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 December 31,
      2008





__
            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
      or Other Jurisdiction 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 _X_   No ___





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 company  X





Indicate
by check mark if the registrant is a shell company (as defined in Rule 12b-2 of
the Act).  Yes___   No  _X_





As of
February 19,
2009, the number of shares of common stock, $0.001 par value, outstanding was
14,564,267.














VIBE
      RECORDS, INC. NEVADA
                  (Formerly
      Benacquista Galleries, Inc.)Form
      10-QFor
      the Quarterly Period Ended December 31, 2008Table
      of ContentsPagePART
      I
                
                Financial
      Information
                
                2Item
      1.
                
                Financial
      StatementsConsolidated
      Balance Sheets
                
                3Consolidated
      Statements of Operations and Comprehensive Loss
                
                4Consolidated
      Statements of Cash Flows
                
                5Notes
      to Consolidated Financial Statements (Unaudited)
                
                6Item
      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
                
                23Item
      4.
                
                Submission
      of Matters to a Vote of Security Holders
                
                23Item
      5.
                
                Other
      Information
                
                23Item
      6.
                
                Exhibits
                
                23Signatures
                
                24






2




VIBE
RECORDS, INC. NEVADA
 (Formerly
Benacquista Galleries, Inc.)
 BALANCE
SHEET
 
 ASSETS
 December
      31,
                                    
                                    
                                    September
      30,2008
                                    
                                    
                                    2008(Unaudited)
                                    
                                    
                                    (Audited)CURRENT
      ASSETS:Cash
      on hand and in bank
                                    
                                    $
                                    309
                                    
                                    
                                    $
                                    0TOTAL
      CURRENT ASSETSPROPERTY
      AND EQUIPMENT - AT COST
                                    
                                    
                                    59,044
                                    
                                    
                                    
                                    59,044Less:  Accumulated
      depreciation
                                    
                                    
                                    (30,298
                                    )
                                    
                                    
                                    (27,624
                                    )NET
      PROPERTY AND EQUIPMENT
                                    
                                    
                                    28,746
                                    
                                    
                                    
                                    31,420OTHER
      ASSETS:Due
      from affiliated entities
                                    
                                    
                                    0
                                    
                                    
                                    
                                    182,709Master
      recordings, net of reserve for impairment
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0TOTAL
      OTHER ASSETS
                                    
                                    
                                    0
                                    
                                    
                                    
                                    182,709TOTAL
      ASSETS
                                    
                                    $
                                    29,055
                                    
                                    
                                    $
                                    214,129
 
 LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
 CURRENT
      LIABILITIES:Bank
      overdraft
                            
                            $
                            0
                            
                            
                            $
                            417Notes
      payable
                            
                            
                            2,335,031
                            
                            
                            
                            2,415,667Accrued
      interest payable
                            
                            
                            680,296
                            
                            
                            
                            633,562Accounts
      payable and accrued expenses
                            
                            
                            194,715
                            
                            
                            
                            180,145TOTAL
      LIABILITIES
                            
                            
                            3,210,042
                            
                            
                            
                            3,229,791COMMITMENTS
      AND CONTINGENCIES
                            
                            
                            0
                            
                            
                            
                            0STOCKHOLDERS’
      EQUITY (DEFICIT)Common stock -$.001 par
      value, 550,000,000 authorized;
                            
                            
                            1,456
                            
                            
                            
                            1,45614,564,267
      issued and outstanding respectivelyAdditional
      paid in capital
                            
                            
                            2,128,247
                            
                            
                            
                            2,128,247Treasury
      stock
                            
                            
                            (734,867
                            )
                            
                            
                            (734,867
                            )Accumulated
      deficit
                            
                            
                            (4,575,823
                            )
                            
                            
                            (4,410,498
                            )TOTAL
      STOCKHOLDERS’ EQUITY (DEFICIT)
                            
                            $
                            (3,180,987
                            )
                            
                            $
                            (3,015,662
                            )TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY (DEFICIT)
                            
