UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10Q





(Mark
One)




x
            Quarterly
      Report Under Section 13 or 15(D) of the Securities Exchange Act of
      1934





For the
quarterly period ended June 30, 2009





 ̈
            Transition
      Report Under Section 13 or 15(D) of the Securities Exchange Act of
      1934





For the
transition period from __________ to __________





VIBE RECORDS, INC.
NEVADA


(Exact
name of registrant as specified in its charter)





Nevada
              0-51107
              71-0928242(State
      of Incorporation)
              (Commission
      File Number)
              (I.R.S.
      Employer Identification
                Number)





824
      Old Country Road, P.O. Box 8, Westbury N.Y. 11590
                11590(Address
      of principal executive offices)
                (Zip
      code)





(516)
333-2400


(Registrant's
telephone number, including area code)





Indicate
by check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject such filing requirements for the past 90
days. Yes xNo
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or smaller reporting
company.  See 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
      companyx





Indicate
by check mark if the registrant is a shell company (as defined in Rule 12b-2 of
the Act).


Yes ̈Nox





As of
August 14, 2009, the number of shares of common stock, par value $0.0001 per
share, outstanding was 20,779,267.





VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)





Form
10-Q


For
the Quarterly Period Ended June 30, 2009





Table
of Contents





PagePART
      I
                Financial
      InformationItem
      1.
                Financial
      StatementsBalance
      Sheets
                2Statements
      of Operations and Comprehensive Loss
                3-4Statements
      of Cash Flows
                5Notes
      to Consolidated Financial Statements (Unaudited)
                6-16Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                17Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                19Item
      4.
                Controls
      and Procedures
                19PART
      II
                Other
      Information
                20Item
      1.
                Legal
      Proceedings
                20Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                22Item
      3.
                Defaults
      Upon Senior Securities
                22Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                22Item
      5.
                Other
      Information
                22Item
      6.
                Exhibits
                23




1


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)





Balance
Sheets


June 30, 2009
                            
                            
                            September 30, 2008Unaudited
                            
                            
                            AuditedCURRENT
      ASSETS:Cash
      on hand and in bank
                            
                            $
                            28,129
                            
                            
                            $
                            -NET
      PROPERTY AND EQUIPMENT (Note 4)
                            
                            
                            56,782
                            
                            
                            
                            31,420Due
      from affiliated entities
                            
                            
                            -
                            
                            
                            
                            182,709TOTAL
      ASSETS
                            
                            $
                            84,911
                            
                            
                            $
                            214,129LIABILITIES
      AND STOCKHOLDERS DEFICITCURRENT
      LIABILITIES:Bank
      overdraft
                            
                            $
                            16,889
                            
                            
                            $
                            417Notes
      payable
                            
                            
                            2,493,704
                            
                            
                            
                            2,415,667Due
      to Shareholders
                            
                            
                            26,950
                            
                            
                            
                            -Accrued
      interest payable
                            
                            
                            795,084
                            
                            
                            
                            633,562Accounts
      payable and accrued expenses
                            
                            
                            321,811
                            
                            
                            
                            180,145TOTAL
      LIABILITIES
                            
                            
                            3,654,438
                            
                            
                            
                            3,229,791COMMITMENTS
      AND CONTINGENCIES
                            
                            
                            -
                            
                            
                            
                            -STOCKHOLDERS
      DEFICITCommon
      stock - $.0001 par value, 550,000,000 authorized; 20,779,267 and
      14,564,267 issued and outstanding, respectively
                            
                            
                            2,078
                            
                            
                            
                            1,456Series
      A Convertible Preferred Stock - $.001 par value, 200,000 shares
      authorized, no shares issued and outstanding, respectively
                            
                            
                            -
                            
                            
                            
                            -Series
      B Convertible Preferred Stock - $.001 par value, 200,000 shares
      authorized, no shares issued and outstanding, respectively
                            
                            
                            -
                            
                            
                            
                            -Additional
      paid in capital
                            
                            
                            2,525,176
                            
                            
                            
                            2,128,247Accumulated
      deficit
                            
                            
                            (5,361,914
                            )
                            
                            
                            (4,410,498
                            )(2,834,660
                            )
                            
                            
                            (2,280,795
                            )Less:
      Treasury stock - 734,867 and 734,867 shares, respectively
                            
                            
                            (734,867
                            )
                            
                            
                            (734,867
                            )TOTAL
      STOCKHOLDERS DEFICIT
                            
                            
                            (3,569,527
                            )
                            
                            
                            (3,015,662
                            )TOTAL
      LIABILITIES AND STOCKHOLDERS DEFICIT
                            
                            $
                            84,911
                            
                            
                            $
                            214,129





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


2


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)





Statements
of Operations and Comprehensive Loss


for
the Nine Months Ended June 30,





January 13,
                              2003InceptionThrough2009
                            
                            
                            2008
                            
                            
                            June 30, 2009REVENUES
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -OPERATING
      EXPENSESResearch
      and artist developments costs
                            
                            
                            52,001
                            
                            
                            
                            120,396
                            
                            
                            
                            585,379General
      and administrative expenses
                            
                            
                            401,476
                            
                            
                            
                            77,329
                            
                            
                            
                            3,037,896Professional
      fees
                            
                            
                            314,771
                            
                            
                            
                            90,733
                            
                            
                            
                            783,586TOTAL
      OPERATING EXPENSES
                            
                            
                            768,248
                            
                            
                            
                            288,458
                            
                            
                            
                            4,406,861(LOSS)
      FROM OPERATIONS
                            
                            
                            (768,248
                            )
                            
                            
                            (288,458
                            )
                            
                            
                            (4,406,861
                            )OTHER
      EXPENSES (INTEREST)
                            
                            
                            (183,169
                            )
                            
                            
                            (137,209
                            )
                            
                            
                            (949,124
                            )NET
      (LOSS) BEFORE INCOME TAXES
                            
                            
                            (951,417
                            )
                            
                            
                            (425,667
                            )
                            
                            
                            (5,355,985
                            )PROVISION
      FOR INCOME TAXES
                            
                            
                            -
                            
                            
                            
                            275
                            
                            
                            
                            (5,930
                            )NET
      (LOSS)
                            
                            $
                            (951,417
                            )
                            
                            $
                            (425,942
                            )
                            
                            $
                            (5,350,055
                            )Loss
      per weighted-average share of common stock outstanding, computed on net
      loss-basic and fully diluted
                            
