stock at an exercise price of $0.12 were issued with the $312,500 note.  Approximately $49,600 of the debt discount on the original note remained unamortized and the value allocated to the warrants issued with the $312,500 note was approximately $45,900.  The beneficial conversion feature related to the $312,500 note was determined to be approximately $216,600.  As a result, the discount on the note totaled $312,100, and is being amortized over term of the note.  The balance of the convertible note payable, net of unamortized discount, was $147,218 at September 30, 2011, and is reported as a current liability on the accompanying consolidated balance sheets.

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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, $90,000, $30,000 and $90,000 for the three months and nine months ended September 30, 2011 and 2010, respectively.

NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock

On May 26, 2011, our board of directors designated 350,000 shares of preferred stock as Series A preferred stock, $0.001 par value.  The Series A preferred stock is entitled to a liquidation preference in the amount of $5 per share, votes on an as converted basis with the common stock on all matters as to which holders of common stock shall be entitled to vote, and is convertible into common stock on a one-for-one hundred basis.  In July 2011, the Company issued 20,000 shares of Series A preferred stock for $100,000.

Under the agreement for the sale of our Equisano dietary product line dated May 27, 2011 described above, 21,500 shares of Series A preferred stock were issued for conversion of an outstanding promissory note in the amount of $100,000 plus $7,500 in accrued interest.

Common stock

In February 2011, we opened a private placement offering to sell up to 2,142,857 units at an offering price of $0.07 per unit.  Each unit is comprised of one share of common stock $0.001 par value, and an “A” warrant to purchase one share of common stock exercisable at $0.20 per share and a “B” warrant to purchase one share of common stock exercisable at $0.40 per share.  This private placement offering closed on May 31, 2011 and 614,287 shares of common stock were issued for an aggregate funding amount of $43,000.

On August 26, 2010, we entered into a consulting agreement for marketing services.  Under this agreement the consultant will provide certain marketing services in exchange for 4,000,000 shares of our common stock valued at $420,000 at the date of grant, based upon the stock price on the date of grant.   2,000,000 shares were issued at signing and 2,000,000 shares were issued on January 3, 2011.

On February 3, 2011, our board of directors approved a grant of 1,000,000 shares of common stock to a third party in consideration for an Assignment and Assumption Agreement.  The stock was valued at $100,000 at the date of grant based upon the stock price on the grant date.  The shares were issued in April, 2011.  Upon the acquisition of the intangible asset, management determined the asset was impaired and recorded an impairment loss of $100,000.

Stock incentive plan

During the first quarter of 2011, we granted 2,379,998 options under our 2010 Stock Incentive Plan with a contractual term of 5 to 10 years and an aggregate fair value on the date of grant of $231,465.  The vesting schedule of these options ranges from immediate vesting to vesting over two years.

During the third quarter of 2011, we granted 1,040,000 options under our 2010 Stock Incentive Plan with a contractual term of 4 to 5 years and an aggregate fair value on the date of grant of $50,506.  The vesting schedule of these options ranges from immediate vesting to vesting over 3 years.

Stock-based compensation expense is recognized using the straight-line attribution method over the optionees’ requisite service period.  Stock-based compensation expense of approximately $42,100 and $206,700 was recorded for three months and nine months ending September 30, 2011, respectively and  stock compensation expense of zero was recorded for both the three and nine months ending September 30, 2010,  as a component of general and administrative expense.    

We use the Black-Scholes option-pricing model to determine the fair value of options on the date of grant.  In determining the fair value of options, we employed the following key assumptions.

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	Nine months ended September 30, 2011
Expected dividend yield	-
Expected stock price volatility	183.17% - 184.27%
Risk-free interest rate	1.63% - 2.00%
Expected term (in years)	4 - 5 years
Weighted-average grant date fair-value	$0.048

Warrants

During the third quarter of 2011, the company issued 50,000 warrants for the purchase of common stock in exchange for consulting services.  These warrants have a five year term and the exercise price is $0.25 per share.  The fair value of the warrants amounting to $2,771 was recorded as consulting fees in the accompanying consolidated financial statements.

