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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





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, 2009



| ̈ | 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.)
|                                                                  | 
|180 Douglas Ave., East, 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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12
months.    Yes   ̈    No  x



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 and non-voting common equity held by non-affiliates of the registrant was approximately $58,517
as of the last business day of the registrants most recently completed second fiscal quarter, based upon the closing sale price on the OTC:BB reported for such date. Shares of common stock held by each officer and director and by each person
who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

There were 44,474,973 shares of the Registrants $0.001 par value common stock outstanding as of December 31, 2009.









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##### Table of Contents

Vertical Health Solutions, Inc.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2009

TABLE OF CONTENTS



|                                                                                                                      |  |   
|--------------------------------------------------------------------------------------------------------------------- |  | --
|PART I                                                                                                                |  |   
|                                                                                                                      | 
|Item 1. Business                                                                                                      |  | 3 
|Item 2. Description of Property                                                                                       |  | 5 
|Item 3. Legal Proceedings.                                                                                            |  | 6 
|Item 4. Submission of Matters to a Vote of Security Holders.                                                          |  | 6 
|                                                                                                                      | 
|PART II                                                                                                               |  |   
|                                                                                                                      | 
|Item 5. 
Market For Registrants Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities. |  | 6 
|Item 6. Selected Financial Data.                                                                                      |  | 6 
|Item 7. 
Managements Discussion and Analysis of Financial Condition and Results of Operations.                       |  | 6 
|Item 8. Financial Statements and Supplementary Data.                                                                  |  | 8 
|Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.                         |  | 8 
|Item 9AT. Controls and Procedures.                                                                                    |  | 8 
|Item 9B. Other Information                                                                                            |  | 9 
|                                                                                                                      | 
|PART III                                                                                                              |  |   
|                                                                                                                      | 
|Item 10. Directors, Executive Officers, and Corporate Governance.                                                     |  | 9 
|Item 11. Executive Compensation.                                                                                      |  | 10
|Item 
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.             |  | 11
|Item 13. Certain Relationships and Related Transactions, and Director Independence.                                   |  | 12
|Item 14. Principal Accounting Fees and Services.                                                                      |  | 12
|                                                                                                                      | 
|PART IV                                                                                                               |  |   
|                                                                                                                      | 
|Item 15. Exhibits and Financial Statement Schedules.                                                                  |  | 12
|                                                                                                                      | 
|SIGNATURES                                                                                                            |  | 14



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##### Table of Contents

Index to Financial Statements

PART I



|Item 1. | DESCRIPTION OF BUSINESS.
|------- | ------------------------

General

In June 2007, Vertical Health Solutions, Inc. completed the sale of its only operating subsidiary, Drug Depot, Inc. The
Company is not actively engaged in any business at the present time and is seeking to develop a new business or secure future acquisitions. Prior to August 2007, the Company, through its wholly-owned subsidiary, operated a Florida retail and
veterinary compounding pharmacy providing specialized compounding pharmaceutical prescription services to veterinarians and their customers in the companion animal sector

Vertical Health Solutions, Inc. was incorporated on March 2000, as a Florida corporation under the name LabelClick.com, Inc. In January
2001, we changed our name to Vertical Health Solutions, Inc. The Companys executive offices are located at 180 Douglas Ave. East, Oldsmar, Florida 34677 and its telephone number is (813) 749-0848. References in this Annual Report on Form
10-K refer to Vertical Health Solutions, Inc. as the Company or Vertical, unless the context otherwise requires.

Cautionary Statements for Purposes of The Safe Harbor Provisions of The Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for forward-looking
statements to encourage companies to provide prospective information, so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual
results to differ materially from those discussed in the forward-looking statement(s). The Company desires to take advantage of the safe harbor provisions of the Act.

Except for historical information, the Companys Annual Report on Form 10-K for the year ended December 31, 2009, the
Companys quarterly reports on Form 10-Q, the Companys current reports on Form 8-K, periodic press releases, as well as other public documents and statements, may contain forward-looking statements within the meaning of the Act.

In addition, representatives of the Company may, from time to time, participate in speeches and calls with market analysts,
conferences with investors and potential investors in the Companys securities, and other meetings and conferences. Some of the information presented in such speeches, calls, meetings and conferences may be forward-looking within the meaning of
the Act.

It is not reasonably possible to itemize all of the many factors and specific events that could affect the Company
and/or the Companys industry as a whole. In some cases, information regarding certain important factors that could cause actual results to differ materially from those projected, forecasted, estimated, budgeted or otherwise expressed in
forward-looking statements made by or on behalf of the Company may appear or be otherwise conveyed together with such statements.

Business
 General

The Company, based on proposed business activities, is a blank check company. The U.S.
Securities and Exchange Commission (the SEC) defines those companies as any company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act of 1934, as amended, (the Exchange Act) and
that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies. Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the Securities Act), the
Company also qualifies as a shell company, because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of blank
check companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The
Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.



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The analysis of new business opportunities has and will be undertaken by or under the
supervision of the officer and directors of the Company. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will
consider the following kinds of factors:



| | (a) | Potential for growth, indicated by new technology, anticipated market expansion or new products;
| | --- | ------------------------------------------------------------------------------------------------



| | (b) | Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Strength and diversity of management, either in place or scheduled for recruitment;
| | --- | -----------------------------------------------------------------------------------



| | (d) | Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities,
through joint ventures or similar arrangements or from other sources;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
| | --- | --------------------------------------------------------------------------------------------------------------------



| | (f) | The extent to which the business opportunity can be advanced;
| | --- | -------------------------------------------------------------



| | (g) | The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | Other relevant factors.
| | --- | -----------------------

In
applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available
business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the
Companys limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.

