UNITED STATES





SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)


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





For the quarterly period ended June 30, 2012





o  TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transitional period from ______ to ______





Commission File No. 0-52524








VANITY EVENTS HOLDING, INC.(Exact name of registrant as specified in its charter)





Delaware

90-0821117(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)





1111 Kane Concourse, Suite 304


Bay Harbor Islands, FL  33154


(Address of principal executive offices) (zip code)





(786) 530-2164


(Registrant's telephone number)








Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x       No o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x       No o





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





Large accelerated filer  o                 Accelerated filer  o               Non-accelerated filer     o


Smaller Reporting Company x





Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes  o       No x





Number of shares of common stock issued and outstanding as of August 15, 2012 was 1,878,864.











1
 Table of Contents





VANITY EVENTS HOLDING, INC.


QUARTERLY REPORT ON FORM 10-Q


TABLE OF CONTENTS











PART I – FINANCIAL INFORMATIONItem 1.

Unaudited Financial Statements
3Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations
14Item 3.

Quantitative and Qualitative Disclosures About Market Risk
20Item 4.

Controls and Procedures
20PART II – OTHER INFORMATIONItem 1.

Legal Proceedings
21Item 1A.

Risk Factors
21Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds
21Item 3.

Defaults Upon Senior Securities
21Item 4.

Mine Safety Disclosures
21Item 5.

Other Information
21Item 6.

Exhibits
22SIGNATURES
23











2
 Table of Contents








PART I





ITEM 1. FINANCIAL STATEMENTS






VANITY EVENTS HOLDING, INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS


June 30,


December 31,2012


2011(Unaudited)AssetsCurrent assets:Cash and cash equivalents

$
114,878


$
16,324Total current assets


114,878



16,324Prepaid consulting fee


568,750



-Intangible assets


2,608,150



-Total assets

$
3,291,778


$
16,324Liabilities and stockholders' deficitCurrent liabilities:Accounts payable and accrued expenses

$
383,576


$
365,501Notes payable - other, net of discount of $232,024 and $133,093, respectively


704,351



563,282Accrued payroll liabilities and sales tax liabilities


355,816



305,544Other liabilities


37,169



37,169Derivative liabilities


16,498,226



353,136Total current liabilities


17,979,138



1,624,632Stockholders' deficitPreferred stock, undesignated, authorized 49,925,000 shares, $0.001 par value,no shares issued and outstanding, respectively


-



-Preferred stock, Series B, authorized 75,000 shares, $0.001 par value,75,000 shares issued and outstanding, respectively


75



75Common stock authorized 500,000,000 shares, $0.001 par value,1,628,864 and 269,596 shares issued and outstanding, respectively


1,629



270Additional paid in capital


3,571,734



156,752Accumulated deficit


(18,260,798
)


(1,765,405
)Total stockholders' deficit


(14,687,360
)


(1,608,308
)Total liabilities and stockholders' deficit

$
3,291,778


$
16,324


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
   3
 Table of Contents
  VANITY EVENTS HOLDING, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011
  (Unaudited)
 Three Months Ended June 30,


Six Months Ended June 30,2012


2011


2012


2011Revenues*

$
-


$
29,347


$
424


$
59,908Cost of goods sold*


-



20,829



-



31,441Gross profit


-



8,518



424



28,467Operating expense:Selling expense*


-



27,194



-



84,063General and administrative expense


181,738



72,282



272,581



346,864Total operating expense


181,738



99,476



272,581



430,927Loss from operations


(181,738
)


(90,958
)


(272,157
)


(402,460
)Gain (loss) on change in fair value of derivative liability


2,900,594



953,310



(8,405,289
)


977,712Gain on conversion of debt


9,981



-



9,981



-Interest expense


(2,063,930
)


(3,169,381
)


(7,827,928
)


(3,236,447
)Income (loss) before provision for income taxes


664,907



(2,307,029
)


(16,495,393
)


(2,661,195
)Provision for income taxes


-



-



-



-Net income (loss)


664,907



(2,307,029
)


(16,495,393
)


(2,661,195
)Preferred dividend


(1,875
)


-



(7,275
)


-Net income (loss) attributable to common shareholders

$
663,032


$
(2,307,029
)

$
(16,502,668
)

$
(2,661,195
)Basic and diluted income (loss) per share

$
0.41


$
(10.23
)

$
(17.36
)

$
(11.88
)Weighted average shares outstanding,Basic and diluted


1,603,011



225,429



950,088



223,922* Amounts reported for the 2011 three and six month periods represent the operations ofthe subsidiary which was spun-off during the year ended December 31, 2011.
 
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
   4
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   VANITY EVENTS HOLDING, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011
  (Unaudited)
  Six Months Ended June 30,2012


2011Cash flows from operating activities:Net loss

$
(16,495,393
)

$
(2,661,195
)Adjustments to reconcile net loss to netcash used in operating activities:Depreciation and amortization


-



9,538Allowance for doubtful accounts


-



(3,966
)Amortization of stock based prepaid fees


81,250Gain on debt conversion


(9,981
)


-Change in fair value of derivative liability


8,405,289



(977,712
)Amortization of debt discount


7,794,696



3,209,987Changes in operating assets and liabilities:Accounts receivable


-



(6,664
)Inventory


-



27,344Other assets


-



(4,730
)Accounts payable and other current liabilities


80,843



136,605Net cash used in operating activities


(143,296
)


(270,793
)Cash flows from investing activities:Cash paid for fixed and intangible assets


(8,150
)


(1,166
)Net cash used in investing activities


(8,150
)


(1,166
)Cash flows from financing activities:Bank overdraft


-



(7,121
)Proceeds from notes payable - bank


-



-Repayments of notes payable - bank


-



(4,102
)Proceeds from notes payable - related parties


-



47,075Repayments of notes payable - related parties


-



(12,464
)Proceeds from notes payable - other


250,000



271,500Repayments of notes payable - other


-



(15,000
)Advances - other


-



-Advances to related party


-



-Net cash provided by financing activities


250,000



279,888Net increase in cash


98,554



7,929Cash, beginning of period


16,324



294Cash, end of period

$
114,878


$
8,223Supplemental Schedule of Cash Flow Information:Cash paid for interest

$
-


$
1,144Non-cash investing and financing activities:Common stock issued for purchase of assets

$
2,600,000


$
-Common stock issued as payment of prepaid consulting fees


650,000



-Common stock issued as payment of accounts payable


19,774Note payable issued as payment for accounts payable


-



84,775Note payable converted to common stock


10,000



1,900Derivative liability reclassified to equity upon conversion of debt


-



9,142Derivative liability of conversion feature of debt


3,563,633



2,947,633Derivative liability of warrants issued with debt


-



235,000Increase in derivative liability resulting from modifications


4,329,994



112,500
  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
  5
 Table of Contents
 
 
 VANITY EVENTS HOLDING, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2012 AND 2011
 (Unaudited)
 
 NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
 
 COMPANY OVERVIEW
 
 Nature of Operations
 
 VANITY EVENTS HOLDING, INC.  (the “Company” or “Vanity” or “we” or “our”), was organized as a Delaware Corporation on August 25, 2004, and is a holding company with expanding lines of business. Utilizing the acquired trademark of America’s Cleaning CompanyTM, Vanity had established a cleaning company offering a full range of residential and commercial cleaning services as its only operating business until December 2010. In September 2010, the Company was forced to suspend its cleaning services operations due to a lack of available funds. In December 2010, we entered into a share exchange agreement (“Exchange Agreement”) by and among the Company, Shogun Energy, Inc., a South Dakota corporation (“Shogun”), Shawn Knapp, the principal shareholder of Shogun (the “Principal Shareholder”) and the other shareholders of Shogun (the “Shogun Shareholders” and collectively with the Principal Shareholder, the “Shareholders”).  Pursuant to the terms of the Exchange Agreement, the Shareholders exchanged an aggregate of 100% of the issued and outstanding shares of capital stock of Shogun in exchange for 500,000 shares of the Company’s series A preferred stock (the “Exchange”). Each share of series A preferred stock shall be entitled to 1,604 pre-reverse split votes per share and shall be convertible into 1,604 pre-reverse split shares of the Company’s common stock.  Upon filing an amendment to the Company’s certificate of incorporation to increase the number of shares of authorized common stock so that there is an adequate amount of shares of authorized common stock for issuance upon conversion of the series A preferred stock (the “Amendment”), the shares of series A preferred stock will be automatically converted into an aggregate of 802,000,000 pre-reverse split shares of the Company’s common stock.  The Exchange Agreement contains customary terms and conditions for a transaction of this type, including representations, warranties and covenants, as well as provisions describing the Exchange consideration, the process of exchanging the consideration and the effect of the Exchange.   The closing of the transaction took place on December 31, 2010.
 