                            $
                            (0.06
                            )
                            
                            $
                            (0.03
                            )Weighted-average
      number of shares of common stock outstanding basic and fully
      diluted
                            
                            
                            16,780,274
                            
                            
                            
                            14,564,267





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


3


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)





Statements
of Operations and Comprehensive Loss


for
the Three Months Ended June 30,





2009
                                
                                
                                2008REVENUES
                                
                                $
                                -
                                
                                
                                $
                                -OPERATING
      EXPENSESResearch
      and artist developments costs
                                
                                
                                1,738
                                
                                
                                
                                14,218General
      and administrative expenses
                                
                                
                                314,290
                                
                                
                                
                                25,695Professional
      fees
                                
                                
                                179,081
                                
                                
                                
                                38,200TOTAL
      OPERATING EXPENSES
                                
                                
                                495,109
                                
                                
                                
                                78,113(LOSS)
      FROM OPERATIONS
                                
                                
                                (495,109
                                )
                                
                                
                                (78,113
                                )OTHER
      EXPENSES (INTEREST)
                                
                                
                                (54,099
                                )
                                
                                
                                (48,975
                                )NET
      (LOSS) BEFORE INCOME TAXES
                                
                                
                                (549,208
                                )
                                
                                
                                (127,088
                                )PROVISION
      FOR INCOME TAXES
                                
                                
                                -
                                
                                
                                
                                -NET
      (LOSS)
                                
                                $
                                (549,208
                                )
                                
                                $
                                (127,088
                                )Loss
      per weighted-average share of common stock outstanding, computed on net
      loss-basic and fully diluted
                                
                                $
                                (0.03
                                )
                                
                                $
                                (0.01
                                )Weighted-average
      number of shares of common stock outstanding basic and fully
      diluted
                                
                                
                                19,805,696
                                
                                
                                
                                14,564,267





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


4


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)





Statements
of Cash Flows


for
the Nine Months Ended June 30,


January 13, 2003InceptionThrough2009
                          
                          
                          2008
                          
                          
                          June 30, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss for the year
                          
                          $
                          (951,417
                          )
                          
                          $
                          (425,942
                          )
                          
                          $
                          (5,361,915
                          )Adjustments
      to reconcile net loss to netcash
      provided by operating activities:Non
      cash expenses related to stock issuances
                          
                          
                          397,552
                          
                          
                          
                          -
                          
                          
                          
                          397,552Depreciation
                          
                          
                          8,946
                          
                          
                          
                          8,808
                          
                          
                          
                          36,570Increase
      (Decrease) inAccounts
      payable
                          
                          
                          141,666
                          
                          
                          
                          62,954
                          
                          
                          
                          321,811Accrued
      interest payable
                          
                          
                          161,522
                          
                          
                          
                          107,239
                          
                          
                          
                          795,084NET
      CASH (USED) IN OPERATING ACTIVITIES
                          
                          
                          (241,731
                          )
                          
                          
                          (246,941
                          )
                          
                          
                          (3,810,898
                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      paid to acquire property and equipment
                          
                          
                          (34,308
                          )
                          
                          
                          (5,810
                          )
                          
                          
                          (93,352
                          )NET
      CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES
                          
                          
                          (34,308
                          )
                          
                          
                          (5,810
                          )
                          
                          
                          (93,352
                          )CASH
      FLOWS FROM FINANCING ACTIVITIES:Cash
      advanced to/from affiliated parties
                          
                          
                          12,709
                          
                          
                          
                          (59,163
                          )
                          
                          
                          -Cash
      received on notes payable
                          
                          
                          78,037
                          
                          
                          
                          958,487
                          
                          
                          
                          4,398,824Due
      to shareholders
                          
                          
                          26,950
                          
                          
                          
                          -
                          
                          
                          
                          26,950Increase
      in bank overdraft
                          
                          
                          16,472
                          
                          
                          
                          1,959
                          
                          
                          
                          16,472Purchase
      of treasury stock
                          
                          
                          -
                          
                          
                          
                          (660,000
                          )
                          
                          
                          (509,867
                          )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                          
                          
                          304,168
                          
                          
                          
                          241,283
                          
                          
                          
                          3,932,379INCREASE
      (DECREASE) IN CASH
                          
                          
                          28,129
                          
                          
                          
                          (11,468
                          )
                          
                          
                          28,129CASH
      AT BEGINNING OF PERIOD
                          
                          
                          -
                          
                          
                          
                          11,468
                          
                          
                          
                          -CASH
      AT END OF PERIOD
                          
                          
                          28,129
                          
                          
                          
                          -
                          
                          
                          
                          28,129SUPPLEMENTAL
      DISCLOSURE OF INTEREST ANDINCOME
      TAXES PAIDInterest
      paid during the period
                          
                          $
                          24,808
                          
                          
                          $
                          29,970
                          
                          
                          $
                          156,841Income
      taxes paid during the period
                          
                          $
                          -
                          
                          
                          $
                          275
                          
                          
                          $
                          5,930SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTINGAND
      FINANCING ACTIVITIESNote
      payable converting to common stock
                          
                          $
                          45,000
                          
                          
                          $
                          -Affiliate
      loans used to pay note payable
                          
                          
                          182,709
                          
                          
                          $
                          -





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


5


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
1 - NATURE OF BUSINESS





Organization and
Nature of Operations-On January 17, 2003, Vibe Records, Inc. (formerly Benaquista Galleries,
Inc.) (“the Company”) was organized under the laws of the State of Nevada to do
business as an independent record label.  As an independent label it
distributes and produces recordings in all electronic forms as well as operates
a recording and production facility.





The
Company intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year.  The
Company utilizes a highly focused artist selection process.  The
artist’s value will be significantly increased through the support of the
Company’s specialized and well seasoned management team, modest recording
budgets supported by a state of-the-art recording studio, strategic alliances
with a renowned audio engineer, and the use of a major manufacturing and
distributing firm.  Furthermore, the Company will utilize these
economic efficiencies to seek out and enter into agreements with pre-established
artists.  Arrangements with established artists will allow the Company
to offer profit sharing ventures with established artists in which the artists
submit their master recordings (while retaining their own ownership rights) and
license the master recordings to the Company for manufacture, distribution and
promotion.





The
Company will also house and operate state of the art recording and production
facilities.  The facilities will be utilized not only by the Company’s
internal artist roster but also will be available for outside
contracting.





