**UNITED
        STATES**
 
 **SECURITIES
        AND EXCHANGE COMMISSION**
 
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 
 (Mark
        One)
 
 **x**
              **QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934**
 
 For
        the
        quarterly period ended June 30, 2005
 
 or
 
 o
              **TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT
                  OF 1934**
 
 For
        the
        Transition Period from  to
 
 Commission
        File No. 000-50508
 
 **NUVIM,
        INC.**
 **(Name
        of Small Business Issuer in Its Charter)**
 
 **Delaware**
              
              **13-4083851****(State
                  or other jurisdiction of**
                **incorporation
                  or organization)**
              
              **(I.R.S.
                  Employer**
                **Identification
                  No.)****12
                  North State Route 17**
                **Paramus,
                  NJ**
              
              **07652****(Address
                  of principal executive offices)**
              
              **(Zip
                  Code)**
 
 **(201)
        556-1000**
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such report(s), and (2) has been
        subject to such filing requirements for the past 90 days. Yes o No
x
 
 At
        August
        12, 2005, 4,630,297 shares of the registrant’s Common Stock, par value $0.00001
        per share, were outstanding.
 
 Transitional
        Small Business Disclosure Format: Yes o No
x
  
  
 **NUVIM,
        INC.**
 
 **Quarterly
        Report on Form 10-QSB**
 
 **Quarterly
        Period Ended June 30, 2005**
 
 **Table
        of Contents**
 
 **Part
                  I - Financial Information**Item
                  1. Financial Statements (Unaudited)Balance
                  Sheet - June 30, 2005
              
              3Statements
                  of Operations - For the three and six months ended June 30, 2005
                  and 2004
              
              4Statement
                  of Changes in Stockholders’ Deficit for the six months ended June 30, 2005
              
              5Statements
                  of Cash Flows for the six months ended June 30, 2005 and 2004
              
              6Notes
                  to Financial Statements
              
              7Item
                  2. Management’s Discussion and Analysis or Plan of Operation
              
              13Item
                  3. Controls and Procedures
              
              28**PART
                  II - Other Information**Item
                  1. Legal Proceedings
              
              28Item
                  2. Unregistered Sales of Equity Securities and Use of Proceeds
              
              28Item
                  6. Exhibits and Reports on Form 8-K
              
              28Signatures
              
              30
 
  2
 
 **Part
        I. Financial Information**
 **Item
        1. Financial Statements**
 
 **NUVIM,
        INC.**
 **BALANCE
        SHEET**
 **(UNAUDITED)**
  **June
                    30, 2005**ASSETSCurrent
                    Assets:Cash
                    and cash equivalents
                
                $
                1,219,041Accounts
                    receivable, net
                
                
                297Inventory
                
                
                118,083Prepaid
                    expenses and other current assets
                
                
                47,699Total
                    Current Assets
                
                
                1,385,120Equipment
                    and furniture, net
                
                
                12,086Deposits
                    and other assets
                
                
                8,547TOTAL
                    ASSETS
                
                $
                1,405,753LIABILITIES
                    AND STOCKHOLDERS’DEFICITCurrent
                    Liabilities:Stockholder
                    loans - subordinated convertible promissory notes
                
                $
                260,000Accrued
                    interest stockholder loans
                
                
                31,031Accounts
                    payable
                
                
                1,160,046Accounts
                    payable and accrued expenses to related parties
                
                
                363,680Accrued
                    expenses
                
                
                106,291Accrued
                    compensation
                
                
                134,721Rescinded
                    series B offering payable
                
                
                42,000Other
                    note payable
                
                
                145,000Total
                    Current Liabilities
                
                
                2,242,769Senior
                    notes payable - related parties
                
                
                500,000Accrued
                    interest - senior notes payable - related party
                
                
                95,118Commitments
                    and ContingenciesStockholders’
                    Deficit:Preferred
                    Stock - 65,000,000 shares authorized:Preferred
                    Stock Series A, convertible, non cumulative, participating, par
                    value
                    $.00001 per share; 4,875,850 shares designated, 0 shares issued
                    and
                    outstanding
                
                
                —Preferred
                    Stock Series C, convertible, non cumulative, participating, par
                    value
                    $.00001 per share; designated 50,000,000 shares, 0 issued and
                    outstanding
                
                
                —Common
                    Stock, 120,000,000 shares authorized, $.00001 par value, 4,630,297
                    shares
                    issued and outstanding
                
                
                46Additional
                    paid-in capital
                
                
                17,731,040Accumulated
                    deficit
                
                
                (19,163,220
                )Total
                    Stockholders’ Deficit
                
                
                (1,432,134
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS’DEFICIT
                
                $
                1,405,753
  The
          Notes
          to Financial Statements are an integral part of these statements.
 3
 
 **NUVIM,
        INC.**
 **STATEMENTS
        OF OPERATIONS**
 **(UNAUDITED)**
 
 **For
                  the Three Months Ended June 30,**
              
              **For
                  the Six Months Ended June 30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Gross
                  Sales
              
              $
              273,789
              
              $
              311,359
              
              $
              649,508
              
              $
              732,914Less:
                  Discounts, Allowances and Promotional Payments
              
              
              124,835
              
              
              82,179
              
              
              291,678
              
              
              185,830Net
                  Sales
              
              
              148,954
              
              
              229,180
              
              
              357,830
              
              
              547,084Cost
                  of Sales
              
              
              169,675
              
              
              168,345
              
              
              377,510
              
              
              389,421Gross
                  Profit (Loss)
              
              
              (20,721
              )
              
              60,835
              
              
              (19,680
              )
              
              157,663Selling,
                  General and Administrative Expenses
              
              
              517,364
              
              
              341,213
              
              
              1,054,055
              
              
              693,683Loss
                  from Operations
              
              
              (538,085
              )
              
              (280,378
              )
              
              (1,073,735
              )
              
              (536,020
              )Other
                  Income (Expense):Interest
                  Expense
              
              
              (210,077
              )
              
              (123,026
              )
              
              (388,879
              )
              
              (264,030
              )Interest
                  Income
              
              
              153
              
              
              —
              
              
              153
              
              
              —Gain
                  on Forgiveness of Accounts Payable
              
              
              148,525
              
              
              60,258
              
              
              148,525
              
              
              —Total
                  Other Income (Expense) - Net
              
              
              (
                  61,399
              )
              
              (518,302
              )
              
              (240,201
              )
              
              (264,030
              )Net
                  Loss Before Income Tax Benefit
              
              
              (599,484
              )
              
              (403,404
              )
              
              (1,313,936
              )
              
              (800,050
              )Income
                  Tax Benefit (Expense)
              
              
              (1,125
              )
              
              3⁄4
              
              
              (1,125
              )
              
              —Net
                  Loss
              
              $
              (600,609
              )
              $
              (403,404
              )
              $
              (1,315,061
              )
              $
              (800,050
              )Basic
                  and Diluted Loss Per Share
              
              $
              (.33
              )
              $
              (2.60
              )
              $
              (1.18
              )
              $
              (5.16
              )Weighted
                  Average Number of Common Shares Outstanding - Basic and Diluted
              
              
              1,819,491
              
              
              155,073
              
              
              1,116,777
              
              
              155,073
 
 The
        Notes
        to Financial Statements are an integral part of these statements.
  4
  **NUVIM,
        INC.**
 **STATEMENTS
        OF CHANGES IN STOCKHOLDERS’ DEFICIT**
 **FOR
        THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)**
  **Preferred
                    Stock**
                  **Series
                    A**
                
                **Preferred
                    Stock**
                  **Series
                    C**
                
                **Common
                    Stock**
                
                **Additional**
                  **Paid-In**
                  **Capital**
                
                **Accumulated**
                  **Deficit**
                
                **Total**
                  **Stockholders’**
                  **Deficit****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**Balance
                    at December 31, 2004
                
                
                4,875,850
                
                $
                49
                
                
                3,623,000
                
                $
                36
                
                
                414,073
                
                $
                4
                
                $
                8,377,140
                
                $
                (17,848,159
                )
                $
                (9,470,930
                )Common
                    stock issued in payment of convertible promissory notes - related
                    parties
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                461,700
                
                
                5
                
                
                6,141,522
                
                
                
                
                
                6,141,527Common
                    stock issued in payment of accrued salaries
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                250,696
                
                
                3
                
                
                593,747
                
                
                
                
                
                593,750Common
                    stock issued in payment of senior notes payable - related parties
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                250,000
                
                
                2
                
                
                499,998
                
                
                
                
                
                500,000Common
                    Stock issued in payment of stockholder loans, subordinated convertible
                    promissory notes payable and accrued interest
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                88,882
                
                
                1
                
                
                118,113
                
                
                
                
                
                118,114Common
                    stock issued in payment of advances - related party
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                23,000
                
                
                
                
                
                69,000
                
                
                
                
                
                69,000Common
                    stock issued in payment of accounts payable
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                42,333
                
                
                
                
                
                109,000
                
                
                
                
                
                109,000Common
                    stock issued upon conversion of convertible promissory note -
                    related
                    party
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                245,000
                
                
                2
                
                
                244,998
                
                
                
                
                
                245,000Common
                    stock issued, conversion of Series A preferred stock
                
                
                (4,875,850
                )
                
                (49
                )
                
                
                
                
                
                
                
                88,732
                
                
                1
                
                
                48
                
                
                
                
                
                -Common
                    stock issued, conversion of Series C preferred stock
                
                
                
                
                
                
                
                
                3,623,000
                
                
                (36
                )
                
                65,881
                
                
                1
                
                
                35
                
                
                
                
                
                -Issuance
                    of common stock, initial public offering
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,700,000
                
                
                27
                
                
                1,577,439
                
                
                
                
                
                1,577,466Net
                    loss for the six months ended June 30, 2005
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,315,061
                )
                
                (1,315,061
                )Balance
                    at June 30, 2005
                
                
                —
                
                $
                —
                
                
                —
                
                $
                —
                
                
                4,630,297
                
                $
                46
                
                $
                17,731,040
                
                $
                (19,163,220
                )
                $
                (1,432,134
                )
  The
        Notes
        to Financial Statements are an integral part of these statements.
  5
 
 **NUVIM,
        INC.**
 **STATEMENTS
        OF CASH FLOWS**
 **(UNAUDITED)**
  **For
                        the Six Months Ended June 30,****2005**
                    
                    **2004**Cash
                        Flow From Operating Activities:Net
                        Loss
                    
                    $
                    (1,315,061
                    )
                    $
                    (800,050
                    )Adjustment
                        to reconcile net loss to net cash used in operating activities:Depreciation
                    
                    
                    9,376
                    
                    
                    21,060Beneficial
                        conversion of notes payable
                    
                    
                    49,755Gain
                        on forgiveness of accounts payable
                    
                    
                    (148,525
                    )
                    
                    —Provision
                        for sales returns and allowances
                    
                    
                    291,678
                    
                    
                    185,830Changes
                        in Operating Assets and Liabilities:Accounts
                        receivable
                    
                    
                    (284,994
                    )
                    
                    (165,779
                    )Inventory
                    
                    
                    (33,599
                    )
                    
                    70,006Prepaid
                        expenses and other current assets
                    
                    
                    14,067
                    
                    
                    31,514Accounts
                        payable
                    
                    
                    171,032
                    
                    
                    (43,627
                    )Accrued
                        compensation
                    
                    
                    177,166
                    
                    
                    256,500Accrued
                        expenses
                    
                    
                    (28,082
                    )
                    
                    106,715Accrued
                        interest
                    
                    
                    333,632
                    
                    
                    241,524Accounts
                        payable to related parties
                    
                    
                    (295,320
                    )
                    
                    26,698Net
                        Cash Used in Operating Activities
                    
                    
                    (1,058,875
                    )
                    
                    (69,609
                    )Cash
                        Flow From Investing Activities:Purchase
                        of equipment and furniture
                    
                    
                    (442
                    )Net
                        Cash Used in Investing Activities
                    