 On July 26, 2011, a majority of the voting capital stock of the Company took action in lieu of a special meeting of Stockholders authorizing the Company to enter into a rescission agreement (the “Rescission Agreement”) of the share exchange agreement, dated December 31, 2010 by and among the Company, Shogun Energy, Inc., Shawn Knapp, the principal shareholder of Shogun (“Mr. Knapp”), and the other shareholders of Shogun (the “Shogun Shareholders” and collectively with Mr. Knapp, the “Shareholders”) for the purpose of rescinding the transactions contemplated by the Exchange Agreement, and upon closing (the “Closing Date”), the Exchange Agreement will be rescinded and all obligations of any party arising from such Exchange Agreement, shall, in all respects, be deemed to be null and void and of no further force and effect (the “Rescission”).  Following the closing of the Rescission, no party to the Exchange Agreement shall have any further obligations of any nature whatsoever with respect to the other parties pursuant to or arising from the Exchange Agreement. The closing of the transactions contemplated by the Rescission Agreement took place on September 20, 2011. The rescission has been accounted for as a spin-off of Shogun by Vanity.
 
 At December 31, 2011, the Company’s wholly-owned subsidiaries include Vanity Events, Inc.; America’s Cleaning Company; and Vanity Licensing, Inc.
 
 Reverse Merger and Rescission
 
 December 2010 Transaction
 
 On December 31, 2010, we entered into a share exchange agreement (“Exchange Agreement”) by and among the Company, Shogun Energy, Inc., a South Dakota corporation (“Shogun”), Shawn Knapp, the principal shareholder of Shogun (the “Principal Shareholder”) and the other shareholders of Shogun (the “Shogun Shareholders” and collectively with the Principal Shareholder, the “Shareholders”).  Pursuant to the terms of the Exchange Agreement, the Shareholders exchanged an aggregate of 100% of the issued and outstanding shares of capital stock of Shogun in exchange for 500,000 shares of the Company’s series A preferred stock (the “Exchange”). Each share of series A preferred stock shall be entitled to 1,604 pre-reverse split votes per share and shall be convertible into 1,604 pre-reverse split shares of the Company’s common stock.  Upon filing an amendment to the Company’s certificate of incorporation to increase the number of shares of authorized common stock so that there is an adequate amount of shares of authorized common stock for issuance upon conversion of the series A preferred stock (the “Amendment”), the shares of series A preferred stock will be automatically converted into an aggregate of 802,000,000 pre-reverse split shares of the Company’s common stock.  The Exchange Agreement contains customary terms and conditions for a transaction of this type, including representations, warranties and covenants, as well as provisions describing the Exchange consideration, the process of exchanging the consideration and the effect of the Exchange.   The closing of the transaction took place on December 31, 2010.
 
 6
 Table of Contents
 
 
 The transaction has been accounted for as a reverse acquisition of Vanity by Shogun but in substance as a capital transaction, rather than a business combination since Vanity had minimal operations and assets as of the closing of the transaction. The stockholders of Shogun owned a majority of the Company’s voting power immediately following the transaction and Shogun’s management has assumed operational, management and governance control. The transaction is deemed as reverse recapitalization and the accounting is similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets should be recorded.  Shogun is treated as the surviving and continuing entity.   The Company did not recognize goodwill or any intangible assets in connection with this transaction. Accordingly, the Company’s historical financial statements are those of Shogun, Energy, Inc.
 
 On July 26, 2011, a majority of the voting capital stock of the Company took action in lieu of a special meeting of Stockholders authorizing the Company to enter into a rescission agreement (the “Rescission Agreement”) of the share exchange agreement, dated December 31, 2010 by and among the Company, Shogun Energy, Inc., Shawn Knapp, the principal shareholder of Shogun (“Mr. Knapp”), and the other shareholders of Shogun (the “Shogun Shareholders” and collectively with Mr. Knapp, the “Shareholders”) for the purpose of rescinding the transactions contemplated by the Exchange Agreement, and upon closing (the “Closing Date”), the Exchange Agreement will be rescinded and all obligations of any party arising from such Exchange Agreement, shall, in all respects, be deemed to be null and void and of no further force and effect (the “Rescission”).  Following the closing of the Rescission, no party to the Exchange Agreement shall have any further obligations of any nature whatsoever with respect to the other parties pursuant to or arising from the Exchange Agreement. The closing of the transactions contemplated by the Rescission Agreement took place on September 20, 2011. The rescission has been accounted for as a spin-off of Shogun by Vanity.
 
 Current Operations
 
 Beginning in the second quarter of 2011, management actively engaged in evolving the existing business model of the Company from a sourcing and distribution company to a licensing and marketing company. Management believed that this new business model would allow the Company to have the ability to capture revenue without many of the associated costs that come along with the production of its products.
 
 The first major area in which we moved this model forward leveraged our Sorbco Agreement (as defined below) with the launch of the Plant Sorb product. We also established an online ecommerce presence with www.thereisaproductforthat.com; in both cases, we will end up receiving our revenue for products sold sequentially ahead of when we have to pay our fulfillment partners.
 
 Sorbco Exclusive License and Distribution Agreement
 
 On July 13, 2011, the Company entered into an exclusive license and distribution agreement (the “Sorbco Agreement”) with Plant Sorb LLC (“Sorbco”) pursuant to which the Company will have the exclusive right and license to (i) market, sell, distribute and otherwise deal in commerce with the Sorbco products in the United States through any media and (ii) use Sorbco’s trademark.  The License Agreement shall have an initial term ending on July 13, 2012, and shall continue on successive one-year terms thereafter unless terminated by either party for cause.  For purposes of the Sorbco Agreement, “cause” is defined as the Company not exceeding a threshold of five hundred thousand dollars ($500,000) of retail revenues through sales of Sorbco products during the initial term of the Sorbco Agreement.
 
 On July 12, 2012 the Company and Sorbco agreed to extend and amend the Sorbco Agreement to grant the Company the non-exclusive right and license to (i) market, sell, distribute and otherwise deal in commerce with the Sorbco products in the United States through any media and (ii) use Sorbco’s trademark.
 
 Shogun Distribution Agreement
 
 On September 20, 2011, the Company and Shogun entered into a non-exclusive sales distributor agreement, pursuant to which Shogun granted Vanity a non-exclusive right to distribute or sell Shogun’s products in the United States for a period of 12 months from the date of the agreement.
 
