UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





ý
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the fiscal year ended September 30, 2008oro
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934


For the
transition period from ____________ to ____________





Commission
file number: 0-51107





VIBE
RECORDS, INC.


(Exact
name of registrant as specified in its charter)





Nevada
            
            71-0928242(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      No.)#824
      Old Country road, PO Box 8 Westbury, New York
            
            11590(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant’s telephone
number, including area code:(516) 333-2400




Securities
registered pursuant to Section 12(b) of the Act:




Title
      of each class
            
            Name
      of each exchange on which registeredNone
            
            OTC
      Bulletin Board





Benacquista
Galleries, Inc.


6870 La
Valle Plateada Rancho Santa Fe, California


(Former
name or former address, if changed since last report)





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


Common
Stock, $0.0001 par value


(Title of
Class)





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 ]





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or 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 large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.


Large
      accelerated filer [   ]
            Accelerated
      filer  [   ]
            Non-accelerated
      filer  [  ]
            Smaller
      Reporting Company  [ X ]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes
[   ]                                          No  [
X ]





The
aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant, computed by reference to the last reported price at which the
stock was sold on March 31, 2008 (the last business day of the registrant’s most
recently completed second quarter) was $913,806.





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Class
            
            Outstanding
      at December 31, 2008Common
      Stock, $.0001 par value per share
            
            14,564,267
      shares








TABLE OF
CONTENTS




PART
      IPageItem
      1.
            Business
            2Item
      1A.
            Risk
      Factors
            7Item
      2.
            Properties
            11Item
      3.
            Legal
      Proceedings
            11Item
      4.
            Submission
      of Matter to a Vote of Security Holders
            12PART
      IIItem
      5.
            Market
      for the Registrant’s Common Stock and Related Stockholder
      Matters
            12Item
      6.
            Selected
      Financial Data
            13Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            13Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            14Item
      8.
            Financial
      Statements and Supplementary Data
            15Item
      9.
            Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure
            15Item
      9A.
            Controls
      and Procedures
            15PART
      IIIItem
      10.
            Directors,
      Executive Officers and Corporate Governance
            16Item
      11.
            Executive
      Compensation
            17Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management
            18Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            19Item
      14.
            Principal
      Accountant Fees and Services
            19PART
      IVItem
      15.
            Exhibits
      and Financial Statements Schedules
            20













PART
I.






FORWARD-LOOKING
STATEMENTS





This
report contains forward-looking statements that are subject to a number of risks
and uncertainties, many of which are beyond our control, which may include
statements about our:





·
            business
      strategy;·
            reserves;·
            financial
      strategy;·
            production;·
            uncertainty
      regarding our future operating results;·
            plans,
      objectives, expectations and intentions contained in this report that are
      not historical.




All
statements, other than statements of historical fact included in this report,
regarding our strategy, future operations, financial position, estimated
revenues and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this report, the words
“could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words. All
forward-looking statements speak only as of the date of this report. You should
not place undue reliance on these forward-looking statements. Although we
believe that our plans, intentions and expectations reflected in or suggested by
the forward-looking statements we make in this report are reasonable, we can
give no assurance that these plans, intentions or expectations will be achieved.
We disclose important factors that could cause our actual results to differ
materially from our expectations under “Risk Factors” and elsewhere in this
report. These cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.







Item 1.Business




General




Vibe
Records, Inc. Business





Vibe
Records, Inc., (the “Company” or “Vibe”) incorporated on March 8, 2004 under the
laws of the State of Delaware, conducts business as an artist and repertoire
company as well as an independent record label.  We intend to
distribute recordings made by our artists on a national basis, as well as
operate state-of-the-art recording and production facilities.





Vibe
Records Holdings, Inc. and Vibe Records, Inc. are separate Delaware
corporations.  On September 10, 2007, the two companies entered
into a plan and accounting of merger with Vibe Records, Inc. being the surviving
corporation.  The two entities are referred to collectively as
“Company”.  The Company operates as an independent record label and a
highly selective Artist and Repertoire company that intends to distribute
nationally recordings made by its artists as well as operate state-of-the-art
recording and production facilities.





After
identifying qualified and talented artists, our long term role includes
nurturing the artist’s career through teaching, encouragement and supervision,
while concurrently searching for and selecting suitable material, accompanists,
side-men, producers and other professionals to enhance the artist’s chances for
success. Vibe intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year. The experience
of Vibe’s President and Chief Executive Officer, Timothy Olphie, will be
extensively relied upon in the selection process.  Mr. Olphie has
received several Gold and Platinum awards for his role at SOUL/MCA Records in
the success of several recording artists and products including, Public Enemy
and the acclaimed film “Juice” and its related soundtrack. To date, Mr. Olphie,
as Producer and/or Executive Producer, has concluded approximately twenty (20)
artist-recording contracts for both major and independent record
labels.





The
Company employs a focused artist selection and developmental
process.  The artist’s value will be significantly increased through
the support of the Company’s specialized and well seasoned management team,
modest recording budgets supported by a state of-the-art recording studio, a
strategic alliance with a renowned audio engineer and the use of a major
manufacturing and distributing firm. Furthermore, the Company will utilize these
economic efficiencies to seek out and enter into agreements with pre-established
artists. Arrangements with established artists will allow the Company to offer
profit sharing ventures with established artists in which the artists submit
their master recordings (while retaining their own ownership rights) and license
the master recordings to the Company for manufacture, distribution and
promotion.





2




The
Company anticipates, but has not committed to, soliciting participation in the
further development of one or more of their artists in the R&B, rap, pop,
country and/or Latin genres through the assignment of a significant portion of
their contractual rights to one of the major manufacturing and distributing
firms such as: Sony/BMG Music Group, RCA Records, a division of BMG Distribution
(BMG) Bertelsman Music Group; Warner/Elektra/Atlantic (WEA), a division of
Warner Music, Inc.; Universal Music Group; MCA Records,
Inc.;  Polygram Holdings, Inc. (PGD); or Def Jam Music, a division of
Universal Music Distribution (UNI) and EMI Music, Inc. Collectively, these
companies supply retailers with approximately 80% of the music recordings
purchased. If the Company determines it is prudent to assign these rights, the
Company intends to obtain and/or retain for its own benefit, royalty overrides
as well as publishing and merchandising interests. In order to assure that the
Company has sufficient latitude to discover and develop an artist to the level
it deems appropriate, if any of the above options of participation outside of
the Company are not pursued, the Company has the ability to continue to
manufacture and distribute the recordings of its new artists to its alliance
with Lightyear Entertainment, which is in turn distributed by Caroline
Distribution, the independent distribution arm of EMI Music.





The
Company will also house and operate state of the art recording and production
facilities. The facilities will be utilized not only by the Company’s internal
artist roster but also will be available for outside contracting.





Through
these and other endeavors, the Company intends to simultaneously promote and
brand the Vibe Records label utilizing the distribution capacity of
Lightyear/Caroline/EMI. The Company believes that operating in this fashion will
reduce overhead, and concerns about collection from accounts.





Merger





On May
30, 2008, Benacquista Galleries, Inc. (the “Predecessor Company”) and Vibe
Records, Inc. (“Vibe” or the “Company”) entered into an Agreement and Plan of
Merger (the “Merger Agreement”).  Pursuant to the terms of the Merger
Agreement, Acquisition Sub merged with and into Vibe.  Vibe, as the
surviving entity, became a wholly-owned subsidiary of the Predecessor Company
(the “Merger”).  At the closing of the Merger, each share of Vibe’s
common stock issued and outstanding immediately prior to the closing of the
Merger was converted into one share of the Predecessor Company’s common stock,
par value $0.001 per share (“Common Stock”).  This transaction was
accounted for as a reverse merger.





Music
Industry





Recorded
music is one of the primary mediums of entertainment for consumers worldwide and
in calendar 2006, according to IFPI, generated $31.8 billion in retail value of
sales. IFPI stands for “International Federation of the Phonographic Industry,”
and it is the organization that represents the interests of the recording
industry worldwide. Its secretariat is based in London, UK, and its membership
comprises some 1450 record companies in 73 countries and affiliated industry
associations in 48 countries.  IFPI's mission is to promote the value
of recorded music, safeguard the rights of record producers and expand the
commercial uses of recorded music in all markets where its members
operate.





The
Recording Industry Association of America (RIAA) is the trade group that
represents the U.S. recording industry. Its mission is to foster a business and
legal climate that supports and promotes our members' creative and financial
vitality. Its members are the record companies that comprise the most vibrant
national music industry in the world. RIAA members create, manufacture and/or
distribute approximately 90% of all legitimate sound recordings produced and
sold in the United States.





There has
been a major shift in distribution of recorded music from specialty shops
towards mass-market and online retailers. According to RIAA, record stores’
share of U.S. music sales has declined from 52% in 1997 to 35% in
2006.  Over the course of the last decade, U.S. store share grew from
32% in 1997 to 54% in 2004, and with the subsequent growth of sales via online
channels since that time, their share contracted to 33% in 2006. In recent
years, online sales of records as well as digital downloads have grown to
represent an increasing share of U.S. sales and combined they accounted for 16%
of music sales in 2006. In terms of genre, rock remains the most popular style
of music, representing 34% of 2006 U.S. unit sales, although genres such as
rap/hip-hop, R&B, Country and Latin music have become increasingly
popular.





Historical
Music Sales




According
to RIAA, from 1990 to 1999, the U.S. music recording industry grew at a compound
annual growth rate of 7.6%, twice the rate of total entertainment spending. This
growth was driven by demand for music, the replacement of LPs and cassettes with
CDs, price increases and strong economic growth and was largely paralleled
around the world.





3




The
industry began experiencing negative growth rates in 1999, on a global basis,
primarily driven by an increase in digital piracy. Other drivers of this decline
were and are the overall recessionary economic environment, bankruptcies of
record retailers and wholesalers, growing competition for consumer discretionary
spending and retail shelf space, and the maturation of the CD format, which has
slowed the historical growth pattern of recorded music sales.





Since
that time, annual dollar sales of records in the U.S. are estimated to have
declined at a compound annual growth rate of 6% (although there was a 2.5%
year-over-year increase recorded in 2004). In 2006, the physical business
experienced a 14% year-over-year decline on a value basis.





Current
Factors




In Vibe’s
opinion, the music industry is shifting away from record stores and towards
digital downloads.  According to the International Federation of the
Phonographic Industry, single-track downloads totaled nearly 795 million in
2006, up 89% on the 420 million online singles sold in 2005. The domestic market
accounts for the bulk of those sales, with 582 million single tracks sold online
in the U.S. in 2006, up 65 % from 2005.





As the
Major Labels stumble, independent labels have gained significant amounts of
market share - accounting for a record eighteen percent (18%) of record sales in
2005, according to the RIAA.  Industry experts suggest that mobile
music sales can be a major area for growth in the forthcoming years with the
recent launch of Apple’s much anticipated iPhone as well as the development of
music phones by Nokia Corp. and Sony Ericsson.





According
to a new survey by the NDP Group, a consumer research group, the spending on
music declined from 44% to 40% per person in 2007, a decrease of 10% as one
million people dropped out of the CD-buyer market.  In the meanwhile,
48% of teenagers bought no CD's last year. At the same-time, Apple and I-Tunes
store in February, 2008 became the nation’s number-two music retailer. Apple has
sold more than 4 Billion downloads since it opened in April 2003 and has 50
million customers.