                    
                    (442
                    )Cash
                        Flow From Financing Activities:Net
                        proceeds from issuance of common stock
                    
                    
                    1,577,466
                    
                    
                    —Reimbursement
                        of, and reduction in deferred offering costs
                    
                    
                    441,243Repayment
                        of notes payable
                    
                    
                    (5,000
                    )
                    
                    —Proceeds
                        from underwriter advance - related party
                    
                    
                    200,000
                    
                    
                    —Repayment
                        of underwriter advance - related party
                    
                    
                    (200,000
                    )Repayment
                        of related party advances
                    
                    
                    (13,000
                    )
                    
                    15,000Net
                        Cash Provided By Financing Activities
                    
                    
                    2,000,709
                    
                    
                    15,000Increase
                        (Decrease) in Cash and Cash Equivalents
                    
                    
                    941,392
                    
                    
                    (54,609
                    )Cash
                        and Cash Equivalents at Beginning of Period
                    
                    
                    277,649
                    
                    
                    54,609Cash
                        and Cash Equivalents at End of Period
                    
                    $
                    1,219,041
                    
                    $
                    —
 
 The
        Notes
        to Financial Statements are an integral part of these statements.
  6
 
 **NUVIM,
        INC.**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        1 - BUSINESS AND BASIS OF PRESENTATION**
 
 **A.     Business**
 
 NuVim,
        Inc. (the “Company”) markets and distributes dietary supplement beverages, which
        enhance the immune system, promote sturdy joints and muscle flexibility.
        The
        Company distributes its products through supermarkets in approximately 13
        states, predominantly on the East Coast, and the District of Columbia. The
        Company’s beverage products contain certain micronutrients which Stolle Milk
        Biologics, Inc. (“SMBI”) has patented. Spencer Trask Specialty Group, LLC (“ST”)
        is the controlling stockholder of SMBI. SMBI and ST collectively are significant
        stockholders of the Company. The Company has entered into supply and licensing
        agreements with SMBI for these patented micronutrients, which can be terminated
        by SMBI under certain conditions.
 
 **B.     Going
        Concern**
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As shown in the accompanying financial statements,
        the Company incurred net losses of $600,609 and $403,404 for the three months
        ended June 30, 2005 and 2004, and $1,315,061 and $800,050 for the six months
        ended June 30, 2005 and 2004, respectively. Management also expects operating
        losses to continue in 2005 and 2006. The Company has negative working capital
        of
        $857,649 and an accumulated deficit of 19,163,220 at June 30, 2005. The
        Company’s continued existence is dependent upon its ability to secure adequate
        financing to fund future operations and commence profitable operations. To
        date,
        the Company has supported its activities through equity investments, the
        sale of
        preferred and common stock, a demand note payable to a bank and cash advances
        from related parties and stockholders. It is the Company’s intention to raise
        additional capital through additional borrowings and sales of its equity
        securities. No assurance can be given that these funding strategies will
        be
        successful in providing the necessary funding to finance the operations of
        the
        Company. Additionally, there can be no assurance, even if successful in
        obtaining financing, the Company will be able to generate sufficient cash
        flows
        to fund future operations. These conditions raise substantial doubt about
        the
        Company’s ability to continue as a going concern. The accompanying financial
        statements do not include any adjustments relating to the recoverability
        and
        classification of recorded assets or amounts and classification of liabilities
        that might be necessary related to this uncertainty.
 
 **C.   
        Basis of Presentation**
 
 The
        unaudited consolidated financial statements included herein have been prepared
        by the Company pursuant to the rules and regulations of the Securities and
        Exchange Commission. Accordingly, they do not include all of the information
        and
        footnotes required by accounting principles generally accepted in the United
        States for complete financial statements. The unaudited interim consolidated
        financial statements as of June 30, 2005 and 2004 reflect all adjustments
        (consisting of normal recurring accruals) which, in the opinion of management,
        are considered necessary for a fair presentation of its financial position
        as of
        June 30, 2005 and as of the results of its consolidated operations and its
        consolidated cash flows for the six month periods ended June 30, 2005 and
        2004.
 
 The
        Unaudited Consolidated Statements of Operations for the six months ended
        June
        30, 2005 and 2004 are not necessarily indicative of results for the full
        year.
 
 While
        the
        Company believes that the disclosures presented are adequate to make the
        information not misleading, these financial statements should be read in
        conjunction with the financial statements and accompanying notes included
        in the
        Company's Current Report on Form SB-2 for the years ended December 31, 2004
        and
        2003 filed June 20, 2005.
 
 7
 **NOTE
        2 - SIGNIFICANT ACCOUNTING POLICIES**
 
 **A.     Stock-Based
        Compensation**
 
 The
        Company accounts for employee stock-based compensation in accordance with
        Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued
        to Employees”, using an intrinsic value approach to measure compensation
        expense, if any. Under this method, compensation expense is recorded on the
        grant date only if the current market price of the underlying stock exceeds
        the
        exercise price. Options and warrants issued to non-employees are accounted
        for
        in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation”, and
        EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to
        Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
        and
        Services” using a fair value approach.
 
 SFAS
        No.
        123 established accounting and disclosure requirements using a fair value-basis
        method of accounting for stock-based employee compensation plans. As allowed
        by
        SFAS No. 123, the Company has elected to continue to apply the intrinsic
        value-based method of accounting described above, and has adopted the disclosure
        requirements of SFAS No. 123. Had the Company elected to recognize compensation
        cost based on fair value of the stock options at the date of grant under
        SFAS
        No.123, such costs would have been recognized ratably over the vesting period
        of
        the underlying instruments and the Company’s net loss and net loss per common
        share would have increased to the pro forma amounts indicated in the table
        below.
 
 **Three
                  Months Ended**
                **June
                  30,**
              
              **Six
                  Months Ended**
                **June
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Net
                  loss, as reported
              
              $
              600,609
              
              $
              403,404
              
              $
              1,315,061
              
              $
              800,050Net
                  loss, pro forma
              
              $
              1,072,491
              
              $
              414,865
              
              $
              1,792,555
              
              $
              811,512Net
                  loss per share, as reported
              
              $
              (.33
              )
              $
              (2.60
              )
              $
              (1.18
              )
              $
              (5.16
              )Net
                  loss per share, pro forma
              
              $
              (.59
              )
              $
              (2.68
              )
              $
              (1.61
              )
              $
              (5.23
              )
 
 The
        pro
        forma results above are not intended to be indicative of or a projection
        of
        future results.
 
 **B.     Debt
        Extinguishments**
 
 The
        Company accounts for debt extinguishments in accordance with Financial
        Accounting Standards Board Statement 15 “Accounting by Debtors and Creditors for
        Troubled Debt Restructurings”. Related party debt extinguishments are recorded
        as increases to paid in capital in accordance with Accounting Principles
        Board
        Opinion 26. ****
 ****
 **C.     Use
        of Estimates**
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the amounts reported in the financial statements
        and
        accompanying notes. These estimates include, but are not necessarily limited
        to,
        accounts receivable allowances, depreciation and coupon liability estimates.
        Actual results could differ from those estimates.
 
 **D.     Reclassifications**
 
 Certain
        reclassifications were made to the 2004 financial statements in order to
        conform
        to the 2005 financial statements.
 
 **E.     Loss
        Per Share**
 
 Loss
        per
        share is presented in accordance with the provisions of SFAS No. 128, Earnings
        Per Share. Basic EPS is calculated by dividing the income or loss available
        to
        common stockholders by the weighted number of common shares outstanding for
        the
        period. Diluted EPS reflects the potential dilution that could occur if
        securities or other contracts to issue common stock were exercised or converted
        into common stock. These common stock equivalents have been omitted from
        earnings per share because they are anti-dilutive. Basic and diluted EPS
        were
        the same for the six months ended June 30, 2005 and 2004. Common stock
        equivalents outstanding at June 30, 2005 consisted of 1,130,816 incentive
        stock
        options and warrants to purchase 6,831,387 shares of common stock at June
        30,
        2005.
 
 8
 **F.** **Recent
        Accounting Pronouncements**
 
 In
        December 2004, the FASB revised FASB Statement No. 123, Accounting for
        Stock-Based Compensation. This Statement supersedes APB Opinion No. 25,
        Accounting for Stock Issued to Employees, and its related implementation
        guidance. This Statement establishes standards for the accounting for
        transactions in which an entity exchanges its equity instruments for goods
        or
        services. It also addresses transactions in which an entity incurs liabilities
        in exchange for goods or services that are based on the fair value of the
        entity's equity instruments or that may be settled by the issuance of those
        equity instruments. This  Statement
        focuses primarily on accounting for transactions in which an entity obtains
        employee services in share-based payment transactions. This Statement does
        not
        change the accounting guidance for share-based payment transactions with
        parties
        other than employees provided in Statement 123 as originally issued and EITF
        Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
        Than Employees for Acquiring, or in Conjunction with Selling, Goods or
        Services." It applies in the first reporting period beginning after December
        15,
        2005. The adoption of Statement No. 123 (revised 2004) is not expected to
        have a
        material impact on the Company's financial position, liquidity, or results
        of
        operations.
 
 **NOTE
        3 - INITIAL PUBLIC OFFERING**
 
 In
        June
        2005, the Company completed an initial public offering (“IPO”) selling 2,700,000
        units at a price of $1.00 per unit to the public. Each unit consisted of
        one
        share of common stock, one Class A redeemable public warrant to purchase
        one
        share of common stock, and one Class B non-redeemable public warrant to purchase
        one share of common stock. The net proceeds from the sale of the 2,700,000
        units
        were approximately $1,577,000 after deducting the underwriting discount and
        offering expenses.
 
 The
        common stock and Class A and Class B public warrants traded only as a unit
        until
        July 21, 2005 when the unit separated, after which the common stock, the
        Class A
        public warrants and the Class B public warrants began trading separately.
 
 *Class
        A public warrants* .
        The
        Class A public warrants included in the units became exercisable on July
        21,
        2005. The exercise price of a Class A public warrant is $1.50. The Class
        A
        public warrants expire on June 20, 2010, the fifth anniversary of the effective
        date of the IPO.
 
 The
        Company has the right to redeem the Class A public warrants at a redemption
        price of $0.25 per warrant, subject to adjustment in the event of stock splits,
        reverse stock splits and other similar events of recapitalization. The
        redemption right arises if the last reported sale price of the Company’s common
        stock equals or exceeds $2.00 for five consecutive trading days ending prior
        to
        the date of the notice of redemption. The Company is required to provide
        30 days
        prior written notice to the Class A public warrant holders of the Company’s
        intention to redeem the warrants.
 
 *Class
        B public warrants* .
        The
        Class B public warrants included in the units became exercisable on July
        21,
        2005. The exercise price of a Class B public warrant is $2.00. The Class
        B
        public warrants expire on June 20, 2010, the fifth anniversary of the closing
        of
        the IPO. The Company does not have the right to redeem the Class B public
        warrants.
 
 **NOTE
        4 - NOTES PAYABLE - UNDERWRITER**
 
 In
        May
        2005, the Company borrowed $200,000 from the investment bank that managed
        the
        initial public offering. The note was repaid upon the closing of the stock
        offering on June 24, 2005. The note did not bear any interest. The Company
        also
        paid $21,874 of principal and accrued interest on an advance from the
        underwriter made in July of 2004.
 
 9
 **NOTE 5
        - ASSIGNMENT OF SENIOR NOTES PAYABLE**
 
 On
        May
        22, 2005 the bank holding a $2,500,000 note receivable from the Company assigned
        the note to the holder guarantor of the note, a holder of the Company’s
        preferred stock and senior secured convertible promissory notes. The note
        was
        extinguished in exchange for common stock upon closing of the initial public
        offering (see note 5).
 