Through
these and other endeavors, the Company intends to simultaneously promote and
brand the Vibe Records label.  The Company has relied principally upon
cash flows from equity issuances and capital contributions from its majority
shareholders to sustain operations.





On May
30, 2008, the Company completed a share exchange acquisition with Vibe Records,
Inc. (a privately held Delaware corporation).  The Company acquired
100% of the stock of Vibe for 13,489,201 shares of Benacquista
Galleries.  The Company has changed its name to Vibe Records, Inc.
Nevada.  This transaction resulted in a change in control of Vibe
Records, Inc.





“The
acquisition of Vibe Records, Inc. (Vibe) by Benaquista Galleries, Inc.
(Benaquista) effected a change in control of Benaquista and is accounted for as
a “reverse acquisition” whereby Vibe is the accounting acquiror for financial
statement purposes.  Accordingly, for all periods subsequent to the
“reverse merger” transaction, the financial statements of the Company will
reflect the historical financial statements of Vibe from its inception and the
operations of Benaquista for all periods subsequent to the May 30, 2008
transaction date."





In a
separate transaction, Benaquista Galleries, Inc.’s President and CEO James Price
exercised a share agreement with the Company would acquire 396,910 of Price’s
896,910 common shares for a payment of $725,000 or approximately $1.82 per
share.




6




Vibe Records, Inc.
Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES





Consolidation- The consolidated financial statements contain the accounts of the
Company for all periods presented and the accounts of its wholly owned
subsidiary.  All intercompany accounts and transactions have been
eliminated in consolidation.





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





Revenue
Recognition-Revenues
are recognized by the Company based on the various types of transactions
generating the revenue.  The Company recognized art revenue when
persuasive evidence of an arrangement exists, services have been rendered or
products have been delivered; the price to the buyer is fixed and determinable;
and collectibility is reasonably assured.





Advertising
Expense- Advertising costs are expensed as incurred.  There
was no advertising expense for the nine months ending June 30, 2009 and
2008.





Income Taxes- The Company recognizes an asset or liability for the deferred tax
consequences of all temporary differences between the tax basis of assets or
liabilities and their reported amounts in the consolidated financial statements
that will result in taxable or deductible amounts in future years when the
reported amounts of the assets or liabilities are recovered or
settled.  Deferred tax assets or liabilities are measured using the
enacted tax rates that will be in effect when the differences are expected to
reverse.  Deferred tax assets are reviewed periodically for
recoverability and valuation allowances are provided as necessary.





Use of Estimates–The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain 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.





Fair Value of
Financial Instruments - The carrying amounts reported in the accompanying
consolidated financial statements for current assets approximate fair values
because of the immediate or short-term maturities of these financial
instruments.





Net Income (Loss)
Per Share-Basic and Diluted - Basic income (loss) per common share is
computed on the basis of the weighted-average number of common shares
outstanding during the period.  Diluted income per share is computed
on the basis of the weighted-average number of common shares and all potentially
issuable common shares outstanding during the year.  There are no
potentially dilutive securities as of June 30, 2009 and 2008.


7


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Recently Issued
Accounting Pronouncements - In May 2009, the FASB issued SFAS No. 165
“Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. SFAS
165 sets forth (1) The period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
The circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. SFAS 165 is effective for interim or
annual financial periods ending after June 15, 2009. The Company is evaluating
the impact the adoption of SFAS 165 will have on its financial
statements.





In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 improves
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. SFAS 166 is effective as
of the beginning of each reporting entity’s first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period and for interim and annual reporting periods thereafter. The
Company is evaluating the impact the adoption of SFAS 166 will have on its
financial statements.





In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”). SFAS 167 improves financial reporting by enterprises involved with
variable interest entities and to address (1) the effects on certain provisions
of FASB Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities”, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS 166 and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. SFAS 167 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. The Company is evaluating the
impact the adoption of SFAS 167 will have on its financial
statements.





In
June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162”. The FASB Accounting Standards
Codification (“Codification”) will be the single source of authoritative
nongovernmental U.S. generally accepted accounting principles.


8


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





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





NOTE
3 - GOING CONCERN UNCERTAINTY





The
Company operates as an independent record label and a highly selective Artist
and Repertoire company that intends to distribute nationally recordings made by
its artists as well as operate state-of-the-art recording and production
facilities.





After
selecting an artist, the Company intends to nurture each artist’s career through
teaching, encouraging and supervising the artist, while simultaneously searching
for and selecting suitable material, accompanists, side-men, producers and other
professionals to enhance that individual’s chances for success.  The
Company intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year.  The
ultimate success of this business plan will extensively rely upon the past
history and experience of the Company’s President and Chief Executive Officer in
the music industry.





The
Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.  Further, the Company faces considerable risk in it’s
business plan.  If no additional operating capital is received during
the next twelve months, the Company will be forced to rely on existing cash in
the bank and additional funds loaned by management and/or significant
stockholders.





The
Company remains dependent upon additional external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide sufficient working capital in excess of the Company’s initial
capitalization to preserve the integrity of the corporate entity.





The
Company anticipates offering future sales of equity
securities.  However, there is no assurance that the Company will be
able to obtain additional funding through the sales of additional equity
securities or, that such funding, if available, will be obtained on terms
favorable to or affordable by the Company.





It is the
intent of management and significant stockholders to provide sufficient working
capital necessary to support and preserve the integrity of the corporate
entity.  However, no formal commitments or arrangements to advance or
loan funds to the Company or repay any such advances or loans
exist.  There is no legal obligation for either management or
significant stockholders to provide additional future funding.


9


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
3 - GOING CONCERN UNCERTAINTY (continued)





In such a
restricted cash flow scenario, the Company would be unable to complete its
business plan steps, and would, instead, delay all cash intensive
activities.  Without necessary cash flow, the Company may become
dormant during the next twelve months, or until such time as necessary funds
could be raised in the equity securities market.





While the
Company is of the opinion that good faith estimates of the Company’s ability to
secure additional capital in the future to reach its goals have been made, there
is no guarantee that the Company will receive sufficient funding to sustain
operations or implement any future business plan steps.





