UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Amendment No.
2

FORM 10-K







|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------

For the fiscal year ended December 31, 2008



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------

For the transition period from              to

Commission file number 001-31275





VERTICAL HEALTH SOLUTIONS, INC.

(Name of small business issuer in its charter)







|                                                                  |  |                                     
|----------------------------------------------------------------- |  | ------------------------------------
|Florida                                                           |  | 59-3635262                          
|(State of or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                                  | 
|855 Dunbar Ave., Ste. B, Oldsmar, Florida                         |  | 34677                               
|(Address of principal executive offices)                          |  | (Zip Code)                          

Issuers telephone number (813) 749-0848





Securities registered under Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.    Yes   ̈    No  x

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    x  YES     ̈  NO



Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.    x

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

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a
small reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check One):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                        |  |   | 
|Non-accelerated Filer   |  |  ̈ |  | Smaller reporting company |  | x

The
aggregate market value of the voting common stock held by non-affiliates of the Registrant was $48,764 based upon the last reported trade of the stock, which was on March 6, 2009 at $.0.005 per share.

There were 44,474,973 shares of the Registrants $.001 par value common stock outstanding as of December 31, 2008.

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









---

EXPLANATORY NOTE

This amended Annual Report on Form 10-K is being filed to include the full financial statements for the period presented, portions of which were
erroneously omitted from the prior filing. Certain other ministerial changes were also made to the non-financial statement portions of this report and its exhibits. The balance of this Annual Report on Form 10-K remains unchanged from the prior
filing.



---

VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES



|                                                                                                           |  |           
|---------------------------------------------------------------------------------------------------------- |  | ----------
|                                                                                                           |  | PAGE      
|                                                                                                           | 
|Independent Auditors Report                                                                               |  | F-2       
|                                                                                                           | 
|Consolidated Balance Sheets as of December 31, 2008 and 2007                                               |  | F-3       
|                                                                                                           | 
|Consolidated Statements of Operations for the years ended December 31, 2008 and
2007                       |  | F-4       
|                                                                                                           | 
|Consolidated Statements of Changes in Stockholders Equity for the years ended December 
31, 2008 and 2007 |  | F-5       
|                                                                                                           | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2008 and
2007                       |  | F-6  F-7 
|                                                                                                           | 
|Notes to Consolidated Financial Statements                                                                 |  | F-8  F-13



F-1



---

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors

Vertical
Health Solutions, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of Vertical Health Solutions, Inc. and
subsidiary as of December 31, 2008 and 2007 and the related statements of operations, changes in stockholders equity, and cash flows for the years ended December 31, 2008 and 2007. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Vertical Health Solutions, Inc. as of December 31, 2008 and 2007 and the results of operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1
to the consolidated financial statements, the Company had a net loss of $106,686 for the year ended December 31, 2008 and had a working capital deficit of $59,795 as of December 31, 2008. The Company currently has no revenue producing
activities and there are no assurances that they will be able to obtain additional financing, if required. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial
statements have been prepared on the basis that the Company will continue as a going concern, which assumes the satisfaction of liabilities in the normal course of business, and does not include any adjustments that may result from the outcome of
this uncertainty.



|                               
|-------------------------------
|BRIMMER, BUREK & KEELAN LLP    
|                               
|/s/ Brimmer, Burek & Keelan LLP
|Tampa, Florida                 
|March 31, 2009                 



F-2



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VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31,