 **NOTE 6
        - DEBT EXTINGUISHMENTS**
 
 On
        June
        24, 2005, the Company issued 1,116,611 shares of common stock in payment
        of
        notes payable, accrued interest, accounts payable, and accrued salaries due
        to
        executive officers at a debt conversion value per share of $1.00 to $13.00.
        The
        debt conversion transactions were contingent on the Company completing a
        public
        offering of its common stock. The shares issued are subject to lock-up
        agreements with the Company’s underwriter of 6 months to one year. The fair
        market value of the shares issued is assumed to be equal to the initial public
        offering price of one “Unit” in the initial public offering completed on June
        24, 2005. The excess of the amount of indebtedness extinguished in excess
        of the
        fair value of shares issued was recorded as gain on extinguishment of debt
        in
        accordance with the provisions of SFAS No. 15, Troubled Debt Restructurings.
        The
        excess of the amount of related party indebtedness extinguished in excess
        of the
        fair value of shares issued was recorded as additional paid in capital in
        accordance with APB 26, paragraph 20. The table below summarizes debt
        extinguishments consummated concurrently with the initial public offering
        of the
        Company’s common stock. ****
  **Excess
                  of****Extinguished
                  Debt****Over
                  Fair Value****Shares****Issued**
              
              **Fair****Value**
              
              ****Debt****
                **Extinguishment**
              
              **Paid
                  In**
                **Capital**
              
              **Gain**Senior
                  secured notes-related parties
              
              
              461,700
              
              $
              461,700
              
              $
              6,141,527
              
              $
              5,679,827Accrued
                  salaries
              
              
              250,696
              
              
              250,696
              
              
              593,750
              
              
              343,054Senior
                  secured notes payable-related parties
              
              
              250,000
              
              
              250,000
              
              
              500,000
              
              
              250,000Subordinated
                  notes payable and accrued interest
              
              
              88,882
              
              
              88,882
              
              
              266,639
              
              
              95,899
              
              
              81,858Related
                  party advances
              
              
              23,000
              
              
              23,000
              
              
              69,000
              
              
              46,000Accounts
                  payable
              
              
              42,333
              
              
              42,333
              
              
              109,000
              
              
              
              
              
              66,667Total
              
              
              1,116,611
              
              $
              1,116,611
              
              $
              7,679,916
              
              $
              6,414,780
              
              $
              148,525
 
 **NOTE
        7 - CONVERTIBLE NOTE**
  On
        July
        26, 2004, the Company issued a convertible promissory note in the amount
        of
        $175,000 in payment of accounts payable owed to the Company’s spokesperson and
        in consideration for his forbearance until a “maturity date,” as defined in the
        note. The note accrued interest at the rate of 10% per annum until its original
        maturity date of January 1, 2005, and 15% thereafter. On June 24, 2005, the
        note
        automatically converted into 245,000 unregistered units substantially identical
        to the units sold at the initial public offering. In accordance with EITF
        98-5,
“Accounting for Convertible Securities with Beneficial Conversion Features
        on
        Contingently Adjustable Conversion Ratios,” the Company had not recorded the
        beneficial conversion feature prior to the closing of the initial public
        offering because its terms change based on the occurrence of future events
        outside the control of the holder of the convertible note. Upon completion
        of
        the public offering on June 24,2005, the Company recorded interest expense
        of
        $49,755 to reflect the beneficial conversion feature of the note.
 
 **NOTE
        8 - SENIOR NOTE PAYABLE - RELATED PARTY**
  On
        May
        31, 2005, holders of senior secured notes - related party agreed to extend
        the
        due date on $500,000 of outstanding notes payable to the earlier of the
        completion of a subsequent stock sale, sale of assets, change of control
        or
        financing by the Company, or November 30, 2006. The notes accrue interest
        at
        8%.
  10
 **NOTE
        9 - STOCKHOLDER LOANS - SUBORDINATED CONVERTIBLE PROMISSORY
        NOTES**
  In
        May
        2005, holders of stockholder loans - subordinated convertible promissory
        notes
        agreed to extend the due date on $225,000 of outstanding notes payable to
        the
        completion of a stock sale subsequent to the initial public offering in June
        2005 by the Company. The notes accrue interest at 10%.
  **NOTE
        10 - NOTE PAYABLE**
  In
        June
        2005, holders of notes payable with a face amount of $150,000 agreed to extend
        the due date to the completion of a stock sale subsequent to the initial
        public
        offering in June 2005 by the Company, if progress payments of $5,000 upon
        the
        completion of the initial public stock offering, and $2,000 each month
        thereafter, are made. The notes accrue interest at 10%.
 
 **NOTE
        11 - PREFERRED STOCK CONVERSION**
 
 On
        June
        24, 2005, 4,875,850 shares of the Company’s series A preferred stock and
        3,623,000 shares of Series C preferred stock automatically converted into
        88,732
        and 65,881 shares of common stock, respectively, upon closing of the Company’s
        initial public offering.
 
 **NOTE
        12 - WARRANTS**
 
 On
        June
        24, 2005, the Company issued warrants to the managing underwriter for its
        initial public offering to purchase 270,000 units identical to those issued
        in
        the IPO. The warrants become exercisable December 20, 2005 and expire five
        years
        from the date of the IPO at a price of $1.20 per unit.
 
 Also,
        on
        June 24, 2005, debtholders cancelled warrants to purchase 63,792 shares of
        common stock and 4,500,000 shares of preferred stock in connection with the
        extinguishment of debt.
  The
        following is a summary of warrants outstanding at June 30, 2005:
 
 **Date
                  Issued**
              
              **Basis
                  for Warrant Issuance**
              
              **Number
                  of**
                **Shares
                  of**
                **Common**
                **Stock**
                **Pertaining
                  to**
                **Warrant**
              
              **Exercise**
                **Price**
                **per
                  Share**November
                  2000
              
              
              Placement
                  agent fees for series A preferred stock (a) (b)
              
              
              8,714
              
              $
              55.00June
                  2001
              
              
              Stockholder
                  demand notes payable (e)
              
              
              8,823
              
              $
              55.00November
                  2002
              
              
              Placement
                  agent fees for series C preferred stock (b) (f)
              
              
              1,273
              
              $
              11.00March
                  2003
              
              
              Accrued
                  compensation
              
              
              2,577
              
              $
              11.00September
                  2004
              
              
              Second
                  amended services agreement (g) (b)
              
              
              650,000
              
              $
              1.00July
                  2004
              
              
              Amended
                  services agreement (h)
              
              
              —
              
              
              —June
                  2005
              
              
              Conversion
                  of note payable(d)
              
              
              245,000
              
              $
              1.50June
                  2005
              
              
              Conversion
                  of note payable(d)
              
              
              245,000
              
              $
              2.00June
                  2005
              
              
              Class
                  A warrants IPO (c) (d)
              
              
              2,700,000
              
              $
              1.50June
                  2005
              
              
              Class
                  B warrants IPO(d)
              
              
              2,700,000
              
              $
              2.00June
                  2005
              
              
              Underwriters
                  warrant(d)
              
              
              270,000
              
              $
              1.20
 
 (a)
                Expires
                    November 2007(b)
                Includes
                    anti-dilution agreement and cashless exercise right.(c)
                Callable
                    at $.25 if common stock trades at $2.00 for five days.(d)
                Expires
                    June 24, 2010.
  11
 (e)
                Expires
                    September 2006.(f)
                Expires
                    the June 20, 2008.(g)
                Expires
                    September 14, 2014.(h)
                Warrant
                    to purchase an amount of common stock to bring spokesperson’s total
                    holdings to 9.9% of outstanding fully-diluted common shares of
                    the Company
                    immediately after its initial public offering. The spokesperson’s holdings
                    exceeded 9.9% immediately after the offering. Therefore, no additional
                    shares were issuable under the warrant.
 
 **NOTE
        13 - EMPLOYEE STOCK OPTIONS**
 
 In
        January 2005, the Board of Directors approved the 2005 Incentive Stock Option
        Plan for the benefit of its officers, employees and consultants. The Board
        also
        approved the 2005 Directors’ Stock Option Plan for the Company’s board members.
        These plans became effective concurrently with the closing of the Company’s
        initial public offering. The Plans expire ten years from the date of adoption.
        The Company is authorized to grant options for up to 1,500,000 common shares
        under the employee plan, and 200,000 under the directors plan. Under each
        Plan,
        the option price of an ISO may not be less than the fair market value of
        a share
        of common stock on the date of grant. An ISO may not be granted to a “ten
        percent stockholder” (as such term is defined in Section 422A of the Internal
        Revenue Code) unless the exercise price is at least 110% of the fair market
        value of the common stock and the term of the option may not exceed five
        years
        from the date of grant. Nonqualified stock options under both plans may be
        granted at exercise prices equal to or greater than 85% of the fair market
        value
        on the date of grant. The maximum term of each stock option granted to persons
        other than ten percent stockholders is ten years from the date of the grant.
        The
        Company may also grant up to options to purchase up to 35,373 shares of common
        stock under three plans adopted in 2000, 2001 and 2003, which have similar
        terms.
 
 A
        summary
        of the activity in the Plans is as follows:
 
 **Number
                  of**
                **Shares**
              
              **Weighted-**
                **Average**
                **Exercise
                  Price**Outstanding
                  December 31, 2004
              
              
              13,116
              
              $
              14.04Cancelled
              
              
              —
              
              
              —Issued
              
              
              1,117,700
              
              $
              1.00Outstanding
                  June 30, 2005
              
              
              1,130,816
              
              $
              1.25
 
 
 The
        options generally expire 10 years from the date of grant. However, in the
        event
        a participant’s employment is terminated for any reason other than the result of
        death, disability or retirement, as defined, the options expire 90 days after
        termination.
 
 If
        a
        participant’s employment is terminated as a result of death, permanent
        disability or retirement, the options expire one year from the date of
        termination.
 
 The
        weighted-average remaining contractual life of options outstanding was 6
        and 9.9
        years as of December 31, 2004 and June 30, 2005, respectively.
 
 Pro-forma
        information regarding net loss is required by SFAS No. 123 and has been
        determined as if the Company had accounted for its employee stock options
        under
        the fair value method of SFAS No. 123. Since there is no trading history
        for the
        Company’s stock, the fair value of the Company’s issued options and warrants
        were estimated at the date of grant using the fair value method with the
        following assumptions:
 
 Assumptions:Risk-free
                  rate
              
              3.5%-4.85
              %Dividend
                  yield
              
              0Volatility
                  factor of the expected market
              
              82
              %Price
                  of the Company’s common stock
              
              1.00Average
                  life
              
              7 years
 
 12
 The
        Black-Scholes option valuation model was developed for use in estimating
        the
        fair value of traded options, which have no vesting restrictions and are
        fully
        transferable. In addition, option valuation models require the input of highly
        subjective assumptions, including the expected stock price volatility. Because
        the Company’s employee stock options have characteristics significantly
        different from those of traded options, and because changes in the subjective
        input assumptions can materially affect the fair value estimate, in management’s
        opinion, the existing models do not necessarily provide a reliable single
        measure of the fair value of its employee stock options.
 