 The Company proceeded to leverage this business model going forward by creating a short form direct response TV spot for the Sorbco products as well as establishing an online ecommerce presence with www.buyplantsorbnow.com , as well as media tested driving traffic to its stand-alone web property in an effort to generate sales for the Sorbco products and Shogun products at www.thereisaaproductforthat.com . The Company’s goal in using the direct response TV spot was if the media tests were successful, the Company would roll-out additional direct TV spots and leverage retail distributors to drive the Company’s products thru mainstream retail channels as well as traditional direct response outlets.  At the end of 2011, after evaluating the media tests, management determined that it would not be profitable or beneficial for the Company to pursue this business model for the Sorbco products past the initial testing phase.
 
 Pippo and Aegis Agreements
 
 Beginning in 2012, management decided to evolve its business strategy from a licensing and marketing company to an e-commerce transactional business where the Company’s management felt it had the relevant core competency and experience to successfully build value for the Company’s shareholders.
 
 On February 29, 2012, the Company entered into a domain name assignment agreement with Greg Pippo, the Company’s chief financial officer (the “Assignor”), pursuant to which the Assignor assigned all of his  rights, title and interest and goodwill in or associated with the domain names www.buyborroworsell.com and www.buyborroworsell.net (the “Domain Names”), together with any unregistered or registered trademarks, service marks, copyrights or other intellectual property or property rights based on or in any way related to the Domain Names.
 
  7
 Table of Contents
  On April 4, 2012, the Company entered into an asset purchase agreement (the “Aegis Agreement”) with Aegis Worldwide, LLC, an entity controlled by Greg Pippo (the “Seller”), pursuant to which the Seller agreed to sell, transfer, convey, and deliver to the Company, all of Seller’s right, title and interest and goodwill in or associated with certain domain names (the “Aegis Domain Names”) along with any information or materials proprietary to the Seller that relate to the  business or affairs associated with the Aegis Domain Names which is of a confidential nature, including, but not limited to, trade secrets, information or materials relating to existing or proposed products (in all and various stages of development), “know-how”, marketing techniques and materials, marketing and development plans and pricing policies (the “Assets").
 
 Simultaneously with the execution of the Aegis Agreement, on April 4, 2012, the parties entered into an option agreement, pursuant to which Seller shall have the option to purchase the Assets and all enhancements to the Assets from the Company in consideration for (i) an amount in cash equal to the net proceeds used by the Company  for the enhancement of the Assets on or after April 4, 2012 and (ii) the cancellation of the Shares. The option is exercisable beginning on the twelve month anniversary of the Closing Date and terminating on the 24 month anniversary of the Closing Date.
 
 The cornerstone of our plan is the development of an online marketplace for many different types of goods.   The Company is developing innovative transactional e-commerce sites through a variety of different web properties. In these challenging economic times, we believe that consumers need access to many different types of goods leveraging the economies that come with shared consumption, along with a convenient and user friendly way to sell or monetize the goods that they currently own.
 
 Our web properties will house several stand-alone sites specifically addressing areas management has identified as attractive in the world of fractional ownership. What that in turn means is that the consumer will not own the goods unless they are purchased outright, instead they will enjoy the use of them through the access that their membership fees allow. The Company plans to offer strong mobile applications to support these sites, as well as leveraging both social and traditional media to build consumer awareness.
 
 Management plans on developing an engaging community experience filled with user feedback and industry specific content that will further enhance the attractiveness of each stand-alone site.  At this time these sites are in the planning and development stages. The stand-alone sites that the company plans to launch are WatchLender.com, ToysLender.com, SneakerLender.com, Shoelender.com, ElectronicsLender.com and CoutureLender.com. Management plans to utilize existing relationships with various suppliers to source product to be offered on the sites. The company is working closely with outsourced third party developers to launch the first of these web and mobile platforms during the second half of 2012.
 
 BASIS OF PRESENTATION AND GOING CONCERN
 
 Changes in Basis of Presentation
 
 The 2011 financial information has been recast so that the basis of presentation is consistent with that of the 2012 financial information. This recast reflects the 1-for-300 reverse stock split of the Company’s common stock that became effective on February 10, 2012.
 
 We have incurred a net loss of $16,495,393 for the six months ended June 30, 2012; of this loss, $8,405,289 was the result of a net, non-cash expense from the change in value of derivative instruments and $7,794,696 was the result of a non-cash expense for debt discount and financing expense related to the issuance and modification of derivative instruments. As of June 30, 2012 we have negative working capital of $17,864,260 and a stockholders’ deficit of $14,687,360. As a result, there is substantial doubt about the Company’s ability to continue as a going concern at June 30, 2012.
 
 Management has implemented new business plans as described above. Our ability to implement our current business plan and continue as a going concern ultimately is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and to achieve profitable operations.
 
 There can be no assurances that funds will be available to the Company when needed or, if available, that such funds would be available under favorable terms. In the event that the Company is unable to generate adequate revenues to cover expenses and cannot obtain additional funds in the near future, the Company may seek protection under bankruptcy laws.  To date, management has not considered this alternative, nor does management view it as a likely occurrence, since the Company is progressing with various potential sources of new capital and we anticipate a successful outcome from these activities. However, capital markets remain difficult and there can be no certainty of a successful outcome from these activities.
 
 The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
 
 8
 Table of Contents
 
 
 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 General
 
 The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011. The results for the three and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012.
 
 The condensed consolidated balance sheet as at December 31, 2011 has been derived from the audited financial statements at that date but do not include all disclosures required by the accounting principles generally accepted in the United States of America.
 
 USE OF ESTIMATES
 
 The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
 
 REVENUE RECOGNITION
 
 We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605 “Revenue Recognition”. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and title has transferred or services have been rendered, the price is fixed and determinable and collectability is reasonably assured. Revenue is not recognized on product sales transacted on a test or pilot basis. Instead, receipts from these types of transactions offset marketing expenses.
 
 FAIR VALUE OF FINANCIAL INSTRUMENTS
 
 Our short-term financial instruments, including cash, accounts receivable and accounts payable and accrued expenses consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of our notes and advances payable is based on management estimates and reasonably approximates their book value based on their current maturity.
 
 Fair value measurements
 
 ASC 820 “Fair Value Measurements and Disclosure” establishes a framework for measuring fair value and expands disclosure about fair value measurements.
 
 ASC 820 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes the following three levels of inputs that may be used:
 
 Level 1 – Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
 
 Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
 
 9
 Table of Contents
 
 
 In accordance with ASC 820, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2012:
 
 Level 1


Level 2


Level 3


TotalAssetsCash and cash equivalents

$
114,878


$
-


$
-


$
114,878Total Assets

$
114,878


$
-


$
-


$
114,878LiabilitiesNotes payable

$
-


$
-


$
704,351


$
704,351Conversion derivative liabilities


-



-



16,498,226



16,498,226Total Liabilities

$
-


$
-


$
17,202,577


$
17,202,577
 
 The following is a description of the valuation methodologies used for these items:
 
 Conversion derivative liability — these instruments consist of certain of our notes which are convertible based on a discount to the market value of our common stock. These instruments were valued using pricing models which incorporate the Company’s stock price, volatility, U.S. risk free rate, dividend rate and estimated life.
 
 The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (warrant derivative liability and conversion derivative liability) for the six months ended June 30, 2012.
 
 Balance at beginning of year

$
353,136Additions to derivative instruments


7,893,627Change in fair value of derivative liabilities


8,405,289Reclassification upon conversion of debt


(153,826
)Balance at end of period

$
16,498,226
 
 LOSS PER SHARE
 
 We use ASC 260, “Earnings Per Share” for calculating the basic and diluted income (loss) per share. We compute basic income (loss) per share by dividing net income (loss) and net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding.
 