Vibe
believes independent labels are better equipped at Internet marketing via
websites and outlets like MySpace and plans to take advantage of this
trend.





Marketing





We
believe that we have structured and implemented a highly efficient manner in
which to enhance the marketing potential of our new talent.  Prior to
the anticipated assignment by the Company of any of its rights under
comprehensive artist recording contracts, the Company will prepare a master/demo
recording package. The Company will establish a master/demo recording fund of
$50,000 per artist for this purpose. The package will consist of a
professionally produced and engineered 3 to 4 song compilations and will be
utilized in conjunction with the solicitation, or if deemed appropriate,
possible retention of the artist’s property rights.





In no
event shall more than $35,000 of this fund be expended to sign any one artist
without the consent of the majority of the Board of the Company. This fund may,
however, be increased by a maximum of 20% with the unanimous consent of the
Board. In no event shall the aggregate of the Master/Demo Recording fund
expenditures for the 5 new artists each year undertaken by the Company
(exclusive of our joint ventures) exceed $350,000. The Company intends to adhere
to the above-mentioned master/demo recording fund strategy regardless of whether
the Company subsequently assigns one or more artists’ contracts, in whole or in
part. This process as a whole will be facilitated by the efficiencies the
Company intends to utilize pertaining to the critical area of the artist
recording budgets (acquisition of in-house recording studio, strategic alliance
with renowned studio engineer, et. al.).





Intellectual
Property





The
Company owns the website and domain VibeRecords.com via Network Solutions
Registration # 25962560 (IP Address 206.28.67.2).
http://www.viberecords.com/





The
Company has registered “Vibe Records” as a trademark in the specific stylized
form appearing in Reg. No. 1,819,799 (“Trademark”). The Company believes that
such protection is of significant value in identifying the Company's products on
CD’s, records, tapes and/or other media existing now or in the future. In
addition, the Company believes this ability affords it brand name marketing
capability within the fields of recorded music distribution and
merchandising.  On September 2, 2004, Vibe Records, Inc. was granted
an extension for the Trademark under Serial Number # 74389095.





The
Company’s rights in this mark are subject and limited to its rights set forth in
the negotiated dispositions of two legal actions entitled National Record Mart,
Inc. v. Vibe Records, Inc. and Vibe Ventures v. Vibe Records, Inc. under the
dispositions of these actions, Vibe Ventures, LLC (“Vibe Ventures”) the original
trademark owner of “Vibe Records”, agreed to give an irrevocable license in
perpetuity to the Company allowing the Company to use the word “Vibe” only in
conjunction with the word “Records” in the stylized logo as a “record label”
(the “Trademark License Agreement”). Its use is limited to the stylized logo as
the name of the “record label” for “record distribution” meaning wholesale
distribution of music by a record company. Vibe Records, Inc. (New York)
irrevocably assigned this interest to Vibe Records Inc. (Delaware).





4




In
addition to the foregoing, the Company has pledged the Company’s intellectual
property rights in the name “Vibe Records” to Robert S. McCoy pursuant to a
Security Lien Agreement whereby McCoy holds a superior lien against any monies
received regarding the Trademark License Agreement with Vibe Ventures,
LLC.  This lien will be removed upon the satisfaction of the loans due
to Mr. Robert S. McCoy are repaid in the aggregate principal amount of
$600,000.




Competition





The
heightened ability to sell or assign one’s rights in potentially successful
recording products to the four (4) major manufacturing and distribution firms
within the music industry, as well as the expanding opportunities to promote and
produce one’s talent independently, lead the Company to believe it has
positioned itself to compete successfully within the R&B, rap and pop genres
of the music industry.  The Company further believes that it has
focused upon a demographic target audience which is experiencing, and will
continue to experience, substantial growth and that the Master/Demo Recording
marketing model is a highly effective manner in which to market the Company’s
artists and products.





Nevertheless,
the Company's record products are marketed and sold to a segment of the
entertainment market that is highly competitive. The principal competitive
factors affecting the market for the Company's products include product quality,
packaging, brand recognition, brand and artist acceptance, price and
distribution capabilities.  There can be no assurance that the Company
will be able to compete successfully against current and future competitors
based on these and other factors. The Company also competes with a variety of
domestic and international producers and distributors many of whom have
substantially greater financial, production, distribution and marketing
resources and have achieved a higher level of brand recognition than the
Company.  In the event the Company becomes successful in its
marketing, promotion and distribution of products bearing its name, it is likely
the Company may experience additional competition in the industry from major
labels, each of which is capable of marketing products designed to compete
directly in the R&B, rap, country, Latin and pop segments. The Company
competes with other music producers and distributors not only for market share,
brand acceptance and loyalty, but also for display space in retail
establishments and, more importantly, for marketing focus by the Company's
distributors and retailers, all of which distribute and sell other manufacturers
products. Future competition could result in price reductions, reduced margins
and loss of market share, all of which could have a material adverse effect on
the Company's business, financial condition and results of
operations.





Independent
labels, such as the Company, have however demonstrated themselves especially
adept at Internet marketing via websites and outlets like MySpace. Endeavors
such as this by independent labels have significantly increased their market
share of annual sales as the major labels struggle to adapt to the age of the
IPod and the Internet.





Employees





As of May
1, 2008, we employed a total of six employees. We believe that we have a good
working relationship with our employees.  We are not a party to any
collective bargaining agreements, no employees are represented by a labor union
and we believe we have good relations with our employees.





Business
Opportunities





The
Company will rely on the experience of the Company’s President and Chief
Executive Officer, Timothy Olphie. Mr. Olphie has received several Gold and
Platinum awards for his role at SOUL/MCA Records in the success of several
recording artists and products. To date, Mr. Olphie, as Producer and/or
Executive Producer, has concluded approximately twenty five artist-recording
contracts for both major and independent record labels.





The
following are business opportunities, potential joint ventures and contractual
relationships arranged or being negotiated by Mr. Olphie.  The Company
will pursue many of the following opportunities after the Merger.





Artist
Recording Agreements




J
and Travis:




In July
of 2007, the Company secured an exclusive recording artist agreement and Joint
Venture with Lift Music, LLC with the pop duo Jay and
Travis.  Currently Kevon Edmonds and Al Mannerism manage the
group. Kevon Edmonds is the brother of the multi platinum producer artist
Kenneth “Babyface” Edmonds.





In
September 2005, the Company executed a Joint Venture Agreement with Lift Music,
whereby the Company and Lift Music would finance, produce, promote, market and
distribute recorded materials by pop duo Jay and Travis on an equal profit
sharing basis. Pursuant to the Agreement, Lift Music has financed and provided
master recordings by Jay and Travis, which the Company will market, promote and
distribute through its distribution channels.





5




The
Baker Girls:




On July
28, 2005 the Company secured an exclusive recording artist agreement with the
Country duo The Baker Girls.  Pursuant to the terms of the Agreement,
The Baker Girls is licensing the excusive right to disseminate The Baker Girls
recordings for a period of Thirty-Six (36) Months from
February 12, 2003.  Although there is litigation between the
Baker Girls and the Company, the Company is involved in settlement talks to
resolve the dispute and intends to continue its business relationship with The
Baker Girls.





Michael
Murphy:




On
February 12th, 2003 The Company secured an exclusive recording artist agreement
with Michael Murphy. The Agreement calls for Mr. Murphy to provide Two (2)
Singles to the Company, with the Company possessing an irrevocable Option for
Two (2) additional full length Albums at a royalty rate of 12% as well as a 4%
producer royalty with customary escalation clauses. Pursuant to the terms of the
Agreement, Mr. Murphy is licensing the excusive right to disseminate Mr.
Murphy’s recordings for a period of Thirty Six (36) Months from February 12th,
2003.  The Company intends to continue its business relationship with
Mr. Murphy.





Promotional
Alliances





Distribution
Agreement with Lightyear Entertainment, L.P.




A
predecessor of the Company executed a Distribution Agreement, dated April 23,
2004 (“Lightyear Agreement”), directly for worldwide distribution through
Lightyear Entertainment, L.P. ("Lightyear"), which is in turn distributed by
Caroline Distribution, the independent distribution arm of EMI
Music.  Lightyear music product is also distributed by JVC in Japan,
by in-akustik in Germany, and by a network of independent distributors elsewhere
around the world. Lightyear's DVD, Digital, and Video On Demand distribution for
independent films are through Warner Home Video in the U.S. and
Canada.  In connection with this Agreement, Lightyear retains a 30%
Distribution Fee (which it shares with Caroline/EMI), and the remaining 70% of
all wholesale revenue is credited to the Company, less costs incurred by
Lightyear on the Company's behalf, such as manufacturing costs and retail
placement costs. The Company has negotiated an extension of the Agreement with
Lightyear which will take effect upon a payment from the Company to
Lightyear.





R&B
Foundation Album:




The
Company intends to produce and record, on a profit sharing basis, the First
R&B Foundation Album which would feature the recordings of legends of the
R&B genre (including Smokey Robinson, Jerry Butler, Lloyd Price, Etta James,
Carlos Santana, Gladys Knight, George Benson, Chaka Kahn, and Aretha Franklin,
et. al.) appearing on recordings in conjunction with some of contemporary R
&B’s biggest names (individuals invited to participate would include one of
more of the following: Lauren Hill - who is a staunch supporter of the
Organization having performed at the 1999 Ceremonies - Stevie Wonder, Janet
Jackson, Prince, Mary J. Blige, Bonnie Raitt, Mariah Carey, Whitney Houston, et.
al.).  The Company’s Record production of a Benefit Single entitled
“Get Together” b/w “United We Stand,” which would provide for all proceeds of
said single to go to the benefit of the Foundation, has already been proposed to
the Foundation as a means of inducing one or more of the Foundation’s above
mentioned marquee artist-supporters to appear on the full length album to be
produced by one or more of the Foundation’s marquee producer-supporters (such as
Quincy Jones, David Foster, Ken “Babyface” Edmonds, Jimmy Jam, Terry Lewis, et.
al.).





The
Company has no assurance of this until negotiations are finalized and
memorialized in an agreement.  Preliminary negotiations indicate that
after recoupment by the Company of all recording costs and fees, the proceeds of
all full length album sales would be distributed 75% to the Foundation with the
remaining 25% to the Company.  The Company intends to pursue this
project.





Artist
Development and Dileo Entertainment:




Mr. Frank
Dileo is President & CEO of Dileo Entertainment, a diversified talent
management company representing clients in all segments of the entertainment
industry including music, sports marketing, motion pictures, television,
personal appearances, commercial endorsements and theater.  The
Company is negotiating a contract with Mr. Dileo intends to work with the
Company on recording projects as an independent contractor.