 **NOTE
        14 - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES**
 **Six
                    Months Ended June 30,****2005**
                
                **2004**Assignment
                    of senior secured notes payable and accrued interest to related
                    party
                
                $
                2,679,498
                
                
                —Automatic
                    conversion of notes payable
                
                $
                245,000
                
                
                —Debt
                    extinguished through issuance of common stock - see note 6
                
                $
                7,679,916
                
                
                —Interest
                    Paid
                
                
                —
                
                
                —
  13
  **Item
        2.** ***MANAGEMENT’S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS***
 
 ** The
        following discussion and analysis of our financial condition and results
        of
        operations should be read in conjunction with our financial statements and
        related notes included elsewhere in this Quarterly Report on Form 10-QSB.
        This
        discussion contains forward-looking statements that are based on our
        management’s beliefs and assumptions and on information currently available to
        our management. Forward-looking statements include, but are not limited to,
        statements regarding:
  •
              possible
                  or assumed future results of operations, including statements regarding
                  revenue mix, cost of revenues, promotion of our products through
                  advertising, sampling and other programs, changes to our internal
                  financial controls, trends in our operating expenses and provision
                  for
                  income taxes, increased costs as a result of becoming a public
                  company and
                  expenses related to stock-based compensation;
 
 •
              financing
                  plans, including the adequacy of financial resources to meet future
                  needs;
 
 •
              business
                  strategies, including any expansion into new products;
 
 •
              our
                  industry environment, including our relationships with our significant
                  customers and suppliers;
  •
              potential
                  growth opportunities; and
  •
              the
                  effects of competition.
  Some
        of
        our forward-looking statements can be identified by use of words such as
        “may,”“will,”“should,”“potential,”“continue,”“expects,”“anticipates,”“intends,”“plans,”“believes”
        and “estimates.”
  Forward-looking
        statements involve many risks, uncertainties and assumptions. Actual results
        may
        differ materially from those expressed in the forward-looking statements
        for a
        number of reasons, including those appearing under the caption “Factors
        Affecting Operating Results” and elsewhere in this Quarterly Report on Form
        10-QSB. The cautionary statements contained or referred to in this report
        should
        be considered in connection with any subsequent written or oral forward-looking
        statements that may be issued by us or persons acting on our behalf. We
        undertake no obligation to release publicly any revisions to any forward-looking
        statements to reflect events or circumstances after the date hereof or to
        reflect the occurrence of unanticipated events.
 
 **Overview**
 
 We
        produce, market and distribute NuVim dietary supplement beverages, which
        contain
        two proprietary micronutrients derived from cow’s milk, known as LactoActin and
        LactoMune. NuVim beverages are non-dairy, virtually lactose-free and fortified
        with vitamins and minerals. Except for Asia, Australia and New Zealand, we
        have
        an exclusive worldwide license agreement with Stolle Milk Biologics, Inc.
        (“SMBI”) to use these proprietary micronutrients in carbonated and
        non-carbonated beverages (and in powders designed for reconstitution based
        on
        those beverages), excluding certain milk, yogurt and nutritional meal
        replacement products. We currently sell our ready-to-drink dietary supplement
        beverages in 13 states, principally in the northeast and southeast, and the
        District of Columbia. Our products are produced by third party manufacturers
        of
        beverage products. We generally sell these products to supermarket chain
        warehouses, who in turn distribute the product to their stores. We also sell
        to
        some distributors that sell our product directly to individual stores.
 
 NuVim
        was
        established in 1999 in conjunction with SMBI, the owner of the proprietary
        technology, to produce, market and distribute beverages that use this
        proprietary micronutrient technology. Our product line currently consists
        of
        three varieties of a natural, fruit-flavored dietary supplement beverage.
        In
        addition, in the second half of 2005, we plan to introduce a three variety
        powder version of our product to be marketed on a national basis through
        our
        website and through our subsidiary, NuVim Powder LLC. The NuVim powder mix
        will
        also contain the same consumer benefits as the original refrigerated
        product.
  We focus on developing brand awareness, and trial and repeat purchases through
        advertising and sampling, coupon distribution and promotional price discounts.
        These marketing expenditures help to enhance distribution and availability
        of
        our products as well as increase consumer awareness and preference for our
        brands. We believe that these marketing and promotional activities are critical
        to the growth of our business and expect to continue these programs in the
        future.
 
 14
 In
        our initial product launch in 2000, we distributed the product through
        supermarkets in the New York metropolitan area. We later expanded to the
        Baltimore/Washington, Philadelphia, Harrisburg, Pittsburgh, Rochester, Buffalo,
        Syracuse and Richmond metropolitan areas. The product launch was supported
        by
        radio advertising, product sampling, store circular advertising and other
        promotional activities. The product launch resulted in increased gross sales
        in
        each of the years 2000, 2001 and 2002, to a high of $3,539,118 in 2002. During
        the initial product roll-out, the cost of marketing and promotional programs
        to
        support the growth resulted in negative cash flows in each of these years.
        Because we were not able to raise additional financing required to support
        the
        promotional and marketing programs, we were forced to stop substantially
        all
        advertising and sampling and coupon programs and reduced promotions of our
        products in the second half of 2002. As a result of these cutbacks in
        advertising, sampling and promotional activities, our gross revenues declined
        each quarter, from the fourth quarter of 2002, through the second quarter
        of
        2004.
 
 During
        the third quarter of 2004, we added distribution in the southeastern United
        States, through the Publix supermarket chain and a forty-three store test
        at the
        Wal Mart supermarket chain. We also secured $1,000,000 in senior secured
        debt
        financing, part of which was used to launch a television advertising campaign
        to
        promote our refrigerated product and implement sampling programs at some
        stores.
        We experienced increased gross case shipments over the immediately preceding
        quarter of approximately 4.6% in the third quarter of 2004, 2.8% in the fourth
        quarter of 2004 and 9.3% in the first quarter of 2005, we believe, as a result
        of the expansion, sampling and advertising.
 
 Case
        shipments declined in the second quarter compared to the first quarter of
        2005,
        by 27% to 15,028, primarily resulting from decreased shipments to the Publix
        Supermarkets chain in the Southeast, and to a lesser extent, decreased sales
        in
        the New York/New Jersey markets. In the first quarter of 2005 we sponsored
        in-store sampling programs at approximately 900 Publix stores in the
        Southeastern United States. We did not repeat the sampling promotions or
        advertising in the second quarter due to a lack of funding. We had anticipated
        closing on our initial public offering during the first quarter of 2005 to
        support sampling and promotional programs at Publix and other stores. However,
        the offering was reduced in size and delayed until the end of the second
        quarter
        of 2005, resulting in a disruption and reduction in size in planned promotional
        programs. This resulted in a decline in sales and the discontinuance of our
        products at certain stores in the Publix supermarket chain, which accounted
        for
        approximately 27% and 12% of our gross sales in the first and second quarter
        of
        2005, respectively. Also, Publix stocks our refrigerated product in the milk
        section, as opposed to the refrigerated juice section at most other stores
        that
        carry our product. We plan to reinstate marketing programs in a smaller number
        of Publix stores (approximately 250) in the third quarter of 2005 to better
        understand consumer behavior and how to increase purchases of our product
        in the
        milk section, until we secure funding to support promotions on a larger
        basis.
  The
        table set forth below discloses selected data regarding sales for the three
        and
        six month periods ended June 30, 2005 and 2004. Data from any one or more
        quarters is not necessarily indicative of annual results or continuing trends.
 
 Sales
        of beverages are expressed in unit case volume. A “unit case” means a unit of
        measurement equal to 512 U.S. fluid ounces of finished beverage (eight 64-ounce
        servings). Unit case volume means the number of unit cases (or unit case
        equivalents) of beverages directly or indirectly sold by us. Gross cases
        sold to
        the customer represents the number of cases shipped to the customer prior
        to any
        returned cases for product that has not been sold by its expiration date.
 
 **Unit
        Case Volume/Case Sales**
 
 **Three
                  Months Ended**
                **June
                  30,**
              
              **Six
                  Months Ended**
                **June
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Gross
                  Cases Sold
              
              
              15,028
              
              
              17,079
              
              
              35,659
              
              
              40,150Gross
                  Sales
              
              $
              273,789
              
              $
              311,359
              
              $
              649,508
              
              $
              732,914Net
                  Sales
              
              $
              148,954
              
              $
              229,180
              
              $
              357,830
              
              $
              547,084
 
 15
 Gross
        sales are the amount invoiced to customers, while net sales deduct from gross
        sales any payment or discount terms, promotional allowances, slotting fees,
        warehouse damage and returned goods in accordance with the Financial Accounting
        Standards Board Emerging Issues Task Force Issue No. 01-09, Accounting For
        Consideration Given By a Vendor to a Customer. In some accounts we pay slotting
        fees when our products are initially introduced to a new account and run
        price
        feature promotions to encourage trials of our product. As brand loyalty grows
        in
        a market, we anticipate that we will be able to run fewer price promotions
        and
        will not incur additional slotting fees. Cases sold decreased 2,051, or 12%,
        for
        the three months ended June 30, 2005, when compared to the same quarter prior
        year and 4,491 or 11.2% for the six months ended June 30, 2005 when compared
        to
        the same period last year. As discussed above, we believe that the number
        of
        cases sold is directly impacted by the effectiveness of advertising, sampling
        and marketing activities we are able to fund in support of our refrigerated
        product. We intend to focus our promotional spending on selected growth
        opportunities such as sampling in newly introduced Publix and Wal-Mart stores
        in
        the state of Florida, and introduction of our Nuvim Powder product line until
        we
        are able to obtain additional funding for a larger promotional program.
 
 **Results
        of Operations**
 
 *Results
        of operations for the three months ended June 30, 2005 compared to the three
        months ended June 30, 2004*
 
 *Gross Sales.* For
        the
        three months ended June 30, 2005, gross sales were $273,789, a decrease of
        $37,570, or 12% lower than gross sales of $311,359 for the three months ended
        June 30, 2004. The decrease in gross sales is primarily attributable to a
        decrease in case volume in stores New York, New Jersey, Pennsylvania, Virginia
        and Maryland, partially offset by sales resulting from the addition of
        distribution in the Southeastern United States through the Publix and Wal-Mart
        Supermarket chains. We suspended substantially all advertising after the
        first
        half of 2002 due to a lack of funding. This resulted in a steady decline
        in
        sales volume in existing stores in each successive quarter through the second
        quarter of 2004, due to a decrease in repeat purchases of our products and
        the
        loss of certain accounts, due to the lower sales volume per store. During
        the
        third quarter of 2004, we secured $1,000,000 of financing from senior secured
        promissory notes and reinstated advertising and sampling programs. We also
        added
        distribution in the Southeastern United States through the Publix and Wal-Mart
        supermarket chains, resulting in increased gross sales through the first
        quarter
        of 2005. However, we did not have funds to support sampling programs in the
        Publix supermarkets during the second quarter of 2005, resulting in decreased
        sales and discontinuance of the product at certain locations. We plan to
        reintroduce sampling programs in a smaller number (approximately 250) Publix
        stores with the proceeds of our initial public offering completed in June
        2005.
 
 *Discounts, Allowances and Promotional Payments* .
        For the
        three months ended June 30, 2005, promotional allowances and discounts were
        $124,835, an increase of $42,656 or 52%, over the promotional allowances
        and
        discounts of $82,179 for the three months ended June 30, 2004. This increase
        is
        primarily attributable to increased promotional price allowances, coupons
        and
        other incentives of $29,176, product returned after its expiration date of
        8,947
        and slotting fees of $6,647. Promotional price allowances, coupons and other
        incentives increased primarily due to increased promotional price programs
        in
        the New York and New Jersey markets. We advertised in store circulars and
        offered reduced prices to customers during the second quarter. We record
        the
        price reductions, which are reimbursed by us to the retailers, in accordance
        with Financial Accounting Standards Board Emerging Issues Task Force, No.
        01-09,
        Accounting for Consideration Given by a Vendor to a Customer. We expect to
        continue to use price promotions and coupon distribution as a means to promote
        consumer sampling and trial of our product into the foreseeable future. As
        the
        product matures and a higher percentage of users of our product are repeat
        purchasers, we expect coupon expense, relative to gross sales, to decline.
        Product returned after its expiration date increased primarily due to credits
        given to retailers for unsold product resulting from the suspension of sampling
        programs in the second quarter of 2005 due to a lack of funding. Slotting
        fees
        increased due to fees paid to gain distribution in approximately 400 stores
        supplied by distributor serving the Mid-Atlantic region of the United States.
        Total Discounts, Allowances and Promotional payments as a percentage of gross
        sales increased from 26% for the three months ended June 30, 2004 to 46%
        for the
        three months ended June 30, 2005, primarily due to the increased coupons
        and
        price discounts discussed above. Discounts, Allowances and Promotional Payments
        are comprised of the following:
  16
 **Three
                  Months Ended**
                **June
                  30,****Increase**
                **(Decrease)**
              
              **Percentage****2004**
              
              **2005**Discounts
                  for timely payment
              
              $
              6,417
              
              $
              4,303
              
              $
              (2,114
              )
              
              (33
              )%Product
                  returned after its expiration date
              
              
              45,144
              
              
              54,091
              
              
              8,947
              
              
              (20
              )%Promotional
                  price allowances, coupons and other incentives
              
              
              29,401
              
              
              58,577
              
              
              29,176
              
              
              99
              %Slotting
                  fees
              
              
              1,217
              
              
              7,864
              
              
              6,647
              
              
              546
              %Total
                  Discounts, Allowances and Promotional Payments
              
              $
              82,179
              
              $
              124,835
              
              $
              42,656
              
              
              52
              %
 
 *Net Sales* .
        Net
        sales for the three months ended June 30, 2005 were $148,954, a decrease
        of
        $80,226, or 35% lower than net sales of $229,180 for the three ended June
        30,
        2004. The decrease in net sales is primarily attributable to the decreased
        case
        sales and promotional pricing discussed above.
 