|                                                                                                                                    |  |      |            |   |      |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                    |  | 2008 |            |   | 2007 |  
|Assets                                                                                                                              |  |      |            |   |      |   |            |  
|Deposits                                                                                                                            |  |      | 1,800      |   |      |   |           |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|Total current assets                                                                                                                |  |      | 1,800      |   |      |   |           |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|Total Assets                                                                                                                        |  | $    | 1,800      |   |      | $ |           |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Liabilities and Stockholders Equity (Deficit)                                                                                      |  |      |            |   |      |   |            |  
|Current liabilities:                                                                                                                |  |      |            |   |      |   |            |  
|Accounts payable                                                                                                                    |  | $    | 54,303     |   |      | $ | 56,649     |  
|Accrued expenses                                                                                                                    |  |      | 1,200      |   |      |   | 26,320     |  
|Notes payable to related parties                                                                                                    |  |      | 6,092      |   |      |   | 8,924      |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Total current liabilities                                                                                                           |  |      | 61,595     |   |      |   | 91,893     |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Total liabilities                                                                                                                   |  |      | 61,595     |   |      |   | 91,893     |  
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Commitments and contingencies                                                                                                       |  |      |           |   |      |   |           |  
|                                                                                                                                    |  |     
|Stockholders equity (deficit):                                                                                                     |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Preferred stock, $0.001 par value, 5,000,000 shares authorized:                                                                     |  |      |            |   |      |   |            |  
|Series A; 10% cumulative, convertible; 1,000,000 shares authorized, no shares issued and outstanding                                |  |      |           |   |      |   |           |  
|Undesignated, 4,000,000 shares authorized, no shares issued and outstanding                                                         |  |      |           |   |      |   |           |  
|Common stock, $.001 par value, 250,000,000 shares authorized; 44,474,973 and 16,722,347 shares issued and outstanding,
respectively |  |      | 44,476     |   |      |   | 16,723     |  
|Additional paid-in capital                                                                                                          |  |      | 2,771,852  |   |      |   | 2,660,821  |  
|Accumulated deficit                                                                                                                 |  |      | (2,876,123 | ) |      |   | (2,769,437 | )
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  |     
|Total stockholders equity                                                                                                          |  |      | (59,795    | ) |      |   | (91,893    | )
|                                                                                                                                    |  |      |            |   |      |   |            |  
|                                                                                                                                    |  | $    | 1,800      |   |      | $ |           |  
|                                                                                                                                    |  |      |            |   |      |   |            |  

See accompanying notes to consolidated financial statements.



F-3



---

VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2008 and 2007



|                                                                                 |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                 |  | 2008 |            |   | 2007 |  
|Sales                                                                            |  | $    |           |   |      | $ |           |  
|Cost of goods sold                                                               |  |      |           |   |      |   |           |  
|                                                                                 |  |      |            |   |      |   |            |  
|Gross profit                                                                     |  |      |           |   |      |   |           |  
|                                                                                 |  |      |            |   |      |   |            |  
|Operating expenses:                                                              |  |      |            |   |      |   |            |  
|Selling, general and administrative expenses                                     |  |      | 116,551    |   |      |   | 213,702    |  
|                                                                                 |  |      |            |   |      |   |            |  
|Total operating expenses                                                         |  |      | 116,551    |   |      |   | 213,702    |  
|                                                                                 |  |      |            |   |      |   |            |  
|                                                                                 |  |     
|Operating loss before other income and expense                                   |  |      | (116,551   | ) |      |   | (213,702   | )
|                                                                                 |  |      |            |   |      |   |            |  
|Other income (expense):                                                          |  |      |            |   |      |   |            |  
|Interest income                                                                  |  |      |           |   |      |   | 3,479      |  
|Gain on settlement of liability                                                  |  |      | 9,865      |   |      |   |           |  
|Gain on sale of subsidiary                                                       |  |      |           |   |      |   | 13,145     |  
|Interest expense                                                                 |  |      |           |   |      |   | (1,376     | )
|                                                                                 |  |      |            |   |      |   |            |  
|Total other income (expense)                                                     |  |      | 9,865      |   |      |   | 15,248     |  
|                                                                                 |  |      |            |   |      |   |            |  
|Loss from continuing operations before income taxes                              |  |      | (106,686   | ) |      |   | (198,454   | )
|                                                                                 |  |      |            |   |      |   |            |  
|Income taxes                                                                     |  |      |           |   |      |   |           |  
|                                                                                 |  |      |            |   |      |   |            |  
|Loss from continuing operations                                                  |  |      | (106,686   | ) |      |   | (198,454   | )
|                                                                                 |  |      |            |   |      |   |            |  
|Discontinued operations                                                          |  |      |            |   |      |   |            |  
|Loss from operation of discontinued animal health products division (net of tax) |  |      |           |   |      |   | 200,520    |  
|Loss from disposal of animal health products division (net of tax)               |  |      |           |   |      |   | (42,177    | )
|                                                                                 |  |      |            |   |      |   |            |  
|                                                                                 |  |      |           |   |      |   | 158,343    |  
|                                                                                 |  |      |            |   |      |   |            |  
|                                                                                 |  |     
|Net loss available to common stockholders                                        |  | $    | (106,686   | ) |      | $ | (40,111    | )
|                                                                                 |  |      |            |   |      |   |            |  
|Basic and diluted loss per share from continuing operations                      |  | $    | (0.00      | ) |      | $ | (0.00      | )
|                                                                                 |  |      |            |   |      |   |            |  
|Basic and diluted loss per share from discontinued operations                    |  | $    | (0.00      | ) |      | $ | (0.00      | )
|Basic and diluted weighted average number of common shares outstanding           |  |      | 16,722,347 |   |      |   | 16,618,453 |  
|                                                                                 |  |      |            |   |      |   |            |  