 Dilutive common stock equivalents consist of shares issuable upon conversion of debt and the exercise of our stock warrants. In accordance with ASC 260-45-20, common stock equivalents derived from shares issuable through the exercise of our debt and warrants subject to derivative accounting are not considered in the calculation of the weighted average number of common shares outstanding because the adjustments in computing income available to common stockholders would result in a loss. Income of $664,907 reported for the three months ended June 30, 2012 resulted solely from gains and losses attributable to our derivative instruments. Accordingly, the diluted EPS would be computed in the same manner as basic earnings per share since the inclusion of the common stock equivalents derived from shares issuable through the exercise of our debt and warrants subject to derivative accounting would be anti-dilutive.
 
 There were 115,824,186 common share equivalents at June 30, 2012 and 14,694,305 at June 30, 2011, which have been excluded from the computation of the weighted average diluted shares.
 
 INCOME TAXES
 
 We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
 
 The Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by the guidance. As a result of this review, the Company concluded that at this time there are no uncertain tax positions that would result in tax liability to the Company. There was no cumulative effect on retained earnings as a result of applying the provisions of this guidance.
 
 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
 In December 2011, the FASB issued disclosure guidance related to the offsetting of assets and liabilities. The guidance requires an entity to disclose information about offsetting and related arrangements for recognized financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for us on a retrospective basis commencing in the first quarter of 2014. We are currently evaluating the impact of this new guidance on our consolidated financial statements.
 
 In September 2011, the FASB issued ASU No. 2011-08, “Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU No. 2011-08 provides companies an option to perform a qualitative assessment to determine whether further goodwill impairment testing is necessary. If, as a result of the qualitative assessment, it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. ASU No. 2011-08 will be effective for the Company for goodwill impairment tests performed in the fiscal year ending September 30, 2013, with early adoption permitted. The adoption of this guidance is expected to have no impact on the Company’s consolidated financial condition and results of operations.
 
 In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of shareholders’ equity. All non-owner changes in shareholders’ equity instead must be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Also, reclassification adjustments for items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 will be effective for the Company for the quarter ending December 31, 2012. The adoption of this guidance will have no impact on the Company’s financial condition and results of operations.
 
 In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 clarifies and changes the application of various fair value measurement principles and disclosure requirements, and will be effective for the Company in the second quarter of fiscal 2012 (January 1, 2012). The adoption of this guidance will have no impact on the Company’s consolidated financial condition and results of operations.
 Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
 
 
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 NOTE 3 – CONVERTIBLE DEBENTURES AND DERIVATIVE LIABILITIES
 
 The Company has identified the embedded derivatives related to its convertible notes, consisting of the conversion feature, its preferred stock, consisting of the conversion feature, and its warrants.  Since certain of the notes are convertible into a variable number of shares, the conversion features of those debentures are recorded as derivative liabilities. Since the warrants and the conversion feature of the preferred stock have a price reset feature, they are recorded as derivative liabilities. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to adjust to fair value as of each subsequent balance sheet date.
 
 Greystone $100K Financing
 
 On March 21, 2012, the Company entered into a Securities Purchase Agreement with Greystone Capital Partners LLC ("Greystone") providing for the sale by the Company to Greystone of a 8% convertible debenture in the principal amount of up to $100,000 (the “March Debenture”). The March Debenture matures on the first anniversary of the date of issuance (the “Maturity Date”) and bears an interest rate of 8% per annum, payable semi-annually and on the Maturity Date. Greystone may convert, at any time, the outstanding principal and accrued interest on the March Debenture into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at a conversion price per share equal to the lesser of (i) a ninety percent (90%) discount of the average of the closing bid price of the Common Stock during the five (5) trading days immediately preceding the date of conversion as quoted by Bloomberg, LP or (ii) the average of the closing bid price per share during the five (5) trading days prior to the date of any such conversion (the “Conversion Price”).
 
 With the exception of the shares that the Company is obligated to issue to previous investors, for as long as the March Debenture is outstanding, the Conversion Price of the March Debenture shall be subject to adjustment for issuances of Common Stock or securities convertible into common stock or exercisable for shares of Common Stock at a purchase price of less than the then-effective Conversion Price, on any unconverted amounts, such that the then applicable Conversion Price shall be adjusted using full-ratchet anti-dilution on such new issuances subject, to customary carve outs, including restricted shares granted to officers, and directors and consultants.
 
 The conversion features of the March 2012 debenture contains a variable conversion rate. As a result, we have classified the conversion feature as a derivative liability in the financial statements. At issue, we have recorded a conversion feature liability of $1,398,576. The value of the conversion feature liability was determined using the Black-Scholes method based on the following assumptions:  (1) risk free interest rate of 0.185%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 718%; and (4) an expected life of 1 year. The Company has allocated $100,000 to debt discount, to be amortized over the life of the debt, with the balance of $1,298,576 being charged to expense at issue.
 
 Flyback $150K Financing
 
 On May 30, 2012, the Company entered into a Securities Purchase Agreement with Flyback LLC ("Flyback") providing for the sale by the Company to Flyback of a 8% convertible debenture in the principal amount of up to $150,000 (the “May Debenture”). The May Debenture matures on the first anniversary of the date of issuance (the “Maturity Date”) and bears an interest rate of 8% per annum, payable semi-annually and on the Maturity Date. Flyback may convert, at any time, the outstanding principal and accrued interest on the May Debenture into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at a conversion price per share equal to the lesser of (i) a ninety percent (90%) discount of the average of the closing bid price of the Common Stock during the five (5) trading days immediately preceding the date of conversion as quoted by Bloomberg, LP or (ii) the average of the closing bid price per share during the five (5) trading days prior to the date of any such conversion (the “Conversion Price”).
 
 With the exception of the shares that the Company is obligated to issue to previous investors, for as long as the May Debenture is outstanding, the Conversion Price of the May Debenture shall be subject to adjustment for issuances of Common Stock or securities convertible into common stock or exercisable for shares of Common Stock at a purchase price of less than the then-effective Conversion Price, on any unconverted amounts, such that the then applicable Conversion Price shall be adjusted using full-ratchet anti-dilution on such new issuances subject, to customary carve outs, including restricted shares granted to officers, and directors and consultants.
 
 The conversion features of the May 2012 debenture contains a variable conversion rate. As a result, we have classified the conversion feature as a derivative liability in the financial statements. At issue, we have recorded a conversion feature liability of $1,819,405. The value of the conversion feature liability was determined using the Black-Scholes method based on the following assumptions:  (1) risk free interest rate of 0.185%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 647%; and (4) an expected life of 1 year. The Company has allocated $150,000 to debt discount, to be amortized over the life of the debt, with the balance of $1,669,405 being charged to expense at issue.
 
 The warrants with price reset features have been adjusted due to the issuance of debt on March 21, 2012 and May 30, 2012. As a result, those warrants now total 2,900,000 with an exercise price of $0.15. The Company has recorded income of $2,217,661and expense of $38,184 for the three and six months ended June 30, 2012, respectively, related to the change in fair value of the warrants through the dates of adjustment. The Company has also recorded an expense of $103,487 and $3,798,131 for the three and six months ended June 30, 2012, respectively, due to the increase in the fair value of the warrants as a result of the modifications.
 
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  The conversion feature of the preferred stock has been adjusted due to the subsequent issuances of debt. As a result, the conversion price is now $0.15 per share or an aggregate of 500,000 shares of the Company’s common stock. The Company has recorded income of $382,353 and expense of $122,647 for the three and six months ended June 30, 2012, respectively, related to the change in fair value of the conversion feature of the preferred stock through the dates of adjustment. The Company has also recorded an expense of $17,843 and $531,863 for the three and six months ended June 30, 2012, respectively, due to the increase in the fair value of the conversion feature as a result of the modifications.
 
 During the six months ended June 30, 2012 we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions aggregated $184,643 and $345,652 for the three and six months ended June 30, 2012, respectively, which has been charged to interest expense.
 