 *Cost of Sales* .
        For the
        three months ended June 30, 2005, cost of sales were $169,675, an increase
        of
        $1,330, or 1% higher than cost of sales of $168,345 for the three months
        ended
        June 30, 2004. Cost of sales as a percentage of gross sales increased to
        62% for
        the three months ended June 30, 2005, compared to 54% for the three months
        ended
        June 30, 2004. The increase in cost of sales as a percentage of gross sales
        was
        primarily due to increased ingredient costs and increased packaging costs
        resulting from shorter production runs due to the lower sales volume.
 
 *Gross Profit (Loss)* .
        Gross
        profit (Loss) was $(20,721) for the three months ended June 30, 2005, a decrease
        of $81,556 from the $60,835 gross profit for the three months ended June
        30,
        2004. Gross profit (loss) as a percentage of gross sales was (8%) for the
        three
        months ended June 30, 2005 compared to gross profit of 19.5% for the three
        months ended June 30, 2004. The decrease in gross profit as a percentage
        of
        gross sales was primarily due to the expense related to promotional pricing
        and
        increased ingredient costs discussed above.
 
 *Selling, General and Administrative Expenses* .
        Selling, general and administrative expenses were $517,364 for the three
        months
        ended June 30, 2005, an increase of $176,151, or 52%, from selling, general
        and
        administrative expenses of $341,213 for the three months ended June 30, 2004.
        Selling, general and administrative expenses exceeded net sales in both periods
        as we are in an early stage of our development and have not achieved sales
        volumes sufficient to generate net sales in excess of our selling, general
        and
        administrative expenses. The increase in selling, general and administrative
        expenses was primarily attributable to increased expenses related to the
        in
        store sampling programs of approximately $51,000, increased administrative
        salaries of approximately $40,000 due to the addition of a full time chief
        financial officer, increased advertising spending of $25,000, and increased
        shipping charges of $15,000 related to distribution to the Southeast markets
        from the warehouse facility in Pennsylvania.
 
 *Loss from Operations* .
        Loss
        from operations was $538,085 for the three months ended June 30, 2005 compared
        to $280,378 for the three months ended June 30, 2004. The $257,707 increase
        in
        loss from operations was primarily attributable to the decreased gross profit
        and increased operating expenses described above.
 
 *Interest Expense* .
        Interest expense was $210,077 for the three months ended June 30, 2005, an
        increase of $87,051, or 70%, from interest expense of $123,026 for the three
        months ended June 30, 2004. The increase in interest expense is primarily
        attributable to an increase in interest on borrowings from the senior notes
        -
        related party. Between July and December 2004, we borrowed $1,000,000 under
        a
        loan agreement with our spokesperson to fund operations and advertising
        programs. On June 24, 2005, in connection with the closing of our initial
        public
        offering, we extinguished approximately $7.7 million of indebtedness through
        the
        issuance of common stock. Therefore we expect interest expense to decline
        in
        future periods due to lower outstanding borrowings.
 
 *Gain on Forgiveness of Accounts Payable* .
        In
        2004, gain on forgiveness of accounts payable represents the difference between
        the invoiced amount and the amount in the form of a note payable for fees
        to a
        law firm incurred and expensed in 2002. In 2005, gain on forgiveness of accounts
        payable represents the difference between the principal and accrued interest
        due
        on notes payable and the fair value of common stock issued to retire those
        obligations.
  *Net Loss* .
        Net
        loss was $600,609 for the three months ended June 30, 2005 compared to $403,404
        for the three months ended June 30, 2004. The $197,205 increase in net loss
        was
        primarily attributable to the lower gross profit and higher operating expenses
        discussed above.
 
 17
 *Results
        of operations for the six months ended June 30, 2005 compared to the six
        months
        ended June 30, 2004*
 
 *Gross
        Sales* .
        For the
        six months ended June 30, 2005, gross sales were $649,508, a decrease of
        $83,406, or 11% lower than gross sales of $732,914 for the six months ended
        June
        30, 2004. The decrease in gross sales is primarily attributable to an 11%
        decrease in case volume resulting from reduced promotional and discontinued
        advertising spending. We suspended substantially all advertising after the
        first
        half of 2002 due to a lack of funding. This resulted in a steady decline
        in
        sales volume in each successive quarter through the second quarter of 2004,
        due
        to a decrease in repeat purchases of our products and the loss of certain
        accounts, due to the lower sales volume per store. During the third quarter
        of
        2004, we secured $1,000,000 of financing from senior secured promissory notes
        and reinstated advertising and sampling programs. We also added distribution
        in
        the Southeastern United States through the Publix and Wal-Mart supermarket
        chains, resulting in increased gross sales through the first quarter of 2005.
        However, we did not have funds to support sampling programs in the Publix
        supermarkets during the second quarter of 2005, resulting in decreased sales
        and
        discontinuance of the product at certain locations. We will reintroduce sampling
        programs in a smaller number (approximately 250) Publix stores with the proceeds
        of our initial public offering completed in June 2005.
 
 *Discounts,
        Allowances and Promotional Payments* .
        For the
        six months ended June 30, 2005, promotional allowances and discounts were
        $291,678, an increase of $105,848 or 47% higher than the promotional allowances
        and discounts of $185,830 for the six months ended June 30, 2004. This increase
        is primarily attributable to increased Promotional price allowances, coupons
        and
        other incentives of $87,116, and slotting fee’s of $18,347. Promotional price
        allowances, coupons and other incentives increased due to sampling programs
        at
        Publix stores in the first quarter of 2005 where $1.00 coupons were distributed
        in store locations, and promotional price discounts in the New York and New
        Jersey markets in the second quarter of 2005. We record the estimated
        redemptions based on our historical experience at the time the coupon is
        distributed in accordance with Financial Accounting Standards Board Emerging
        Issues Task Force, No. 01-09, Accounting for Consideration Given by a Vendor
        to
        a Customer. We also record reimbursements given to retailer for consumer
        price
        promotions in accordance with EITF 01-09. We expect to continue to use coupon
        distribution and price promotions as a means to promote consumer sampling
        and
        trial of our product into the foreseeable future. Slotting fees increased
        due to
        fees paid to gain distribution in approximately 400 stores supplied by
        distributor serving the Mid-Atlantic region of the United States. Discounts,
        Allowances and Promotional payments as a percentage of gross sales increased
        from 25% for the six months ended June 30, 2004 to 44% for the six months
        ended
        June 30, 2005, primarily due to the increased coupons and price discounts
        discussed above. Discounts, Allowances and Promotional Payments are comprised
        of
        the following:
 
 
 
 **Six
                  Months Ended**
                **June
                  30,****2004**
              
              **2005**
              
              **Increase****(Decrease)**
              
              **Percentage**Discounts
                  for timely payment
              
              $
              14,682
              
              $
              8,988
              
              $
              (5,694
              )
              
              (39
              )%Product
                  returned after its expiration date
              
              
              79,013
              
              
              85,092
              
              
              6,079
              
              
              (12
              )%Promotional
                  price allowances, coupons and other incentives
              
              
              86,619
              
              
              173,735
              
              
              87,116
              
              
              98
              %Slotting
                  fees
              
              
              5,517
              
              
              23,864
              
              
              18,347
              
              
              332
              %Total
                  Discounts, Allowances and Promotional Payments
              
              $
              185,830
              
              $
              291,679
              
              $
              105,849
              
              
              (49
              )%
 
 *Net
        Sales* .
        Net
        sales for the six months ended June 30, 2005 were $357,830, a decrease of
        $189,254, or 35% lower than net sales of $547,084 for the six months ended
        June
        30, 2004. The decrease in net sales is primarily attributable to the decrease
        in
        cases sold and increased Discounts, allowances and promotional payments
        discussed above.
 
 18
 *Cost
        of Sales* .
        For the
        six months ended June 30, 2005, cost of sales were $377,510, a decrease of
        $11,911 or 3% lower than cost of sales of $389,421 for the six months ended
        June
        30, 2004. The decrease in cost of sales was primarily attributable to a 39%
        decrease in cases sold discussed above. Cost of sales as a percentage of
        gross
        sales increased to 58% for the three months ended June 30, 2005, compared
        to 53%
        for the three months ended June 30, 2004. The increase in cost of sales as
        a
        percentage of gross sales was primarily due to increased ingredient costs
        and
        increased packaging costs resulting from shorter production runs due to the
        lower sales volume.
  *Gross
        Profit (loss)* .
        Gross
        profit (loss) was $(19,680) for the six months ended June 30, 2005, a decrease
        of $177,342, from the $157,663 gross profit for the six months ended June
        30,
        2004. Gross profit (loss) as a percentage of gross sales was (3)% for the
        six
        months ended June 30, 2005, compared to a gross profit as a percentage of
        gross
        sales of 22% for the six months ended June 30, 2004. The decrease in gross
        profit as a percentage of gross sales was primarily due to the increased
        coupons
        and price incentives discussed above.
 
 *Selling,
        General and Administrative Expenses* .
        Selling, general and administrative expenses were $1,054,055 for the six
        months
        ended June 30, 2005, an increase of $360,192 or 52%, from selling, general
        and
        administrative expenses of $693,683 for the six months ended June 30, 2004.
        Selling, general and administrative expenses exceeded net sales in both periods
        as we are in an early stage of our development and have not achieved sales
        volumes sufficient to generate net sales in excess of our selling, general
        and
        administrative expenses. The increase in selling, general and administrative
        expenses was primarily attributable to increased advertising and in-store
        sampling expenses of $175,000 and increased administrative salaries of $125,000,
        primarily due to the addition of a Chief Financial Officer in 2005.
 
 *Loss
        from Operations* .
        Loss
        from operations was $1,073,735 for the six months ended June 30, 2005 compared
        to $536,020 for the six months ended June 30, 2004. The $537,710 increase
        in
        loss from operations was primarily attributable to the increased operating
        expenses described above.
 
 *Interest
        Expense* .
        Interest expense was $388,879 for the six months ended June 30, 2005, a decrease
        of $124,848, or 47%, from interest expense of $264,031 for the six months
        ended
        June 30, 2004. The increase in interest expense is primarily attributable
        to an
        increase in interest on borrowings from the senior notes - related party.
        Between July and December 2004, we borrowed $1,000,000 under a loan agreement
        with our spokesperson to fund operations and advertising programs. On June
        24,
        2005, in connection with the closing of our initial public offering, we
        extinguished approximately $7.7 million of indebtedness through the issuance
        of
        common stock. Therefore we expect interest expense to decline in future periods
        due to lower outstanding borrowings.
 
 *Gain
        on Forgiveness of Accounts Payable* .
        In
        2004, Gain on forgiveness of accounts payable represents the difference between
        the invoiced amount and the amount in the form of a note payable for fees
        to a
        law firm incurred and expensed in 2002. In 2005, Gain on forgiveness of accounts
        payable represents the difference between the principal and accrued interest
        due
        on notes payable and the fair value of common stock issued to retire those
        obligations.
 