See accompanying notes to consolidated financial statements.



F-4



---

VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY DEFICIT

Years Ended December 31, 2008 and 2007



|                                                                      |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   |            |   |  |   |          |  
|--------------------------------------------------------------------- |  | --------------- |  | ------------ | - | ------------------------ | ---------- | ------------------ | - | ------ | ------------------------- | - | --------- |  | - | ---------- | - |  | - | -------- | -
|                                                                      |  | Preferred Stock |  | Common Stock |   | AdditionalPaid-inCapital |            | AccumulatedDeficit |   |        | TotalStockholdersDeficit |  
|                                                                      |  | Shares          |  | Dollars      |   | Shares                   |            | Dollars            |   |        |                          
|Balance at December 31, 2006                                          |  | 0               |  | $            | 0 |                          | 16,423,755 |                    | $ | 16,424 |                           | $ | 2,628,275 |  | $ | (2,729,326 | ) |  | $ | (84,267  | )
|                                                                      |  |                 |  |              |   |                          |           
|Issuance of common stock in settlement of a payable                   |  |                 |  |              |   |                          | 298,592    |                    |   | 299    |                           |   | 32,546    |  |   |            |   |  |   | 32,845   |  
|Net loss                                                              |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   | (40,111    | ) |  |   | (40,111  | )
|                                                                      |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   |            |   |  |   |          |  
|Balance at December 31, 2007                                          |  | 0               |  | $            | 0 |                          | 16,722,347 |                    | $ | 16,723 |                           | $ | 2,660,821 |  | $ | (2,769,437 | ) |  | $ | (91,893  | )
|Issuance of common stock in settlement of payables                    |  |                 |  |              |   |                          | 14,298,086 |                    |   | 14,298 |                           |   | 57,213    |  |   |            |   |  |   | 71,511   |  
|Issuance of common stock in settlement of related party notes payable |  |                 |  |              |   |                          | 12,454,540 |                    |   | 12,455 |                           |   | 49,818    |  |   |            |   |  |   | 62,273   |  
|Issuance of common stock in settlement of accrued expenses            |  |                 |  |              |   |                          | 1,000,000  |                    |   | 1,000  |                           |   | 4,000     |  |   |            |   |  |   | 5,000    |  
|Net loss                                                              |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   | (106,686   | ) |  |   | (106,686 | )
|                                                                      |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   |            |   |  |   |          |  
|Balance, December 31, 2008                                            |  | 0               |  | $            | 0 |                          | 44,474,973 |                    | $ | 44,476 |                           | $ | 2,771,852 |  | $ | (2,876,123 | ) |  | $ | (59,795  | )
|                                                                      |  |                 |  |              |   |                          |            |                    |   |        |                           |   |           |  |   |            |   |  |   |          |  

See accompanying notes to consolidated financial statements.