During the second quarter of 2011, we issued warrants to purchase 1,016,100 shares of common stock under agreements for consulting services.  These warrants have exercise prices of $0.05 to $0.25 per share and have terms from five to seven years.  The fair value of warrants issued under consulting agreements amounting to $42,844 is recorded as deferred compensation.  The amortization of deferred compensation is recorded as consulting expense and was approximately $4,000 and $48,400 for the three months and nine months ending September 30, 2011.

In connection with the private placement of common stock on May 31, 2011, we issued warrants to purchase common stock to the investors.  There were a total of 614,287 warrants to purchase shares of common stock exercisable at $0.20 per share and 614,287 warrants to purchase shares of common stock exercisable at $0.40 per share.  These warrants have a term of three years.

During the first quarter of 2011, we issued warrants to purchase 600,000 shares of common stock at $0.12 per share in conjunction with the issuance of convertible promissory notes.  The warrants have a term of three years.   The fair value of these warrants was recorded as debt discount.  The amortization related to these warrants is recorded as interest expense and was $55,100 and $150,700 for the three and nine months ending September 30, 2011 and zero for the both the three and nine months ending September 30, 2010.

We use the Black-Scholes option-pricing model to determine the fair value of warrants on the date of grant. In determining the fair value of warrants, we employed the following key assumptions:

	Nine months ended	Nine months ended
	September 30, 2011	September 30, 2010
Expected dividend yield	-	-
Expected stock price volatility	187.22% - 193.64%	67.63% - 80.52%
Risk-free interest rate	0.79% - 2.53%	1.64% - 2.69%
Expected term (in years)	3 - 7 years	3 - 5 years
Weighted-average grant date fair-value	$0.04 - $0.10	$0.08 - $0.11

NOTE 11 – SUBSEQUENT EVENTS

On October 6, 2011, the Board of Directors agreed to consulting agreements with an accounting and finance service provider.  Under the agreements, the company issued 300,000 warrants with an exercise price of $0.05 per share and a five year term.

On October 6, 2011, the Board of Directors agreed to sales commission agreements with individuals that are based primarily on sales of TNS product.  Depending on sales benchmarks, a certain number of warrants will be vested.  Along with warrants, commissions of 10% of sales will be payable in cash as compensation.

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On November 7, 2011, the Company announced its intentions to seek shareholder approval at the Annual Shareholders Meeting in December to amend the Company’s Articles of Incorporation to change its name as part of its overall strategy to expand its biotechnology focus.  The Company is proposing to change its name to Entia Biosciences, Inc. and to transfer the TNS name to a newly formed subsidiary that will continue to concentrate on the sales and marketing of branded consumer products.  Entia Biosciences, Inc. will focus on research and development of needed therapeutic dietary supplements, technology acquisition and licensing, and institutional sales and branded and private label solutions.  In addition, the shareholders will be asked to approve a 1:10 reverse split of the Company’s common stock.

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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 our 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 looking statements: the strength of the domestic and local economies in which our 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 following 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, Inc. (TNS) is an emerging biotechnology company engaged in the discovery, formulation, and marketing of natural ingredients that can be used in organic nutraceutical and cosmetic products developed and sold by TNS and by third parties.  Our current portfolio of ingredients includes ERGO D2, vitamin D, L-Ergothioneine, beta-glucans, polyphenols and curcumin.  These highly potent antioxidants provide multiple health benefits for both humans and animals and address multi-billion dollar markets for inflammation control, immune system support, increased energy and stamina, reduced stress and anxiety, and hair and nail growth.  Mushroom dietary supplements have the nutritional potential to provide multiple health benefits for humans, including providing antioxidants, reducing inflammation, supporting the immune system, promoting healthy joints, increasing stamina, and reducing stress and anxiety.  We develop production and analytic technologies for food and nutritional supplements composed primarily of mushrooms.  We naturally enhance the vitamin D content of mushrooms supplied by domestic growers, utilizing TNS patent pending proprietary UV-light methodology at our Sherwood, Oregon facility.  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 also use our ingredients in nutraceutical products that we formulate and market to consumers.  We have developed mushroom based nutraceutical dietary supplement products that are made entirely of naturally occurring dietary substances which are manufactured under contract by third party contractors, Columbia Nutritional Services, Inc. of Vancouver, Washington and Pro-Tech Laboratories of Quitman, Texas.  We currently market three natural organic nutraceutical mushroom dietary supplement products, ImmuSANO,GlucoSANO, and Gröh, which has been designed to nutritionally support hair follicles and nail beds.  We sold our EquiSANO product for the equine market to FunGuys LLC on May 27, 2011. 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.  We sell our ingredients directly to manufacturers of cosmetic and nutraceutical products and indirectly through resellers.  We market and sell our consumer products directly to consumers utilizing network marketing programs, direct mail order, internet marketing, and commission sales people and indirectly through resellers.  Our current portfolio of consumer products include proprietary formulations of over the counter mushroom based nutraceutical products produced by outside contract manufacturers.  Fulfillment and distribution is performed at facilities in Stevenson, Washington, Sherwood, Oregon and Quitman, Texas.