NOTE
4 - PROPERTY AND EQUIPMENT





Property
and equipment as of June 30, 2009 and September 30, 2008, is comprised of the
following:





2009
                  
                  
                  2008Recording
      and computer equipment
                  
                  $
                  54,523
                  
                  
                  $
                  20,523Furniture
      and fixtures
                  
                  
                  8,268
                  
                  
                  
                  8,268Automobile
                  
                  
                  30,253
                  
                  
                  
                  30,25393,044
                  
                  
                  
                  59,044Less:  Accumulated
      depreciation
                  
                  
                  (36,262
                  )
                  
                  
                  (27,624
                  )Net
      property and equipment
                  
                  $
                  56,782
                  
                  
                  $
                  31,420





Depreciation
expense for the nine months ended June 30, 2009 and 2008, was $8,946 and $8,808,
respectively.





NOTE
5 - MASTER RECORDINGS





The
Company acquired the rights to use the Vibe Records, Inc. trademark license,
master recordings and its name.  The Company purchased these rights by
issuing stock to the shareholders of Vibe Records, Inc.  The valuation
of the asset is based upon experience of the management of the Company and their
knowledge of the costs of producing the master recordings.  Management
has provided a 100% valuation allowance in regard to this asset.





NOTE
6 - STOCKHOLDERS’ EQUITY





Vibe
Records Holdings, Inc. and Vibe Records, Inc. were separate Delaware
corporations which shared common ownership from their respective
formation.  On September 10, 2007, the two companies entered into a
plan and accounting of merger with Vibe Records, Inc. being the surviving
corporation.  All financial reporting related to Vibe Records
Holdings, Inc. and Vibe Records, Inc. has been presented on a combined basis
since their respective formation.  The following stock transactions
represent the cumulative effect of all historical stock
transactions.


10


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
6 - STOCKHOLDERS’ EQUITY (continued)





On March
8, 2004, 5,025,000 shares of common stock were issued to the controlling
shareholder in connection with the contribution of the Vibe trademark and the
master recording library.





On March
8, 2004, 7,184,201 shares of common stock were issued to various individuals for
payment of outstanding debt and guarantee of notes payable.





On
September 30, 2004, 1,280,000 share of common stock were issued upon the
conversion of $1,600,000 in notes payable at $1.25 per share.





On May
30, 2008, in connection with the Vibe-Benaquista merger 100% of the outstanding
shares of Vibe Records, Inc. were exchanged for 13,489,201 shares of Benaquista
common stock.





On May
30, 2008, the Company purchased 396,940 of its common stock from James Price for
a price of $725,000.





On
February 27, 2009, the Company issued 4,000,000 shares to an individual in
settlement of $40,000 out of a $45,000 note payable.  As of April 1,
2009, the Company issued an additional 1,000,000 shares of its common stock to
settle the remaining $5,000 of the $45,000 note payable.





In June
2009 the Company issued 605,000 shares of its common stock to its officer and
directors. The Company recorded $169,400 in compensation expense related to this
issuance.





In June
2009 the Company issued 460,000 shares of its common stock to various
consultants. The Company recorded $141,150 in compensation expense related to
these issuances.





In June
2009 the Company issued 150,000 shares of its common stock for legal services.
The Company recorded $42,000 in compensation expense related to this
issuance.





NOTE
7 - INCOME TAXES





The
components of income tax benefit (expense) for the years ended June 30, 2009 and
2008, respectively, are as follows:


11


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
7 - INCOME TAXES (continued)


2009
                  
                  
                  2008Federal:Current
                  
                  $
                  0
                  
                  
                  $
                  0Deferred
                  
                  
                  0
                  
                  
                  
                  00
                  
                  
                  
                  0State:Current
                  
                  
                  0
                  
                  
                  
                  0Deferred
                  
                  
                  0
                  
                  
                  
                  0Totals
                  
                  $
                  0
                  
                  
                  $
                  0





The
Company’s income tax expense for the nine months ended June 30, 2009 and 2008,
respectively, differed from the statutory federal rate of 34 percent as
follows:





2009
                  
                  
                  2008Statutory
      rate applied to loss before income taxes
                  
                  $
                  (323,482
                  )
                  
                  
                  (56,211
                  )Increase
      (decrease) in income taxes resulting from:Net
      operating loss from non deductible in current year
                  
                  
                  323,482
                  
                  
                  
                  56,211Income
      Expense
                  
                  $
                  0
                  
                  
                  $
                  0





The
Company has paid no federal or state income taxes since its
incorporation.  As of June 30, 2009 and 2008, the Company has net
operation loss carried forward of approximate $3,725,000.





NOTE
8 - LOANS PAYABLE





The
Company maintains a working capital line of credit for $600,000 with Wachovia
Bank.  Interest is paid monthly at the bank’s prime
rate.  The note is 100% secured by marketable securities of a
shareholder.  The balance outstanding as of June 30, 2009 and 2008 was
$599,921 and $599,921 respectively.





Vibe
Records Holding Inc. issued a Promissory Note, dated March 31, 2004, for $25,000
to Robert L. Fulton.  Said note called for interest at a rate of Ten
Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Fulton shall have the right, for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records, Inc.
stock.


12


Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
8 - LOANS PAYABLE (continued)





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$25,000 to Ronald Alcus.  Said note called for interest at a rate of
Ten Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Alcus shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records, Inc.
stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$35,000 to Robert Fishman.  Said note called for interest at a rate of
Ten Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Fishman shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the
note was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records,
Inc. stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$70,000 to Kevin Kemp.  Said note called for interest at a rate of Ten
Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Kemp shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 100,000 Shares of Vibe
Records, Inc. stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$25,000 to James P. Amonette.  Said note called for interest at a rate
of Ten Percent.  Principal and interest were made payable on December
31, 2004.  Mr. Amonette shall have the right for a period of thirty
(30) business days following effectiveness of any registration statement filed
by the Company, to convert the principal and accrued but unpaid interest into
shares of the Company’s Common Stock at $1.25 per share.  In addition,
the note was collateralized by a Pledge Agreement for 20,000 Shares of Vibe
Records, Inc. stock.





As of
June 30, 2009, we have an aggregate principal amount, including accrued interest
thereon, of $337,573 due under our convertible promissory notes payable to
Robert I. Fulton, Ronald Alcus, Paul Scaturro, Robert Fishman, Kevin Kemp, and
James Amonette, as described above.  We are currently negotiating with
the holders of this indebtedness to convert all amounts and payables into an
aggregate of 278,250 shares of our common stock, based on a conversion price
equal to $1.25 per share.  We have not finalized any agreement with
these Noteholders and there is no assurance that we will ever finalize and enter
into any such agreement with these noteholders.





The
Company has been advanced various sums by Mr. Robert S. McCoy and Michael
Tyler.  These notes are secured in part by 30% of the issued and
outstanding stock of the Company owned by the majority
shareholder.  These loans bear interest at 10% and are due upon
demand.