F-5



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VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2008 and 2007



|                                                                                  |  |      |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | 2008 |          |   | 2007 |  
|Cash flows from operating activities:                                             |  |      |          |   |      |   |          |  
|Net loss                                                                          |  | $    | (106,686 | ) |      | $ | (40,111  | )
|Adjustments to reconcile net loss to net cash provided by operating activities:   |  |      |          |   |      |   |          |  
|Depreciation and amortization                                                     |  |      |         |   |      |   | 1,248    |  
|Gain on settlement of liability                                                   |  |      | (9,865   | ) |      |   |         |  
|Gain on settlement of related party liabilities                                   |  |      |         |   |      |   | (13,145  | )
|Gain on sale of subsidiary                                                        |  |      |         |   |      |   | 42,177   |  
|Common stock issued for services                                                  |  |      |         |   |      |   | 32,845   |  
|Changes in operating assets and liabilities:                                      |  |      |          |   |      |   |          |  
|Deposits                                                                          |  |      | (1,800   | ) |      |   |         |  
|Accounts payable                                                                  |  |      | 79,030   |   |      |   | 85,383   |  
|Accrued expenses                                                                  |  |      | (20,120  | ) |      |   |         |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash (used) provided by operating activities from continuing operations       |  |      | (59,441  | ) |      |   | 108,397  |  
|Net cash used by operating activities attributable to discontinued operations     |  |      |         |   |      |   | (375,194 | )
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash used by operating activities                                             |  |      | (59,441  | ) |      |   | (266,797 | )
|                                                                                  |  |     
|Cash flows from investing activities:                                             |  |      |          |   |      |   |          |  
|Proceeds from the sale of subsidiary                                              |  |      |         |   |      |   | 67,000   |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash provided by investing activities from continuing operations              |  |      |         |   |      |   | 67,000   |  
|Net cash provided by investing activities attributable to discontinued operations |  |      |         |   |      |   | 19,498   |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash provided by investing activities                                         |  |      |         |   |      |   | 86,498   |  
|                                                                                  |  |     
|Cash flows from financing activities:                                             |  |      |          |   |      |   |          |  
|Proceeds from related party notes payable                                         |  |      | 59,441   |   |      |   | 92,654   |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash provided by financing activities from continuing operations              |  |      | 59,441   |   |      |   | 92,654   |  
|Net cash provided by financing activities attributable to discontinued operations |  |      |         |   |      |   |         |  
|                                                                                  |  |      |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |      | 59,441   |   |      |   | 92,654   |  
|                                                                                  |  |      |          |   |      |   |          |  
|                                                                                  |  |     
|Net decrease in cash                                                              |  |      |         |   |      |   | (87,645  | )
|Cash at beginning of period                                                       |  |      |         |   |      |   | 87,645   |  
|                                                                                  |  |      |          |   |      |   |          |  
|                                                                                  |  |     
|Cash at end of period                                                             |  | $    |         |   |      | $ |         |  
|                                                                                  |  |      |          |   |      |   |          |  

See accompanying notes to consolidated financial statements.



F-6



---

VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWSContinued

Years Ended December 31, 2008 and 2007



|                                                  |  |      |   |      |   |      
|------------------------------------------------- |  | ---- | - | ---- | - | -----
|                                                  |  | 2008 |   | 2007
|Supplemental disclosure of cash flow information: |  |      |   |      |   |      
|Cash paid during the period for interest          |  | $    |  |      | $ | 4,901
|Cash paid during the period for income taxes      |  | $    |  |      | $ |     

During the year ended
December 31, 2008, the Company issued 14,298,086 shares of common stock valued at $71,511 in relief of payables.

During the year ended
December 31, 2008, the Company issued 1,000,000 shares of common stock valued at $5,000 in relief of accrued expenses.

During the year
ended December 31, 2008, the Company issued 12,454,540 shares of common stock valued at $62,273 in settlement of notes payable, related parties.

On June 1, 2007, the Company sold a subsidiary which included $449,730 of assets, the assumption of liabilities of $340,553 in exchange for $30,000
cash and a $37,000 receivable.

During the year ended December 31, 2007, the Company settled $43,145 in related party payables for
$30,000 in cash, which resulted in a $13,145 gain on settlement of liabilities.

See accompanying notes to consolidated
financial statements.



F-7



---

VERTICAL HEALTH SOLUTIONS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008 AND 2007

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Vertical Health Solutions, Inc., incorporated as Labelclick.com, Inc. on March 3, 2000 under the laws of the State of Florida, is
located in Oldsmar, Florida. The Company changed its name to Vertical Health Solutions, Inc. on January 11, 2001.