We utilize novel clinical models, biomarkers, and analytical tools to validate the nutritional and clinical efficacy of our ingredients and the products that incorporate them.  Our scientific strategy and technology platform initially focused on the unique manufacturing and health benefits of specific bioactive nutrients found in certain whole natural mushrooms and their

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mycelial biomasses (mushroom powder and its active components).  In early 2011, we expanded into curcumin extracted from tumeric.  

Research and development of new ingredients and nutraceutical products are also performed under contract with outside laboratories, such as the Department of Food Science, Pennsylvania State University.

On May 27, 2011, we entered into an Asset Sales Agreement with FunGuys LLC and Mark C. Wolf, the Co-Manager of FunGuys, under which we agreed to sell to FunGuys all rights to the mushroom based nutraceutical product EquiSANO^TM, including our wholesale and retail customer accounts, product proprietary formulation and know-how and 556 Kilos of dried mushroom ingredients.  FunGuys LLC is one of our larger ingredients customers, has already developed a nutraceutical product for animals under the “D is for Dogs” brand, and intends to expand into the equine market.  EquiSANO^TM is formulated for consumption by horses, and is composed of a proprietary blend of 5 types of certified organic medicinal mushrooms, each of which contains bioactive nutrients that assist the horse in balancing cellular function and promoting a stronger immune system which is associated with increased resistance to infections.  

As consideration for the sale of EquiSANO^TM, Mark Wolf agreed to cancel the Convertible Promissory Note issued by TNS to Larry Johnson on January 12, 2010, in the principal amount of $100,000, with interest payable at maturity of 6% per annum.  This promissory note, which had matured on December 31, 2010 and remained unpaid, was assigned to by Mr. Johnson to Mr. Wolf on December 31, 2010.  In addition, Mr. Wolf agreed to extend the maturity date of a promissory note issued by TNS to him on February 18, 2010 in the principal amount of $50,000 and interest in the amount of 6% per annum, from December 31, 2011 to June 30, 2012.  Mr. Wolf also converted a promissory note in the amount of $107,500, including principal and accrued interest to the date of the Asset Sales Agreement, issued to him on February 18, 2010 into 21,500 shares of TNS Series A convertible preferred stock,.  In addition, FunGuys agreed to purchase TNS’s remaining inventory of EquiSANO plus a mutually agreed amount of TNS ingredients over the next three years provided the pricing of those ingredients remains competitive.

Quarterly Highlights

In August 2011 we announced that we have entered into a research agreement with Dr. Jack Rogers, Ph.D.., Associate Professor of Psychiatry and Neuroscience at Harvard Medical School and Director of the Neurochemistry Laboratory at Massachusetts General Hospital, to evaluate the therapeutic and prophylactic potential of Ergo-D2™ as a dietary therapy or as a palliative therapy for Parkinson’s disease patients.

Parkinson’s disease (PD) is a chronic progressive movement disorder characterized by shaking and difficulty with walking, movement and coordination. and affects over one million people in the United States. The cause is unknown and there is presently no cure. Alpha-synuclein has been identified as a genetic risk factor for PD and is a logical target for therapies such as the TNS dietary supplement Ergo-D2™, that have the potential to inhibit synthesis and accumulation as well as lower the toxicity of this protein.