 *Net
        Loss* .
        Net
        loss was $1,315,061 for the six months ended June 30, 2005 compared to $800,050
        for the six months ended June 30, 2004. The $515,011 increase in net loss
        from
        operations was primarily attributable to the lower gross profit and higher
        operating expenses discussed above.
 
 **Liquidity
        and Capital Resources**
 
 Our
        operations to date have generated significant operating losses that have
        been
        funded through the issuance of common stock, preferred stock and external
        borrowings. We will require additional sources of outside capital to continue
        our operations and currently have no identifiable source.
 
 On
        June 24, 2005, we completed an initial public offering of 2,700,000 units,
        with
        each unit consisting of one share of common stock, one redeemable Class A
        warrant, and one Class B warrant to purchase common stock. The offering resulted
        in net proceeds to the Company of $1,577,000 after deducting underwriting
        discounts and offering expenses. We expect the net proceeds, along with product
        revenues and expected proceeds from the sale of State of New Jersey Tax benefits
        of approximately $250,000 to be adequate to fund our operations through 2005.
        However, we may need additional funding to continue operations beyond that
        date,
        or to fund advertising and promotional programs to maintain and increase
        sales.
        We did not use any of the proceeds of the initial public offering to fund
        promotional activies in the second quarter of 2005.
 
 19
 In
        May 2005, we borrowed $200,000 from the investment bank that managed the
        initial
        public offering. The note was repaid upon the closing of the stock offering
        on
        June 24, 2005. The note did not bear any interest. We also paid $21,874 of
        principal and accrued interest on an advance from the underwriter made in
        July
        of 2004.
  On
        June
        24, 2005, we issued 1,116,611 shares of common stock in settlement of $7,684,000
        of notes payable, accrued interest, accounts payable, and accrued salaries
        due
        to executive officers at a debt conversion value per share ranging from $1.00
        to
        $13.00 per share of common stock. The table below summarizes the debt
        extinguishments transactions:
  Shares
                Issued
              
              Debt
                ExtinguishmentSenior
                  secured notes-related parties
              
              
              461,700
              
              $
              6,141,527Accrued
                  salaries
              
              
              250,696
              
              
              593,750Senior
                  secured notes payable - related parties
              
              
              250,000
              
              
              500,000Subordinated
                  notes payable and accrued interest
              
              
              88,882
              
              
              266,639Related
                  party advances
              
              
              23,000
              
              
              69,000Accounts
                  payable
              
              
              42,333
              
              
              109,000Total
              
              
              1,116,611
              
              $
              7,679,916
 
 
 On
        June
        24, 2005, a convertible note payable with a face value of $175,000 automatically
        converted into 245,000 unregistered units substantially identical to the
        units
        sold at the initial public offering. In accordance with EITF 98-5, “Accounting
        for Convertible Securities with Beneficial Conversion Features on Contingently
        Adjustable Conversion Ratios,” the Company had not recorded the beneficial
        conversion feature prior to the closing of the initial public offering because
        its terms change based on the occurrence of future events outside the control
        of
        the holder of the convertible note. Upon completion of the public offering
        on
        June 24, 2005, we recorded interest expense of $49,755 to reflect the beneficial
        conversion feature of the note.
 
 Additionally,
        we have extended the due date on $500,000 of outstanding senior secured notes
        payable to the earlier of the completion of an a subsequent stock sale, sale
        of
        assets, change of control or financing by the Company, or November 30,
        2006.
  As
        of
        June 30, 2005, we had cash on hand of $1,219,000, and a working capital deficit
        of $858,000. We have negotiated with certain noteholders and vendors to defer
        payment or accept progress payments on approximately $400,000 of accounts
        payable, and $436,000, of notes payable and accrued interest thereon until
        we
        are able to raise additional financing. We owe $200,000 to SMBI, the provider
        of
        the exclusive whey protein concentrate used in our product, which is due
        on
        January 15, 2006. If we do not pay this amount, we risk losing the exclusive
        right to the ingredient. As of July 31, 2005, we had remaining cash on hand
        of
        approximately $800,000. We will need to raise additional financing to pay
        our
        past due obligations, fund operating losses and to support sales and marketing
        programs to increase sales of our products. If we are not able to identify
        additional sources of financing, we may not be able to continue operations
        beyond January 2006.
 
 Net
        cash used in operating activities for the six months ended June 30, 2005
        was
        $1,058,875 compared to cash used in operating activities of $69,609 during
        2004.
        The increase in cash used by operating activities of $989,266 was primarily
        attributable to an increased net loss of $663,536 and payments of related
        party
        accounts payable, including $250,000 to SMBI our exclusive provider of whey
        protein concentrate, of $295,320.
 
 Net
        cash provided by financing activities was $2,000,709 for the six months ended
        June 30, 2005, compared to $15,000 for the six months ended June 30, 2004.
        The
        increase of $1,985,709 is due to net proceeds from the initial public offering
        of the our common stock.
 
 20
 **Application
        of Recent and Critical Accounting Policies and Pronouncements**
 
 ***Recent
        Accounting Pronouncements***
 
 In
        December 2004, the FASB revised FASB Statement No. 123, Accounting for
        Stock-Based Compensation. This Statement supersedes APB Opinion No. 25,
        Accounting for Stock Issued to Employees, and its related implementation
        guidance. This Statement establishes standards for the accounting for
        transactions in which an entity exchanges its equity instruments for goods
        or
        services. It also addresses transactions in which an entity incurs liabilities
        in exchange for goods or services that are based on the fair value of the
        entity's equity instruments or that may be settled by the issuance of those
        equity instruments. This Statement focuses primarily on accounting for
        transactions in which an entity obtains employee services in share-based
        payment
        transactions. This Statement does not change the accounting guidance for
        share-based payment transactions with parties other than employees provided
        in
        Statement 123 as originally issued and EITF Issue No. 96-18, "Accounting
        for
        Equity Instruments That Are Issued to Other Than Employees for Acquiring,
        or in
        Conjunction with Selling, Goods or Services." It applies in the first reporting
        period beginning after December 15, 2005. The adoption of Statement No. 123
        (revised 2004) is not expected to have a material impact on the Company's
        financial position, liquidity, or results of operations
 
 ***Critical
        Accounting Estimates***
 
 The
        discussion and analysis of our financial condition and results of operations
        are
        based upon our financial statements, which have been prepared in accordance
        with
        accounting principles generally accepted in the United States of America.
        The
        preparation of these financial statements requires us to make estimates and
        judgments that affect the reported amount of assets and liabilities, revenues
        and expenses, and related disclosure on contingent assets and liabilities
        at the
        date of our financial statements. Actual results may differ from these estimates
        under different assumptions and conditions.
 
 Critical
        accounting policies are defined as those that are reflective of significant
        judgments, estimates and uncertainties and potentially result in materially
        different results under different assumptions and conditions. For a detailed
        discussion on the application of these and other accounting policies, see
        Note 2
        to our annual financial statements for the year ended December 31, 2004.
 
 **Placement
        and Promotional Allowances and Credits for Product Returns**
 
 As
        an inducement to our customers to promote our products in preferred locations
        of
        their stores, we provide placement and promotional allowances to certain
        customers. We also provide credits for customer coupon redemptions, consumer
        price reductions, and product which has not been sold by its expiration date.
        These allowances and credits are reflected as a reduction of revenue in
        accordance with Emerging Issues Task Force (“EITF”) No. 01-9, which requires
        certain sales promotions and customer allowances previously classified as
        selling, general and administrative expenses to be classified as a reduction
        of
        sales or as cost of goods sold. Provisions for promotional allowances are
        recorded upon shipment and are typically based on shipments to the retailer
        during an agreed upon promotional period. We expect to offer promotional
        allowances at historical levels in the near future as an incentive to our
        customers. Slotting or placement fees are deducted from revenue in the period
        paid. Provisions for coupon redemptions and product returned that has reached
        its expiration date are based on historical trends. Information such as the
        historical number of cases returned per unit shipped, product shelf life,
        current sales volume, and coupons distributed during the period are used
        to
        derive estimates of the required allowance. As we expand production and
        introduce new products, we may incur increased levels of returned goods.
        Also,
        our estimates assume we will continue as a going concern and maintain
        distribution with wholesalers and supermarkets that currently carry our product.
        If a supermarket or wholesaler discontinues our product, we may experience
        return rates in excess of our historical trend. This could result in material
        charges to future earnings for reimbursements to our customers for returned,
        unsold product.
 
 21
 **Accounts
        Receivable**
 
 We
        evaluate the collectibility of our trade accounts receivable based on a number
        of factors. Accounts receivable are unsecured, non-interest bearing obligations
        that are typically due from customers within 30 days of the invoice date.
        We
        apply collections in accordance with customer remittance advices or to the
        oldest outstanding invoice if no remittance advice is presented with payment.
 
 We
        estimate an allowance for doubtful accounts and revenue adjustments based
        on
        historical trends and other criteria. Further, as accounts receivable
        outstanding are deemed uncollectible or subject to adjustment, these allowances
        are adjusted accordingly. In circumstances where we become aware of a specific
        customer’s inability to meet its financial obligations to us, a specific reserve
        for bad debts is estimated and recorded which reduces the recognized receivable
        to the estimated amount we believe will ultimately be collected. In addition
        to
        specific customer identification of potential bad debts, bad debt charges
        are
        recorded based on our recent past history and an overall assessment of past
        due
        trade accounts receivable outstanding. We also estimate the amount of credits
        for product placement, promotion and expired product that are expected to
        be
        issued for product sold based on an evaluation of historical trends and record
        an allowance when the sale is recorded.
 
 **Inflation**
 
 We
        do not believe that inflation had a significant impact on our results of
        operations for the periods presented.
 
 **Off-Balance
        Sheet Transactions**
 
 At
        June 30, 2005, we did not have any relationships with unconsolidated entities
        or
        financial partnerships, such as entities often referred to as structured
        finance
        or special purpose entities, which would have been established for the purpose
        of facilitating off-balance sheet arrangements or other contractually narrow
        or
        limited purposes.
 
 
 **Factors
        Affecting Operating Results**
  *Investing
        in our shares involves a high degree of risk. You should carefully consider
        the
        following risks, as well as the other information in this report, before
        deciding whether to invest in our shares. If any of the following risks actually
        occur, our business, financial condition, results of operations and liquidity
        could suffer. In that event, the trading price of our shares could decline
        and
        you might lose all or part of your investment.*
  **Risks
        Related to Our Business**
 
 **We
        will need to raise additional capital.**
 
 We
        are currently operating at a loss and expect our expenses to continue to
        increase as we expand our product line as well as our geographic presence
        throughout the United States. To date, we have relied primarily on financing
        transactions to fund operations. We raised net proceeds of approximately
        $1,577,000 from our initial public offering, which, together with revenues
        from
        product sales, and proceeds from the sale of State of New Jersey Tax benefits,
        we believe will be sufficient to fund our operations for the remainder of
        2005,
        and our projections could be wrong. We could face unforeseen costs such as
        an
        increase in transportation costs resulting from the recent significant increases
        in the cost of fuel; or our revenues could fall short of our projections
        because
        retail outlets discontinue ordering our products or for reasons unrelated
        to our
        products, such as a revenue decline due to changes in consumer habits and
        preferences or we may achieve lower margins than planned on our products
        due to
        cost increases or competitive pricing pressure. We will need another infusion
        of
        capital to continue to fund our operations in 2006. However, we do not have
        any
        currently identified sources of additional capital. New sources of capital
        may
        not be available to us when we need it or may be available only on terms
        we
        would find unacceptable. If such capital is not available on satisfactory
        terms,
        or is not available at all, we will be unable to continue to fully develop
        our
        business, and our operations and financial condition will be materially and
        adversely affected. Such a lack of additional funding could force us to cease
        operations altogether. Debt financing, if obtained, could increase our expenses
        and would be required to be repaid regardless of operating results. In addition,
        if we raise additional funds through the issuance of equity, equity-related
        or
        convertible debt securities, these securities may have rights, preferences
        or
        privileges senior to those of the rights of our ordinary shares and our
        shareholders may experience additional dilution. Any such developments can
        adversely affect your investment in our company, harm our financial and
        operating results, and cause our share price to decline.
 