                            $
                            29,055
                            
                            
                            $
                            214,129
 
 The
accompanying notes are an integral part of these combined financial
statements






3




VIBE
RECORDS, INC. NEVADA
 (Formerly
Benacquista Galleries, Inc.)
 STATEMENT
OF OPERATIONS AND COMPREHENSIVE LOSS
 FOR
THE THREE MONTHS ENDED DECEMBER 31,
 
 January
      132003InceptionThroughDecember
      31,2008
                  
                  
                  2007
                  
                  
                  2008REVENUES
                  
                  $
                  0
                  
                  
                  $
                  0
                  
                  
                  $
                  0OPERATING
      EXPENSESResearch
      and artist developments costs
                  
                  
                  22,692
                  
                  
                  
                  65,714
                  
                  
                  
                  556,070General
      and administrative expenses
                  
                  
                  35,769
                  
                  
                  
                  22,121
                  
                  
                  
                  2,672,189Professional
      fees
                  
                  
                  46,446
                  
                  
                  
                  22,825
                  
                  
                  
                  515,261TOTAL
      OPERATING EXPENSES
                  
                  
                  (104,907
                  )
                  
                  
                  (110,660
                  )
                  
                  
                  (3,743,520
                  )(LOSS)
      FROM OPERATIONS
                  
                  
                  (104,907
                  )
                  
                  
                  (110,660
                  )
                  
                  
                  (3,743,520
                  )OTHER
      EXPENSES (INTEREST)
                  
                  
                  (60,418
                  )
                  
                  
                  (46,331
                  )
                  
                  
                  (826,373
                  )NET
      (LOSS) BEFORE INCOME TAXES
                  
                  
                  (165,325
                  )
                  
                  
                  (156,991
                  )
                  
                  
                  (4,569,893
                  )PROVISION
      FOR INCOME TAXES
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  (5,930
                  )NET
      (LOSS)
                  
                  
                  (165,325
                  )
                  
                  
                  (156,991
                  )
                  
                  
                  (4,575,823
                  )OTHER
      COMPREHENSIVE INCOME
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0COMPREHENSIVE
      LOSS
                  
                  $
                  (165,325
                  )
                  
                  $
                  (156,991
                  )
                  
                  $
                  (4,575,823
                  )Loss
      per weighted-average share of commonstock
      outstanding, computed on net loss-basic and fully
                  
                  
                  (.01
                  )
                  
                  
                  (.01
                  )Weighted-average
      number of shares of commonstock
      outstanding basic and fully diluted
                  
                  
                  14,564,267
                  
                  
                  
                  13,489,301


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






4




VIBE
RECORDS, INC. NEVADA
 (Formerly
Benacquista Galleries, Inc.)
 STATEMENT
OF CASH FLOWS
 FOR
THE THREE MONTHS ENDED DECEMBER 31,
 
 
 January
      132003InceptionthroughDecember
      31,2008
                                            
                                            
                                            2007
                                            
                                            
                                            2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss for the year
                                            
                                            $
                                            (165,325
                                            )
                                            
                                            $
                                            (156,991
                                            )
                                            
                                            
                                            (4,575,823
                                            )Adjustments
      to reconcile net loss to net cash provided byoperating
      activitiesDepreciation
                                            
                                            
                                            2,674
                                            
                                            
                                            
                                            3,373
                                            
                                            
                                            
                                            30,298Increase
      (Decrease) inAccounts
      payable
                                            
                                            
                                            14,570
                                            
                                            
                                            
                                            15,801
                                            
                                            
                                            
                                            194,715Accrued
      interest payable
                                            
                                            
                                            46,734
                                            
                                            
                                            
                                            33,240
                                            
                                            
                                            
                                            680,296NET
      CASH (USED) IN OPERATING ACTIVITIES
                                            
                                            
                                            (101,347
                                            )
                                            
                                            
                                            (104,577
                                            )
                                            
                                            
                                            (3,670,514
                                            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      advanced to affiliated parties
                                            
                                            
                                            (24,071
                                            )
                                            
                                            
                                            (15,342
                                            )
                                            