13





Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
to Financial Statements


June
30, 2009 (unaudited)





NOTE
8 - LOANS PAYABLE (continued)





On March
31, 2008, approximately $1,600,000 in principal amounts owed to Mr. McCoy and
Mr. Tyler were converted to Common Stock at $1.25 per share.





The
following is a summary of the outstanding principal and accrued
interest:





Principal
                  
                  
                  Accrued Interest
                  
                  
                  TotalRobert
      McCoy
                  
                  $
                  893,553
                  
                  
                  $
                  419,046
                  
                  
                  $
                  1,312,599Michael
      Tyler
                  
                  
                  346,200
                  
                  
                  
                  222,999
                  
                  
                  
                  569,199James
      Price
                  
                  
                  361,235
                  
                  
                  
                  26,293
                  
                  
                  
                  387,528Totals
                  
                  $
                  1,600,988
                  
                  
                  $
                  668,338
                  
                  
                  $
                  2,269,326





The
Company has incurred a bank note for the purchase of an
automobile.  The note calls for payments of principal and interest of
$693.62 with a final payment due May 25, 2011.  The note is
collateralized by the automobile costing $30,252.





NOTE
9 - LEGAL PROCEEDINGS





Vibe
Records, Inc. has filed a Summons and Complaint against the Baker Girls for
breach of their Artist Recording Contract, Use and Misappropriation of Trade
Secrets, Usurpation of Corporate Assets and Opportunity, Breach of Fiduciary
Obligations, Tortious Interference with Contractual Relations, Tortious
Interference with Prospective Business Relations, Fraud, Unjust Enrichment,
Copyright Infringement and False Designation of Origin under the Lanham
Act.  The Company is seeking a Preliminary and Permanent Injunction,
and Accounting as well as the imposition of a Constructive Trust as well as One
Million Dollars in compensatory and punitive damages before the Court of Maury
County in the State of Tennessee.





In
addition, the Company is party to certain previous material disputes as
follows:





Vibe
Records, Inc. and Vibe Ventures, Inc.:





Vibe
Records, Inc. (Records) and Vibe Ventures, Inc. (Ventures) (an unrelated third
party) are parties to a 1990’s declaratory judgment action.  That
litigation was commenced to determine each entity’s entitlement to use the
“Vibe” trademark, and resulted in an agreement regarding the respective rights
to the use of the intellectual property (i.e. Vibe trademark.)  The
agreement was memorialized in a settlement agreement (the “Settlement
Agreement”) and an accompanying




14




Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
To Financial Statements


June
30, 2009 (Unaudited)





NOTE
9 - LEGAL PROCEEDINGS (continued)





Vibe
Records, Inc. and Vibe Ventures, Inc.:





Licensing
agreement (the “License” entered into on or about May 29, 1998, between the two
unrelated companies.  Pursuant to the Settlement Agreement, Vibe
Records agreed to assign the registration for its mark (as defined in the
Settlement Agreement) to Vibe Ventures, pursuant to an assignment attached to
the Settlement Agreement in exchange for Vibe Venture’s license of Vibe Records
mark, pursuant to the License.





The
License set forth in pertinent parts, Vibe Records’ right, as
follows:




1.  Ventures
hereby grants to Records the right and license to use the Mark only as the name
of a record label and for records distribution, meaning wholesale distribution
of music by a record company, but except as specifically permitted in paragraph
2 of the License.





2.  Nothing
in the License shall prohibit Records from using the Mark to identify Records as
a record label on records, tapes, CD’s and/or other media now existing or
existing in the future used to record music (and on merchandise such as clothing
sold to promote Records’ record label) (the “Licensed Products”) sold through
direct mail, the Internet and/or in retail stores.





3.  Ventures
will not itself use, nor will it enter into any license or other agreement to
permit the use of the Mark on Licensed Products, nor will it use the word “VIBE” in immediate proximity
to the exact word Records on any Licensed products.





Based
upon this agreement, it is Vibe Records’ intellectual property counsel’s opinion
that Vibe Ventures is not entitled to create a record label and/or distribute
records under the mark assigned to Vibe Records in as much as such use would
constitute a use of the Mark on a Licensed Product in violation of paragraph 3
of the License.





On July
5, 2006, The Wicks Group of Companies, L.L.C., A New York-based private equity
firm, announced their acquisition of VIBE Ventures, the world’s leading urban
music and lifestyle magazine.  Along with their acquisition,
management expressed a commitment to extend the VIBE brand into multiple media
platforms and distribution channels, while strengthening its unique position
among it base of young and multicultural consumers.  A contemporaneous
full page advertisement in the June 2006 edition of Vibe Magazine which the
Company’s legal counsel believes is clear infringement on Vibe Records valued
licensed rights.  Furthermore, Vibe Magazine is now promoting other
internet music activities available for sale on their website.




15




Vibe
Records, Inc. Nevada


(Formerly
Benacquista Galleries, Inc.)


Notes
To Financial Statements


June
30, 2009 (Unaudited)





NOTE
9 - LEGAL PROCEEDINGS (continued)





On or
about June 14, 2006, Vibe Records, through its intellectual property counsel,
served notice upon Ventures to cease and desist from any further discussions
which reference, utilize or interfere with the license held by Vibe Records,
Inc.  Although Vibe Records is willing to discuss the possibility of a
strategic alliance with Vibe Ventures, a license agreement and/or an alternative
assignment of rights that would result in enhanced revenues for both Ventures
and Records, Vibe Records may seek damages against Vibe Ventures for
infringement on Vibe Records’ intellectual property rights pursuant to the
Agreement.





In
addition to the foregoing, the Company has pledged the Company’s intellectual
property rights in the name “Vibe Records” to Robert S. McCoy pursuant to a
Security Lien Agreement whereby McCoy holds a superior lien against any monies
received regarding the Trademark





License
Agreement with Vibe Ventures, LLC.  This lien will be removed when the
loans to Mr. McCoy are repaid in the aggregate principal amount of
$600,000.




Since
February 11, 2008, the Company was granted 4 motions for extension to discovery
by the United States Patent and Trademark office.  Currently, a
Stipulation of Settlement is in discussion between the
parties.  Through June 30, 2009, the case is still on extension
pending discovery.