Dr. Rogers will be working to measure in vivo the efficacy of Ergo-D2™ in repressing alpha-synuclein translation and promoting the survival and viability of dopaminergic neurons using the transgenic mouse model for PD.

Ergo-D2™ is a mushroom-based functional food ingredient containing Ergothioneine and Vitamin D2. Ergothioneine (Ergo) is made in few organisms, notably filamentous fungi, and is an amino acid whose chemistry differs from conventional sulfur-containing antioxidants such as glutathione and lipoic acid. Although L-Ergothioneine cannot be made in human cells, it is a powerful antioxidant that is present in some tissues at high levels and can only be absorbed from the diet. In humans, ERGO is taken up from the gut and concentrated in tissues by a specific genetically encoded transport protein called The Ergothioneine Transporter. In March 2010 we acquired the exclusive world-wide rights to this transporter from the University of Cologne, Cologne, Germany. The license comprises the patent application entitiled “Identification of Ergothioneine Transporter and Therapeutic Uses Thereof.” TNS has also filed a series of provisional use patents covering the application of Ergothioneine, Vitamin D2 and/or Ergo-D2™ in neuroinflammatory disease states associated with free radicals and oxidative stress, such as Alzheimer’s disease, Parkinson’s disease, post-traumatic stress disorder (PTSD), depression and other comorbid chronic inflammatory conditions.

In August 2011 we expanded our relationship with Penn State University.  We have acquired additional technology rights from the Penn State Research Foundation relating to our method of rapid generation of Vitamin D from mushrooms and fungi using pulsed, ultraviolet light. We have executed an addendum to its fully executed, exclusive license agreement covering

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non-Agaricus bisporus mushrooms that clarifies our rights to commercialize all ingestible and non-ingestible applications for such mushrooms on a global basis. In a separate agreement, We have also executed an exclusive license agreement for the Canadian patent rights using this technology for Agaricus bisporus mushrooms.

Results of Operations for the three and nine months ended September 30, 2011

During the three months and nine months ended September 30, 2011, we had a net loss of $(200,793) and $(1,094,903) respectively versus a net loss of $(428,849) and $(922,177)  for the same periods last year, respectively.  The decrease in the net loss for the three month period was primarily due to larger revenues and a decrease in expenses.  The increase in the net loss for the nine month period was primarily attributable to increased consulting expense, increased general and administrative expense and impairment of an intangible asset.   

Revenues

Revenues and Cost of Goods Sold (in thousands, except percentages):

	For the Three Months Ended September 30,		Change
	2011	2010	$	%
Revenues	$ 109	$ 97	$ 12	12%
Cost of Goods Sold	$ 15	$ 40	$ (25)	-63%
	For the Nine Months Ended September 30,		Change
	2011	2010	$	%
Revenues	$ 309	$ 296	$ 13	4%
Cost of Goods Sold	$ 101	$ 123	$ (22)	-18%

Revenues.  Revenues are generated primarily from the sale of our mushroom based nutraceutical dietary supplement products.  We generated $108,566 in revenues for the three months ended September 30, 2011 as compared to $96,705 in revenues for the same period last year.  The increase in revenues was primarily due to the increase in Groh sales.  For the nine month period ended September 30, 2011 our revenues increased by $13,000 due to the increase sales of Groh, our product designed to nutritionally support hair follicles and nail beds.  We generated $309,309 in revenues for the nine months ended September 30, 2011 as compared to $295,737 in revenues for the same period last year.  Overall, approximately 39% of our revenues came from sales of Groh, 25% came from sales of GlucoSANO and ImmunoSANO, 8% from sales of Nu-Flex products, 9% from sales of EquiSANO, and 19% from sales of bulk mushroom substrate and shipping revenue.