                                            
                                            (206,780
                                            )Cash
      paid to acquire property and equipment
                                            
                                            
                                            0
                                            
                                            
                                            
                                            (3,632
                                            )
                                            
                                            
                                            (59,044
                                            )NET
      CASH (USED) IN INVESTING ACTIVITIES
                                            
                                            
                                            (24,071
                                            )
                                            
                                            
                                            (18,974
                                            )
                                            
                                            
                                            (2,265,824
                                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Decrease
      in bank overdraft
                                            
                                            
                                            (417
                                            )
                                            
                                            
                                            0
                                            
                                            
                                            
                                            (417
                                            )Cash
      received on notes payable
                                            
                                            
                                            126,144
                                            
                                            
                                            
                                            21,931
                                            
                                            
                                            
                                            4,446,931Purchase
      of Treasury Stock
                                            
                                            
                                            0
                                            
                                            
                                            
                                            (100,000
                                            )
                                            
                                            
                                            (509,867
                                            )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                            
                                            
                                            125,727
                                            
                                            
                                            
                                            119,317
                                            
                                            
                                            
                                            3,936,647INCREASE
      (DECREASE) IN CASH
                                            
                                            
                                            309
                                            
                                            
                                            
                                            (4,234
                                            )
                                            
                                            
                                            309CASH
      AT BEGINNING OF PERIOD
                                            
                                            
                                            0
                                            
                                            
                                            
                                            11,468
                                            
                                            
                                            
                                            0CASH
      AT END OF PERIOD
                                            
                                            $
                                            309
                                            
                                            
                                            $
                                            7,234
                                            
                                            
                                            $
                                            309SUPPLEMENTAL
      DISCLOSURE OF INTERESTAND
      INCOME TAXES PAIDInterest
      paid during the period
                                            
                                            $
                                            13,684
                                            
                                            
                                            $
                                            13,091
                                            
                                            
                                            $
                                            1,460,777Income
      taxes paid during the period
                                            
                                            $
                                            0
                                            
                                            
                                            $
                                            0
                                            
                                            
                                            $
                                            5,930SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTINGAND
      FINANCING ACTIVITIESAffiliate
      loans used to pay note payable
                                            
                                            
                                            206,780
 
 
 The
accompanying notes are an integral part of these combined financial
statements.






5




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








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


DECEMBER
31, 2008 AND 2007





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.





Inventory-Inventory
is stated at the lower cost or market.





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
were no Advertising expense for the three months ending December 31, 2008 and
2007.





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 December 31, 2008 and 2007.







7




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES(continued)





Recently Issued
Accounting Pronouncements - In September 2006, the FASB issued Statement
of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157),
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and requires additional disclosures
about fair value measurements.  SFAS 157 aims to improve the
consistency and comparability of fair value measurements by creating a single
definition of fair value.  The Statement emphasizes that fair value is
not entity-specific, but instead is a market-based measurement of an asset or
liability.  SFAS 157 upholds the requirements of previously issued
pronouncements concerning fair value measurements and expands the required
disclosures.  This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, however earlier
application is permitted provided the reporting entity has not yet issued
financial statements for the fiscal year.  The Company does not
believe that the adoption of SFAS 157 will have a material effect on its
consolidated financial statements.





In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Post-Retirement Plans, amending SFAS No. 87,
Employers’ Accounting for Pensions, SFAS No. 88, Employers’ Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, SFAS No. 106, Employers’ Accounting for Postretirement
Benefits Other than Pension”, and SFAS No. 132 (R), “Employers’ Disclosures
about Pensions and Other Postretirement Benefits”.  SFAS No. 158
requires recognition of the overfunded or underfunded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in a reporting entity’s statement of financial position and to
recognize changes in that funded status in the year in which the changes occur
through comprehensive income.  It also requires an employer to measure
the funded status of a plan as of the date of its year-end statement of
financial position.   The statement is effective as of the end of
the fiscal year ending after December 15, 2006.  The adoption of SFAS
No. 158 is not expected to have a material impact on the Company’s condensed
consolidated financial statements.