NOTE
10 - COMMITMENTS AND CONTINGENCIES





Leases





The
Company entered into various lease agreements for office space expiring in
December 2007 calling for rent payments of $3,500 per
month.  Subsequent to the balance sheet date the company entered into
a new lease calling for monthly payment of $1,850 plus real estate
taxes.  Future minimum lease payments are as follows:





Year
      endingDecember 31
                  
                  Amounts2010
                  
                  
                  22,0002011
                  
                  
                  22,0002012
                  
                  
                  22,000Totals
                  
                  $
                  66,000




16




FORWARD-LOOKING
STATEMENTS





This
report contains forward-looking statements that are subject to a number of risks
and uncertainties, many of which are beyond our control, which may include
statements about our:





·
            business
      strategy;





·
            financial
      strategy;





·
            uncertainty
      regarding our future operating
results;





·
            plans,
      objectives, expectations and intentions contained in this report that are
      not historical.




All
statements, other than statements of historical fact included in this report,
regarding our strategy, future operations, financial position, estimated
revenues and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this report, the words
“could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words. All
forward-looking statements speak only as of the date of this report. You should
not place undue reliance on these forward-looking statements. Although we
believe that our plans, intentions and expectations reflected in or suggested by
the forward-looking statements we make in this report are reasonable, we can
give no assurance that these plans, intentions or expectations will be achieved.
We disclose important factors that could cause our actual results to differ
materially from our expectations under “Risk Factors” and elsewhere in this
report. These cautionary statements qualify all forward-looking statements
attributable to us, or persons acting on our behalf.





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





The
following discussion highlights the principal factors that have affected our
financial condition and results of operations as well as our liquidity and
capital resources for the periods described. This discussion contains
forward-looking statements. Please see “Forward-Looking Statements” and "Risk
Factors" for a discussion of the uncertainties, risks and assumptions associated
with these forward-looking statements.





The
following discussion and analysis of Vibe’s financial condition and results of
operations are based on Vibe’s financial statements, which Vibe has prepared in
accordance with U.S. generally accepted accounting principles.  You
should read the discussion and analysis together with such financial statements
and the related notes thereto.





Overview




We are an
early stage company led by an experienced management team and focused on
identifying qualified and talented artists.  Our long term role
includes nurturing the artist’s career through teaching, encouragement and
supervision, while concurrently searching for and selecting suitable material,
accompanists, side-men, producers and other professionals to enhance the
artist’s chances for success.





Plan of
Operations




The
Company intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year.  The
Company utilizes a highly focused artist selection process. The artist’s value
will be significantly increased through the support of the Company’s specialized
and well seasoned management team, modest recording budgets supported by a state
of-the-art recording studio, strategic alliances with a renowned audio engineer,
and the use of a major manufacturing and distributing firm. Furthermore, the
Company will utilize these economic efficiencies to seek out and enter into
agreements with pre-established artists. Arrangements with established artists
will allow the Company to offer profit sharing ventures with established artists
in which the artists submit their master recordings (while retaining their own
ownership rights) and license the master recordings to the Company for
manufacture, distribution and promotion.




17




The
Company will also house and operate state of the art recording and production
facilities. The facilities will be utilized not only by the Company’s internal
artist roster but also will be available for outside contracting.





Through
these and other endeavors, the Company intends to simultaneously promote and
brand the Vibe Records label.  The Company believes that operating in
this fashion will reduce overhead, and concerns about collection from
accounts.





Critical
Accounting Policies





“Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
discusses our consolidated financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements, the 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. On an
on-going basis, we evaluate our estimates and judgments, including those related
to revenue recognition, valuation allowances for inventory and accounts
receivable, and impairment of long-lived assets. We base our estimates and
judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances. The result of these estimates
and judgments form the basis for making conclusions about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions. The SEC suggests that all registrants list their most “critical
accounting policies” in Management’s Discussion and Analysis.





Critical
accounting policies are those that are most important to the portrayal of our
financial condition and our results of operations, and require management’s most
difficult, subjective and complex judgments as a result of the need to make
estimates about the effect of matters that are inherently uncertain. Our most
critical accounting policies include, but are not limited to, revenue
recognition, our ability to collect accounts receivable, the carrying value of
inventories and fixed assets, the useful lives of our fixed assets and
long-lived assets, the impairment of goodwill, the valuation of common stock
related to compensation and other services, and the recoverability of
deferred tax assets. In applying these policies, management must use its
informed judgments and best estimates. Estimates, by their nature, are based on
judgments and available information such as the estimated life of fixed assets
for depreciation purposes, the market valuation of inventory in reporting
inventory at the lower of cost or market, and the determination of the market
value of stock when issued as compensation or as repayment for loans. The
estimates that we make are based upon historical factors, current circumstances
and the experience and judgment of our management. We evaluate our assumptions
and estimates on an ongoing basis and may employ outside experts to assist in
our evaluations. Changes in such estimates, based on more accurate future
information, may affect amounts reported in future periods.





Results
of Operations.





Three
Months Ended June 30, 2009 and 2008





There was
no revenue or cost of good sold for the three and nine months ended June 30,
2009 and June 30, 2008.





For the
three months ending June 30, 2009 and June 30, 2008, the Company experienced a
net loss of $549,208 and $127,088, respectively. General and administrative
expenses increased to $314,290 from $25,695 for the three months ended June
30, 2009 and June 30, 2008 due to additional consulting costs, additional costs
of being public and stock-based compensation to officers in 2009. Professional
fees and expenses increased to $179,081 from $38,200 for the three months
ended June 30, 2009 and June 30, 2008 due to increase accounting and legal
expenses related to the company’s cost of being public and various legal
matters.  Research and development expenses decreased to $1,738 from
$14,218 for the three months ended June 30, 2009 and June 30, 2008 due to a lack
of funding for developing new projects and the inability to enter new markets in
2009. Interest expense increased to $54,099 from $48,975 for the three
months ended June 30, 2009 and June 30, 2008 due to conversion of certain
obligations to equity and additional interest accruals on various notes
payable.