Luck
Music:




Music industry veteran Steve Levesque
has formed LUCK MEDIA & MARKETING, INC. and serves as President. The firm
specializes in music public relations and marketing.  Levesque left
his long-time post as Senior Vice President, Music at the Lee Solters Co. to
launch Luck Media & Marketing. He originally joined Solters/Roskin/Friedman
in 1990. Levesque previously served at Enigma Records as National Director of
Media Relations. The Company is negotiating a contract with Luck Media &
Marketing to work with the Company as an independent contractor.http://luckmedia.com/





6





CO
5 Music:




The
Company engaged the services of Circle of Fifths Music, L.L.C. (CO5) to provide
radio promotion for the Company’s artist the Baker Girls. With David Newmark at
the helm with his team of industry veterans (Trudie Richardson, “Bubba” Wayne
and Darlene Starr), CO5 will service the group’s single to radio as well as
oversee a secondary radio initiative to maintain prior momentum behind the
group’s single.


http://www.co5music.com/





Joint
Venture Agreements:





Off
the Hook Records, Inc:




On
January 15, 2004 the Company and Off the Hook Records, Inc. executed a Joint
Venture Agreement whereby they will sign new talent to production deals and
subsequently finance, produce, promote, market and distribute their master
recordings on an 18 % retail sharing basis with Republic Distribution, Inc., a
division of Universal Distribution. Both genres of urban entertainment and media
will actively co-promote the Company’s artists through their East Coast based
promotional resource base. The Company believes that these aggressive grass
roots promotional efforts will facilitate the entry of their artists into the
urban marketplace.





TC
Music, Inc:




In
September 2006, the Company executed a Joint Venture Agreement with TC Music
whereby the Company and TC Music would finance, produce, promote, market and
distribute recorded materials by pop artist Katelyn Tarver on an equal profit
sharing basis. Pursuant to the Agreement, TC Music has financed and provided
Master recordings by Katelyn Tarver which the Company will market, promote and
distribute through its distribution channels.







Item
1A.Risk
Factors




THIS
REPORT CONTAINS CERTAIN STATEMENTS RELATING TO FUTURE EVENTS AND THE FUTURE
FINANCIAL PERFORMANCE OF OUR COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT
SUCH STATEMENTS ARE ONLY PREDICTIONS, INVOLVE RISKS AND UNCERTAINTIES, AND THAT
ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS,
PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS
IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH BELOW, WHICH COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH
FORWARD-LOOKING STATEMENTS.











RISKS
RELATED TO OUR BUSINESS





The
music industry has been declining and may continue to decline, which may
adversely affect our prospects and our results of operations.




Illegal
downloading of music from the Internet, piracy, economic recession, and growing
competition for consumer discretionary spending and retail shelf space may all
be contributing to declines in the recorded music industry. Additionally, the
period of growth in recorded music sales driven by the introduction and
penetration of the CD format has ended. While CD sales still generate most of
the recorded music revenues, CD sales continue to decline industry-wide and we
expect that trend to continue. New formats for selling recorded music product
have been created, including the legal downloading of digital music using the
Internet, physical format product innovations and the distribution of music on
mobile devices, and revenue streams from these new channels are beginning to
emerge. These new digital revenue streams are important to offset declines in
physical sales and represent the fastest growing area of our business. While it
is believed within the recorded music industry that growth in digital sales will
re-establish a growth pattern for all recorded sales, the timing of the recovery
cannot be established with accuracy nor can we determine the impact of how these
changes will affect individual markets.  There can be no assurance
that the Company will ever achieve any revenues or profitable operations through
these new digital revenue streams.





7




The
Company has incurred operating losses since inception and there is no certainty
that the Company will ever achieve profitability.




The
Company has incurred operating losses since its inception. The Company expects
to incur significant increasing operating losses for the foreseeable future,
primarily due to the expansion of its operations.  The negative cash
flow from operations is expected to continue and to accelerate in the
foreseeable future. The Company’s ability to achieve profitability depends upon
its ability to discover new talent and develop existing talent, commercial
acceptance for its talent, and the Company’s ability to enter into agreements
for distribution and manufacturing.  There can be no assurance that
the Company will ever achieve any revenues or profitable
operations.





The
Company may be unable to manage its growth or implement its expansion
strategy.




The
Company may not be able to expand its product and service offerings, its client
base and markets, or implement the other features of its business strategy at
the rate or to the extent presently planned. The Company’s projected growth will
place a significant strain on the Company’s administrative, operational and
financial resources. If the Company is unable to successfully manage its future
growth, establish and continue to upgrade its operating and financial control
systems, recruit and hire necessary personnel or effectively manage unexpected
expansion difficulties, the Company’s financial condition and results of
operations could be materially and adversely affected. Furthermore, the
Company's growth depends upon its ability to attract new talent and commercially
develop existing talent. There can be no assurance that the Company's efforts to
attract and develop talent can be accomplished on a profitable basis, if at all.
The Company's expansion of its record distribution and promotions will depend on
a number of factors, most notably the timely and successful promotion and sale
of its products by the Company and its regional distributors. The inability of
the Company to expand sales in a timely manner would have a material adverse
effect on the Company's business, operating results and financial
condition.





Our
prospects and financial results may be adversely affected if we fail to
identify, sign and retain artists that have consumer appeal




We are
dependent on identifying, signing and retaining artists with long-term
potential, whose debut albums are well received on release, whose subsequent
albums are anticipated by consumers and whose music will continue to generate
sales as part of our catalog for years to come. The competition among record
companies for such talent is intense. Competition among record companies to sell
records is also intense and the marketing expenditures necessary to compete are
significant and have increased as well. Our competitive position is dependent on
our continuing ability to attract and develop talent whose work can achieve a
high degree of public acceptance. Our financial results may be adversely
affected if we are unable to identify, sign and retain such artists under terms
that are economically attractive to us. There can be no assurance that the
Company will be able to successfully and profitably obtain and market such
talent in the near term or in the future.




The
R&B, rap, pop, country and latin genres of the music industry, where the
Company intends to focus, are highly competitive and characterized by changing
consumer preferences and continuous introduction of new artists. The Company’s
goal is to maintain and improve the recording artists currently under contract
with the Company and to seek out and recruit additional talent that will appeal
to various consumer preferences.  The Company believes that its future
growth will depend, in part, on its ability to anticipate changes in consumer
preferences and develop and introduce, in a timely manner, artists and products
which adequately address such changes. There can be no assurances that the
Company will be successful in recruiting, developing, and marketing such artists
and products on a timely and regular basis. The failure of the Company to
successfully introduce such artists or products, or the failure of the retail
markets to accept them, would have a materially adverse effect on the Company’s
ability to operate profitably.





No
assurance can be given that consumer demand for the R&B, rap, pop, country
and latin genres of the music industry, such as those products intended to be
produced by the Company, will continue in the future or, if such demand does
continue, that the Company will be able to satisfy consumer preferences. Changes
in consumer spending can affect both the quantity sold and the price of the
Company's products and may therefore affect the Company's operating
results.





If
we fail to obtain necessary funds for our operations, we will be unable to
maintain and develop and commercialize our products.




Our
present and future capital requirements depend on many factors,
including:




·
            our
      ability and willingness to enter into new agreements with strategic
      partners, and the terms of these agreements;·
            our
      ability to enter into new agreements to expand the distribution of our
      talents records, and the terms of such agreements;·
            the
      costs of recruiting and retaining qualified personnel;
      and·
            the
      time and costs involved in finding and maintaining
      talent.




Our
ability to continue as a going concern ultimately depends on our ability to
increase sales and reduce expenses to a level that will allow us to operate
profitably and sustain positive operating cash flows.





8





Additional
financing may be necessary for the implementation of the Company’s growth
strategy.




We may
require additional debt and/or equity financing to pursue our growth
strategy.  Given our operating history and existing losses, there can
be no assurance that we will be successful in obtaining additional
financing.  Lack of additional funding could force us to curtail
substantially our growth plans. Furthermore, the issuance by us of any
additional securities pursuant to any future fundraising activities undertaken
by us would dilute the ownership of existing shareholders and may reduce the
price of our common stock.





Furthermore,
debt financing, if available, will require payment of interest and may involve
restrictive covenants that could impose limitations on the Company’s operating
flexibility.  The Company’s failure to successfully obtain additional
future funding may jeopardize its ability to continue its business and
operations.





The
Company is dependent upon key personnel and consultants.




The
Company’s success is heavily dependent on the continued active participation of
its current executive officers listed under “Management.” Loss of the services
of one or more of these officers could have a material adverse effect upon the
Company’s business, financial condition or results of operations. Further, the
Company’s success and achievement of its growth plans depend on its ability to
recruit, hire, train and retain other highly qualified technical and managerial
personnel. Competition for qualified employees among companies in the music
industry is intense, and the loss of any of such persons, or an inability to
attract, retain and motivate any additional highly skilled employees required
for the expansion of the Company’s activities, could have a materially adverse
effect on the Company. The inability of the Company to attract and retain the
necessary personnel and consultants and advisors could have a material adverse
effect on the Company’s business, financial condition or results of
operations.  We do not carry “key person” insurance covering any
members of our senior management.




The
Company is controlled by current officers, directors and principal
stockholders.




The
Company’s directors, executive officers and principal stockholders and their
affiliates beneficially own a majority of the outstanding shares of Common Stock
of the Company.  Accordingly, the Company’s executive officers,
directors, principal stockholders and certain of their affiliates will have the
ability to control the election of the Company’s Board of Directors of the
Company and the outcome of issues submitted to the Company’s
stockholders.





We
face significant competition.




The
Company's recorded products will be marketed and sold to a segment of the market
that is highly competitive.  The principal competitive factors
affecting the market for the Company's products include product quality,
packaging, brand recognition, brand and artist acceptance, price and
distribution capabilities.  There can be no assurance that the Company
will be able to compete successfully against current and future competitors
based on these and other factors. The Company also competes with a variety of
domestic and international producers and distributors, many of whom have
substantially greater financial, production, distribution and marketing
resources and have achieved a higher level of brand recognition than the
Company.  In the event the Company becomes successful in its
marketing, promotion and distribution of products bearing its name, it is likely
the Company may experience additional competition in the industry from major
labels, each of which is capable of marketing products designed to compete
directly in the R&B, rap, pop, country and latin segments. The Company
competes with other music producers and distributors not only for market share,
brand acceptance and loyalty, but also for display space in retail
establishments and, more importantly, for marketing focus by the Company's
distributors and retailers, all of which distribute and sell other manufacturers
products.  Future competition could result in price reductions,
reduced margins and loss of market share, all of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.





Any
Inability to adequately protect our intellectual property could harm our ability
to compete.




Our
future success and ability to compete depends in part upon our intellectual
property, which we attempt to protect with a combination of copyright and
trademark laws, as well as with contractual provisions. These legal protections
afford only limited protection and are time-consuming and expensive to obtain
and/or maintain. Further, despite our efforts, we may be unable to prevent third
parties from infringing upon or misappropriating our intellectual
property.





We have
registered one trademark with the United States Patent and Trademark Office. Any
trademarks that are issued to us could be invalidated, circumvented or
challenged.  Currently, we are involved in a legal proceeding
regarding our “Vibe” trademark. While we diligently intend to protect our
intellectual property rights, the monitoring of any infringement and/or
misappropriation of our intellectual property can be difficult, and there is no
guarantee that we would detect any infringement or misappropriation of our
intellectual property rights.  Even if we detect infringement or
misappropriation of our intellectual property rights, litigation to enforce
these rights could cause us to divert financial and other resources away from
our business operations.





9




Our
involvement in intellectual property litigation could adversely affect our
business.