In
September 30, 2008, the Securities and Exchange Commission issued Staff
Accounting Bulletin (“SAB”) 108, “Considering the Effects of Prior Year
Measurements When Quantifying Misstatements in Current Year Financial
Statements.”  SAB 108 clarifies the staff’s position regarding the
process of quantifying financial statements misstatements.  More
specifically, the staff noted that certain registrants do not consider the
effects of prior year errors on current year financial statements, thereby
allowing improper assets or liabilities to remain unadjusted.  The
staff believes this approach is not in the best interests of the users of the
financial statements.  SAB 108 is effective for fiscal years ending on
or after November 15, 2006, with earlier adoption encouraged.  At
present, the Company is evaluating the impact, if any, that the adoption of SAB
108 will have on the condensed consolidated financial statements.






8




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”, including an amendment of FASB
Statement No. 115.  This pronouncement permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value.  SFAS 159 is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007.  The impact of adopting SFAS 159 on the Company’s
consolidated financial statements, if any, has not yet been
determined.





In
December 2007, the FASB issued FASB Statement No. 141 (R), “Business
Combinations”, which establishes accounting principles and disclosure
requirements for all transactions in which a company obtains control over
another business.  Statement 141 (R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  Earlier adoption is prohibited.  The Company is in
the process of determining the effect, if any, that the adoption of FAS 141 (R),
will have on its results of operations or financial position.





NOTE
3 - GOING CONCERN





Business
Condition - The Company has a limited operating history.  The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate continuation of
the Company as a going concern.  During the three months ended
December 31, 2008 and 2007, the Company had a net loss from continuing
operations of $104,907 and $110,660 and it had negative cash flows from
operations of $101,347 and $104,577.  In addition, the Company had a
deficit accumulated in the development stage of $4,575,823 and $3,916,292 as of
December 31, 2008 and 2007.  This situation raises substantial doubt
about its ability to continue as a going concern.





Certain
vendors continue to accept the Company’s equity securities for compensation for
their services which has helped and will continue to help preserve
cash.  While such non-cash expense is not currently expected to be as
high, based upon ongoing discussions with the vendors, management believes that
they will continue to accept such securities in the foreseeable
future.


The
company is presently pursuing additional financing.
 
 In
addition, the Company does not anticipate making any significant loan payments
in the near future.
 
 Finally,
management believes that, in the event necessary, certain operating expenses can
be curtailed.
 
 These
expenses are principally related to employment and facility
costs.




9




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





NOTE
3 - GOING CONCERN (continued)





The
Company’s ability to continue as a going concern is dependent upon the
preservation of existing cash reserves, its ability to raise capital, and
ultimately, the achievement of profitable operations.  The financial
statements do not include any adjustments that might arise as a result of this
uncertainty.  The Company is currently negotiating additional
financing with several financial institutions in order to fulfill the Company’s
acquisition strategy.  However, there can be no assurance that such
negotiations will be successful.





NOTE
4 - PROPERTY AND EQUIPMENT





Property
and equipment as of December 31, 2008 and 2007, is comprised of the
following:




2008
                                  
                                  
                                  2007Recording
      and computer equipment
                                  
                                  $
                                  20,523
                                  
                                  
                                  $
                                  19,105Furniture
      and fixtures
                                  
                                  
                                  8,268
                                  
                                  
                                  
                                  8,858Automobile
                                  
                                  
                                  30,253
                                  
                                  
                                  
                                  30,25359,044
                                  
                                  
                                  
                                  58,216Less:  Accumulated
      depreciation
                                  
                                  
                                  (30,298
                                  )
                                  
                                  
                                  (19,268
                                  )Net
      property and equipment
                                  
                                  $
                                  28,746
                                  
                                  
                                  $
                                  38,948




Depreciation
expense for the three months ended December 31, 2008 and 2007 was $2,674 and
$3,373, 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.
 
 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.