18




Nine
Months Ended June 30, 2009 and 2008





For the
nine months ending June 30, 2009 and June 30, 2008, the Company experienced a
net loss of $951,417 and $425,942, respectively. The Company experienced a net
loss of $5,350,055 for the period from January 13, 2003 (inception) through June
30, 2009. General and administrative expenses increased to $401,476 from $77,329
for the nine months ended June 30, 2009 and June 30, 2008 due to additional
consulting costs, additional costs of being public and stock-based compensation
to officers in 2009, and $3,037,896 for the period from January 13, 2003
(inception) through June 30, 2009.  Professional fees and expenses
increased to $314,771 from $90,733 for the nine months ended June 30, 2009 and
June 30, 2008 due to accounting and legal expenses as a result of being a public
company, and $783,586 for the period from January 13, 2003 (inception) through
June 30, 2009.  Research and development expenses decreased to $52,001
from $120,396 for the nine months ended June 30, 2009 and June 30, 2008 due to a
lack of cash in 2009, and $585,379 for the period from January 13, 2003
(inception) through June 30, 2009.  Interest expense increased to
$183,169 from $137,209 for the nine months ended June 30, 2009 and June 30, 2008
due to conversion of certain obligations to equity and interest accruals on
various notes payable, and $949,124 for the period from January 13, 2003
(inception) through June 30, 2009





Liquidity
and Capital Resources





As of
June 30, 2009, the Company had a working capital deficit of $3,626,309. If
the Company is not successful in generating sufficient liquidity from operations
or in raising sufficient capital resources, on terms acceptable to it, this
could have a material adverse effect on its business, results of operations
liquidity and financial condition.




As shown
in the consolidated financial statements, at both June 30, 2009 and June 30,
2008, the Company had $28,129 and zero cash on hand.  We had a net
loss of $951,417 for the nine months ended June 30, 2009.





We have
historically incurred recurring losses from operations. Our continuation is
dependent upon a successful program of acquisitions and achieving a profitable
level of operations. We will need $1.5 million of additional financing for
ongoing operations and acquisitions. The issuance of additional equity
securities by us would result in a significant dilution in the equity interests
of our current stockholders. Obtaining loans, assuming those loans would be
available, would increase our liabilities and future cash commitments. We cannot
assure that we will be able to obtain further funds we desire for our continuing
operations or, if available, that funds can be obtained on commercially
reasonable terms. If we are not able to obtain additional financing on a timely
basis, we would cease our operations.





Item
3. Quantitative and Qualitative Disclosures About Market Risk.





Not
applicable.





Item
4.   Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





The
Company’s Chief Executive Officer and acting Chief Financial Officer has
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the
fiscal period ending June 30, 2009 covered by this Quarterly Report on Form
10-Q. Based upon such evaluation, the Chief Executive Officer and Chief
Financial Officer has concluded that, as of the end of such period, the
Company’s disclosure controls and procedures were effective as required under
Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the
Company’s Chief Executive Officer and Chief Financial Officer does not
relate to reporting periods after June 30, 2009. We will need $1.5 million
of additional financing for ongoing operations and acquisitions. The issuance of
additional equity securities by us would result in a significant dilution in the
equity interests of our current stockholders. Obtaining loans, assuming those
loans would be available, would increase our liabilities and future cash
commitments. We cannot assure that we will be able to obtain further funds we
desire for our continuing operations or, if available, that funds can be
obtained on commercially reasonable terms. If we are not able to obtain
additional financing on a timely basis, we would cease our
operations.




19




Management’s
Report on Internal Control Over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.





The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the
financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis. Management
has determined that material weaknesses exist due to a lack of segregation of
duties, resulting from the Company’s limited resources.





Changes
in Internal Control over Financial Reporting





No change
in the Company’s internal control over financial reporting occurred during the
quarter ended June 30, 2009, that materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial
reporting.





PART
II - OTHER INFORMATION





Item
1.  Legal Proceedings.





The
Company and/or its predecessors have been party to certain previous material
disputes as follows:





Vibe Records and Vibe
Ventures





The
Company and Vibe Ventures were parties to a mid 1990’s declaratory judgment
action. That litigation was commenced to determine each party’s entitlement to
use of the “Vibe” trademark, and resulted in an agreement regarding the
respective rights to the use of the intellectual property (i.e. Vibe trademark.)
The agreement was memorialized in a settlement agreement (the “Settlement
Agreement”) and an accompanying Trademark License Agreement entered into on or
about May 29, 1998, between Records and Ventures.




20




Pursuant
to the Settlement Agreement, the Company agreed to assign the registration for
its mark (as defined in the Settlement Agreement) to Vibe Ventures, pursuant to
an assignment agreement in exchange for Vibe Venture’s licensing of the Vibe
Records mark, pursuant to the Trademark License Agreement. The Trademark License
Agreement set forth in pertinent parts, the Company’s rights, as
follows:





The
Company was granted, subject to certain limitations, the right and license to
use the Vibe Trademark only as the name of a record label and in the wholesale
distribution of music by a record company.





The
Company was not prohibited from using the Vibe Trademark to identify the Company
as a record label on records, tapes, CD’s and/or other media now existing or
existing in the future used to record music (and on merchandise such as clothing
sold to promote Records’ record label) (the “Licensed Products”) sold through
direct mail, the Internet and/or in retail stores.




Vibe
Ventures is permitted to use, nor will it enter into any license or other
agreement to permit the use of the trademark on “Licensed Products” (as defined
in the Trademark License Agreement), nor will it use the word “VIBE” in
immediate proximity to the exact word Records on any Licensed
Products.




Based
upon this agreement, it is the Company’s intellectual property counsel’s opinion
that Vibe Ventures is not entitled to create a record label and/or distribute
records under the mark licensed to the Company in as much as such use would
constitute a use of the Mark on a Licensed Product in violation of paragraph 3
of the Trademark License Agreement.





On July
5, 2006, The Wicks Group of Companies, L.L.C., a New York-based private equity
firm, announced their acquisition of Vibe Ventures. Along with their
acquisition, management expressed a commitment to extend the “VIBE” brand into
multiple media platforms and distribution channels, while strengthening its
unique position among its base of young multicultural consumers. A
contemporaneous full page Advertisement in the June 2006 edition of Vibe
Magazine offered “CERTIFIED CLASSIC VIBE REVOLUTIONS CD HITS VOLUME ONE, IN
STORE SOON!”, which counsel believes may infringe upon the Company’s licensed
rights under the Trademark License Agreement. Furthermore, Vibe Magazine is now
promoting other internet music activities available for sale on their
website.





Although
the Company is willing to discuss the possibility of a strategic alliance with
Vibe Ventures, a license agreement and/or an alternative assignment of rights
that would result in enhanced revenues for both Vibe Ventures and the Company,
the Company may seek damages against Vibe Ventures for infringement on the
Company’s intellectual property rights pursuant to the Trademark License
Agreement.