Principles of
Consolidation

The consolidated financial statements as of and for the year ended December 31, 2007 include the
accounts of Vertical Health Solutions, Inc. and its wholly owned subsidiary (collectively the Company), Drug Depot, Inc. through May 31, 2007 (date of sale). All intercompany accounts and balances have been eliminated in
consolidation.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months
or less to be cash equivalents.

Impairment of Assets

The Companys policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets, certain
identifiable intangibles and goodwill when certain events have taken place that indicate that the remaining balance may not be recoverable. When factors indicate that the intangible assets should be evaluated for possible impairment, the Company
uses an estimate of related undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment write-down would be the difference between the
carrying amounts and the fair value of these assets. Losses on impairment are recognized by a charge to earnings. Factors considered in the valuation include current operating results, trends and anticipated undiscounted future cash flows. There
were no impairment losses recorded during the years ended December 31, 2008 and 2007 as all fixed assets were disposed of in the sale of the subsidiary, Drug Depot on May 31, 2007.

Loss on Sale of Subsidiary

On June 1, 2007, Vertical Health Solutions, Inc. (the Company), its wholly-owned subsidiary Drug Depot, Inc. (Drug
Depot) and T&L, Inc. (T&L), pursuant to which the Company agreed to sell all of the outstanding capital stock of Drug Depot to T&L (the Agreement). The purchase price for the sale is (i) the payment of
$67,000 in cash, and (ii) the cancellation of an outstanding promissory note issued by the Company to T&L in the current principal amount of $146,206.

Drug Depot constituted substantially all of the Companys 2007 assets and operations. The Statement of Operations for the year ended
December 31, 2007, reflects only the portion of the income and expenses of Drug Depot through the date of the sale, June 1, 2007, and $42,177 is recorded as a loss on the disposal.

Income Taxes

The
Company utilizes the guidance provided by Statement of Financial Accounting Standards No. 109, Accounting For Income Taxes (SFAS 109). Under the liability method specified by SFAS 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities. Valuation allowances are provided if necessary to reduce deferred tax assets to the amount expected to be realized.



F-8



---

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes (FIN 48) on January 1, 2007. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax
return, including a decision whether to file or not to file in a particular jurisdiction. The adoption of FIN 48 did not have a material impact to the Companys financial statements.

Earnings (Loss) Per Common Share

The Company utilizes the guidance provided by Statement of Financial Accounting Standards No. 128, Earnings per Share
(SFAS 128). Earnings (loss) per share are computed using the basic and diluted calculations on the face of the statement of operations. Basic earnings (loss) per share are calculated by dividing net income by the weighted average number of shares of
common stock outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock
equivalents, using the treasury stock method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at December 31, 2008 and 2007, as well as the reported amounts of revenues and
expenses for the years then ended. The actual outcome of the estimates could differ from the estimates made in the preparation of the consolidated financial statements.

Revenue Recognition

Revenues are recognized when the merchandise is shipped and title passes to the customer. Revenue is recorded net of any discounts,
allowances, returns or credits. Returns are allowed for certain products and are subject to a restocking fee. The Company has not experienced any significant discounts, allowances, returns or credits to date.

Segment Information

The
Company utilizes the guidance provided by Statement of Financial Accounting Standards No. 131, Disclosures About Segments Of An Enterprise And Related Information (SFAS 131). Certain information is disclosed in accordance with SFAS
131, based on the way management organizes financial information for making operating decisions and assessing performance. For the year ended December 31, 2008 and 2007, the Company operated only one segment.

Stock Based Compensation

In December 2004, the Financial Accounting Standards Board (FASB) issued a revision to SFAS No. 123, SFAS 123R Share-Base Payment.
SFAS No. 123R requires all companies to measure compensation costs for all share based payment, including stock options, at fair value and expense such payments over the service period. SFAS No. 123R specifies that companies must use an
option-pricing model to estimate fair value, although it does not specifically require the use of a particular model. The new standard is effective for annual periods beginning after December 15, 2005.