Form of Acquisition

The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and
desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.

It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other
securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called tax free reorganization
under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the Code), depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were
structured to take advantage of these provisions rather than other tax free provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares. Under other
circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional
dilution to the equity of those who were stockholders of the Company prior to such reorganization.



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The present stockholders of the Company will likely not have control of a majority of the
voting shares of the Company following a reorganization transaction. As part of such a transaction, all or a majority of the Companys directors may resign and new directors may be appointed without any vote by stockholders.

In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval
by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders meeting and obtain the approval of the holders of a majority of the outstanding shares. The
necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will
seek to structure any such transaction so as not to require stockholder approval.

It is anticipated that the investigation of
specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and
others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a
specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.

Competition

Our primary goal is
the acquisition of a target company or business seeking the perceived advantages of being a publicly held corporation. The Company faces vast competition from other shell companies with the same objectives. The Company is in a highly competitive
market for a small number of business opportunities which could reduce the likelihood of consummating a successful business combination. A large number of established and well-financed entities, including small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a
successful business combination.

Patent and Trademarks

We currently do not own any patents, trademarks or licenses of any kind.

Government Regulations

There are
no government approvals necessary to conduct our current business.

Employees

We presently have no employees. Our officer and directors are engaged in outside business activities and we anticipate that they will devote to our
business very limited time until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.



|Item 2. | DESCRIPTION OF PROPERTY.
|------- | ------------------------

As of December 31, 2009, the Company had no real property, equipment, furniture, and leasehold improvements.



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|Item 3. | LEGAL PROCEEDINGS.
|------- | ------------------

The
Company is not currently a party to any other legal proceeding, which it believes will have a material adverse affect on its results of operations.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------

There were no matters submitted to a vote of security holders during the fourth quarter of the year ended December 31, 2009.

PART II



|Item 5. | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|------- | ------------------------------------------------------------------------------------------------

Market for Securities

In
October 2003, the Company filed Form 211, under the U.S. Securities and Exchange Commission Rule 15c2-11, to apply with NASD Regulation for listing of its common stock and warrants on the OTC Bulletin Board. In January 2004, the Companys
common stock began trading on the OTC Bulletin Board under the symbol VHSL. There is a limited trading market for the Companys stock; therefore historical price information is limited. High and low sales prices since that time, by
quarter-ended date, are as follows:



|                   |  |      |       |     |   |      
|------------------ |  | ---- | ----- | --- | - | -----
|                   |  | High |       | Low
|March 31, 2008     |  | $    | 0.06  |     | $ | 0.03 
|June 30, 2008      |  | $    | 0.03  |     | $ | 0.002
|September 30, 2008 |  | $    | 0.10  |     | $ | 0.01 
|December 31, 2008  |  | $    | 0.01  |     | $ | 0.01 
|                   |  |     
|March 31, 2009     |  | $    | 0.011 |     | $ | 0.005
|June 30, 2009      |  | $    | 0.006 |     | $ | 0.005
|September 30, 2009 |  | $    | 0.018 |     | $ | 0.006
|December 31, 2009  |  | $    | 0.02  |     | $ | 0.005

As of
December 31, 2009, there were approximately 259 stockholders of record of the Companys common stock.

Dividend Policy

Historically, the Company has not declared or paid any cash dividends on its common stock. Any future determination to pay
dividends on its common stock will depend upon the Companys results of operations, financial condition and capital requirements, applicable restrictions under any contractual arrangements and such other factors deemed relevant by the
Companys Board of Directors.

Recent Sales of Unregistered Securities:

None.



|Item 6. | Selected Financial Data.
|------- | ------------------------

Not
applicable.



|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

The statements contained in this Report that are not historical are forward-looking statements, including statements regarding the
Companys expectations, intentions, beliefs or strategies regarding the future. Forward-looking statements include the Companys statements regarding liquidity, anticipated cash needs and availability



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and anticipated expense levels. All forward-looking statements included in this Report are based on information available to the Company on the date hereof, and the Company assumes no obligation
to update any such forward-looking statements. It is important to note that the Companys actual results could differ materially from those in such forward-looking statements. Additionally, the following discussion and analysis should be read
in conjunction with the Financial Statements and notes thereto appearing elsewhere in this Report. The discussion is based upon such financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles.

Overview

The Company is currently operating as a public shell and does not generate revenues or produce products.

Selling, general and administrative costs include professional fees and consulting expenses and other minor costs.

Results of Operations

Year Ended December 31, 2009 Compared To Year Ended December 31, 2008

Operating expenses. The Company incurred operating expenses of $56,641 for the year ended December 31, 2009, a decrease of
$59,910 or 51%, compared to $116,551 for the year ended December 31, 2008. The decrease was primarily attributable to the lack of operations in 2009 and search for a merger candidate.

Interest expense, net of interest income. Interest income, net of interest expense was $0 for the each of the years ended
December 31, 2009 and 2008.

Income taxes. The Company had no income tax provision for the years ended
December 31, 2009 and 2008. No tax benefit has been provided due to the uncertainty in the utilization of the loss carry forwards. These net operating losses may be carried forward for up to 20 years.

Preferred dividends. Preferred dividends on the Companys preferred stock were $0 for the years ended December 31, 2009
and December 31, 2008.

Net loss per share.Net loss per share was $0.00 for the year ended December 31,
2009, compared to net loss per share of $0.01 for the year ended December 31, 2008.