 During the six months ended June 30, 2012, $10,000 of principal was converted into 59,171 shares of common stock. The Company has recorded income of $16,094 for the three and six months ended June 30, 2012, respectively, related to the change in fair value of the conversion feature through the date of conversion.
 
 At June 30, 2012, we recalculated the fair value of our embedded conversion features and warrants subject to derivative accounting and have determined that their fair value at June 30, 2012 was $16,498,226. The value of the conversion liabilities and warrant liabilities was determined using the Black-Scholes method based on the following assumptions:  (1) risk free interest rate of 0.205% - 0.75%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 562% - 650%; and (4) an expected life of  1 – 4 years. We recorded income of $284,486 and expense of $8,260,552 during the three and six months ended June 30, 2012.
 
 The Company is in default on six of its notes, aggregating $430,100 of unpaid principal and $67,757 of unpaid accrued interest. The Company has not repaid principal or accrued but unpaid interest that has become due and payable under the notes.  The Company is currently working with the note holders on making arrangements to honor its obligations under the notes, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the notes.
 
 NOTE 4 – STOCKHOLDERS’ EQUITY
 
 Preferred Stock
 
 The Company is authorized to issue 50,000,000 shares of preferred stock, with par value of $0.001 per share, of which 75,000 shares have been designated as Series B 10% Convertible preferred stock, with par value of $0.001 per share. There were 75,000 Series B shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively.
 
 Common Stock
 
 The Company is authorized to issue 500,000,000 shares of common stock, with par value of $0.001 per share. As of June 30, 2012 and December 31, 2011, there were 1,628,864 and 269,596 shares of common stock issued and outstanding, respectively.
 
 On September 30, 2011, a majority of the voting capital stock of the Company took action by written consent authorizing the Company to amend its Certificate of Incorporation, as amended, to (1) effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $.001 per share (the "Common Stock") at the ratio of 300-for-1 (the “Reverse Stock Split”), and (2) increase the number of authorized shares of Common Stock of the Company from 350,000,000 shares to 500,000,000 shares (the “Authorized Capital Change” and collectively with the Reverse Stock Split, the “Corporate Actions”).
 
 The Authorized Capital Change became effective on November 18, 2011. The reverse stock split became effective on February 10, 2012. Unless otherwise stated, all share and per share amounts in these financial statements have been retroactively restated to reflect the effects of the reverse stock split.
 
 During April 2012 we issued 50,000 shares of common stock in settlement of accounts payable in the amount of $19,774.
 
 During May 2012 we issued 59,171 shares of common stock upon conversion of notes payable in the amount of $10,000.
 
 Cortell Communications Agreement
 
 On March 29, 2012, the Company entered into a consultant agreement pursuant to which the consultant shall provide, among other services, public relations, advisory and consulting services to the Company commencing on March 29, 2012 and ending on March 28, 2014.  As consideration for these services, the Company issued to the Consultant 250,000 shares of its common stock. The shares have been valued at $650,000 at March 31, 2012, based on the quoted market price of our common stock on March 30, 2012. We have charged $81,250 of the payment to expense during the second quarter of 2012, based on the 24 month term of the agreement. The remaining amount of $568,750 has been recorded as prepaid consulting fees at June 30, 2012. During the second half of 2012, we will assess the value of the services and will adjust the carrying amount of the prepayment and the related expense accordingly. We have charged $81,250 of the payment to expense during the second quarter of 2012, based on the 24 month term of the agreement.
 
 
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 Asset Purchase Agreement with Aegis Worldwide, LLC
 
 On April 4, 2012 (the “Closing Date”), the Company entered into an asset purchase agreement (the “Aegis Agreement”) with Aegis Worldwide, LLC, an entity controlled by Greg Pippo, the Company’s chief financial officer (the “Seller”), pursuant to which the Seller agreed to sell, transfer, convey, and deliver to the Company, all of Seller’s right, title and interest and goodwill in or associated with certain domain names (the “Domain Names”) along with any information or materials proprietary to the Seller that relate to the  business or affairs associated with the Domain Names which is of a confidential nature, including, but not limited to, trade secrets, information or materials relating to existing or proposed products (in all and various stages of development), “know-how”, marketing techniques and materials, marketing and development plans and pricing policies (the “Assets”)).  In consideration for the purchase of the Assets, the Company issued to the Seller 1,000,000 shares of its common stock on March 29, 2012. The shares have been valued at $2,600,000 at March 31, 2012, based on the quoted market price of our common stock on March 20, 2012. This amount has been recorded as intangible asset acquisition at June 30, 2012. During the second half of 2012, we will assign a value to the assets acquired and adjust the carrying value accordingly.
 
 Simultaneously with the execution of the Aegis Agreement, on March 30, 2012, the parties entered into an option agreement, pursuant to which Seller shall have the option to purchase the Assets and all enhancements to the Assets from the Company in consideration for (i) an amount in cash equal to the net proceeds used by the Company for the enhancement of the Assets on or after the Closing Date and (ii) the cancellation of the Shares. The option is exercisable beginning on the twelve month anniversary of the Closing Date and terminating on the 24 month anniversary of the Closing Date.
 
 NOTE 5 – SUBSEQUENT EVENTS
 
 On July 19, 2012, the Company entered into a consulting agreement (the “Agreement”) with Sadore Consulting Group LLC (the “Consultant”) pursuant to which the Consultant agreed to provide certain strategic advisory services to the Company for a period of 30 days in consideration for (i) $15,000 and (ii) 250,000 shares of the Company’s common stock.





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


This discussion contains forward-looking statements based upon our current expectations and involves risks and uncertainties.  To the extent that the information presented in this report discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking.  Such forward-looking statements can be identified by the use of words such as “may,” “will,” “should,” “might,” “would,” “intends,” “anticipates,” “believes,” “estimates,” “projects,” “forecasts,” “expects,” “plans,” and “proposes.” Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.  These include, among others, the cautionary statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this report.  These cautionary statements identify important factors that could cause actual results to differ materially from those described in the forward-looking statements.  When considering forward-looking statements in this report, you should keep in mind the cautionary statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section below, and other sections of this report.
 
 All forward-looking statements included in this quarterly report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements, unless required by law. It is important to note that our actual results could differ materially from those included in such forward-looking statements.
 
 The following discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and related notes included herein.
 
 Overview
 
 The Company is a holding company with expanding lines of business. Utilizing their licensed trademark of America’s Cleaning CompanyTM, Vanity established a cleaning company offering residential and commercial cleaning services. This company intended to expand its reach through national franchising. In addition, the Company also sought out, licenses, develops, promotes, and brings to market various innovative consumer and commercial products.   Upon the closing of transactions contemplated by the Exchange Agreement, the Company shifted its operations beginning in 2011 to focus on the business of Shogun Energy, Inc.
 
 Shogun’s goal is to produce a premium line of energy drinks that are unique and appealing to all demographics, which adds to the allure of its product and the value of its brand.  Shogun does not directly manufacture the Shogun Energy® drink, but instead outsources the manufacturing process to third party bottlers and contract packers.
 
 After careful review of the Company’s business model during the first half of 2011, the Company determined that the capital requirements and time to market for the products and services of Shogun were greater than had been previously expected.  As such, on June 30, 2011, the Company and Shogun entered into the Rescission Agreement, which relieved the Company of further capital investment in the Shogun business and allowed the Company to streamline its business operations and operate under a more efficient business model on a going forward basis. The assets, liabilities and operations of Shogun were spun-off on September 20, 2011 pursuant to the Rescission Agreement.
 
 Beginning in the second quarter of 2011, management actively engaged in evolving the existing business model of the Company from a sourcing and distribution company to a licensing and marketing company. Management believed that this new business model would allow the Company to have the ability to capture revenue without many of the associated costs that come along with the production of its products.
 