On or
about June 14, 2006, the Company, through its intellectual property counsel,
served notice upon Vibe Ventures to cease and desist from any further
discussions which reference, utilize or interfere with the License held by the
Company.  On February 11, 2008, the Company’s motion for an extension
to discovery was granted by the United States Patent and Trademark Office
whereby the Company received extensions on discovery until August 10, 2008. As a
result of the resolution of certain unrelated disputes with Vibe Ventures, the
Company has withdrawn its USPTO Opposition No. 91178619 relating to the above
described matter.





In
addition to the foregoing, the Company has pledged the Company’s intellectual
property rights in the name “Vibe Records” to Robert S. McCoy pursuant to a
Security Lien Agreement whereby Mr. McCoy holds a superior lien against any
monies received regarding the Trademark License Agreement with Vibe Ventures,
LLC.  This lien will be removed when the loans to Mr. McCoy are repaid
in the aggregate principal amount of $600,000.




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





On
January 19, 2009, the board of directors of the Company approved the
settlement of an aggregate of Forty Five Thousand dollars ($45,000) of
outstanding notes of the Company (the “Notes”).  The Notes were
settled through an agreement between the Company and the noteholders to convert
the Notes into shares of the Company’s common stock. Based upon the assets and
capitalization of the Company, the conversion price of the shares of common
stock to be issued upon conversion of the Notes was set at $0.01 per share by
the Company’s board of directors. Between January 19, 2009 and June 30,
2009, all of the Notes were converted by their holders into an aggregate of
5,000,000 shares of the common stock of the Company pursuant to this agreement.
The shares of common stock issued in the conversion were restricted shares and
were issued in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section
4(2) of the Securities Act. The shares issued in the conversion were subject to
Rule 144 under the Securities Act.  No general solicitations were made
in connection with the conversion, and, prior to making any conversion, the
Company had reasonable grounds to believe, and believed, that the holders of the
Notes were capable of evaluating the merits and risks of the investment and were
able to bear the economic risk of the investment.





There
were no proceeds to the Company from the issuance of shares on the conversion of
the Notes as described above.





Item
3.   Defaults Upon Senior Securities.





None.





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





None.





Item
5.  Other Information.





Preferred
Stock





On
January 19, 2009, the board of directors of the Company approved and authorized
two series of preferred stock of the Company.  On or about January 23,
2009, we filed a Certificate of Designation, Preferences and Rights of Series A
Convertible Preferred Stock (the “Series A Preferred Stock”) and a Certificate
of Designation, Preferences and Rights of Series B Convertible Preferred Stock
(“the Series B Preferred Stock”) (together the “Certificates of Designation”)
with the Secretary of State of Nevada.  Pursuant to the Certificates
of Designation, we authorized 200,000 shares of our preferred stock to be
designated the Series A Preferred Stock and 200,000 shares of our preferred
stock to be designated the Series B Preferred Stock.





Series
A Preferred Stock





The
holders of the Series A Preferred Stock may, in their sole discretion, convert
each share of Series A Preferred Stock into 4,000 shares of the Company’s common
stock at any time following the date of issuance of the Series A Preferred
Stock.  Adjustments in the conversion ratio will be made in the event
of a stock dividend, stock split, reclassification, reorganization,
consolidation or merger in a manner which will provide the preferred holders,
upon full conversion into common stock, with the same percentage ownership of
the Company that existed immediately prior to such action.  The Series
A Preferred Stock has the same voting rights as our common stock, on an as
converted basis, with the Series A preferred holders having one vote for each
share of common stock into which their Series A Preferred Stock is
convertible.  The holders of the Series A preferred stock have a
liquidation preference over our common stock of up to one hundred dollars ($100)
per Series A share held.  The Company will not pay a dividend on the
shares of Series A Preferred Stock.





As of
August 14, 2009, there were no shares of the Series A Preferred Stock issued and
outstanding.





Series
B Preferred Stock





The
holders of the Series B Preferred Stock may, in their discretion, convert each
share of Series B Preferred stock into 4,000 shares of the Company’s common
stock at any time following the date of issuance of the Series B Preferred
Stock.  Adjustments in the conversion ratio will be made in the event
of a stock dividend, stock split, reclassification, reorganization,
consolidation or merger in a manner which will provide the preferred holders,
upon full conversion into common stock, with the same percentage ownership of
the Company that existed immediately prior to such action.  The Series
B Preferred Stock does not have voting rights on matters presented to our common
stockholders, for a vote.  The Series B Preferred Stock and has an
equal liquidation right with any shares of our Series A Preferred Stock then
outstanding.  The Company will not pay a dividend on the shares of
Series B Preferred Stock.




22




As of
August 14, 2009, there were no shares of the Series B Preferred Stock issued and
outstanding.





Item
6.  Exhibits.





Exhibit
                Number
              
              Description3.1
      #
              
              Articles
      of Incorporation of Benacquista Galleries Inc., dated January 13, 2003
      (incorporated by reference to Exhibit 3.1 on Form SB-2 filed March 31,
      2003).3.2
      #
              
              By-laws
      of Benacquista Galleries Inc., dated January 17, 2003 (incorporated by
      reference to Exhibit 3.2 on Form SB-2 filed March 31,
    2003).4.1
      #
              
              Certificate
      of Designation, Preferences and Rights of the Series A Convertible
      Preferred Stock of Vibe Records, Inc. Nevada (incorporated by reference to
      Exhibit 4.1 to the Form 8-K filed on January 26, 2009).4.2
      #
              
              Certificate
      of Designation, Preferences and Rights of the Series B Convertible
      Preferred Stock of Vibe Records, Inc. Nevada (incorporated by reference to
      Exhibit 4.2 to the Form 8-K filed on January 26, 2009).10.1
      #@
              
              Employment
      Agreement by and between Mr. Tim Olphie and Vibe Records, Inc. Nevada,
      dated as of January 26, 2009 (incorporated by reference to Exhibit 10.1 to
      the Form 8-K filed on January 26, 2009).31.1*
              
              Certificate
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2*
              
              Certificate
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1*
              
              Certificate
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.32.2*
              
              Certificate
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.




#
            Incorporated
      by reference.


@
            Management
      contract or compensatory plan.


*
            Filed
      herewith.





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto authorized.





Date:
      August 19, 2009
                
                VIBE
      RECORDS, INC. NEVADABy:
                /s/ Timothy OlphieChief
      Executive Officer,Chief
      Financial Officer




23