Inflation; Seasonality.Management believes that there was no material effect on operations or the financial condition of the Company as a result of inflation for the years ended December 31, 2009 and 2008. Management also believes that its business is not
seasonal; however, significant promotional activities can have a direct impact on sales volume in any given quarter.

Financial Condition, Liquidity and Capital Resources

The Company had cash of $2,932 and a working capital deficit of $116,436 at December 31, 2009, compared to cash of $0 and a working
capital deficit of $59,795 at December 31, 2008.

Net cash used by operating activities was $90,976 for the year ended
December 31, 2009, as compared to net cash used in operating activities of $59,441 for the year ended December 31, 2008.

Net cash provided by investing activities was $0 for the year ended December 31, 2009, as compared to $0.

Net cash provided by financing activities was $93,908 for the year ended December 31, 2009, as compared to $59,441 for the year
ended December 31, 2008. The increase in cash provided by financing activities is primarily due the proceeds from a note payable received in the year ended December 31, 2009.

The Companys future liquidity and cash requirements will primarily depend on the Companys ability to develop a new business
or secure future acquisitions. In particular, as the Company will not have any cash flows from operations, it will be necessary for the Company to raise capital or seek additional financing. While there can be no assurance that such raising of
capital or seeking of additional financing would be available in amounts and on terms acceptable to the Company, management believes that such financing would likely be available on acceptable terms.



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|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

See financial statements following Item 15 of this Annual Report on Form 10-K.



|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

Disclosure
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out
an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Management conducted its evaluation based on the framework in
Internal Control  IntegratedFramework issued by the Committee on Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, at
December 31, 2009, such disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rue
13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Our management assessed our internal control over financial reporting based on the Internal Control  Integrated Framework
issued by the COSO. Based on the results of this assessment, our management concluded that our internal control over financial reporting were not effective as of December 31, 2009 based on such criteria due to the Companys lack of
internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review and audit process, management believes that the financial statements and other information presented
herewith are materially correct.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system
are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Based on their evaluation as of the end of the period
covered by this report, management concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that the objectives of our disclosure control system were met.



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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended December 31, 2009 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Auditors
Report on Internal Control over Financial Reporting

This Annual Report does not include an attestation report of the Companys
independent registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report.



|Item 9B. | OTHER INFORMATION.
|-------- | ------------------

None



|Item 10. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
|-------- | --------------------------------------------------------------------------------------------------------------------------------------

The following are the names and certain information regarding the current Directors and Executive Officers of the Company:



|                   |  |     |  |                                                       |  |               
|------------------ |  | --- |  | ----------------------------------------------------- |  | --------------
|Name               |  | Age |  | Position                                              |  | Director Since
|Stephen M. Watters |  | 43  |  | Chief Executive and Chief Financial Officer, Director |  | 2006          
|                   |  |     | 
|Jugal K. Taneja    |  | 66  |  | Director                                              |  | 2000          
|                   |  |     | 
|Alfred Lehmkuhl    |  | 78  |  | Director                                              |  | 2002          

Pursuant to the
Companys bylaws, each director serves for a term of one year and until his successor is duly qualified. Officers are elected annually by the Board of Directors (subject to the terms of any employment agreement), at the Companys annual
meeting, to hold such office until an officers successor has been duly appointed and qualified, unless an officer sooner dies, resigns or is removed by the Board. Some of the directors and executive officers of the Company also serve in
various capacities with subsidiary of the Company. There are no family relationships among any of the Companys other directors and executive officers.

Background of Executive Officers and Directors

On January 4, 2006 Stephen Watters resigned as Chief Executive Officer of the Company and effective July 7, 2006, was
reappointed Chief Executive and Financial Officer of the Company. Prior to working with us, Mr. Watters was the Co-founder, Chief Executive Officer and President, of Drugmax, Inc., from September 1998 until August 2000. DrugMax was a wholesaler
and retailer of pharmaceuticals, over-the counter drugs, health and beauty care products and private label dietary supplements. DrugMax was subsequently renamed Family Med and is no longer in business. From September through November 1998,
Mr. Watters served as Vice President of Finance of Dynamic Health Products, Inc., a publicly-held nutraceutical products company. Prior to that, he worked in the investment banking and brokerage businesses from April 1992 to September 1998. He
received his Executive Masters of Business Administration degree from Case Western Reserve University in 1997.

On
January 4, 2006, Jugal Taneja resigned as a consultant to the Company. Jugal K. Taneja had served as a director of the Company since its inception and as a consultant to the Company since March 2000. In addition to his service to the Company,
Mr. Taneja operates several other companies. He served as Co-Chairman of the Board



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of DrugMax, Inc., and from October 2000 to November 2004 served as DrugMaxs Chief Executive Officer. He previously served as DrugMaxs Chief Executive Officer from its inception in
October 1993 through April 1995, and again from January 1996 until August 1999. Further, he served at various times over the years as DrugMaxs President and Secretary. DrugMax was a wholesaler and retailer of pharmaceuticals, over-the counter
drugs, health and beauty care products and private label dietary supplements. DrugMax was subsequently renamed FamilyMed and is no longer in business. Mr. Taneja also serves as Chairman and a director of Geopharma, Inc., a publicly-held
pharmaceutical and nutraceutical products company. Mr. Taneja holds degrees in Petroleum Engineering, Mechanical Engineering, and a Masters in Business Administration from Rutgers University.