Advertising Costs

The
Company charges advertising costs to expense as incurred. Advertising expense was $0 and $1,387 for the years ended December 31, 2008 and 2007, respectively.

Fair Value of Financial Instruments

Effective December 1, 2007, the Company adopted SFAS No. 157 for our financial assets and liabilities. Management uses the fair value
hierarchy of SFAS No. 157, Fair-Value Measurements, which gives the highest priority to quoted prices in active markets. The fair value of financial instruments is estimated based on market trading information, where available. Absent
published market values for an instrument or other assets, management uses observable market data to arrive at its estimates of fair value. Management believes that the carrying amount of deposits, accounts payable, accrued expenses and notes
payables approximate fair value.

SFAS No. 157 defines fair value as an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market
participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used
to measure fair value are as follows:



|        |  |                                                                                                                                                                                                                                                                                                                                
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                                           
|        | 
|Level 2 |  | Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar
assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing
models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.                                      



F-9



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Earnings (Loss) Per Share

Earnings (loss) per share are computed using the basic and diluted calculations on the face of the statement of operations. Basic earnings
(loss) per share are calculated by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is calculated by dividing the net
income (loss) by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method. Convertible debt and preferred stock warrants, officer,
employee and non-employee stock options that are considered potentially dilutive are included in the fully diluted share calculation at December 31, 2008 and 2007.

The following sets forth the computation of basic and diluted net earnings (loss) per common share for years ended December 31, 2008
and 2007:



|                                                     |  |                   |            |   |                   |   |            |  
|---------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                     |  | December 31, 2008 |            |   | December 31, 2007 |  
|Numerator:                                           |  |                   |            |   |                   |   |            |  
|Net loss                                             |  | $                 | (106,686   | ) |                   | $ | (40,111    | )
|Less preferred stock dividend and accreted dividends |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Net loss available to common stockholders            |  | $                 | (106,686   | ) |                   | $ | (40,111    | )
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Denominator:                                         |  |                   |            |   |                   |   |            |  
|Weighted average basic shares outstanding            |  |                   | 16,722,347 |   |                   |   | 16,618,453 |  
|Stock options                                        |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|Warrants                                             |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Weighted average fully diluted shares outstanding    |  |                   | 16,722,347 |   |                   |   | 16,618,453 |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Net loss per common shareBasic and diluted          |  | $                 | (0.01      | ) |                   | $ | (0.00      | )
|                                                     |  |                   |            |   |                   |   |            |  

NOTE 2 GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America, which contemplates continuation of Vertical Health Solutions, Inc. (VHS) as a going concern. However, VHS has sustained operating losses in recent years and following the sale of Drug Depot has no operating revenue. Further for the year
ended December 31, 2008, VHS had negative working capital of $61,595. The Company has incurred losses in previous years resulting in an accumulated deficit of approximately $2,876,123. These factors raise substantial doubt about the ability of
Vertical Health Solutions, Inc. to continue as a going concern.

The Company is pursuing equity financing for the further
growth of the business and other acquisitions: failure to secure such financing or to raise additional capital may result in the Company depleting its available funds and not being able to pay its obligations.



F-10



---

The financial statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets of the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

NOTE 3 RELATED PARTY TRANSACTIONS

On January 18, 2006, the Company entered into an agreement with Vitality Systems, Inc. (Vitality), pursuant to which
Vitality purchased all of the outstanding stock of the Companys wholly-owned subsidiary Labelclick, Inc. The purchase price consisted of a 7% promissory note in the principal amount of $300,000, together with the assumption of all debt and
personal guarantee of the outstanding bank debt included in the estimated amount of $1,800,000. The promissory note has a term of three years and is payable monthly in the amount of $9,263, accrued and unpaid interest. The Agreement is effective as
of January 4, 2006. Vitality is owned by Stephen Watters, our former Chief Executive Officer and a director, Brian Nugent, our former President and a director, and Jugal K. Taneja, a former consultant and a director. In connection with the
sale, the Company received an independent valuation of LabelClick which supported the price paid by Vitality and the sale was approved by the Companys independent directors.