 22
 **Our
        auditors have substantial doubt about our ability to continue as a going
        concern.**
 
 In
        their report in connection with our 2004 financial statements, our auditors
        included an explanatory paragraph stating that, because we have incurred
        net
        losses and have a net capital deficiency for the years ended December 31,
        2003
        and 2004, and, as of May 30, 2005, we were in default on approximately $8.1
        million of notes payable and stockholder loans and accrued interest, there
        is
        substantial doubt about our ability to continue as a going concern. Our
        continued existence will depend in large part upon our ability to successfully
        secure additional financing to fund future operations. Our initial public
        offering was not sufficient to completely alleviate these concerns. If we
        are
        not able to achieve positive cash flow from operations or to secure additional
        financing as needed, we will continue to experience the risk that we will
        not be
        able to continue as a going concern.
 
 **We
        have approximately $1.3 million of indebtedness that is payable out of proceeds
        of additional financing that we secure.**
 
 We
        have not had sufficient capital to operate our business for approximately
        three
        years, and as a result, we have negotiated extended payment terms on
        approximately $1,028,000 of notes payable, and $450,000 of accounts payable
        which are due and payable upon receipt of additional financing. Additionally,
        we
        owe SMBI, the exclusive provider of the whey protein concentrate used in
        our
        product $200,000 on the earlier of securing additional financing, or January
        16,
        2006. These outstanding obligations may make it difficult to raise additional
        financing.
 
 **Our
        limited operating history makes evaluation of our business difficult.**
 
 We
        have a limited operating history and have encountered, and expect to continue
        to
        encounter, many of the difficulties and uncertainties often faced by early
        stage
        companies. We commenced our business operations in 1999 and began marketing
        our
        initial products in 2000 on a limited basis. Accordingly, we have only a
        limited
        operating history with which you can evaluate our business and prospects.
        An
        investor in our units must consider our business and prospects in light of
        the
        risks, uncertainties and difficulties frequently encountered by early stage
        companies, including limited capital, delays in product development, possible
        marketing and sales obstacles and delays, inability to gain customer acceptance
        or to achieve significant distribution of our products to customers and
        significant competition. We cannot be certain that we will successfully address
        these risks. If we are unable to address these risks, our business may not
        grow,
        our stock price may suffer and/or we may be unable to stay in business.
 
 **We
        have a history of losses and we expect to continue to operate at a loss for
        the
        foreseeable future.**
 
 Since
        our inception in 1999, we have incurred net losses in every year, including
        net
        losses of $2,239,440 for the year ended December 31, 2003, $2,131,581 for
        the
        year ended December 31, 2004 and $1,315,061 for the six months ended June
        30,
        2005. We had a working capital deficit of $857,649 at June 30, 2005 and have
        negative cash flows from operations. As a result of ongoing operating losses,
        we
        also had an accumulated deficit of $19,163,220 and a stockholders’ deficit of
        $1,432,134 at the same date. We expect to incur losses until at least 2007
        and
        may never become profitable. We also expect that our expenses will increase
        substantially for the foreseeable future as we seek to expand our product
        line
        and sales and distribution network, implement internal systems and
        infrastructure and comply with the legal, accounting and corporate governance
        requirements imposed upon public companies. These ongoing financial losses
        may
        adversely affect our stock price.
 
 23
 **Our
        success substantially depends on maintaining our relationships with SMBI.**
 
 SMBI
        is the holder of certain patents and trademarks that cover the micronutrients
        that we use in our products and is our only supplier of those micronutrients.
        We
        have a license agreement and a supply agreement with SMBI, both of which
        are
        critical to our business and expire in 2014. Under the SMBI license agreement,
        we have the right to use SMBI’s intellectual property for the production and
        distribution of carbonated and noncarbonated beverages incorporating the
        micronutrients that provide the health benefits of our products. SMBI also
        supplies the key ingredient in our products under the terms of the supply
        agreement. These agreements contain cross-termination provisions, and therefore,
        we risk losing both our rights to the licensed use of the micronutrients
        and
        other SMBI intellectual property needed for our business, as well as our
        sole
        source of supply, if either agreement is terminated in accordance with its
        terms. Furthermore, any exclusive rights we enjoy under the license and supply
        agreements may be jeopardized if we fail to satisfy certain minimum purchase
        requirements. In addition, SMBI and its affiliate, Spencer Trask Specialty
        Group, LLC (“Spencer Trask”), are founders and significant stockholders of our
        company and, as such, SMBI has provided us with favorable terms under the
        supply
        contract. However, due to our relationship with Spencer Trask, there is a
        potential for conflicts of interest between SMBI and us. If we are unable
        to
        obtain the whey protein concentrate from SMBI for any reason, our manufacturing
        and distribution processes could be severely disrupted, and our operations
        could
        be adversely affected. We are aware of only one other source that might be
        able
        to provide an immune enhancement whey protein but it does not contain LactoActin
        and LactoMune, which are proprietary to SMBI, and we are not certain of its
        effectiveness. Moreover, it is our understanding that this ingredient would
        not
        provide the muscle flexibility health benefit that we achieve by using the
        SMBI
        whey protein concentrate. In addition, even if we are able to find acceptable
        alternative sources of supply, the new terms would likely be less favorable
        than
        those that we receive from SMBI. Accordingly, it is critical that we continue
        to
        meet all of our material obligations under both the license agreement and
        the
        supply agreement. In the past, we have not always been able to do so because
        of
        a lack of financial resources, and we paid SMBI $250,000 of past due payables
        out of the net proceeds of our initial public offering. An additional payment
        of
        $200,000 is due in January 2006. If we do not make that payment on time,
        the
        NuVim trademark will revert to SMBI, and we will be in default under our
        license
        and supply agreements.
 
 **Our
        business depends on the acceptance of our products in both existing and new
        marketing areas.**
 
 We
        intend to expand into new geographic areas and broaden our product offerings
        to
        generate additional sales. Our refrigerated beverage products are currently
        available in the northeastern United States and, recently, portions of the
        south, but our beverage products have not yet been widely distributed. We
        do not
        know whether the level of market acceptance we have received in the northeastern
        United States for our initial products will be matched or exceeded in the
        geographic locations we are newly serving, or in other areas of the country
        as
        we expand our distribution in the future. We also will need to raise additional
        financing to support this expansion.
 
 As
        we
        expand our product line to include additional flavors of the refrigerated
        beverage, as well as the shelf-stable sports drink and the powder mix, we
        will
        face the additional uncertainty of whether these new products will gain market
        acceptance in any market. We can give no assurance that we will expand into
        new
        geographic areas or successfully expand our product line. It is unlikely
        that we
        will achieve profitability and otherwise have a successful business unless
        we
        are able to gain market acceptance of our existing and future products over
        a
        wide geographic area.
 
 **Consumers
        who try our products may not experience the health benefits we claim, which
        may
        cause them to discontinue using our products.**
 
 There
        have been approximately 20 independent clinical studies that have demonstrated
        the health benefits of the micronutrient components of our products. However,
        there has been only one, small-scale study of the effects of NuVim beverages
        directly. That study required the subjects to consume 12 ounces of NuVim
        daily
        for six weeks. While the study did validate the positive health claims we
        believe our products provide, it did not consider whether a smaller quantity
        of
        the beverage or a shorter period of continued usage might provide similar
        benefits. Therefore, we currently cannot confirm that the health benefits
        of our
        products will be evident to casual consumers of our products. Consumers may
        determine that drinking 12 ounces of NuVim per day for a minimum of six weeks
        requires more discipline and expense than they are willing to devote. If
        consumers do not use our product in the quantity or for the duration we
        recommend, they may not achieve the health benefits we claim, which may cause
        them to make alternative nutritional beverage and/or dietary supplement
        purchasing decisions.
 
 **Our
        business may suffer from lack of diversification.**
 
 Our
        business is centered on nutritional beverages. The risks associated with
        focusing on a limited product line are substantial. If consumers do not accept
        our products or if there is a general decline in market demand for, or any
        significant decrease in, the consumption of nutritional beverages, we are
        not
        financially or operationally capable of introducing alternative products
        within
        a short time frame. As a result, such lack of acceptance or market demand
        decline could cause us to cease operations.
 
 24
 **Expansion
        of our business is dependent on our ability to expand production.**
 
 We
        currently manufacture our entire product line at Clover Farms Dairy in Reading,
        Pennsylvania. Our ability to expand beyond our current marketing areas depends
        on, among other things, the ability to produce our product in commercial
        quantities sufficient to satisfy the increased demand. Although our present
        production capacity is sufficient to meet our current and short-term future
        production needs, production capacity may not be adequate to supply future
        needs. If additional production capacity becomes needed, it will be necessary
        to
        engage additional co-packers or to expand production capacity at our present
        co-packer facility. If we expand production at Clover Farms Dairy, we risk
        having to pay significantly greater transportation costs to transport our
        products to warehouses in other regions of the United States. Any new co-packing
        arrangement raises the additional risk of higher marginal costs than we
        currently enjoy since we would be required to negotiate new terms with any
        new
        co-packer. We may not be able to pass along these higher costs to our customers.
        If we are unable to pass along the higher production costs imposed by new
        co-packers to our customers, we either will suffer lower gross margins and
        lower
        profitability, once achieved, or we may be unable to expand our business
        as we
        have planned, which could disappoint our stockholders.
 
 **Our
        business contains risks due to the perishable nature of our product.**
 
 Our
        current refrigerated product is a perishable beverage that has a limited
        shelf-life of approximately 83 days. This restricted shelf life means that
        we do
        not have any significant finished goods inventory and our operating results
        are
        highly dependent on our ability to accurately forecast near term sales in
        order
        to adjust our raw materials sourcing and production needs. When we do not
        accurately forecast product demand, we are either unable to meet higher than
        anticipated demand or we produce excess inventory that cannot be profitably
        sold. Additionally, our customers have the right to return products that
        are not
        sold by their expiration date. Therefore, inaccurate forecasts that either
        mean
        that we are unable meet higher than anticipated demand or that result in
        excess
        production, or significant amounts of product returns on any of our products
        that are not sold by the expiration date could cause customer dissatisfaction,
        unnecessary expense and a possible decline in profitability.
 
 **Government
        regulation may adversely affect our business.**
 
 Our
        business is subject to government regulation, principally the United States
        Food
        and Drug Administration (the “FDA”), which regulates the processing,
        formulation, packaging, labeling and advertising of dietary products, and
        to a
        lesser extent, state governments, where state attorneys general have authority
        to enforce their state consumer protection acts. Specifically, we are subject
        to
        the Dietary Supplement and Health Education Act (“DSHEA”). Under DSHEA, dietary
        supplements are permitted to make “statements of nutritional support” with
        notice to the FDA, but without FDA pre-approval. The FDA does not allow claims
        that a dietary product may mitigate, treat, cure or prevent disease. There
        can
        be no assurance that at some future time the FDA will not determine that
        the
        statement of nutritional support we make on our packaging is a prohibited
        claim
        rather than an acceptable nutritional support statement. Such a determination
        by
        the FDA would require deletion of the treatment, cure or prevention of disease
        claim, or, if it is to be used at all, submission by our company and the
        approval by the FDA of a new drug application, which would entail costly
        and
        time-consuming clinical studies, or revision to a health claim, which would
        require demonstration of substantiated scientific evidence to support such
        claim
        and would also consume considerable management time and financial resources.
 
 Our
        advertising of dietary supplement products is also subject to regulation
        by the
        Federal Trade Commission (the “FTC”) under the Federal Trade Commission Act,
        which prohibits unfair or deceptive trade practices, including false or
        misleading advertising. The FTC in recent years has brought a number of actions
        challenging claims made by companies that suggest that their products are
        dietary supplements. No assurance can be given that actions will not be brought
        against us by the FTC or any other party challenging the validity of our
        product
        advertising claims.
 