Alfred F. Lehmkuhl has been a Director since May 2002. Since June 1988, he has been Chief Executive Officer of Seven Limers, Inc., an
agricultural equipment and supply company, and KAS Trucking, Inc., a regulated common carrier trucking company. He served as President and Chief Executive Officer of Horns Crop Service, Inc., an agricultural supply company from September 1984
to December 1993. Mr. Lehmkuhl holds a Bachelor of Science degree in Animal Nutrition from The Ohio State University.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4, 5, and amendments thereto, furnished to the Company during fiscal year 2008 and 2007, the
Company is not aware of any director, officer or beneficial owner of more than ten percent of the Companys Common Stock that failed to file reports required by Section 16(a) of the Securities Exchange Act of 1934 on a timely basis during
fiscal year 2008.

Code of Ethics

The Company has adopted its Code of Ethics and Business Conduct for Officers, Directors and Employees, which applies to all of the
officers, directors and employees of the Company. The Code of Ethics is filed as an exhibit to this Report on Form 10-K, incorporated by reference.



|Item 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

SUMMARY COMPENSATION TABLE (1)



|                            |      |                            |   |           |   |          |   |                |   |                     |  |                          |        |          |   |       
|--------------------------- | ---- | -------------------------- | - | --------- | - | -------- | - | -------------- | - | ------------------- |  | ------------------------ | ------ | -------- | - | ------
|                            |      | Summary Compensation Table |   |           |   |         
|Name Principal Positions    |      | YearEnded                  |   | Salary($) |   | Bonus($) |   | StockAwards($) |   | OptionAwards($) (A) |  | All OtherCompensation($) |        | Total($)
|Stephen M. Watters,CEO, CFO |      | 2009                       |   | 0         |   |         |   |               |   |                    |  | $                        | 12,000 |          | $ | 12,000
|                            | 2008 |                            | 0 |           |  |          |  |                |  |                     |  |                         |        |          | 0
|                            | 2007 |                            | 0 |           |  |          |  |                |  |                     |  |                         |        |          | 0

During the year ended
December 31, 2009, the Company did not pay any director fees for each meeting attended by such director. Directors who are also employees receive no compensation for serving on the Board. The Companys non-employee directors receive
options to purchase shares of common stock at the market price on the date they are granted, reimbursement of expenses incurred consequential to their service and may receive additional options at the discretion of the Board. There was no
compensation paid to our non-employee directors during the year ended December 31, 2009.

Employment Agreements

The Company did not have any outstanding employment contracts with any of its officers or directors for the year ended December 31, 2009.

The Company did not grant or issue any stock options for the year ended December 31, 2009.



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|                                          |  |           |  |                                                            |  |                                                                   |  |                                                 |  |                                             
|----------------------------------------- |  | --------- |  | ---------------------------------------------------------- |  | ----------------------------------------------------------------- |  | ----------------------------------------------- |  | --------------------------------------------
|Name                                      |  | GrantDate |  | All OtherStock Awards:Number ofShares of StockOr Units (#) |  | All OtherOption Awards:Number
ofSecurities Under-LyingOptions (#) |  | Exercise orBase PriceOf
OptionAwards($ / Share) |  | Grant DateFair ValueOf Stock andOptionAwards
|Stephen M. Watters, CEO, CFO and Director |  |           |  |                                                           |  |                                                                  |  |                                                |  |                                            



|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------

The following table sets forth certain information, as of December 31, 2009 with respect to the beneficial ownership of the
outstanding Common Stock by (i) any holder of more than five (5%) percent; (ii) each of the Companys executive officer and directors; and (iii) the directors and executive officer of the Company as a group. An asterisk
indicates beneficial ownership of less than 1% of the outstanding Common Stock. Except as otherwise indicated, each of the shareholders listed below has sole voting and investment power over the shares beneficially owned.



|       |  |                                                   |  |                                           |  |                                    |  
|------ |  | ------------------------------------------------- |  | ----------------------------------------- |  | ---------------------------------- | -
|Class  |  | Name and Address of Beneficial Owner(1)           |  | Amount andNature
ofBeneficialOwnership(2) |  | ApproximateTitle
ofPercent OfClass |  
|Common |  | Stephen M. Watters(3)                             |  | 19,162,244                                |  | 43.09                              | %
|Common |  | Brian T. Nugent (4)                               |  | 5,427,085                                 |  | 12.20                              | %
|Common |  | Jugal K. Taneja(5)                                |  | 13,997,603                                |  | 31.47                              | %
|       |  |                                                   | 
|Common |  | Alfred Lehmkuhl(6)                                |  | 1,562,395                                 |  | 3.51                               | %
|Common |  | All officers and directors as a group (3 persons) |  | 34,722,242                                |  | 78.07                              | %



|(1) | Except as otherwise indicated, the address of each beneficial owner is c/o Vertical Health Solutions, Inc. at 180 Douglas Ave., East, Oldsmar, FL 34677.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to the shares shown.
Except where indicated by footnote and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of voting securities shown as beneficially owned by them.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Of the shares beneficially owned by Mr. Watters, 1,913,868 shares are owned by SMW Capital Group Limited Partnership, a company owned and controlled by
Mr. Watters. Also includes 228,575 shares are owned by Kristen Watters, Mr. Watters wife. Mr. Watters disclaims beneficial ownership of the shares registered in the name of his wife.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Of the shares beneficially owned by Mr. Nugent, 95,240 shares are owned by Julie Nugent, Mr. Nugents wife. Mr. Nugent disclaims beneficial
ownership of the shares registered in the name of his wife.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Of the shares beneficially owned by Mr. Taneja, 450,994 shares are owned by Manju Taneja, Mr. Tanejas wife. 839,570 shares are owned by
Carnegie Capital LLC, a company owned and controlled by Mr. Taneja, and 322,232 shares are owned by Bryan Capital Limited Partnership, a company wholly-owned by Dynamic Health Products, Inc., a public company which is controlled by
Mr. Taneja. Mr. Taneja disclaims beneficial ownership of the shares registered in the name of his wife.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