10




VIBE
RECORDS, INC.NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





NOTE
6 - STOCKHOLDERS’ EQUITY (continued)





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





NOTE
7 - INCOME TAXES





The
components of income tax benefit (expense) for the years ended September 30,
2008 and 2007, respectively, are as follows:







2008
                          
                          
                          2007Federal:Current
                          
                          $
                          0
                          
                          
                          $
                          0Deferred
                          
                          
                          0
                          
                          
                          
                          00
                          
                          
                          
                          0State:Current
                          
                          
                          0
                          
                          
                          
                          0Deferred
                          
                          
                          0
                          
                          
                          
                          0Totals
                          
                          $
                          0
                          
                          
                          $
                          0




The
Company’s income tax expense for the three months ended December 31, 2008 and
2007, respectively, differed from the statutory federal rate of 34 percent as
follows:







2008
                          
                          
                          2007Statutory
      rate applied to loss before income taxes
                          
                          $
                          (56,211
                          )
                          
                          $
                          (53,377
                          )Increase
      (decrease) in income taxes resulting from:Net
      operating loss from non deductible in current year56,211
                          
                          
                          
                          53,377Income
      Expense
                          
                          $
                          0
                          
                          
                          $
                          0





The
Company has paid no federal or state income taxes since its
incorporation.  As of December 31, 2008 and 2007, the Company has net
operation loss carried forward of approximate $3,165,000.


11
 VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





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
December 31, 2008 and September 30 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
as 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
$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
$25,000 to Paul Scaturro.  Said note called for interest at a rate of
Ten Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Scaturro 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.





12




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





NOTE
8 - LOANS PAYABLE (continued)





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
March 31, 2008, we have an aggregate principal amount, including accrued
interest thereon, of $306,365 due under our convertible promissory notes payable
to Robert I. Fulton, Ronald Alcus, Paul Scaturro, Robert Fishman, Kevin Kemp,
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.





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
                          
                          $
                          804,662
                          
                          
                          $
                          358,952
                          
                          
                          $
                          1,163,614Michael
      Tyler
                          
                          
                          288,200
                          
                          
                          
                          202,071
                          
                          
                          
                          490,271James
      Price
                          
                          
                          361,235
                          
                          
                          
                          6,136
                          
                          
                          
                          367,371Totals
                          
                          $
                          1,454,097
                          
                          
                          $
                          567,159
                          
                          
                          $
                          2,021,256




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


13





VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
9 - LEGAL PROCEEDINGS (continued)





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





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 ecord 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





14





VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007





NOTE
9 - LEGAL PROCEEDINGS (continued)





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 addition 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.





On or
about June 14, 2006, Vibe Records, through it 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.




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 a (90) day extension on discovery until May 12,
2008.  Currently, a Stipulation of Settlement is in discussion between
the parties.





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:




15




VIBE
RECORDS, INC. NEVADA


(Formerly
Benacquista Galleries, Inc.)


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
10 - COMMITMENTS AND CONTINGENCIES (continued)





Year
      endingDecember 31
                          
                          Amounts2008
                          
                          $
                          22,2002009
                          
                          
                          22,0002010
                          
                          
                          22,0002011
                          
                          
                          22,0002012
      and thereafter
                          
                          
                          22,000Totals
                          
                          $
                          110,200




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 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 December 31, 2008 and 2007





As shown
in the consolidated financial statements, at both December 31, 2008 and December
31, 2007, the Company had no cash on hand.  We had a net loss of
$165,325 for the three months ended December 31, 2008. Net cash used in
operating activities was $101,347 for the three months ended December 31, 2008.
This was mainly due to an increase of interest expense and professional
fees.





Net cash
used in operating activities was $104,577 for the three months ended December
31, 2007. We had a net loss of $156,991. This was primarily due to interest
expense and professional fees.






18




Cash flows
used in investing activities was $24,071 during the three months ended December
31, 2008, consisting of advances made to affiliates.





Cash flows
provided by investing activities was $18,924 during the three months ended
December 31, 2007, consisting of $3,632 for purchases of property, plant and
equipment, offset by $15,342 received from affiliates.





The cash
flows provided by financing activities were $125,727 during the three months
ended December 31, 2008 due to an increase in notes payable and purchase of
treasury stock.