 
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 On May 24, 2011, the Company entered into a non-exclusive license agreement (the “Sorbco Non-Exclusive License Agreement”) with Plant Sorb LLC (“Sorbco”) pursuant to which the Company has the non-exclusive right and license to (i) market, sell, distribute and otherwise deal in commerce with certain Sorbco products in the United States through any media and (ii) use Sorbco’s trademark.  The Sorbco Non-Exclusive License Agreement had an initial term commencing on the date of the Sorbco Non-Exclusive License Agreement and ending on May 31, 2011, and continues on a month-to-month basis thereafter unless terminated by either party on not less than thirty (30) days’ notice prior to the end of the initial term or any month-to-month extension.  On July 13, 2011, the Company entered into an exclusive license and distribution agreement (the “Sorbco Exclusive License Agreement” and together with the Sorbco Non-Exclusive License Agreement the “Sorbco Agreement”) with Sorbco pursuant to which the Company has the exclusive right and license to (i) market, sell, distribute and otherwise deal in commerce with the Sorbco products in the United States through any media and (ii) use Sorbco’s trademark.  The Sorbco Exclusive License Agreement had an initial term ending on July 13, 2012, and shall continue on successive one-year terms thereafter unless terminated by either party for cause.  For purposes of the Sorbco Exclusive License Agreement, “cause” is defined as the Company not exceeding a threshold of five hundred thousand dollars ($500,000.00) of retail revenues through sales of Sorbco products during the initial term of the Sorbco Exclusive License Agreement.On July 12, 2012 the Company and Sorbco agreed to extend and amend the Sorbco Agreement to grant the Company the non-exclusive right and license to (i) market, sell, distribute and otherwise deal in commerce with the Sorbco products in the United States through any media and (ii) use Sorbco’s trademark.
 
 On September 20, 2011, the Company and Shogun entered into a non-exclusive sales distributor agreement, pursuant to which Shogun granted Vanity a non-exclusive right to distribute or sell Shogun’s products in the United States for a period of 12 months from the date of the Agreement.
 
 The Company proceeded to leverage this business model going forward by creating a short form direct response TV spot for the Sorbco products as well as establishing an online ecommerce presence with www.buyplantsorbnow.com, as well as media tested driving traffic to its stand-alone web property in an effort to generate sales for the Sorbco products and Shogun products at www.thereisaaproductforthat.com. The Company’s goal in using the direct response TV spot was if the media tests were successful, the Company would roll-out additional direct TV spots and leverage retail distributors to drive the Company’s products thru mainstream retail channels as well as traditional direct response outlets.  At the end of 2011, after evaluating the media tests, management determined that it would not be profitable or beneficial for the Company to pursue this business model for the Sorbco products past the initial testing phase.
 
 Beginning in 2012, management decided to evolve its business strategy from a licensing and marketing company to an e-commerce transactional business where the Company’s management felt it had the relevant core competency and experience to successfully build value for the Company’s shareholders.
 
 On February 29, 2012, the Company entered into a domain name assignment agreement with Greg Pippo, the Company’s chief financial officer (the “Assignor”), pursuant to which the Assignor assigned all of his  rights, title and interest and goodwill in or associated with the domain names www.buyborroworsell.com and www.buyborroworsell.net (the “Domain Names”), together with any unregistered or registered trademarks, service marks, copyrights or other intellectual property or property rights based on or in any way related to the Domain Names.  In consideration for the assignment of the Domain Names, the Corporation agreed to pay the Assignor $2,500 for the fees and expenses related to the Domain Names incurred by the Assignor to date.
 
 On April 4, 2012, the Company entered into an asset purchase agreement (the “Aegis Agreement”) with Aegis Worldwide, LLC, an entity controlled by Greg Pippo, the Company’s chief financial officer (the “Seller”), pursuant to which the Seller agreed to sell, transfer, convey, and deliver to the Company, all of Seller’s right, title and interest and goodwill in or associated with certain domain names (the “Aegis Domain Names”) along with any information or materials proprietary to the Seller that relate to the business or affairs associated with the Aegis Domain Names which is of a confidential nature, including, but not limited to, trade secrets, information or materials relating to existing or proposed products (in all and various stages of development), “know-how”, marketing techniques and materials, marketing and development plans and pricing policies (the “Assets”). In consideration for the purchase of the Assets, the Company agreed issue Seller 1,000,000 shares of Company’s common stock.
 Simultaneously with the execution of the Aegis Agreement, on April 4, 2012, the parties entered into an option agreement, pursuant to which Seller shall have the option to purchase the Assets and all enhancements to the Assets from the Company in consideration for (i) an amount in cash equal to the net proceeds used by the Company for the enhancement of the Assets on or after April 4, 2012 and (ii) the cancellation of the Shares. The option is exercisable beginning on the twelve month anniversary of the Closing Date and terminating on the 24 month anniversary of the Closing Date.
 
 
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 The cornerstone of our plan is the development of an online marketplace for many different types of goods.  The Company is developing innovative transactional e-commerce sites through a variety of different web properties. In these challenging economic times, we believe that consumers need access to many different types of goods leveraging the economies that come with shared consumption, along with a convenient and user friendly way to sell or monetize the goods that they currently own.
 
 Our web properties will house several stand-alone sites specifically addressing areas management has identified as attractive in the world of fractional ownership. What that in turn means is that the consumer will not own the goods unless they are purchased outright, instead they will enjoy the use of them through the access that their membership fees allow. The Company plans to offer strong mobile applications to support these sites, as well as leveraging both social and traditional media to build consumer awareness.
 
 Management plans on developing an engaging community experience filled with user feedback and industry specific content that will further enhance the attractiveness of each stand-alone site.  At this time these sites are in the planning and development stages. The stand-alone sites that the company plans to launch are WatchLender.com, ToysLender.com, SneakerLender.com, Shoelender.com, ElectronicsLender.com and CoutureLender.com. Management plans to utilize existing relationships with various suppliers to source product to be offered on the sites. The company is working closely with outsourced third party developers to launch the first of these web and mobile platforms during the second half of 2012.
 
 Recent Developments
 
 On September 30, 2011, the Board of Directors and a majority of the voting capital stock of the Company took action by written consent authorizing the Company to amend its Certificate of Incorporation, as amended, to (1) effect a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $.001 per share (the "Common Stock") at the ratio of 300-for-1 (the “Reverse Stock Split”), and (2) increase the number of authorized shares of Common Stock of the Company from 350,000,000 shares to 500,000,000 shares (the “Authorized Capital Change” and collectively with the Reverse Stock Split, the “Corporate Actions”). The Authorized Capital Change became effective on November 18, 2011.  The reverse stock split became effective on February 10, 2012 upon approval from FINRA. Unless otherwise stated, all share and per share amounts in these financial statements have been retroactively restated to reflect the effects of the reverse stock split.
 
 Critical Accounting Policies
 
 The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our financial statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:
 
 Use of Estimates - These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
 
 Going Concern - The financial statements have been prepared on a going concern basis, and do not reflect any adjustments related to the uncertainty surrounding our recurring losses or accumulated deficit
 
 Revenue Recognition - We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605 “Revenue Recognition”. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and title has transferred or services have been rendered, the price is fixed and determinable and collectability is reasonably assured. Revenue is not recognized on product sales transacted on a test or pilot basis. Instead, receipts from these types of transactions offset marketing expenses.
 
 Fair Value of Financial Instruments - Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of the Company’s derivative instruments is determined using option pricing models.
 
 Results of Operations
 
 Three Months ended June 30, 2012 as compared to the Three Months ended June 30, 2011
 
 The results of operations for the corresponding 2012 and 2011 periods include Shogun’s operations through September 20, 2011, the date of closing on the Rescission. All of the revenue reported in the 2011 period resulted from Shogun’s operations. Comparisons between the comparable periods are not necessarily indicative of our future operations.
 