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##### Table of Contents

|(6) | Of the shares beneficially owned by Mr. Lehmkuhl, 38,100 shares are held by Mr. Lehmkuhl as custodian for each of Joseph J. Zam, Jr. and Katelyn C. Zam,
Mr. Lehmkuhls grandchildren.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
|-------- | -------------------------------------------------------------------------

Amounts due from and to affiliates represent balances owed to or from the Company for sales or purchases occurring in the normal course of
business. Amounts due from and to these affiliates are in the nature of trade payables or receivables and fluctuate based on sales and purchasing volume and payments received. The Company believes that material affiliated transactions and loans, and
business relationships entered into by the Company with certain of its officers, directors and principal shareholders or their affiliates were on terms no less favorable than the Company could have obtained from independent third parties. 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.



|Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES.
|-------- | ---------------------------------------

Audit Fees. The aggregate fees billed by our auditors to date, for professional services rendered for the audit of the Companys annual financial
statements for the years ended December 31, 2009 and December 31, 2008, and for review of the financial statements included in the Companys quarterly reports on Form 10-Q and Form 10-QSB during such fiscal years, were $24,000 and
$62,568, respectively.

Tax Fees. The aggregate fees billed for tax preparation and related services by our auditors was $0 for the years
ended December 31, 2009 and 2008.

All Other Fees. For the fiscal year ended December 31, 2009 and 2008, the Company incurred fees
to auditors of $0 for services rendered to the Company, other than the services covered in Audit Fees, Audit-Related Fees or Tax Fees.



|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|-------- | -------------------------------------------

The following exhibits are filed with this report:



|     |  |                                                                                                                                                                                                             
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Articles of Incorporation*                                                                                                                                                             
|     | 
|3.2  |  | Amendment Creating Class of Preferred Stock*                                                                                                                                                                
|     | 
|3.3  |  | By-Laws*                                                                                                                                                                                                    
|     | 
|3.4  |  | Certificate of Incorporation of Vertical Health Ventures, Inc., a wholly-owned subsidiary of the Company, filed as Exhibit 3.4 to Form SB-2, File No. 333-116682.                                           
|     | 
|3.5  |  | Certificate of Designation of Vertical Health Ventures, Inc., designating the rights of Series A Cumulative Convertible Preferred Stock, as amended, filed as Exhibit 3.5 to Form
SB-2, File No. 333-116682.
|     | 
|3.6  |  | Bylaws of Vertical Health Ventures, Inc, filed as Exhibit 3.6 to Form SB-2, File No. 333-116682.                                                                                                            
|     | 
|4.1  |  | Specimen Stock Certificate*                                                                                                                                                                                 
|     | 
|4.2  |  | Amendment No. 1 to Securities Purchase Agreement, dated as of September 20, 2004, filed as exhibit 4.9 to Companys Report on Form SB2/A dated as of October 20, 2004, and
incorporated herein by reference.
|     | 
|4.3  |  | Form of Redeemable Class A Warrant Agreement between Vertical Health Solutions, Inc. and Registrar and Transfer Company*                                                                                    
|     | 
|10.1 |  | Form of 2001 Stock Option Plan*                                                                                                                                                                             



12



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|     |  |                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------
|10.2 |  | Form of Consulting Agreement with Jugal K. Taneja**                                                                    
|     | 
|10.3 |  | Stephen Watters warrant agreement*                                                                                     
|     | 
|10.4 |  | Jugal K. Taneja warrant agreement*                                                                                     
|     | 
|14.1 |  | Code of Ethics of Vertical Health Solutions, Inc.***                                                                   
|     | 
|31.1 |  | Certification Of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|* | Incorporated by reference to the Companys registration statement on Form SB-2, file no. 333-74766.
|- | ---------------------------------------------------------------------------------------------------

|** | Incorporated by reference to the Companys 10-KSB filed for the year ending December 31, 2004.
|-- | ----------------------------------------------------------------------------------------------

|*** | Incorporated by reference to the Companys 10-KSB filed for the year ending December 31, 2007.
|--- | ----------------------------------------------------------------------------------------------



13



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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 14, 2010 |  | By: |  | /s/ Stephen M. Watters                                                 
|                      |  |     |  | Stephen M. Watters, Chief Executive
Officer and Chief 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 14, 2010
|          |  | Stephen M. Watters     |  |       |  |          |  |      |  |               
|          |  |                        |  |       | 
|By:       |  | /s/ Jugal K. Taneja    |  |       |  | Director |  |      |  | April 14, 2010
|          |  | Jugal K. Taneja        |  |       |  |          |  |      |  |               
|          |  |                        |  |       | 
|By:       |  | /s/ Alfred Lehmkuhl    |  |       |  | Director |  |      |  | April 14, 2010
|          |  | Alfred Lehmkuhl        |  |       |  |          |  |      |  |               



14



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VERTICAL HEALTH SOLUTIONS, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES



|                                                                                             |  |           
|-------------------------------------------------------------------------------------------- |  | ----------
|                                                                                             |  | PAGE      
|                                                                                             | 
|Independent Auditors Report                                                                 |  | F-2       
|                                                                                             | 
|Balance Sheets as of December 31, 2009 and 2008                                              |  | F-3       
|                                                                                             | 
|Statements of Operations for the years ended December 31, 2009 and 2008                      |  | F-4       
|                                                                                             | 
|Statements of Changes in Stockholders Equity for the years ended December 31, 2009 and 2008 |  | F-5       
|                                                                                             | 
|Statements of Cash Flows for the years ended December 31, 2009 and 2008                      |  | F-6  F-7 
|                                                                                             | 
|Notes to Financial Statements                                                                |  | F-8  F-12



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Vertical Health Solutions,
Inc.