Cost of Goods Sold.    Cost of goods sold includes raw materials such as nutraceutical mushrooms, as well as production costs for manufacturing our supplement products.  Our cost of goods sold was $15,128 for the three months ended September 30, 2011 resulting in a gross profit of $93,437 as compared to a cost of goods sold of $39,644 and a gross profit of $57,061 for the three months ended September 30, 2010.  Our gross profit margin for the three months ending September 30, 2011 increased by 64.91% over three months ending September 30, 2010 while our gross profit margin for the nine months ending September 30, 2011 increased by 20.23% over nine months ended September 30, 2010.  The cause of the increase in gross profit is our production processes have become more efficient during 2011, which is our second year of production.

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 September 30, 2011, we did not have any employees.  Our Chief Executive Officer, Marvin S. Hausman, M.D. and our Vice President for Marketing and Sales, Devin Andres, have provided employee like services pursuant to consulting

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arrangements .  Both Dr. Hausman and Mr. Andres have subsequently entered into employment agreements with TNS on October 28, 2011.  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 September 30, 2011 we had cash of $7,971 as compared with cash of $65,061 on December 31, 2010.  We have incurred debts in an aggregate principal amount of $412,500 at various rates of interest.  $50,000 of debt plus accrued interest at 6% is due December 31, 2011, $312,500 plus accrued interest at 5% matures on June 30, 2012 and $50,000 and accrued interest at 6% matures on June 30, 2012.  Management believes the Company will be able to continue to generate funding so that the Company will have sufficient funds to remain operational through January 2012.

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 debt or equity financing, we may be unable to continue operations in the future.  In April 2011 we closed a private placement of units to two investors, with each unit comprised of one share of common stock, one A warrant exercisable at $0.20 per share and one B warrant exercisable at $0.40 per share, for a price of $0.07 per unit.  We had net proceeds of $43,000 from the private placement through the issuance of 614,287 units.  We have undertaken a private placement of convertible preferred stock for $1.5 million.  During third quarter 2011, we received net proceeds of $100,000 for issuing 20,000 shares of preferred stock.  In addition, under the agreement for the sale of our Equisano dietary product line dated May 27, 2011with FunGuys LLC and Mark Wolf described above, 21,500 shares of Series A preferred stock were issued for conversion of an outstanding promissory note in the amount of $100,000 plus $7,500 in accrued interest.

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.  Our 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.

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, 2010.

Subsequent Events

                On October 28, 2011 our President, Chief Executive Officer, Interim Chief Financial Officer and Chairman, Marvin S. Hausman, M.D. entered into an Employment Agreement with TNS.  Dr. Hausman will be compensated as follows:  (1)  a base salary of $250,000 of which $120,000 is to be paid in cash and the remaining $130,000 is to be paid in the form of 833,400 shares of common stock in four equal quarterly installments with the first installment of 208,350 shares issuable on the Commencement Date, an option to purchase 1,389,000 shares at $0.047 per share, and a ten year warrant to purchase 1,389,000 shares at $0.036 per share; (2) as a retention incentive, a warrant to purchase 5 million shares at $0.055 per share, and (3) an annual bonus which Dr. Hausman may be awarded at the discretion of the board of directors based on his performance and the financial condition of the corporation.  Dr. Hausman will also receive employee benefits, including family health and dental insurance coverage and short and long term disability insurance coverage.  In addition, Dr. Hausman was to be issued 8,342,334 shares of common stock in lieu of cash for accrued consulting fees due to Dr. Hausman and out of pocket expenses incurred in the aggregate amount of $300,300.

Also on October 28, 2011, Devin Andres, the Vice President of Operations entered into an Employment Agreement with TNS.  The agreement is for a one year term.  Mr. Andres will be compensated as follows:  (1)  a base salary of $175,000 of which

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$72,000 is to be paid in cash and the remaining $103,000 is to be paid in the form of 694,500 shares of common stock in four equal quarterly installments with the first installment of 173,625 shares issuable on the Commencement Date,, an option to purchase 1,083,420 shares at $0.047 per share, and a ten year warrant to purchase 1,083,420  shares at $0.036 per share; (2) as a retention incentive, a warrant to purchase 3.5 million shares at $0.055 per share, and (3) an annual bonus which Mr. Andres may be awarded at the discretion of the board of directors based on his performance and the financial condition of the corporation.  Mr. Andres will also receive employee benefits, including family health and dental insurance coverage and short and long term disability insurance coverage.