 Revenues:
 
 Net sales were $0 for the three months ended June 30, 2012 compared to net sales of $29,347 for the 2011 period, a decrease of $29,347, or 100%. Gross profit for the 2011 period was $8,518. The principal reason for the decrease in sales in 2012 is directly related to spin-off of the Shogun operations in September of 2011. Our revenues subsequent to the spin-off have been minimal as we implement our current business plan.
 
 Operating expense:
 
 Selling expense was $27,194 for the three months ended June 30, 2011, with no comparable expense in the current 2012 period. The reason for the decrease in 2012 is directly related to spin-off of the Shogun operations in September of 2011.
 
 General and administrative expense for the three months ended June 30, 2012 was $181,738, as compared to $72,282 for the three months ended June 30, 2011, an increase of $109,456, or 151.42%. The principal reason for the increase in expense in 2012 is an increase in payroll of approximately $122,000 (resulting from prior period payroll accrual reversals recorded in the 2011 three month period) and an increase in stock-based consulting fees of $81,250, partially offset by a decrease in professional fees of approximately $57,000. Other expense decreases are directly related to spin-off of the Shogun operations in September of 2011. Current general and administrative expense consists primarily of payroll, professional fees and consulting fees.
 
 
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 Other income (expense):
 
 We had income from the change in the fair value of our derivative liabilities of $2,900,594 during the three months ended June 30, 2012 as compared to income of $953,310 in the comparable 2011 period. The change in the fair value of our derivative liabilities resulted primarily from the changes in our stock price and the volatility of our common stock during the reported periods. Refer to Note 3 to the financial statements for further discussion of our derivative liabilities.
 
 We reported gain from the conversion of debt of $9,981 during the three months ended June 30, 2012, with no comparable item in the 2011 period. The gain on debt conversion resulted from the issuance of common shares to pay off debt, based on the fair value of the shares issued as compared to the carrying value of the related debt. The closing price on the date of conversion is used to compute the actual fair market value of our common stock in determining the amount of the gain or loss.
 
 We reported interest expense of $2,063,930 during the three months ended June 30, 2012 as compared with interest expense of $3,169,381 during the three months ended June 30, 2011. Interest expense during the 2012 period consists primarily of the expense associated with the price resets of certain of our derivative instruments aggregating $121,330 and derivative liabilities issued during the period whose fair values exceeded the proceeds of the debt aggregating $1,854,048. The balance of the expense for the 2012 period relates to the amortization of debt discount and interest accrued on the debt. Interest expense for the 2011 period consists primarily of the expense associated with the price resets of certain of our derivative instruments aggregating $112,500 and derivative liabilities issued during the period whose fair values exceeded the proceeds of the debt aggregating $2,947,635. The balance of the expense for the 2011 period relates to the amortization of debt discount and interest accrued on the debt.
 
 Net loss:
 
 We reported net income of $664,907 and net loss of $2,307,029 during the three month periods ended June 30, 2012 and 2011, respectively, resulting from the components described above.
 
 Six Months ended June 30, 2012 as compared to the Six Months ended June 30, 2011
 
 The results of operations for the corresponding 2012 and 2011 periods include Shogun’s operations through September 20, 2011, the date of closing on the Rescission. All of the revenue reported in the 2011 period resulted from Shogun’s operations. Comparisons between the comparable periods are not necessarily indicative of our future operations.
 
 Revenues:
 
 Net sales were $424 for the six months ended June 30, 2012 compared to net sales of $59,908 for the 2011 period, a decrease of $59,484, or 99.29%. Gross profit was $424 and $28,467 for the 2012 and 2011 periods, respectively. The principal reason for the decrease in sales in 2012 is directly related to spin-off of the Shogun operations in September of 2011. Our revenues subsequent to the spin-off have been minimal as we implement our current business plan.
 
 Operating expense:
 
 Selling expense was $84,063 for the six months ended June 30, 2011, with no comparable expense in the current 2012 period. The reason for the decrease in 2012 is directly related to spin-off of the Shogun operations in September of 2011.
 
 General and administrative expense for the six months ended June 30, 2012 was $272,581, as compared to $346,864 for the six months ended June 30, 2011, a decrease of $74,283, or 21.42%. The principal reason for the decrease in expense in 2012 is directly related to spin-off of the Shogun operations in September of 2011. Current general and administrative expense consists primarily of payroll, professional fees and stock-based consulting fees.
 
 
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 Other income (expense):
 
 We had expense from the change in the fair value of our derivative liabilities of $8,405,289 during the six months ended June 30, 2012 as compared to income of $977,712 in the comparable 2011 period. The change in the fair value of our derivative liabilities resulted primarily from the changes in our stock price and the volatility of our common stock during the reported periods. Refer to Note 3 to the financial statements for further discussion of our derivative liabilities.
 
 We reported gain from the conversion of debt of $9,981 during the six months ended June 30, 2012, with no comparable item in the 2011 period. The gain on debt conversion resulted from the issuance of common shares to pay off debt, based on the fair value of the shares issued as compared to the carrying value of the related debt. The closing price on the date of conversion is used to compute the actual fair market value of our common stock in determining the amount of the gain or loss.
 
 We reported interest expense of $7,827,928 during the six months ended June 30, 2012 as compared with interest expense of $3,236,447 during the six months ended June 30, 2011. Interest expense during the 2012 period consists primarily of the expense associated with the price resets of certain of our derivative instruments aggregating $4,329,994 and derivative liabilities issued during the period whose fair values exceeded the proceeds of the debt aggregating $3,313,633. The balance of the expense for the 2012 period relates to the amortization of debt discount and interest accrued on the debt. Interest expense for the 2011 period consists primarily of the expense associated with the price resets of certain of our derivative instruments aggregating $112,500 and derivative liabilities issued during the period whose fair values exceeded the proceeds of the debt aggregating $2,947,635. The balance of the expense for the 2011 period relates to the amortization of debt discount and interest accrued on the debt.
 
 Net loss:
 
 We reported net losses of $16,495,393 and $2,661,195 during the six month periods ended June 30, 2012 and 2011, respectively, resulting from the components described above.
 
 Liquidity and Capital Resources
 
 As of June 30, 2012 we had a working capital deficit of $17,864,260. During the six months ended June 30, 2012 we raised $250,000 in cash proceeds from the sale of convertible debentures (see below).
 
 Operating Activities - For the six months ended June 30, 2012,  net cash used in operating activities was $143,296, primarily attributable to a loss of $224,139 (after adjusting for non-cash items), partially offset by an increase in accounts payable of $80,843. Net cash used in operating activities for the six months ended June 30, 2011 was $270,793, primarily attributable to a loss of $423,348 (after adjusting for non-cash items) partially offset by an increase in accounts payable of $136,605.
 
 Investing Activities -  For the six months ended June 30, 2012, net cash used in investing activities was $8,150 related to the build-out of intangible assets. For the six months ended June 30, 2011, net cash used in investing activities was $1,166, related to the purchases of furniture and equipment.
 
 Financing Activities - For the six months ended June 30, 2012 and 2011, net cash provided by financing activities was $250,000 and $279,888, respectively. Net proceeds from loans obtained through bank, related parties and others were $250,000 and $318,575 during 2012 and 2011, respectively. During 2011 we repaid a bank overdraft of $7,121 and repaid other debt aggregating $31,566.
 
 Our continuation as a going concern for a period longer than the current fiscal year is dependent upon our ability to obtain necessary additional funds to continue operations and expansion of our business, to determine the existence, discovery and successful exploitation of potential revenue sources that will be financed primarily through available working capital, the sales of securities and convertible debt, issuance of notes payable other debt or a combination thereof, depending upon the transaction size, market conditions and other factors.
 