We have audited the accompanying balance sheets of Vertical Health Solutions, Inc. as of December 31, 2009 & 2008, and the related
statements of operations, changes in stockholders equity, and cash flows for the years then ended. Vertical Health Solution, Inc.s management is responsible for these financial statements. Our responsibility is to express an opinion on
these 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 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 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 financial statements referred to above present fairly, in all material respects, the
financial position of Vertical Health Solutions, Inc. as of December 31, 2009 & 2008 and the results of operations and cash flows for the years ended December 31, 2009 & 2008 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial statements, the Company incurred a net loss of $56,641 during the year ended December 31, 2009, and, as of that date, had a working capital deficiency of $116,436 and a retained deficit of $2,932,764.
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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.



|                               
|-------------------------------
|/s/ BRIMMER, BUREK & KEELAN LLP
|Brimmer, Burek & Keelan LLP    
|                               
|Tampa, Florida                 
|April 14, 2010                 



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##### Table of Contents

VERTICAL HEALTH SOLUTIONS, INC.

BALANCE SHEETS

December 31,



|                                                                                                       |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                       |  | 2009 |            |   | 2008 |  
|Assets                                                                                                 |  |      |            |   |      |   |            |  
|Cash                                                                                                   |  | $    | 2,932      |   |      | $ |           |  
|Deposits                                                                                               |  |      | 1,800      |   |      |   | 1,800      |  
|                                                                                                       |  |      |            |   |      |   |            |  
|Total current assets                                                                                   |  |      | 4,732      |   |      |   | 1,800      |  
|                                                                                                       |  |      |            |   |      |   |            |  
|Total Assets                                                                                           |  | $    | 4,732      |   |      | $ | 1,800      |  
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|Liabilities and Stockholders Equity (Deficit)                                                         |  |      |            |   |      |   |            |  
|Current liabilities:                                                                                   |  |      |            |   |      |   |            |  
|Accounts payable                                                                                       |  | $    | 9,168      |   |      | $ | 54,303     |  
|Accrued expenses, related parties                                                                      |  |      | 12,000     |   |      |   | 1,200      |  
|Notes payable                                                                                          |  |      | 100,000    |   |      |   |           |  
|Notes payable to related parties                                                                       |  |      |           |   |      |   | 6,092      |  
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|Total current liabilities                                                                              |  |      | 121,168    |   |      |   | 61,595     |  
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|Total liabilities                                                                                      |  |      | 121,168    |   |      |   | 61,595     |  
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|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 shares issued and outstanding |  |      | 44,476     |   |      |   | 44,476     |  
|Additional paid-in capital                                                                             |  |      | 2,771,852  |   |      |   | 2,771,852  |  
|Accumulated deficit                                                                                    |  |      | (2,932,764 | ) |      |   | (2,876,123 | )
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|Total stockholders deficit                                                                            |  |      | (116,436   | ) |      |   | (59,795    | )
|                                                                                                       |  |      |            |   |      |   |            |  
|                                                                                                       |  |     
|                                                                                                       |  | $    | 4,732      |   |      | $ | 1,800      |  
|                                                                                                       |  |      |            |   |      |   |            |  

See accompanying notes to financial statements.



F-3



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##### Table of Contents

VERTICAL HEALTH SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

Years Ended December 31, 2009 and 2008



|                                                                       |  |      |            |   |      |   |            |  
|---------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                       |  | 2009 |            |   | 2008 |  
|Sales                                                                  |  | $    |           |   |      | $ |           |  
|Cost of goods sold                                                     |  |      |           |   |      |   |           |  
|                                                                       |  |      |            |   |      |   |            |  
|Gross profit                                                           |  |      |           |   |      |   |           |  
|                                                                       |  |      |            |   |      |   |            |  
|Operating expenses:                                                    |  |      |            |   |      |   |            |  
|Selling, general and administrative expenses                           |  |      | 56,641     |   |      |   | 116,551    |  
|                                                                       |  |      |            |   |      |   |            |  
|Total operating expenses                                               |  |      | 56,641     |   |      |   | 116,551    |  
|                                                                       |  |      |            |   |      |   |            |  
|                                                                       |  |     
|Operating loss before other income and expense                         |  |      | (56,641    | ) |      |   | (116,551   | )
|                                                                       |  |      |            |   |      |   |            |  
|Other income (expense):                                                |  |      |            |   |      |   |            |  
|Gain on settlement of liability                                        |  |      |           |   |      |   | 9,865      |  
|                                                                       |  |      |            |   |      |   |            |  
|Total other income (expense)                                           |  |      |           |   |      |   | 9,865      |  
|                                                                       |  |      |            |   |      |   |            |  
|Loss before income taxes                                               |  |      | (56,641    | ) |      |   | (106,686   | )
|                                                                       |  |      |            |   |      |   |            |  
|Income taxes                                                           |  |      |           |   |      |   |           |  
|                                                                       |  |      |            |   |      |   |            |  
|Net loss available to common stockholders                              |  | $    | (56,641    | ) |      | $ | (106,686   | )
|                                                                       |  |      |            |   |      |   |            |  
|Basic and diluted loss per share from continuing operations            |  | $    | (0.00      | ) |      | $ | (0.01      | )
|                                                                       |  |      |            |   |      |   |            |  
|Basic and diluted weighted average number of common shares outstanding |  |      | 44,474,973 |   |      |   | 16,722,347 |  
|                                                                       |  |      |            |   |      |   |            |  

See accompanying notes to financial statements.