Our
business and recognition in the music industry is highly dependent upon
intellectual property, a field that has encountered increasing litigation in
recent years. If we are alleged to infringe the intellectual property rights of
a third party, any litigation to defend the claim could be costly and would
divert the time and resources of management, regardless of the merits of the
claim. There can be no assurance that we would prevail in any such litigation.
If we were to lose a litigation relating to intellectual property, we could,
among other things, be forced to pay monetary damages and/or to cease the sale
or use of certain products. Any of the foregoing may adversely affect our
business.





RISKS
RELATED TO OUR COMMON STOCK





There
is not now, and there may not ever be, an active market for our shares of common
stock.




There can
be no assurance that an active market for our common stock will develop. If an
active public market for our common stock does not develop, shareholders may not
be able to re-sell the shares of our common stock that they own and may lose all
of their investment.





Sales
of a substantial number of shares of our common stock may cause the price of our
common stock to decline.




Should an
active public market develop and our stockholders sell substantial amounts of
our common stock in the public market, shares sold at a price below the current
market price at which the common stock is trading will cause that market price
to decline. Moreover, the offer or sale of a large number of shares at any price
may cause the market price to fall. These sales also may make it more difficult
for us to sell equity or equity-related securities in the future at a time and
price that we deem reasonable or appropriate.





Additional
stock offerings may dilute current stockholders.




Given our
plans and our expectation that we may need additional capital and personnel, we
may need to issue additional shares of capital stock or securities convertible
or exercisable for shares of capital stock, including preferred stock, options
or warrants. The issuance of additional capital stock may dilute the ownership
of our current stockholders.





Our
Common Stock will be subject to the "Penny Stock" rules of the SEC.




The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





·
            that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and·
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.




In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:






·
            obtain
      financial information and investment experience objectives of the person;
      and·
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.




The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:





·
            sets
      forth the basis on which the broker or dealer made the suitability
      determination; and·
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.




10





Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our common
stock.




We (being
the entity post Merger and therefore including our history as well as that of
the Company) have never paid cash dividends on our common stock and do not
anticipate paying cash dividends in the foreseeable future. The payment of
dividends on our common stock will depend on earnings, financial condition and
other business and economic factors affecting it at such time as the board of
directors may consider relevant. If we do not pay dividends, our common stock
may be less valuable because a return on your investment will only occur if its
stock price appreciates.  Prior to closing of the contemplated Merger,
we will furnish you with supplemental information updating any relevant sections
of this report.







Item 2.Property:




Our
principal executive offices are located at # 824 Old Country Road, Westbury, New
York 11590.  This office consists of approximately 1800 square
feet which we rent for 3,500.00 per month. Our lease terminates in 2012 and we
have not as yet determined whether we will renew the lease for the existing
space or seek new space.






Item 3.Legal
Proceedings




The
Company is presently party to the following legal proceedings.





Baker
Girls




The
Company has filed a Summons and Complaint against The Baker Girls for breach of
their Artist Recording Contract, Use and Misappropriation of Trade Secrets,
Usurpation of Corporate Assets and Opportunity, Breach of Fiduciary Obligations,
Tortious Interference with Contractual Relations, Tortious Interference with
Prospective Business Relations, Fraud, Unjust Enrichment, Copyright Infringement
and False Designation of Origin under the Lanham Act. The Company is seeking a
preliminary and permanent injunction, an accounting as well as the imposition of
a constructive trust as well as One Million Dollars in compensatory and punitive
damages before the Court of Maury County in the State of
Tennessee.  The Company is involved in settlement talks to resolve the
dispute and continue its business relationship with The Baker Girls





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





Vibe
Records and Vibe Ventures:




The
Company and Vibe Ventures were parties to a mid 1990’s declaratory judgment
action. That litigation was commenced to determine each party’s entitlement to
use of the “Vibe” trademark, and resulted in an agreement regarding the
respective rights to the use of the intellectual property (i.e. Vibe trademark.)
The agreement was memorialized in a settlement agreement (the “Settlement
Agreement”) and an accompanying Trademark License Agreement entered into on or
about May 29, 1998, between Records and Ventures.





Pursuant
to the Settlement Agreement, the Company agreed to assign the registration for
its mark (as defined in the Settlement Agreement) to Vibe Ventures, pursuant to
an assignment agreement in exchange for Vibe Venture’s licensing of the Vibe
Records mark, pursuant to the Trademark License Agreement. The Trademark License
Agreement set forth in pertinent parts, the Company’s rights, as
follows:





The
Company was granted, subject to certain limitations, the right and license to
use the Vibe Trademark only as the name of a record label and wholesale
distribution of music by a record company.





The
Company was not prohibited from using the Vibe Trademark to identify the Company
as a record label on records, tapes, CD’s and/or other media now existing or
existing in the future used to record music (and on merchandise such as clothing
sold to promote Records’ record label) (the “Licensed Products”) sold through
direct mail, the Internet and/or in retail stores.





11




Vibe
Ventures is permitted to use, nor will it enter into any license or other
agreement to permit the use of the trademark on “Licensed Products” (as defined
in the Trademark License Agreement”), nor will it use the word “VIBE” in
immediate proximity to the exact word Records on any Licensed
Products.




Based
upon this agreement, it is the Company’s intellectual property counsel’s opinion
that Vibe Ventures is not entitled to create a record label and/or distribute
records under the mark licensed to the Company inasmuch as such use would
constitute a use of the Mark on a Licensed Product in violation of paragraph 3
of the Trademark License Agreement.





On July
5, 2006, The Wicks Group of Companies, L.L.C., a New York-based private equity
firm, announced their acquisition of Vibe Ventures. Along with their
acquisition, management expressed a commitment to extend the “VIBE” brand into
multiple media platforms and distribution channels, while strengthening its
unique position among its base of young multicultural consumers. A
contemporaneous full page Advertisement in the June 2006 addition of Vibe
Magazine offered “CERTIFIED CLASSIC VIBE REVOLUTIONS CD HITS VOLUME ONE, IN
STORE SOON!”, which counsel believes may infringe upon the Company’s licensed
rights under the Trademark License Agreement. Furthermore, Vibe Magazine is now
promoting other internet music activities available for sale on their
website.





Although
the Company is willing to discuss the possibility of a strategic alliance with
Vibe Ventures, a license agreement and/or an alternative assignment of rights
that would result in enhanced revenues for both Vibe Ventures and the Company,
the Company may seek damages against Vibe Ventures for infringement on the
Company’s intellectual property rights pursuant to the Trademark License
Agreement.





On or
about June 14, 2006, the Company, through its intellectual property counsel,
served notice upon Vibe Ventures to cease and desist from any further
discussions which reference, utilize or interfere with the License held by the
Company.  On February 11, 2008, the Company’s motion for an extension
to discovery was granted by the United States Patent and Trademark Office
whereby the Company received extensions on discovery until August 10, 2008.
Currently a Stipulation of Settlement is in discussion between the
parties.





In
addition to the foregoing, the Company has pledged the Company’s intellectual
property rights in the name “Vibe Records” to Robert S. McCoy pursuant to a
Security Lien Agreement whereby McCoy holds a superior lien against any monies
received regarding the Trademark License Agreement with Vibe Ventures,
LLC.  This lien will be removed when the loans to Mr. McCoy are repaid
in the aggregate principal amount of $600,000. .






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




None.






PART
II




Item 5.Market for the Registrant’s
Common Stock, Convertible PreferredStock and Related
Stockholder Matters




Our
common stock is quoted on the OTC Bulletin Board, a service provided by the
Nasdaq Stock Market Inc., under the symbol “VBRE”.  The following
table sets forth the high and low bid prices for our common stock as reported
each quarterly period within the last two fiscal years on the OTC Bulletin
Board, and as obtained from BigCharts.com. The high and low prices reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions (1).





Fiscal
      year ended September 30, 2008
            
            High
            
            
            LowQuarter endedDecember
      31, 2007
            
            $
            0.87
            
            
            $
            0.26March
      31, 2008
            
            $
            7.85
            
            
            $
            0.15June
      30, 2008
            
            $
            4.95
            
            
            $
            0.60September
      30, 2008
            
            $
            1.01
            
            
            $
            0.66Fiscal
      year ended September 30, 2007
            
            High
            
            
            LowQuarter endedDecember
      31, 2006
            
            $
            0.87
            
            
            $
            0.26March
      31, 2007
            
            $
            7.85
            
            
            $
            0.15June
      30, 2007
            
            $
            4.95
            
            
            $
            0.60September
      30, 2007
            
            $
            1.01
            
            
            $
            0.66(1)
      On January 8, 2007, we consolidated our authorized common shares on a
      one-for-ten basis, with a corresponding reduction in our common shares
      issued and outstanding as of that date. All prices reflect such
      consolidation.





12




Item 6.  Selected
Financial Data;




Not
applicable.







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




The
following discussion highlights the principal factors that have affected our
financial condition and results of operations as well as our liquidity and
capital resources for the periods described. This discussion contains
forward-looking statements. Please see “Forward-Looking Statements” and "Risk
Factors" for a discussion of the uncertainties, risks and assumptions associated
with these forward-looking statements.





The
following discussion and analysis of Vibe’s financial condition and results of
operations are based on Vibe’s financial statements, which Vibe has prepared in
accordance with U.S. generally accepted accounting principles.  You
should read the discussion and analysis together with such financial statements
and the related notes thereto.





Overview




We are an
early company led by an experienced management team and focused on identifying
qualified and talented artists.  Our long term role includes nurturing
the artist’s career through teaching, encouragement and supervision, while
concurrently searching for and selecting suitable material, accompanists,
side-men, producers and other professionals to enhance the artist’s chances for
success.




Plan
of Operations




The
Company intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year.  The
Company utilizes a highly focused artist selection process. The artist’s value
will be significantly increased through the support of the Company’s specialized
and well seasoned management team, modest recording budgets supported by, a
state of-the-art recording studio, strategic alliances with a renowned audio
engineer, and the use of a major manufacturing and distributing firm.
Furthermore, the Company will utilize these economic efficiencies to seek out
and enter into agreements with pre-established artists. Arrangements with
established artists will allow the Company to offer profit sharing ventures with
established artists in which the artists submit their master recordings (while
retaining their own ownership rights) and license the master recordings to the
Company for manufacture, distribution and promotion.





The
Company will also house and operate state of the art recording and production
facilities. The facilities will be utilized not only by the Company’s internal
artist roster but also will be available for outside contracting.





Through
these and other endeavors, the Company intends to simultaneously promote and
brand the Vibe Records label.  The Company believes that operating in
this fashion will reduce overhead, and concerns about collection from
accounts.





Critical
Accounting Policies





“Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
discusses our consolidated financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On an
on-going basis, we evaluate our estimates and judgments, including those related
to revenue recognition, valuation allowances for inventory and accounts
receivable, and impairment of long-lived assets. We base our estimates and
judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances. The result of these estimates
and judgments form the basis for making conclusions about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions. The SEC suggests that all registrants list their most “critical
accounting policies” in Management’s Discussion and Analysis.