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 September 30, 2011.  Based on that evaluation, our principal executive officer and principal financial officer concluded that the material weaknesses identified in our management report on internal controls and procedures contained in our Form 10-K for the fiscal year ended December 31, 2010, Item 9A filed on May 18, 2011 still exist, and therefore our disclosure controls and procedures were not effective as of September 30, 2011.

Changes in Internal Control Over Financial Reporting

As of September 30, 2011, 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 September 30, 2011, 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, 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 

                We have undertaken a private placement of convertible preferred stock for $1.5 million.  During third quarter 2011, we had net proceeds of $100,000 for 20,000 shares of preferred stock to two investors.  In addition, under the agreement for the sale of our Equisano dietary product line dated May 27, 2011with FunGuys LLC and Mark Wolf described above, 21,500 shares of Series A preferred stock were issued for conversion of an outstanding promissory note in the amount of $100,000 plus $7,500 in accrued interest.  Each share of Series A preferred stock are initially convertible into one hundred shares of common stock, subject to adjustment pursuant to certain anti-dilution provisions.  The issuance of the preferred shares was exempt from registration based on Section 4(2) under the Securities Act.

Item 3.  Defaults Upon Senior Securities

None.

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

None.

Item 5.  Other Information

None.

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Item 6.  Exhibits 

Exhibit Number	Description of Exhibit	Filed Herewith	Form	Exhibit	Filing Date
3.1	Amended and Restated Articles of Incorporation of Registrant		8-K	3.1	10/29/2010
3.2	Amended and Restated Bylaws of Registrant		8-K	3.2	09/22/2010
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 Medical 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
10.6	$50,000 Promissory Note between TNS and Marvin S. Hausman, M.D. and Philip Sobol dated December 30, 2009		8-K	10.1	12/31/2010
10.7	$100,000 Promissory Note between TNS and Larry A. Johnson dated January 12, 2010		8-K	10.1	2/24/2010
10.8	$100,000 Promissory Note between TNS and Mark C. Wolf dated February 18, 2010		8-K	10.2	2/24/2010
10.9	$50,000 Promissory Note between TNS and Mark C. Wolf dated February 18, 2010		10-K	10.9	4/15/2010
10.10	Profit Sharing Agreement between TNS, American Charter & Marketing LLC, and Delta Group Investments, Limited dated March 26, 2010		10-K	10.10	4/15/2010
10.11	Form of Common Stock and Warrant Agreement 2010		8-K	10.1	12/20/2010
10.12	$312,500 Promissory Note between TNS and Delta Group Investments Limited dated January 26, 2011		8-K	10.2	2/22/2010
10.13	Termination of Profit Sharing Agreement dated February 21, 2011		8-K	10.1	2/22/2011
10.14	Lease Agreement between TNS and Sherwood Venture LLC dated March 15, 2011		8-K	10.1	4/6/2011
10.15	Form of Warrant A Agreement 2010		8-K	10.2	12/22/2010
10.16	Form of Warrant B Agreement 2010		8-K	10.3	12/22/2010
10.15	Form of Warrant A Agreement 2010		8-K	10.2	12/22/2010
10.16	Form of Warrant B Agreement 2010		8-K	10.3	12/22/2010
10.17	Asset Purchase Agreement between TNS, FunGuys, LLC and Mark C. Wolf dated May 27, 2011	X	8-K	10.1	3/3/2011
10.18	Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock of Total Nutraceutical Solutions, Inc. dated May 26, 2011.		8-K	10.3	3/3/2011
10.19	Employment Agreement between Marvin S. Hausman, M.D. and Total Nutraceutical Solutions, Inc. dated October 28, 2011.		8-K	10.1	11/2/2011
10.20	Employment Agreement between Devin Andres and Total Nutraceutical Solutions, Inc. dated October 28, 2011.		8-K	10.2	11/2/2011
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

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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.
November 14, 2011	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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