 
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 Greystone $100K Financing
 
 On March 21, 2012, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Greystone Capital Partners LLC , an accredited investor (the “Investor”), providing for the sale by the Company to the Investor of a 8% convertible debenture in the principal amount of up to $100,000 (the “Debenture”). The Debenture matures on the first anniversary of the date of issuance (the “Maturity Date”) and bears interest a rate of 8% per annum, payable semi-annually and on the Maturity Date. The Investor may convert, at any time, the outstanding principal and accrued interest on the Debenture into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at a conversion price per share equal to the lesser of (i) a ninety percent (90%) discount of the average of the closing bid price of the Common Stock during the five (5) trading days immediately preceding the date of conversion as quoted by Bloomberg, LP or (ii) the average of the closing bid price per share during the five (5) trading days prior to the date of any such conversion (the “Conversion Price”).
 
 With the exception of the shares that the Company is obligated to issue to previous investors, for as long as the Debenture is outstanding, the Conversion Price of the Debenture shall be subject to adjustment for issuances of Common Stock or securities convertible into common stock or exercisable for shares of Common Stock at a purchase price of less than the then-effective Conversion Price, on any unconverted amounts, such that the then applicable Conversion Price shall be adjusted using full-ratchet anti-dilution on such new issuances subject, to customary carve outs, including restricted shares granted to officers, and directors and consultants.
 
 Flyback $150K Financing
 
 On May 30, 2012, the Company entered into a Securities Purchase Agreement with Flyback LLC ("Flyback") providing for the sale by the Company to Flyback of a 8% convertible debenture in the principal amount of up to $150,000 (the “May Debenture”). The May Debenture matures on the first anniversary of the date of issuance (the “Maturity Date”) and bears an interest rate of 8% per annum, payable semi-annually and on the Maturity Date. Flyback may convert, at any time, the outstanding principal and accrued interest on the May Debenture into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at a conversion price per share equal to the lesser of (i) a ninety percent (90%) discount of the average of the closing bid price of the Common Stock during the five (5) trading days immediately preceding the date of conversion as quoted by Bloomberg, LP or (ii) the average of the closing bid price per share during the five (5) trading days prior to the date of any such conversion (the “Conversion Price”).
 
 With the exception of the shares that the Company is obligated to issue to previous investors, for as long as the May Debenture is outstanding, the Conversion Price of the May Debenture shall be subject to adjustment for issuances of Common Stock or securities convertible into common stock or exercisable for shares of Common Stock at a purchase price of less than the then-effective Conversion Price, on any unconverted amounts, such that the then applicable Conversion Price shall be adjusted using full-ratchet anti-dilution on such new issuances subject, to customary carve outs, including restricted shares granted to officers, and directors and consultants.
 
 We presently do not have any other available credit, bank financing or other external sources of liquidity. We will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.
 
 We will still need additional capital in order to continue operations until we are able to achieve positive operating cash flow. Additional capital is being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.
 
 Off-Balance Sheet Arrangements
 
 We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
 
 
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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not applicable.





ITEM 4. CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and Procedures





We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended September 30, 2011 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of June 30, 2012.





Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff.  The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.





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





These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the quarter ended June 30, 2012 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the quarter ended June 30, 2012 are fairly stated, in all material respects, in accordance with US GAAP.





Limitations on Effectiveness of Controls and Procedures





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





Changes in Internal Controls





During the fiscal quarter ended June 30, 2012, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting








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PART II





ITEM 1. LEGAL PROCEEDINGS





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





ITEM 1A: RISK FACTORS





Not applicable.





ITEM 1B. UNRESOLVED STAFF COMMENTS





Not applicable.





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





None.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES.





On June 4, 2010, the Company entered into a securities purchase agreement with Greystone Captial Partners LLC  (“Greystone”), providing for the sale by the Company to Greystone of a 10% convertible note in the aggregate principal amount of $50,000, due June 4, 2011 (the “Greystone June 2010 Note”). On August 9, 2011, the Company entered into an omnibus waiver and modification agreement with Greystone related to the Greystone June 2010 Note, pursuant to which, among other things, Greystone agreed to (i) extend the maturity date of the note from June 4, 2011 until September 30, 2011 and (ii) Greystone waived any default or breach that may have resulted by way of the Greystone June 2010 Note maturing on June 4, 2011.  As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the Greystone June 2010 Note.  The Company is currently working with Greystone on making arrangements to honor its obligations under the Greystone June 2010 Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the Greystone June 2010 Note.





On July 29, 2010, the Company entered into a securities purchase agreement with IIG Management LLC  (“IIG”), providing for the sale by the Company to IIG of a 10% convertible note in the aggregate principal amount of $120,000, due July 29, 2011 (the “IIG Note”). On August 9, 2011, the Company entered into an omnibus waiver and modification agreement with IIG related to the IIG Note, pursuant to which, among other things, IIG agreed to (i) extend the maturity date of the note from July 29, 2011 until September 30, 2011 and (ii) IIG waived any default or breach that may have resulted by way of the IIG Note maturing on July 29, 2011.  As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the IIG Note.  The Company is currently working with IIG on making arrangements to honor its obligations under the IIG Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the IIG Note.





On November 9, 2010, the Company entered into a securities purchase agreement with Greystone providing for the sale by the Company to Greystone of a 10% convertible note in the aggregate principal amount of $50,000, due November 9, 2011 (the “Greystone Nov 2010 Note”). As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the Greystone Nov 2010 Note.  The Company is currently working with Greystone on making arrangements to honor its obligations under the Greystone Nov 2010 Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the Greystone Nov 2010 Note.





On April 6, 2011, the Company entered into a securities purchase agreement with IIG providing for the sale by the Company to IIG of a 10% convertible note in the aggregate principal amount of $135,000, due April 9, 2012 (the “IIG April 2011 Note”). As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the IIG April 2011 Note.  The Company is currently working with IIG on making arrangements to honor its obligations under the IIG April 2011 Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the IIG April 2011 Note.





On May 10, 2011, the Company entered into a securities purchase agreement with Greystone providing for the sale by the Company to Greystone of a 10% convertible note in the aggregate principal amount of $50,000, due May 10, 2012 (the “Greystone May 2011 Note”). As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the Greystone May 2011 Note.  The Company is currently working with Greystone on making arrangements to honor its obligations under the Greystone May 2011 Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the Greystone May 2011 Note.





On June 13, 2011, the Company entered into a securities purchase agreement with Greystone providing for the sale by the Company to Greystone of a 10% convertible note in the aggregate principal amount of $50,000, due June 13, 2012 (the “Greystone June 2011 Note”). As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the Greystone June 2011 Note.  The Company is currently working with Greystone on making arrangements to honor its obligations under the Greystone June 2011 Note, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the Greystone June 2011 Note.





ITEM 4. MINE SAFETY DISCLOSURES





Not applicable.





ITEM 5. OTHER INFORMATION.





Not applicable.








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ITEM 6. EXHIBITS





EXHIBIT NO.

DESCRIPTION31.1

Certificate of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.31.2

Certificate of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.32.1

Certificate of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.32.2

Certificate of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.101.INS

XBRL Instance Document*101.SCH

XBRL Taxonomy Extension Schema Document*101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*101.DEF

XBRL Taxonomy Extension Definition Linkbase Document*101.LAB

XBRL Taxonomy Extension Label Linkbase Document*101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document*





* Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Form 10-Q within the permitted 30-day grace period for the first quarterly period in which detailed footnote tagging is required after the filing date of this Form 10-Q.




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SIGNATURES





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








VANITY EVENTS HOLDING, INC.Date: August 20, 2012
By:
/s/ Lloyd LapidusName: Lloyd LapidusTitle: Interim Chief Executive Officer (principal executive officer)














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