Critical
accounting policies are those that are most important to the portrayal of our
financial condition and our results of operations, and require management’s most
difficult, subjective and complex judgments as a result of the need to make
estimates about the effect of matters that are inherently uncertain. Our most
critical accounting policies include, but are not limited to,  revenue
recognition, our ability to collect accounts receivable, the carrying value of
inventories and fixed assets, the useful lives of our fixed assets and
long-lived assets, the impairment of goodwill, the valuation of common stock
related to compensation and other services and the recoverability of
deferred tax assets. In applying these policies, management must use its
informed judgments and best estimates. Estimates, by their nature, are based on
judgments and available information such as the estimated life of fixed assets
for depreciation purposes, the market valuation of inventory in reporting
inventory at the lower of cost or market, and the determination of the market
value of stock when issued as compensation or as repayment for loans. The
estimates that we make are based upon historical factors, current circumstances
and the experience and judgment of our management. We evaluate our assumptions
and estimates on an ongoing basis and may employ outside experts to assist in
our evaluations. Changes in such estimates, based on more accurate future
information, may affect amounts reported in future periods.





13




Results
of Operations.





Years
Ended September 30, 2008 and 2007





There was
no revenue or cost of good sold for the years ended September 30, 2008 and
September 30, 2007.





For the
years ending September 30, 2008 and September 30, 2007, the Company experienced
a net loss of $651,197 and $637,590, respectively. General and administrative
expenses decreased to $65,147 from $95,407 for the years ended September
30, 2008 and September 30, 2007 due to staff reductions and office relocation.
Professional fees and expenses increased to $197,539 from $10,025 for the
years ended September 30, 2008 and September 30, 2007 due to increase accounting
and legal expenses.  Research and development expenses decreased to
$177,385 from $243,043 for the years ended September 30, 2008 and September 30,
2007 due to management’s time obligations pertaining to the
merger.  Interest expense decreased to $211,126 from $289,115 for the
years ended September 30, 2008 and September 30, 2007 due to conversion of
certain obligations to equity.




Liquidity
and Capital Resources





As of
September 30, 2008, the Company had a working capital deficit of
$3,229,791. If the Company is not successful in generating sufficient
liquidity from operations or in raising sufficient capital resources, on terms
acceptable to it, this could have a material adverse effect on its business,
results of operations liquidity and financial condition. To date, the Company
has not received any notice of default on any loans.




We have
historically incurred recurring losses from operations. Our continuation is
dependent upon securing financing and achieving a profitable level of
operations. We will need $1.5 million of financing for the execution of our
business plan. The issuance of additional equity securities by us would result
in a significant dilution in the equity interests of our current stockholders.
Obtaining loans, assuming those loans would be available, would increase our
liabilities and future cash commitments. We cannot assure that we will be able
to obtain further funds we desire for our continuing operations or, if
available, that funds can be obtained on commercially reasonable terms. If we
are not able to obtain additional financing on a timely basis, we would cease
our operations.


As shown
in the consolidated financial statements, at September 30, 2008 and September
30, 2007, the Company had no cash on hand and cash on hand of
$11,468.  We had a net loss of $651,197 for the year ended September
30, 2008. Net cash used in operating activities was $302,022 for the year ended
September 30, 2008. This was as a result of our net loss, partially offset by an
increase of $180,558 in accounts payable and accrued expenses payable, $156,887
due to an increase in accrued interest payable, and $11,730 of depreciation
expenses. Net cash
used in operating activities was $396,654 for the year ended September 30, 2007,
as a result of our net loss of $637,590, partially offset by an increase in
accrued interest payable of $230,200.





Cash
flows used in investing activities was $88,826 during the year ended September
30, 2008, consisting of $4,460 for purchases of property, plant and equipment
and $84,336 for advances made to affiliates. Cash
flows used by investing activities was $48,270 during the year ended September
30, 2007, consisting of $5,539 for purchases of property, plant and equipment,
offset by $42,911 received from affiliates.





The cash
flows provided by financing activities were $379,380 during the year ended
September 30, 2008 due to an increase in notes payable and purchase of treasury
stock. The cash
flows provided by financing activities were $453,762 during the year ended
September 30, 2007 due to an increase in notes payable.








Item 7A. Quantitative and
Qualitative Disclosures About Market Risk.





Not
applicable.





14





Item 8.Financial Statements and
Supplementary Data




The
consolidated financial statements of the Company, together with the Reports of
Independent Registered Public Accounting Firm thereon of S. W. Hatfield, CPA,
appear herein. See Index to Consolidated Financial Statements, appearing on page
F-1.







Item 9.Changes In and Disagreements
With Accountants on Accounting and Financial Disclosure




On August
7, 2008, we dismissed Hansen, Barnett and Maxwell PC (the " Former Auditors
"), as our certified independent accountants and retained Scott W.
Hatfield CPA (the " New Auditor ") as our
certified accountants.  On July 14, 2008 our Audit Committee as
well as our board of directors approved the change in auditors.




In
connection with the audits of the Registrant’s financial statements for the
fiscal years ended September 30, 2007 and 2006 there were no disagreements with
the Former Auditors on any matter of accounting principals or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of the Former
Auditors would have caused them to make reference to the subject matter of
the disagreement in their report.  Neither of the Former Auditors
reports on the financial statements for the fiscal years ended September 30,
2007 and 2006 contained an adverse opinion, or was modified as to uncertainty,
audit scope or accounting principals, except that the Former Auditor’s opinion
in its report on the financial statements expressed substantial doubt with
respect to our ability to continue as a going concern for each of those two
years.




On August
7, 2008, we engaged the New Auditor as its certified independent
accountants for the year ending September 30, 2008.  Prior to July 14,
2008 we had not consulted with the New Auditor concerning the application of
accounting principles to any specific completed or contemplated transaction, or
the type of audit opinion that might be rendered on the financial statement.







Item
9A.   Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





The
Company’s Chief Executive Officer and acting Chief Financial Officer has
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the
fiscal period ending September 30, 2008 covered by this Annual Report on
Form 10-K. Based upon such evaluation, the Chief Executive Officer and Chief
Financial Officer has concluded that, as of the end of such period, the
Company’s disclosure controls and procedures were effective as required under
Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the
Company’s Chief Executive Officer and Chief Financial Officer does not
relate to reporting periods after September 30, 2008.





Management’s
Report on Internal Control Over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.





The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the
financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





15




A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis. Management
has determined that material weaknesses exist due to a lack of segregation of
duties, resulting from the Company’s limited resources.





This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permit us to
provide only management’s report in this Annual Report on Form
10-K.





Changes
in Internal Control over Financial Reporting





No change
in the Company’s internal control over financial reporting occurred during the
year ended September 30, 2008, that materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial
reporting.






PART
III




Item
10.  Directors, Executive Officers and Corporate
Governance




The
following table sets forth certain information with respect to our directors and
executive officers.





Name
            
            Age
            
            PositionTimothy
      J. Olphie
            
            54
            
            Chairman
      of the Board, President and Chief Executive OfficerRobert
      S. McCoy, Jr.
            
            70
            
            DirectorThomas
      G. Kober
            
            50
            
            Vice
      President & Treasurer, DirectorMichael
      L. Tyler
            
            50
            
            Vice
      President & Secretary, Director





Timothy
J. Olphie, President and Director





From
January 1993 to the present, Mr. Olphie has been employed as an independent
record producer.  Since May 2004, he has been President of the
Company. Mr. Olphie received a Bachelor’s Degree in Marketing and Management
from the State University of New York at Brockport.





Mr.
Olphie has been actively involved in the music industry for twenty five (25)
years, entering as an Account Representative with the New York City branch
office of the American Society of Composers, Authors and Publishers (ASCAP) in
1979. In 1982 Mr. Olphie was offered, and accepted, a position with Record
World, a regionally based record franchise. He was promoted to the role of
Public Relations Director shortly thereafter and remained with the company until
1989, at which time he accepted a position with CBS Records as an Account
Service Representative.





In 1991,
Mr. Olphie accepted a position as General Manager of SOUL/MCA Records, a joint
venture between Sound of Urban Listeners (SOUL) and MCA Records, Inc. of New
York City. His responsibilities included the day-to-day activities of an
independent record company distributed by major label and the marketing and
management of several SOUL/MCA recording acts. At SOUL/MCA, Mr. Olphie received
several Gold and Platinum awards for his role in the success of several
recording acts including Public Enemy, the Young Black Teenagers, and the movie
“Juice” and its related soundtrack. In addition, Mr. Olphie was responsible for
negotiating the terms and promotional success for the “Bomb Squad”; renowned
producers, Hank and Keith Shocklee. The likes of Vanessa Williams, “The Right
Stuff”, Bobby Brown, Bell, Biv, Devoe,” I Thought it was Me”, Madonna, “Like a
Prayer”, Ice Cube, Son of Bazerk, Jody Watley, etc. to name a few. To date, Mr.
Olphie has concluded approximately twenty five (25) artist recording contracts
for both major and independent record labels as producer and/or executive
producer including Danny Gatton on Elektra Entertainment, a division of Warner
Communications, Inc. (nominated for “Best Rock Instrumental – 1992 Grammy
Awards”); Spectrum City (currently known as Public Enemy) on Hollywood Records,
a division of the Walt Disney Company specifically the movie “South Central:,
Produced by Oliver Stone; Jammy on Vibe Records, Inc. (distributed nationally by
Landmark Distributors, Inc.); Ricca on Epic Records, a division of SONY and
Producer of former Vibe Records recording artist Chantele Doucette winner of the
2003 Adult Singer award for CBS Television’s Star Search show. In addition, Ms.
Doucette was awarded a Sony Music recording contract. In 1993 Mr. Olphie joined
Independent National Distribution Inc. (INDI) and became their New York City
Sales Representative.





16




Robert
S. McCoy, Jr., Director





Since May
2004, Robert S. McCoy, Jr. has been a director of Vibe Records, Inc. He retired
in 2003 after 19 years with Wachovia Corporation and successor companies. Mr.
McCoy had been Vice Chairman and Chief Financial Officer of Wachovia. Prior to
joining the banking industry Mr. McCoy was with Price Waterhouse & Co. for
23 years. Mr. McCoy currently serves on the Board of Directors of four public
companies; Krispy Kreme Doughnuts, Inc, MedCath Corporation, Website Pros, Inc.,
and Benacquista Galleries, Inc. He also serves on the board of additional
private companies in which he is an investor.





Dr.
Michael L. Tyler, Director, Vice President and Secretary





Since May
2004, Dr. Michael L. Tyler has been a Director, Vice President and Secretary of
Vibe Records, Inc.  Dr. Tyler graduated magna cum laude from
Columbia State Community College in Columbia, Tennessee, in 1977 with
Associate of Science degrees in chemistry and biology.  He continued his
education at Memphis State University in Memphis, TN., graduating
magna cum laude in 1979 with Bachelor of Science degrees in chemistry and
biology.  His doctorate degree in dentistry was earned from the University
of Tennessee Center for the Health Sciences in Memphis, TN., in 1983. Dr. Tyler
has been practicing general and family dentistry for the last 21 years.  He
is a member of the American Dental Association, Tennessee Dental Association,
and Maury County Dental Association.  He is on staff at
Maury Regional Hospital. He is a member of Rotary International,
serving his local club as president, and has been honored with a Paul Harris
Fellowship.





Thomas
G. Kober, C.P.A., Director, Vice President and Treasurer





Since May
2004, Thomas G. Kober, has been a Director of Vibe Records, Inc. and has served
as Vice President and Treasurer since July 2007.  Mr. Kober’s Academic
and Professional Credentials consist of the following: Bachelor of Science,
Accounting, Manhattan College, 1979; Certified Public Accountant, 1985. He
is presently a Partner in Blanchfield, Meyer Kober and Rizzo LLP, since 1986 and
specializes in the construction industry, Sarbanes-Oxley compliance
requirements, consulting public companies regarding SEC filing requirements,
computer hardware and software consulting with extensive experience in
consulting on mergers and acquisitions as well as negotiating with financial
institutions.