As of December 31, 2008, the Company owes $6,092 to Vitality Systems, Inc., owned by Stephen M. Watters, an officer of the Company,
Jugal K. Taneja and Brian T. Nugent, principal shareholders and Directors of the Company. Amounts due to affiliates represent balances owed to or from the Company for sales or purchases occurring in the normal course of business. Any future
transactions between the Company and its officers, directors or affiliates will be subject to approval by a majority of disinterested directors or shareholders in accordance with Florida law.

NOTE 4INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 2008 and 2007 is as follows:



|                                      |  |      |   |      |   |  
|------------------------------------- |  | ---- | - | ---- | - | -
|                                      |  | 2008 |   | 2007
|Current income tax expense (benefit)  |  | $    |  |      | $ | 
|Deferred income tax expense (benefit) |  |      |  |      |   | 
|                                      |  |      |   |      |   |  
|Income tax expense (benefit)          |  | $    |  |      | $ | 
|                                      |  |      |   |      |   |  

Income taxes for the years ended December 31,
2008 and 2007 differs from the amounts computed by applying the effective income tax rate of 34% to income before income taxes as a result of the following:



|                                               |  |      |         |   |      |   |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                               |  | 2008 |         |   | 2007 |  
|Computed tax benefit at the statutory rate 34% |  | $    | (36,100 | ) |      | $ | (28,800 | )
|Increase (decrease) in taxes resulting from:   |  |      |         |   |      |   |         |  
|Net operating loss                             |  |      | 36,100  |   |      |   | 28,800  |  
|                                               |  |      |         |   |      |   |         |  
|                                               |  |     
|Current income tax expense (benefit)           |  | $    |        |   |      | $ |        |  
|                                               |  |      |         |   |      |   |         |  



F-11



---

Temporary differences that give rise to deferred tax assets and liabilities:



|                                |  |      |          |   |      |   |          |   
|------------------------------- |  | ---- | -------- | - | ---- | - | -------- | --
|                                |  | 2008 |          |   | 2007 |  
|Deferred tax assets:            |  |      |          |   |      |   |          |   
|Net operating loss carryforward |  | $    | 651,400  |   |      | $ | 545,700  |   
|Less valuation allowance        |  |      | (651,400 | ) |      |   | (545,700 | ))
|                                |  |      |          |   |      |   |          |   
|                                |  |     
|Gross deferred tax asset        |  |      |         |   |      |   |         |   
|Gross deferred tax liability    |  |      |         |   |      |   |         |   
|                                |  |      |          |   |      |   |          |   
|                                |  |     
|Net deferred tax asset          |  | $    |         |   |      | $ |         |   
|                                |  |      |          |   |      |   |          |   

The Company has available at December 31, 2008, approximately $1,496,200 of unused operating loss
carryforwards that may be applied against future taxable income and that expire in various years from 2021 to 2028. The Company does not have a reasonable expectation of utilizing the tax benefit of the net operating loss carryforward and therefore
has provided a full valuation allowance against the deferred tax asset.

NOTE 5STOCK OPTIONS

During 2001, the Company adopted a stock option plan to be administered by the board of directors. Under the plan, the exercise price of
any options granted may not be less than 100% of the fair market value of the Companys common stock on the date of the grant (110% for holders of more than 10% of the total combined voting power of all classes of capital stock then
outstanding).

On April 21, 2003, the Companys Registration Statement on Form SB-2, Amendment No.9, was declared
effective by the U.S. Securities and Exchange Commission. Pursuant to the Companys registered offering, in June 2003, the Company sold an aggregate of 40,000 units, consisting of 200,000 (40,000 pre-split) shares of common stock and 200,000
(40,000 pre-split) redeemable class A common stock purchases warrants. The Company received cash proceeds aggregating $204,000 and charged deferred offering costs aggregating approximately $143,423 against the offering proceeds. The warrants had an
exercise price of $6.25 and expired April 21, 2008. There were no warrants outstanding as of December 31, 2008.