 25
 **Our
        business may be subject to product liability claims relating to consumer
        use of
        our products.**
 
 As
        a marketer of beverages that are ingested by consumers, we face an inherent
        risk
        of exposure to product liability claims if the use of our products results
        in
        injury or our labeling contains inadequate warnings concerning potential
        side
        effects. With respect to product liability claims, we have obtained a $2.0
        million liability insurance policy ($2.0 million per occurrence), which we
        believe is adequate for our kind of business activity. The policy contains
        certain exclusions that would pertain to food products such as the additional
        products exclusion for bodily injury or property damage arising out of the
        manufacture, handling, distribution, sale, application or use of certain
        specified products ( *e.g* .,
        silicone, latex, and dexfenfluramine, among others), the intended injury
        and the
        willful and intentional acts exclusions. There can be no assurance that such
        insurance will continue to be available at a reasonable cost, or, if available,
        that it will be adequate to cover potential liabilities. If we are found
        liable
        for product liability claims that exceed our coverage or are subject to a
        policy
        exclusion, such liability could require us to pay financial losses for which
        we
        have not budgeted and may not have adequate resources to cover. If the uninsured
        losses were significantly large enough to impact our ability to continue
        our
        then-existing level of operations, we might experience a decline in net income
        and earnings per share, and our stock price might suffer. In an effort to
        limit
        any liability, we generally obtain contractual indemnification from parties
        supplying raw materials or marketing our products. Such indemnification is
        limited, however, by the terms of each related contract and, as a practical
        matter, by the creditworthiness of the indemnifying party.
 
 Despite
        the insurance coverage that we plan on maintaining, it is possible that we
        may
        be sued if one or more consumers believe our products have caused them harm.
        While no such claims have been made to date, the results of any such suit
        could
        result in significant financial damages to us, as well as serious damage
        to the
        reputation and public perception of our company, even if we are ultimately
        found
        not to be at fault.
 
 **Risks
        Related to Investment in Our Securities**
 
 **There
        is a limited history trading in our securities, and an active market may
        not
        develop or, if developed, be sustained. If a public trading market does not
        develop, our security holders may not be able to sell any of their securities.**
 
 There
        is presently a limited trading history for our common stock, Class A public
        warrants or Class B public warrants, which trade on the OTCBB, which is
        generally considered to be a less efficient market than an exchange or Nasdaq
        and is typified by thinly-traded market activity. We can provide no assurance
        that an active market will develop or be sustained for any of these securities.
        If an active public trading market for our securities does not develop or
        is not
        sustained, it may be difficult or impossible for purchasers in this offering
        to
        resell their securities at any price. Even if an active public market does
        develop, the market price could decline below the amount our public investors
        paid for their units, or the assumed allocated price of the components of
        the
        units.
 
 **Future
        sales of shares by our existing shareholders may cause our share price to
        fall.**
  The
        market price of our shares could decline as a result of sales of ordinary
        shares
        by our existing shareholders, including by our directors, officers or their
        affiliates, or the perception that these sales could occur. These sales might
        also make it more difficult for us to sell equity securities at a time and
        price
        that we deem appropriate. The lock-up agreements delivered by shareholders,
        including our directors and executive officers, provide that Paulson Investment
        Company, in its sole discretion, may release any of those parties, at any
        time
        or from time to time and without notice, from obligations under these
        agreements, including the obligation not to dispose of shares for a period
        ranging from 180 to 360 days after the date of our initial public offering.
 
 **The
        Class A public warrants may be redeemed on short notice. This may have an
        adverse effect on their price.**
 
 We
        may redeem the Class A public warrants for $0.25 per warrant on 30 days’ notice
        at any time after the last reported sale price per share of our common stock
        equals or exceeds $2.00 for five consecutive trading days. If we give notice
        of
        redemption, holders of our Class A public warrants will be forced to sell
        or
        exercise the Class A public warrants they hold or accept the redemption price.
        The notice of redemption could come at a time when it may not be advisable
        or
        possible for holders of our public warrants to sell or exercise the Class
        A
        public warrants they hold.
 
 26
 **If
        we do not maintain an effective registration statement or comply with applicable
        state securities laws, our warrantholders may not be able to exercise the
        Class
        A or Class B public warrants.**
 
 In
        order for the holders of our Class A or Class B public warrants to be able
        to
        exercise their warrants, the shares of our common stock to be issued upon
        exercise of those warrants must be covered by an effective and current
        registration statement and qualify or be exempt under the securities laws
        of the
        state or other jurisdiction in which the warrantholders live. We can give
        no
        assurance that we will be able to continue to maintain a current registration
        statement relating to the shares of our common stock underlying the Class
        A or
        Class B public warrants or that an exemption from registration or qualification
        will be available throughout their term. This may have an adverse effect
        on
        demand for the Class A or Class B public warrants and the prices that can
        be
        obtained from reselling them.
 
 **While
        the public warrants are outstanding, it may be more difficult to raise
        additional equity capital.**
 
 During
        the term that the Class A public warrants and Class B public warrants are
        outstanding, the holders of the public warrants will be given the opportunity
        to
        profit from a rise in the public market price of our common stock, which
        public
        market price did not exist prior to this offering. In addition, the Class
        B
        public warrants are not redeemable by us. We may find it more difficult to
        raise
        additional equity capital while these warrants are outstanding. At any time
        during which these public warrants are likely to be exercised, we may be
        able to
        obtain additional equity capital on more favorable terms from other sources.
 
 **The
        ability of our stockholders to sell our common stock and warrants in the
        secondary market could be restricted because our stock is considered to be
        “penny stock.”**
 
 The
        Securities and Exchange Commission has adopted regulations which generally
        define “penny stock” to be an equity security that has a market price, as
        defined, of less than $5.00 per share or an exercise price of less than $5.00
        per share, subject to certain exceptions that do not apply to us. So long
        as our
        common stock trades below $5.00, and our securities trade on the OTCBB, our
        securities are deemed to be “penny stock.” As such, our securities will be
        subject to rules that impose additional sales practice requirements on
        broker-dealers who sell them. For transactions covered by these rules, the
        broker-dealer must make a special suitability determination for the purchaser
        of
        such securities and have received the purchaser’s written consent to the
        transactions prior to the purchase. Additionally, for any transaction involving
        a penny stock, unless exempt, the rules require the delivery, prior to the
        transaction, of a disclosure schedule prepared by the Securities and Exchange
        Commission relating to the penny stock market. The broker-dealer also must
        disclose the commissions payable to both the broker-dealer and the registered
        underwriter, current quotations for the securities and, if the broker-dealer
        is
        the sole market maker, the broker-dealer must disclose this fact and the
        broker-dealer’s presumed control over the market. Finally, among other
        requirements, monthly statements must be sent disclosing recent price
        information for the penny stock held in the account and information on the
        limited market in penny stocks. Many brokerage firms have policies prohibiting
        their brokers from trading in penny stocks. As such, the “penny stock” rules may
        restrict the ability of stockholders to sell our common stock and warrants
        in
        the secondary market.
 
 **Future
        sales or the potential for future sales of shares of our common stock may
        cause
        the trading price of our common stock and public warrants to decline and
        could
        impair our ability to raise capital through subsequent equity offerings.**
 
 Approximately
        42% of our outstanding common stock will be held by our current stockholders
        following this offering. If these stockholders sell substantial amounts of
        our
        common stock in the public market following this offering, the market price
        of
        our common stock could fall. Prior to this offering, there has been no public
        market for any of our securities. However, once a market is created, if these
        stockholders publicly sell substantial amounts of common stock, the market
        price
        of our common stock could fall. These sales could also make it more difficult
        for us to sell shares of our common stock or equity-related securities in
        the
        future, and we expect to need to do so within the next year.
 
 We
        have 4,630,297 shares of common stock outstanding. Of these shares, 654,911
        shares have been registered for resale and available to be sold by the owners
        of
        those shares upon expiration of a six-month lockup, commencing on the effective
        date of this offering. Assuming that all the remaining existing stockholders
        sign lock-up agreements with the underwriters that restrict their ability
        to
        transfer stock for up to one year from the effective date of this prospectus,
        approximately 1,275,386 shares of common stock will become eligible for sale
        in
        the public market after this one-year period, subject to the restrictions
        of
        Rule 144 promulgated under the Securities Act of 1933, as amended. For more
        information see “Shares Eligible for Future Sale.”
 
 27
 In
        addition, we intend to file a registration statement under the Securities
        Act of
        1933, as amended, after the completion of this offering to register our existing
        option plans. We expect this registration statement to become effective
        immediately upon filing. Holders of stock options have also signed one-year
        lock-up agreements, and if all holders of outstanding options exercisable
        at the
        end of the one-year period were to exercise and sell the shares issuable
        upon
        exercise of these options, approximately 578,316 additional shares of common
        stock (including 563,000 option shares issuable upon exercise of options
        expected to be granted on the effective date of our 2005 option plans) will
        become eligible for sale and freely tradeable in the public markets at the
        end
        of the one-year period.
 **Item 3.
          **Controls
          and Procedures.****
 
 The
        Company’s President and Chief Executive Officer and the Company’s Chief
        Financial Officer have reviewed the disclosure controls and procedures relating
        to the Company at June 30, 2005 and concluded that such controls and procedures
        were effective to provide reasonable assurance that all material information
        about the financial and operational activities of the Company was made known
        to
        them. There were no changes in the Company’s internal control over financial
        reporting during the six months ended June 30, 2005 that materially affected,
        or
        are reasonably likely to materially affect, the Company’s internal control over
        financial reporting.
 
 **PART
        II. OTHER INFORMATION**
 
 **Item 1.** **Legal
          Proceedings.**
 
 There
        are
        at present no legal proceedings pending against the Company.
 
 **Item 2.
          **Unregistered
          Sales of Equity Securities and Use of Proceeds.****
 
 **Use
        of Proceeds From Sales of Registered Securities**
 
 On
        June
        20, 2005, the SEC declared effective our Registration Statement on Form SB-2
        (Reg. No. 333-120938), and we closed our initial public offering of 2,700,000
        units on June 24, 2005. Each unit consisted of one share of common stock,
        one
        Class A redeemable public warrant and one Class B non-redeemable public warrant.
        The managing underwriter of our initial public offering was Paulson Investment
        Company, Inc. The initial public offering price was $1.00 per unit. The gross
        proceeds of the offering were $2,700,000. Our net proceeds from the offering,
        after deducting the underwriter’s discount of $243,000 and other fees and
        expenses, aggregated $1,577,466.
 
 As
        of
        June 30, 2005, we had applied proceeds from the initial public offering as
        follows:
 
 Payment
                  to SMBI for assignment of NuVim trademark and payable
              
              $
              250,000Repayment
                  of short-term loans from the representative
              
              
              100,000Available
                  for working capital and future operations
              
              
              1,227,466Total
              
              $
              1,577,466
 
 28
 
  **Item 6.
            **Exhibits****
  (a)
        The
        following exhibits are filed as part of this report:
 
 **Exhibit No.**
              
              **Description**31.1
              
              Certification
                  of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
              
              Certification
                  of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
              
              Certification
                  of the Chief Executive pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
              
              Certification
                  of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
  29
  
 **SIGNATURES**
 
 In
        accordance with the requirements of the Securities Exchange Act of 1934,
        the
        registrant caused this report to be signed on its behalf by the undersigned,
        thereunto duly authorized.
 
 
 NUVIM,
                  INC.Date:
                  August ___ , 2005
              
              By:
              
              /s/
                  RICHARD P. KUNDRATRichard
                  P. Kundrat
                Chief
                  Executive Officer and Chairman of the Board
                (Principle
                  Executive Officer)Date:
                  August ___, 2005
              
              By:
              
              /s/
                  MICHAEL VESEYMichael
                  Vesey
                Chief
                  Financial Officer
                (Principal
                  Financial and Accounting Officer)
 
 
 30