Mr.
Kober’s Professional Affiliations include: American Institute of Certified
Public Accountants, Member Information Technology Division, Member Taxation
Committee, New York State Society of Certified Public Accountants, Member Real
Estate Contractors Committee, Long Island Chapter of the Construction Financial
Management Association, Former Treasurer and member of Board of Directors, Long
Island Association - Tax Policy Committee, Board member of various charitable
endeavors.





Item
11.  Executive Compensation
  The
following table sets forth the annual and long-term compensation paid to the
Company’s executive officers.  No other executive officers earned more
than $100,000 per year at the end of the last completed fiscal
year.
 
 Summary
Compensation Table
 
 Name
      & Principal Position
              
              Year
              
              
              Salary
      ($)
              
              
              Bonus
      ($)
              
              
              Stock
      Awards($)
              
              
              Option
      Awards ($)
              
              
              Non-Equity
      Incentive Plan Compensation ($)
              
              
              Change
      in Pension Value and Non-Qualified Deferred Compensation Earnings
      ($)
              
              
              All
      Other Compensation ($)
              
              
              Total
      ($)Timothy
      J. Olphie, President and CEO
              
              2007
              
              $
              75,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              $
              -
              
              
              $
              -James
      Price
              
              
              2007
              
              
              $
              75,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              $
              75,000Presidentand
                Chief
      Executive Officer
              
              
              2006
              
              
              $
              75,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              $
              75,000


17




Outstanding
Equity Awards at Fiscal Year-End Table.
  None.
 
 Employment
Agreements
  The
Company entered into a three (3) year employment agreement with Mr. Olphie on
July 5, 2006. Under such agreement, Mr. Olphie receives annual compensation of
($75,000), full health insurance benefits, a minimum of fifteen (15) cumulative
sick days per year, a minimum of fifteen (15) cumulative vacation days per year;
he is entitled to life insurance not to exceed $500,000 paid by the Company with
Mr. Olphie designating the beneficiary; yearly bonus of five percent (5%) of the
after tax profits of the Company and any subsidiary companies that were
subsidiaries or part of the Company during the term of his agreement. Mr. Olphie
will eventually be provided with a company car for his business and personal
use, a pension plan with a minimum of one for one dollars ($1) dollars
contributed by the Company for each one dollar ($1) contributed by Mr.
Olphie.
 
 Should
Mr. Olphie become totally disabled during the term of the Agreement and remain
so for a period in excess of ninety (90) days, the Company shall pay him five
thousand dollars ($5,000) each month starting ninety (90) days after the
disability began and payments will remain in effect until the Executive is no
longer disabled or reaches the age 65. Health benefits shall remain in effect
without lapse during any such period while Mr. Olphie is disabled.
 
 The
Company and Mr. Olphie plan to enter into an amendment to his employment
agreement pursuant to which Mr. Olphie agreed to reduce his number of vacation
days per year from a minimum of thirty cumulative vacation days per year to a
maximum of fifteen cumulative vacation days per year.
 
 Board
of Directors
  The
Company intends to offer compensation of $5,000 per annum for service on its
Board.
 Item 12.  Security
Ownership of Certain Beneficial Owners and Management
 
 The
following table indicates beneficial ownership of the Company’s common stock as
of December 31st, 2008 by:
  ·
              Each
      person or entity known by the Company to beneficially own more than 5% of
      the outstanding shares of the Company’s common stock;·
              Each
      executive officer and director of the Company; and·
              All
      executive officers and directors of the Company as a
  group.
  Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities.  Percentage of beneficial ownership is
      based on 13,489,201 shares of common stock outstanding as of December
      31st, 2008.  Unless other indicated, the address of each
      beneficial owner listed below is c/o Vibe Records, Inc., 824 Old Country
      Road, P.O. Box 8, Westbury, New York, 11590.Name and
    Address
              
              Number
      of Shares
              
              
              Percentage
      of Shares OwnedTimothy
      J. Olphie (1)
              
              
              5,484,925
              
              
              
              40.66Robert
      S. McCoy, Jr. (1)
              
              
              3,275,421
              
              
              
              24.28Thomas
      G. Kober (1)
              
              
              0
              
              
              
              0.00Michael
      L. Tyler (1)
              
              
              1,965,789
              
              
              
              14.57All
      Officers and Directors as a group (4 persons)
              
              
              10,726,135
              
              
              
              80.51(1)
      The
      address for each executive is the Company’s principal executive
      offices.


18




Item 13.  Certain
Relationships and Related Transactions, and Director
Independence




Other
than as disclosed below, there have been no transactions, or proposed
transactions, which have materially affected or will materially affect us in
which any director, executive officer or beneficial holder of more than 10% of
the outstanding common stock, or any of their respective relatives, spouses,
associates or affiliates, has had or will have any direct or material indirect
interest. We have no policy regarding entering into transactions with affiliated
parties.





On May
30, 2008, Vibe entered into convertible promissory notes with James Price for
$200,000 and with Robert S. McCoy for $225,000.  Interest on the
promissory notes shall accrue at the rate of 5% per annum.  The
promissory notes are convertible into Common Stock at the price of $0.25 per
share.  The Maturity Date of the promissory notes is the earlier of
August 28, 2008 or five days after the closing of any equity financing equal to
or greater than $500,000.





Off
the Hook Records, Inc:-Affiliate




Off the
Hook Records, Inc. is owned by the same shareholders of the Company. As of
September 30, 2008 the Company is owed $182,709 for advances make to Off the
Hook Records for office space, producer fees and related studio fees. The amount
is due on demand. As of December 31, 2008 the Company has not demanded
payment.





Blanchfield,
Meyer, Kober and Rizzo LLP





For the
period ended September 30, 2008 the firm Blanchfield, Meyer, Kober and
Rizzo(BMKR) has accrued Fees totaling 37,500 for accounting and bookkeeping
services  The company treasurer is a 20 % partner in this entity. No
payment has been made by the company and no demand has been made for
payment





In
addition BMKR has advance 19,708 for payment of various outstanding invoices due
to outside vendors. No demand has been made in regard to these
invoices





Item 14. Principal
Accountant Fees and Services




Audit
Fees




Audit fees for 2008 and 2007 were
$28,083 and $0, respectively.  All services provided by independent
accountants were approved by the audit committee.  Audit Fees consist
of fees billed for professional services rendered for the audit of the Company’s
annual statements, for review of interim consolidated financial statements
included in quarterly reports and services that are normally provided by S. W.
Hatfield, CPA  in connection with statutory and regulatory filings or
engagements.




Audit
Related Fees




The Company did not incur non audit
related fees from S. W. Hatfield, CPA in 2008 and 2007.  Audit-Related
Fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company’s
consolidated financial statements and are not reported under “Audit
Fees.”





Tax
Fees





The Company did not incur tax fees
from S. W. Hatfield, CPA in 2008 and 2007.  Tax Fees consist of fees
billed for professional services rendered for tax compliance.  These
services include assistance regarding federal, state and local tax
compliance.





All Other
Fees





The Audit Committee meets with the
independent auditor prior to the audit and discusses the planning and staffing
of the audit, approves in advance the engagement of the independent auditor for
all audit services and non-audit services and approves the fees and other terms
of any such engagement, and obtains periodically from the independent auditor a
formal verbal communication of the matters required to be discussed by
Statements of Auditing Standards No. 61 and SEC Rule 10(a).  In
addition, the Company obtains a letter describing all relationships between the
auditor and the Company and discusses with the auditor any disclosed
relationships or services that may impact auditor objectivity and
independence.





19




PART
IV




Item
15.Exhibits and Financial
Statement Schedules






(a)
            Exhibits
      and Financial Statements




Financial
      Statements.  See Item 8. Index to Financial
      Statements




(b)
            Exhibits




10.1
              Share
      Exchange Agreement by and between Vibe Records, Inc. Nevada (f/k/a
      Benacquista Galleries, Inc.) (the “Company”) and Vibe Records, Inc., dated
      April 4, 2008. (incorporated by reference and previously filed on Form 8-K
      on April 8, 2008)
 
 10.2
              Letter
      Agreement by and among the Company Timothy Olphie and James Price dated
      April 4, 2008. (incorporated by reference and previously filed on Form 8-K
      on April 8, 2008)
 
 10.3
              Agreement
      of Sale by and among the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated January 11, 2008 (incorporated by reference and
      previously filed on Form 8-K on January 16,
  2008)
 
 10.4
              Letter
      Agreement between the Company, Timothy Olphie and James Price dated April
      23, 2008, (incorporated by reference and previously filed on Form 8-K on
      April 29, 2008)10.5
              Letter
      Agreement between the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated May 12, 2008, (incorporated by reference and previously
      filed on Form 8-K on May 21, 2008).10.6
              Letter
      Agreement between the Company, Vibe Records, Inc., Timothy Olphie and
      James Price dated May 16, 2008, (incorporated by reference and previously
      filed on Form 8-K on May 21, 2008).10.7
              Agreement
      and Plan of Merger by and among the Company, Benacquista Acquisition Corp.
      and Vibe Records, Inc., dated May 30, 2008 (incorporated by reference and
      previously filed on Form 8-K on June 6,
2008).
 
 31*
              Certificate
      Pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32*
              Certificate
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.





20





VIBE
RECORDS, INC. NEVADA




Index to
Financial Statements




CONTENTS








Page





PageReport
      of Independent Registered Public Accounting Firm: S. W. Hatfield,
      CPA
            F-1Balance
      Sheets as of September 30, 2008 and 2007
            F-2Statements
      of Operations and Comprehensive Loss for the Years Ended September 30,
      2008, 2007 and January 13, 2003 (Inception) through September 30,
      2008
            F-3Statements
      of Cash Flows for the Years Ended September 30, 2008 and
    2007
            F-4Statements
      of Stockholders’ Equity (Deficit) for the Years Ended September 30, 2008
      and 2007
            F-5Notes
      to the Financial Statements
            F-7






















REPORT
OF REGISTERED INDEPENDENT
CERTIFIED PUBLIC ACCOUNTING FIRM




Board of
Directors and Stockholders
 Vibe
Records, Inc.
 
 We have
audited the accompanying balance sheets of Vibe Records, Inc. (a Nevada
corporation) as of September 30, 2008 and 2007 and the related statements of
operations and comprehensive loss, changes in stockholders' deficit and cash
flows for each of the years ended September 30, 2008 and 2007 and for the period
from January 13, 2003 (date of inception) through September 30, 2008,
respectively. These financial statements are the sole responsibility of the
Company's management. 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall 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 Vibe Records, Inc. (a Nevada
corporation) as of September 30, 2008 and 2007 and the results of its operations
and cash flows for each of the years ended September 30, 2008 and 2007 and for
the period from January 13, 2003 (date of inception) through September 30, 2008,
respectively, in conformity with generally accepted 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 3 to the financial
statements, the Company has no viable operations or significant assets and is
dependent upon significant stockholders to provide sufficient working capital to
maintain the integrity of the corporate entity. These circumstances create
substantial doubt about the Company's ability to continue as a going concern and
are discussed in Note 3. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.