The cash
flows provided by financing activities were $119,317 during the three months
ended December 31, 2007 also due to an increase in notes payable.





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.





Liquidity
and Capital Resources





As of
December 31, 2008, the Company had a working capital deficit of $3,209,733
million. 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.




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 December 31, 2008 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 December 31, 2008. 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.





Management’s
Report on Internal Control Over Financial Reporting






19




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 December 31, 2008, 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 is presently
party to the following legal proceedings.





Baker
Girls




The
Company 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, an 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.  The Company is involved in settlement talks to resolve the
dispute and intends to continue its business relationship with The Baker
Girls





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





Vibe
Records and Vibe Ventures:






20




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.





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 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 inasmuch 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 addition 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.
Currently a Stipulation of Settlement is in discussion between the
parties.





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.






21




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





On January
19, 2009, the board of directors of the Registrant approved and authorized two
series of preferred stock of the Registrant.  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 Registrant’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 Regist4rant 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 folders of the Series A preference over our common
stock up to the one hundred dollar ($100) per share issuance price of the Series
A Preferred Stock.  The Registrant will not pay a dividend on the
shares of Series A Preferred Stock.





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 Registrant’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 Registrant 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 Registrant will not pay a dividend on the shares of
Series B Preferred Stock.





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 current 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. The conversion of the Notes to shares of the
Company’s common stock is at the discretion of the noteholders. However,
convertibility of the Notes is subject to certain limitations based on the
number of shares of the Company’s common stock then outstanding.







Upon the
eventual full conversion of the Notes to common shares, the approved settlement
of the Notes will result in the issuance by the Company of an aggregate of
4,500,000 restricted shares of its common stock to the holders of the
Notes.  Between January 19, 2009 and February 19, 2009, $15,000 in
face amount of the Notes were converted by their holders into an aggregate of
1,500,000 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.






22




As of
February 19, 2009, $30,000  in face amount of the Notes remain
outstanding and are converted by their holders into an aggregate of3,000,000
shares of the common stock of the Company pursuant to the above described
settlement agreement.





Item
3.   Defaults Upon Senior Securities.





None.





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





None.








Item
5.  Other Information.





Not
applicable.





Item
6.  Exhibits.





Exhibit
                Number
              Description3.1
      #
              Articles
      of Incorporation of Benacquista Galleries Inc., dated January 17, 200
      (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
      #
              Share
      Exchange Agreement by and between Vibe Records, Inc. Nevada (f/k/a
      Benacquista Galleries, Inc.) and Vibe Records, Inc., dated April 4, 2008.
      (incorporated by reference and previously filed on Form 8-K on April 8,
      2008)





10.2
      #
              Letter
      Agreement by and among the Company Timothy Olphie and James Price dated
      April 4, 2008. (incorporated by reference and previously filed on Form 8-K
      on April 8, 2008)





10.3
      #
              Agreement
      of Sale by and among the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated January 11, 2008 (incorporated by reference and
      previously filed on Form 8-K on January 16,
  2008)






23




10.4
      #
              Letter
      Agreement between the Company, Timothy Olphie and James Price dated April
      23, 2008, (incorporated by reference and previously filed on Form 8-K on
      April 29, 2008)10.5
      #
              Letter
      Agreement between the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated May 12, 2008, (incorporated by reference and previously
      filed on Form 8-K on May 21, 2008).10.6
      #
              Letter
      Agreement between the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated May 16, 2008, (incorporated by reference and previously
      filed on Form 8-K on May 21, 2008).10.7
      #
              Agreement
      and Plan of Merger by and among the Company, Benacquista Acquisition Corp.
      and Vibe Records, Inc., dated May 30, 2008 (incorporated by reference and
      previously filed on Form 8-K on June 6, 2008).10.8
      #@
              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.





VIBE
      RECORDS, INC. NEVADADate: 
      February 19, 2009
            By:
            /s/ Timothy
      J. OlphieTimothy
      J. OlphieChief
      Executive Officer and Chief Financial
Officer