F-4



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VERTICAL HEALTH SOLUTIONS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY DEFICIT

Years Ended December 31, 2009 and 2008



|                                                                      |  |                 |  |              |   |                    |            |             |   |         |                     |         |           |  |         |            |   |  |   |          |  
|--------------------------------------------------------------------- |  | --------------- |  | ------------ | - | ------------------ | ---------- | ----------- | - | ------- | ------------------- | ------- | --------- |  | ------- | ---------- | - |  | - | -------- | -
|                                                                      |  | Preferred Stock |  | Common Stock |   | Additional
Paid-in |            | Accumulated |   |         | Total
Stockholders |        
|                                                                      |  | Shares          |  | Dollars      |   | Shares             |            | Dollars     |   | Capital |                     | Deficit |           |  | Deficit |           
|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  | )
|Net loss                                                              |  |                 |  |              |   |                    |            |             |   |         |                     |         |           |  |         | (56,641    | ) |  |   | (56,641  | )
|                                                                      |  |                 |  |              |   |                    |            |             |   |         |                     |         |           |  |         |            |   |  |   |          |  
|Balance, December 31, 2009                                            |  | 0               |  | $            | 0 |                    | 44,474,973 |             | $ | 44,476  |                     | $       | 2,771,852 |  | $       | (2,932,764 | ) |  | $ | (116,436 | )
|                                                                      |  |                 |  |              |   |                    |            |             |   |         |                     |         |           |  |         |            |   |  |   |          |  

See accompanying notes to financial statements.



F-5



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##### Table of Contents

VERTICAL HEALTH SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

Years Ended December 31, 2009 and 2008



|                                                                                |  |      |         |   |      |   |          |  
|------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | -------- | -
|                                                                                |  | 2009 |         |   | 2008 |  
|Cash flows from operating activities:                                           |  |      |         |   |      |   |          |  
|Net loss                                                                        |  | $    | (56,641 | ) |      | $ | (106,686 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |      |         |   |      |   |          |  
|Gain on settlement of liability                                                 |  |      |        |   |      |   | (9,865   | )
|Changes in operating assets and liabilities:                                    |  |      |         |   |      |   |          |  
|Deposits                                                                        |  |      |        |   |      |   | (1,800   | )
|Accounts payable                                                                |  |      | (45,135 | ) |      |   | 79,030   |  
|Accrued expenses                                                                |  |      | 10,800  |   |      |   | (20,120  | )
|                                                                                |  |      |         |   |      |   |          |  
|Net cash used by operating activities                                           |  |      | (90,976 | ) |      |   | (59,441  | )
|                                                                                |  |      |         |   |      |   |          |  
|                                                                                |  |     
|Cash flows from investing activities:                                           |  |      |         |   |      |   |          |  
|Proceeds from the sale of subsidiary                                            |  |      |        |   |      |   |         |  
|                                                                                |  |      |         |   |      |   |          |  
|Net cash provided by investing activities                                       |  |      |        |   |      |   |         |  
|                                                                                |  |      |         |   |      |   |          |  
|                                                                                |  |     
|Cash flows from financing activities:                                           |  |      |         |   |      |   |          |  
|Proceeds from notes payable                                                     |  |      | 100,000 |   |      |   |         |  
|Proceeds (payments) from related party notes payable                            |  |      | (6,092  | ) |      |   | 59,441   |  
|                                                                                |  |      |         |   |      |   |          |  
|Net cash provided by financing activities                                       |  |      | 93,908  |   |      |   | 59,441   |  
|                                                                                |  |      |         |   |      |   |          |  
|                                                                                |  |     
|Net increase in cash                                                            |  |      | 2,932   |   |      |   |         |  
|Cash at beginning of period                                                     |  |      |        |   |      |   |         |  
|                                                                                |  |      |         |   |      |   |          |  
|                                                                                |  |     
|Cash at end of period                                                           |  | $    | 2,932   |   |      | $ |         |  
|                                                                                |  |      |         |   |      |   |          |  

See accompanying notes to financial statements.



F-6



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##### Table of Contents

VERTICAL HEALTH SOLUTIONS, INC.

STATEMENTS OF CASH FLOWSContinued

Years Ended December 31, 2009 and 2008



|                                                  |  |      |   |      |   |  
|------------------------------------------------- |  | ---- | - | ---- | - | -
|                                                  |  | 2009 |   | 2008
|Supplemental disclosure of cash flow information: |  |      |   |      |   |  
|Cash paid during the period for interest          |  | $    |  |      | $ | 
|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.

See accompanying notes to financial statements.



F-7



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##### Table of Contents

VERTICAL HEALTH SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

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.

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, 2009 and 2008.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes
resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax
consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be
realized.

The Company adopted the provisions of FASB ASC 740-10 Uncertainty in Income Taxes (ASC 740-10), on
January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized
benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in operating expenses.

Earnings (Loss) Per Common 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 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, 2009 and 2008, 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 financial statements.



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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 as the Company has not had any revenue
since the year ended December 31, 2007.