/s/
      S.W. Hatfield,
    CPAS.W.
      HATFIELD, CPA































F-1




VIBE
RECORDS, INC.


BALANCE
SHEET


SEPTEMBER
30,








ASSETS2008
            
            
            2007CURRENT
      ASSETS:Cash
      on hand and in bank
            
            $
            0
            
            
            $
            11,468TOTAL
      CURRENT ASSETS
            
            
            0
            
            
            
            11,468PROPERTY
      AND EQUIPMENT - AT COST
            
            
            59,044
            
            
            
            54,584Less
      accumulated depreciation
            
            
            (27,624
            )
            
            
            (15,894
            )NET
      PROPERTY AND EQUIPMENT
            
            
            31,420
            
            
            
            38,690OTHER
      ASSETS:Due
      from affiliated entities
            
            
            182,709
            
            
            
            98,343Master
      recordings, net of reserve for impairment
            
            
            0
            
            
            
            0TOTAL
      ASSETS
            
            $
            214,129
            
            
            $
            148,501LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT
      LIABILITIES:Bank
      overdraft
            
            $
            417
            
            
            $
            0Note
      payable
            
            
            2,415,667
            
            
            
            1,176,127Accrued
      interest payable
            
            
            633,562
            
            
            
            472,675Accounts
      payable and accrued expenses
            
            
            180,145
            
            
            
            0TOTAL
      LIABILITIES
            
            
            3,229,791
            
            
            
            1,648,802COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITY (DEFICIT)Common stock -$.0001
      par value, 100,000,000 authorized14,564,267
      and 13,489,201 issued and outstanding respectively
            
            
            1,456
            
            
            
            1,348Additional
      paid in capital
            
            
            2,128,247
            
            
            
            2,257,652Treasury
      stock
            
            
            (734,867
            )
            
            
            (0
            )Accumulated
      deficit
            
            
            (4,410,498
            )
            
            
            (3,759,301
            )TOTAL
      STOCKHOLDERS’ EQUITY (DEFICIT)
            
            $
            (3,015,662
            )
            
            $ (1,500,301)\TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
            
            $
            214,129
            
            
            $
            148,501





The
      accompanying notes are an integral part of these combined financial
      statements.
            Page 1





F-2




VIBE
RECORDS, INC.


STATEMENT
OF OPERATIONS AND COMPREHENSIVE LOSS


FOR
THE NINE MONTHS ENDED SEPTEMBER 30,





January
      13,2003
      (inception)through
      September 302008
            
            
            2007
            
            
            2008REVENUES
            
            $
            0
            
            
            $
            0
            
            
            $
            0OPERATING
      EXPENSESResearch
      and artist developments costs
            
            
            177,385
            
            
            
            243,043
            
            
            
            533,378General
      and administrative expenses
            
            
            65,147
            
            
            
            95,407
            
            
            
            2,636,420Professional
      fees
            
            
            197,539
            
            
            
            10,025
            
            
            
            468,815TOTAL
      OPERATING EXPENSES
            
            
            440,071
            
            
            
            348,475
            
            
            
            3,638,613(LOSS)
      FROM OPERATIONS
            
            
            (440,071
            )
            
            
            (348,475
            )
            
            
            (3,638,613
            )OTHER
      EXPENSES (INTEREST)
            
            
            211,126
            
            
            
            289,115
            
            
            
            765,955NET
      (LOSS) BEFORE INCOME TAXES
            
            
            (651,197
            )
            
            
            (637,590
            )
            
            
            (4,404,568
            )PROVISION
      FOR INCOME TAXES
            
            
            0
            
            
            
            0
            
            
            
            (5,930
            )NET
      (LOSS)
            
            
            (651,197
            )
            
            
            (637,590
            )
            
            
            (4,410,498
            )OTHER
      COMPREHENSIVE INCOME
            
            
            0
            
            
            
            0
            
            
            
            0COMPREHENSIVE
      LOSS
            
            $
            (651,197
            )
            
            $
            (637,590
            )
            
            $
            (4,410,498
            )Loss
      per weighted-average share of common stock outstanding, computed on net
      loss-basic and fully diluted
            
            
            (0.04
            )
            
            
            (0.05
            )
            
            
            (.36
            )Weighted-average
      number of shares of common stock outstanding basic and fully
      diluted
            
            
            13,817,542
            
            
            
            12,212,708





The
      accompanying notes are an integral part of these combined financial
      statements.
            Page 2




F-3





VIBE
RECORDS, INC.


STATEMENT
OF CASH FLOWS


FOR
THE YEAR ENDED SEPTEMBER 30,


January
      13,2003
      (inception)through
      September 302008
            
            
            2007
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss for the year
            
            $
            (651,197
            )
            
            $
            (637,590
            )
            
            
            (4,410,498
            )Adjustments
      to reconcile net loss to net cash provided by operating
      activitiesDepreciation
            
            
            11,730
            
            
            
            10,636
            
            
            
            27,624Increase
      (Decrease) inAccounts
      payable
            
            
            180,558
            
            
            
            0
            
            
            
            180,145Accrued
      interest payable
            
            
            156,887
            
            
            
            230,300
            
            
            
            633,562NET
      CASH (USED) IN OPERATING ACTIVITIES
            
            
            (302,022
            )
            
            
            (396,654
            )
            
            
            (3,569,167
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      advanced to affiliated parties
            
            
            (84,366
            )
            
            
            (42,911
            )
            
            
            (182,709
            )Cash
      paid to acquire property and equipment
            
            
            (4,460
            )
            
            
            (5,359
            )
            
            
            (59,044
            )NET
      CASH (USED) IN INVESTING ACTIVITIES
            
            
            (88,826
            )
            
            
            (48,270
            )
            
            
            (241,753
            )CASH FLOWS FROM FINANCING
      ACTIVITIES:Increase
      in bank overdraft
            
            
            417
            
            
            
            0Cash
      received on notes payable
            
            
            878,963
            
            
            
            453,762
            
            
            
            4,320,787Purchase
      of Treasury Stock
            
            
            (500,000
            )
            
            
            
            
            
            
            (509,867
            )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            379,380
            
            
            
            453,762
            
            
            
            3,810,920(DECREASE)
      IN CASH
            
            
            (11,468
            )
            
            
            8,838
            
            
            
            0CASH
      AT BEGINNING OF PERIOD
            
            
            11,468
            
            
            
            2,630
            
            
            
            0CASH
      AT END OF PERIOD
            
            $
            0
            
            
            
            11,468
            
            
            
            0SUPPLEMENTAL
      DISCLOSURE OF INTEREST AND INCOME TAXES PAIDInterest
      paid during the period
            
            $
            54,239
            
            
            $
            58,815
            
            
            
            132,393Income
      taxes paid during the period
            
            $
            0
            
            
            $
            0
            
            
            
            5,930SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIESAcquisition
      of treasury stock with note payable
            
            $
            225,000
            
            
            $
            -Notes(s)
      payable converted into common stock
            
            $
            0
            
            
            $
            1,600,000





The
      accompanying notes are an integral part of these combined financial
      statements.
            Page
      3




F-4





VIBE
RECORDS, INC.


STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)


YEARS
ENDED SEPTEMBER 30, 2008, AND 2007





DeficitAccumulatedAdditional
            
            
            Stock
            
            
            
            
            
            During
      theCommon
    Stock
            
            
            Paid-in
            
            
            Subscription
            
            
            Treasury
            
            
            DevelopmentShares
            
            
            Amount
            
            
            Capital
            
            
            Receivable
            
            
            Stock
            
            
            Stage
            
            
            TotalBalances March
      8, 2004 (date of  inception)
            
            
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-Shares
      issued for  contribution of recording library
            
            
            5,025,000
            
            
            
            503
            
            
            
            623,497
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            624,000Shares
      issued for payment of debt guarantees
            
            
            7,184,201
            
            
            
            717
            
            
            
            34,283
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            35,000Capital
      contributionsNet loss for the
      period
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,665,740
            )
            
            
            (1,665,740
            )Balance
      - September 30, 2004
            
            
            12,209,201
            
            
            
            1,220
            
            
            
            657,780
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            (1,665,740
            )
            
            
            (1,006,740
            )Capital
      contributionsNet loss for the
      period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (686,551
            )
            
            
            (686,551
            )Balance
      – September 30, 2005
            
            
            12,209,201
            
            
            
            1,220
            
            
            
            657,780
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            (2,352,291
            )
            
            
            (1,693,291
            )Shares
      issued Underlying  Warrants issued for Notes
      receivableCapital
      contributionsNet loss for the
      period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (769,420
            )
            
            
            (769,420
            )





The
      accompanying notes are an integral part of these combined financial
      statements.
            Page
      4




F-5




VIBE
RECORDS, INC.


STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)


YEARS
ENDED SEPTEMBER 30, 2008, AND 2007





DeficitAccumulatedAdditional
            
            
            Stock
            
            
            
            
            
            During
      theCommon
    Stock
            
            
            Paid-in
            
            
            Subscription
            
            
            Treasury
            
            
            DevelopmentShares
            
            
            Amount
            
            
            Capital
            
            
            Receivable
            
            
            Stock
            
            
            Stage
            
            
            TotalBalance
      – September 30, 2006
            
            
            12,209,201
            
            
            
            1,220
            
            
            
            657,780
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            (3,121,711
            )
            
            
            (2,462,711
            )Conversion
      to notes to common stock
            
            
            1,280,000
            
            
            
            128
            
            
            
            1,599,872
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,600,000Net loss for the
      period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (637,590
            )
            
            
            (637,590
            )Balance
      September 30, 2007
            
            
            13,489,201
            
            
            
            1,348
            
            
            
            2,257,692
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            3,759,301
            
            
            
            (1,500,301
            )Effect
      of reverse acquisition
            
            
            1,075,066
            
            
            
            108
            
            
            
            (129,405
            )
            
            
            -0-
            
            
            
            (9,867
            )
            
            
            
            
            
            
            (139,164
            )Purchase
      of treasury stock
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            (725,000
            )
            
            
            
            
            
            
            (725,000
            )Net loss for the
      period
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-
            
            
            
            (651,197
            )
            
            
            (657,197
            )14,564,267
            
            
            
            1,456
            
            
            
            2,128,247
            
            
            
            -0-
            
            
            
            (734,867
            )
            
            
            (4,410,498
            )








The
      accompanying notes are an integral part of these combined financial
      statements.
            Page
      5




F-6





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
1 - NATURE OF BUSINESS





Organization and
Nature of Operations-On January 17, 2003, Vibe Records, Inc. (formerly Benaquista Galleries,
Inc.) (“the Company”) was organized under the laws of the State of Nevada to do
business as an independent record label.  As an independent label it
distributes and produces recordings in all electronic forms as well as operates
a recording and production facility.





The
Company intends to attempt to secure exclusive standard industry recording
contracts for between three (3) to five (5) new artists per year.  The
Company utilizes a highly focused artist selection process.  The
artist’s value will be significantly increased through the support of the
Company’s specialized and well seasoned management team, modest recording
budgets supported by a state of-the-art recording studio, strategic alliances
with a renowned audio engineer, and the use of a major manufacturing and
distributing firm.  Furthermore, the Company will utilize these
economic efficiencies to seek out and enter into agreements with pre-established
artists.  Arrangements with established artists will allow the Company
to offer profit sharing ventures with established artists in which the artists
submit their master recordings (while retaining their own ownership rights) and
license the master recordings to the Company for manufacture, distribution and
promotion.