F-12



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|                                               |  |                |  |                              |   |                |   |                              |   |  
|---------------------------------------------- |  | -------------- |  | ---------------------------- | - | -------------- | - | ---------------------------- | - | -
|                                               |  | 2008           |  | 2007                        
|                                               |  | NumberofShares |  | WeightedAverageExercisePrice |   | NumberofShares |   | WeightedAverageExercisePrice
|Outstanding at January 1,                      |  |               |  | $                            |  |                |  |                              | $ | 
|Granted                                        |  |               |  |                              |  |                |  |                              |   | 
|Exercised/exchanged                            |  |               |  |                              |  |                |  |                              |   | 
|Forfeited                                      |  |               |  |                              |  |                |  |                              |   | 
|                                               |  |                |  |                              |   |                |   |                              |   |  
|Outstanding at December 31,                    |  |               |  | $                            |  |                |  |                              |   | 
|                                               |  |                |  |                              |   |                |   |                              |   |  
|Options exercisable at December 31,            |  |               |  | $                            |  |                |  |                              |   | 
|                                               |  |                |  |                              |   |                |   |                              |   |  
|Weighted average fair value of options granted |  |                |  | $                            |  |                |   |                              | $ | 
|                                               |  |                |  |                              |   |                |   |                              |   |  

NOTE 6SALE OF SUBSIDIARY

On June 1, 2007, Vertical Health Solutions, Inc. (the Company), its wholly-owned subsidiary Drug Depot, Inc. (Drug
Depot) and T&L, Inc. (T&L), entered into an agreement whereby the Company agreed to sell all of the outstanding capital stock of Drug Depot to T&L (the Agreement). The purchase price for the sale was
(i) the payment of $67,000 in cash, and (ii) the cancellation of an outstanding promissory note issued by the Company to T&L in the current principal amount of $146,206.

Assets and liabilities disposed of comprised of the following at June 1, 2007:



|                            |  |   |          |  
|--------------------------- |  | - | -------- | -
|Cash                        |  | $ | 231,448  |  
|Accounts receivable, net    |  |   | 108,639  |  
|Inventories                 |  |   | 84,499   |  
|Other current assets        |  |   | 538      |  
|Property and equipment, net |  |   | 13,127   |  
|Intangible assets, net      |  |   | 8,621    |  
|Other assets                |  |   | 2,858    |  
|                            |  |   |          |  
|                            |  | $ | 449,730  |  
|                            |  |   |          |  
|Accounts payable            |  |   | (145,252 | )
|Due to related parties      |  |   | (45,352  | )
|Accrued interest            |  |   | (3,743   | )
|Note payable                |  |   | (146,206 | )
|                            |  |   |          |  
|Book value of net assets    |  | $ | (109,177 | )
|                            |  |   |          |  

Drug Depot constituted substantially all of the Companys 2007 assets and operations. The Statement of
Operations for the year ended December 31, 2007, reflects only the portion of the income and expenses of Drug Depot through the date of the sale, June 1, 2007, and $42,177 is recorded as a loss on the disposal.



F-13



---

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



|                      |  |                                 |  |                                                                        
|--------------------- |  | ------------------------------- |  | -----------------------------------------------------------------------
|                      |  | VERTICAL HEALTH SOLUTIONS, INC.
|                      |  |                                
|Dated: April 29, 2009 |  | By:                             |  | /s/ Stephen M. Watters                                                 
|                      |  |                                 |  | Stephen M. Watters, Chief Executive Officer and Chief Financial Officer
|                      |  |                                 |  | Principal Financial Officer                                            

Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.



|          |  |                                                                                                             |  |       |  |          |  |               
|--------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----- |  | -------- |  | --------------
|Signature |  |                                                                                                             |  | Title |  | Date    
|          |  |                                                                                                             |  |      
|By:       |  | /s/ Stephen M. Watters                                                                                      |  |       |  | Director |  | April 29, 2010
|          |  | Stephen M. Watters
(Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) |  |       |  |          |  |               
|          |  |                                                                                                             |  |      
|By:       |  | /s/ Jugal K. Taneja                                                                                         |  |       |  | Director |  | April 29, 2010
|          |  | Jugal K. Taneja                                                                                             |  |       |  |          |  |               
|          |  |                                                                                                             |  |      
|By:       |  | /s/ Alfred Lehmkuhl                                                                                         |  |       |  | Director |  | April 29, 2010
|          |  | Alfred Lehmkuhl                                                                                             |  |       |  |          |  |