Stock Based Compensation

The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial
statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The basis for the above assumptions are as follows: the dividend rate is based upon the Companys history of dividends; the
risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Companys historical pattern of options granted
and the period of time they are expected to be outstanding; and expected volatility was calculated by review of a peer companys historical activity.

As of December 31, 2009 and 2008, the Company has not awarded any share-based payments.

Non-Employee Stock-Based Compensation  The Company accounts for stock based compensation awards issued to non-employees for services and
financing arrangements, as prescribed by FASB ASC 505-50, Equity-Based Payments to Non-Employees, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily
determinable. The fair value of common stock issued for services is based on the closing stock price on the date the common stock was issued.

As of December 31, 2009 and 2008, the Company has not awarded any stock based compensation.

Advertising Costs

The
Company charges advertising costs to expense as incurred. Advertising expense was $0 for each of the years ended December 31, 2009 and 2008.

Fair Value of Financial Instruments

The Company, in estimating its fair value disclosures for financial instruments, uses the following methods and assumptions:

Deposits, Accounts Payable and Accrued Expenses: The carrying amounts reported in the balance sheet for deposits, accounts payable
and accrued expenses approximate their fair value due to their relatively short maturity.

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, 2009 and 2008.



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The following sets forth the computation of basic and diluted net earnings (loss) per common
share for years ended December 31, 2009 and 2008:



|                                                     |  |                   |            |   |                   |   |            |  
|---------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                     |  | December 31, 2009 |            |   | December 31, 2008 |  
|Numerator:                                           |  |                   |            |   |                   |   |            |  
|Net loss                                             |  | $                 | (56,641    | ) |                   | $ | (106,686   | )
|Less preferred stock dividend and accreted dividends |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Net loss available to common stockholders            |  | $                 | (56,641    | ) |                   | $ | (106,686   | )
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Denominator:                                         |  |                   |            |   |                   |   |            |  
|Weighted average basic shares outstanding            |  |                   | 44,474,973 |   |                   |   | 16,722,347 |  
|Stock options                                        |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|Warrants                                             |  |                   |           |   |                   |   |           |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Weighted average fully diluted shares outstanding    |  |                   | 44,474,973 |   |                   |   | 16,722,347 |  
|                                                     |  |                   |            |   |                   |   |            |  
|                                                     |  |                  
|Net loss per common shareBasic and diluted          |  | $                 | (0.00      | ) |                   | $ | (0.01      | )
|                                                     |  |                   |            |   |                   |   |            |  

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, 2009, VHS had negative working capital of $116,436. The Company has incurred losses in previous years resulting in an accumulated deficit of approximately $2,932,764. 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.

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

As of December 31, 2008, the Company owed $6,092, which was repaid during 2009, 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, 2009 and 2008 is as follows:



|                                      |  |      |   |      |   |  
|------------------------------------- |  | ---- | - | ---- | - | -
|                                      |  | 2009 |   | 2008
|Current income tax expense (benefit)  |  | $    |  |      | $ | 
|Deferred income tax expense (benefit) |  |      |  |      |   | 
|                                      |  |      |   |      |   |  
|Income tax expense (benefit)          |  | $    |  |      | $ | 
|                                      |  |      |   |      |   |  



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Income taxes for the years ended December 31, 2009 and 2008 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:



|                                               |  |      |         |   |      |   |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                               |  | 2009 |         |   | 2008 |  
|Computed tax benefit at the statutory rate 34% |  | $    | (19,300 | ) |      | $ | (36,100 | )
|Increase (decrease) in taxes resulting from:   |  |      |         |   |      |   |         |  
|Increase in valuation reserve                  |  |      | 19,300  |   |      |   | 36,100  |  
|                                               |  |      |         |   |      |   |         |  
|                                               |  |     
|Current income tax expense (benefit)           |  | $    |        |   |      | $ |        |  
|                                               |  |      |         |   |      |   |         |  

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



|                                |  |      |          |   |      |   |          |  
|------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                |  | 2009 |          |   | 2008 |  
|Deferred tax assets:            |  |      |          |   |      |   |          |  
|Net operating loss carryforward |  | $    | 670,700  |   |      | $ | 651,400  |  
|Less valuation allowance        |  |      | (670,700 | ) |      |   | (651,400 | )
|                                |  |      |          |   |      |   |          |  
|                                |  |     
|Gross deferred tax asset        |  |      |         |   |      |   |         |  
|Gross deferred tax liability    |  |      |         |   |      |   |         |  
|                                |  |      |          |   |      |   |          |  
|                                |  |     
|Net deferred tax asset          |  | $    |         |   |      | $ |         |  
|                                |  |      |          |   |      |   |          |  

The Company has available at December 31, 2009, approximately $1,552,800 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, 2009 and 2008, respectively.



|                                               |  |                |  |                              |   |                |   |                              |   |  
|---------------------------------------------- |  | -------------- |  | ---------------------------- | - | -------------- | - | ---------------------------- | - | -
|                                               |  | 2009           |  | 2008                        
|                                               |  | 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 |  |                |  | $                            |  |                |   |                              | $ | 
|                                               |  |                |  |                              |   |                |   |                              |   |  



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NOTE 6 - NOTE PAYABLE

On February 1, 2009, the Company received $100,000 in exchange for a nonrecourse note payable. The note is non-interest bearing, unsecured and due on
demand.

NOTE 7 SUBSEQUENT EVENT

The Company has evaluated subsequent events through April 14, 2010, the date on which this Form 10-K was filed with the Securities and Exchange
Commission.