The
Company will also house and operate state of the art recording and production
facilities.  The facilities will be utilized not only by the Company’s
internal artist roster but also will be available for outside
contracting.





Through
these and other endeavors, the Company intends to simultaneously promote and
brand the Vibe Records label.  The Company has relied principally upon
cash flows from equity issuances and capital contributions from its majority
shareholders to sustain operations.





During
the period ending June 30, 2008, the Company completed a share exchange
acquisition with Vibe Records, Inc. of New York.  The Company acquired
100% of the stock of Vibe for 13,489,201 shares of Benacquista
Galleries.  The Company has changed its name to Vibe Records,
Inc.  This transaction resulted in a change in control of Vibe
Records, Inc.





“The
acquisition of Vibe Records, Inc. (Vibe) by Benaquista Galleries, Inc.
(Benaquista) effected a change in control of Benaquista and is accounted for as
a “reverse acquisition” whereby Vibe is the accounting acquiror for financial
statement purposes.  Accordingly, for all periods subsequent to the
“reverse merger” transaction, the financial statements of the Company will
reflect the historical financial statements of Vibe from its inception and the
operations of Benaquista for all periods subsequent to the May 30, 2008
transaction date."





In a
separate transaction, Benaquista Galleries, Inc.’s President and CEO James Price
exercised a share agreement with the Company would acquire 396,910 of Price’s
896,910 common shares for a payment of $725,000 or approximately $1.82 per
share.




F-7





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES





Consolidation- The consolidated financial statements contain the accounts of the
Company for all periods presented and the accounts of its wholly owned
subsidiary.  All intercompany accounts and transactions have been
eliminated in consolidation.





Cash - The
Company considers all highly liquid investments with a maturity of three months
or less to be cash equivalents.





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





Revenue
Recognition-Revenues
are recognized by the Company based on the various types of transactions
generating the revenue.  The Company recognized art revenue when
persuasive evidence of an arrangement exists, services have been rendered or
products have been delivered; the price to the buyer is fixed and determinable;
and collectibility is reasonably assured.





Advertising
Expense- Advertising costs are expensed as incurred. There were no
advertising expense for the period ending September 30, 2008 and
2007.





Income Taxes- The Company recognizes an asset or liability for the deferred tax
consequences of all temporary differences between the tax basis of assets or
liabilities and their reported amounts in the consolidated financial statements
that will result in taxable or deductible amounts in future years when the
reported amounts of the assets or liabilities are recovered or
settled.  Deferred tax assets or liabilities are measured using the
enacted tax rates that will be in effect when the differences are expected to
reverse.  Deferred tax assets are reviewed periodically for
recoverability and valuation allowances are provided as necessary.





Use of Estimates–The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.





Fair Value of
Financial Instruments - The carrying amounts reported in the accompanying
consolidated financial statements for current assets approximate fair values
because of the immediate or short-term maturities of these financial
instruments.





Net Income (Loss)
Per Share-Basic and Diluted - Basic income (loss) per common share is
computed on the basis of the weighted-average number of common shares
outstanding during the period.  Diluted income per share is computed
on the basis of the weighted-average number of common shares and all potentially
issuable common shares outstanding during the year.  There are no
potentially dilutive securities as of September 30, 2008 and 2007.





F-8





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)





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





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





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





F-9





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (continued)





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





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





NOTE
3 - GOING CONCERN





Business
Condition - The Company has a limited operating history.  The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate continuation of
the Company as a going concern.  During the year ended September 30,
2008 and 2007, the Company had a net loss from continuing operations of $651,197
and $637,590 and it had negative cash flows from operations of $302,022 and
$396,654.  In addition, the Company had a deficit accumulated in the
development stage of $4,410,498 and $3,759,301 as of September 30, 2008 and
2007.  This situation raises substantial doubt about its ability to
continue as a going concern.





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





The
company is presently pursuing additional financing.





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





F-10





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007





NOTE
3 - GOING CONCERN (continued)





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





NOTE
4 - PROPERTY AND EQUIPMENT





Property
and equipment as of September 30, 2008 and 2007, is comprised of the
following:





2008
            
            
            2007Recording
      and computer equipment
            
            $
            20,523
            
            
            $
            19,105Furniture
      and fixtures
            
            
            8,268
            
            
            
            5,226Automobile
            
            
            30,253
            
            
            
            30,25359,044
            
            
            
            54,584Less:  Accumulated
      depreciation
            
            
            (27,624
            )
            
            
            (15,894
            )Net
      property and equipment
            
            $
            31,420
            
            
            $
            38,690





Depreciation
expense for the years ended September 30, 2008 and 2007 was $11,730 and $11,422,
respectively.





NOTE
5 - MASTER RECORDINGS





The
Company acquired the rights to use the Vibe Records, Inc. trademark license,
master recordings and its name.  The Company purchased these rights by
issuing stock to the shareholders of Vibe Records, Inc.  The valuation
of the asset is based upon experience of the management of the Company and their
knowledge of the costs of producing the master recordings.  Management
has provided a 100% valuation allowance in regard to this asset.





NOTE
6 - STOCKHOLDERS’ EQUITY





Vibe
Records, Inc. and Vibe Record Holdings were merged on October 1,
2008.  All financial reporting has always been done using combining
entries.  The following stock transfers are for the combined
(consolidated) entities.





On March
8, 2004, 5,025,000 shares of common stock were issued to the controlling
shareholder in connection with the contribution of the Vibe trademark and the
master recording library.





On March
8, 2004, 7,184,201 shares of common stock were issued to various individuals for
payment of outstanding debt and guarantee of notes payable.





F-11





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
6 - STOCKHOLDERS’ EQUITY (continued)





On
September 30, 2004, 1,280,000 share of common stock were issued upon the
conversion of $1,600,000 in notes payable @ $1.25 per share.





On May
30, 2008, in connection with the Vibe-Benaquista merger 100% of the outstanding
shares of Vibe Records, Inc. were exchanged for 13,489,201 shares of Benaquista
common stock.





On May
30, 2008, the Company purchased 396,940 of its common stock from James Price for
a price of $725,000.





NOTE
7 - INCOME TAXES





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





2008
            
            
            2007Federal:Current
            
            $
            
            
            
            $DeferredState:CurrentDeferredTotals
            
            $
            
            
            
            $





The
Company’s income tax expense for the years ended September 30, 2008 and 2007,
respectively, differed from the statutory federal rate of 34 percent as
follows:





2008
            
            
            2007Statutory
      rate applied to loss before income taxes
            
            $
            (221,407
            )
            
            $
            (216,781
            )Increase
      (decrease) in income taxes resulting from:Net
      operating loss from non deductible in current year
            
            
            221,407
            
            
            
            216,781Income
      Expense
            
            $
            0
            
            
            $
            0





The
Company has paid no federal or state income taxes since its
incorporation.  As of September 30, 2008 and 2007, the Company has net
operation loss carried forward of approximate $3,000,000.




F-12





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007





NOTE
8 - LOANS PAYABLE





The
Company maintains a working capital line of credit for $600,000 with Wachovia
Bank.  Interest is paid monthly at the bank’s prime
rate.  The note is 100% secured by marketable securities of a
shareholder.  The balance outstanding as of September 30, 2008 and
2007 was $ 599,921 and $ 599,921 respectively.





Vibe
Records Holding Inc. issued a Promissory Note, dated March 31, 2004, for $25,000
to Robert L. Fulton.  Said note called for interest at a rate of Ten
Percent.  Principal and interest were made  payable on
December 31, 2004.  Mr. Fulton shall have the right, for a period of
thirty (30) business days following effectiveness of any registration statement
filed by the Company,  to convert the principal and accrued but unpaid
interest into shares of the Company’s Common Stock at $1.25 per
share.  In addition, the note was collateralized by a Pledge Agreement
for 30,000 Shares of Vibe Records, Inc. stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$25,000 to Ronald Alcus. Said note called for interest at a rate of Ten
Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Alcus shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records, Inc.
stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$25,000 to Paul Scaturro. Said note called for interest at a rate of Ten
Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Scaturro shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records, Inc.
stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$35,000 to Robert Fishman.  Said note called for interest at a rate of
Ten Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Fishman shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 30,000 Shares of Vibe Records, Inc.
stock.





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$70,000 to Kevin Kemp.  Said note called for interest at a rate of Ten
Percent.  Principal and interest were made payable on December 31,
2004.  Mr. Kemp shall have the right for a period of thirty (30)
business days following effectiveness of any registration statement filed by the
Company, to convert the principal and accrued but unpaid interest into shares of
the Company’s Common Stock at $1.25 per share.  In addition, the note
was collateralized by a Pledge Agreement for 100,000 Shares of Vibe Records,
Inc. stock.




F-13





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007





NOTE
8 - LOANS PAYABLE (continued)





Vibe
Records Holdings Inc. issued a Promissory Note, dated March 31, 2004, for
$25,000 to James P. Amonette.  Said note called for interest at a rate
of Ten Percent.  Principal and interest were made payable on December
31, 2004.  Mr. Amonette shall have the right for a period of thirty
(30) business days following effectiveness of any registration statement filed
by the Company, to convert the principal and accrued but unpaid interest into
shares of the Company’s Common Stock at $1.25 per share.  In addition,
the note was collateralized by a Pledge Agreement for 20,000 Shares of Vibe
Records, Inc. stock.





As of
March 31, 2008, we have an aggregate principal amount, including accrued
interest thereon, of $306,365 due under our convertible promissory notes payable
to Robert I. Fulton, Ronald Alcus, Paul Scaturro, Robert Fishman, Kevin Kemp,
James Amonette, as described above.  We are currently negotiating with
the holders of this indebtedness to convert all amounts and payables into an
aggregate of 278,250 shares of our common stock, based on a conversion price
equal to $1.25 per share.  We have not finalized any agreement with
these Noteholders and there is no assurance that we will ever finalize and enter
into any such agreement with these Noteholders.





The
Company has been advanced various sums by Mr. Robert S. McCoy and Michael
Tyler.  These notes are secured in part by 30% of the issued and
outstanding stock of the Company owned by the majority
shareholder.  These loans bear interest at 10% and are due upon
demand.





On March
31, 2008, approximately $1,600,000 in principal amounts owed to Mr. McCoy and
Mr. Tyler
were converted to Common Stock at $1.25 per share.





The
following is a summary of the outstanding principal and accrued
interest:





Principal
            
            
            Accrued Interest
            
            
            TotalRobert
      McCoy
            
            $
            930,443
            
            
            $
            326,112
            
            
            $
            1,256,555Michael
      Tyler
            
            
            270,700
            
            
            
            190,521
            
            
            
            461,221James
      Price
            
            
            361,235
            
            
            
            6,136
            
            
            
            367,371Totals
            
            $
            1,562,378
            
            
            $
            522,769
            
            
            $
            2,085,147





The
Company has incurred a bank note for the purchase of an
automobile.  The note calls for payments of principal and interest of
$693.62 with a final payment due May 25, 2011.  The note is
collateralized by the automobile costing $30,252.





F-14





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
9 - LEGAL PROCEEDINGS





Vibe
Records, Inc. has filed a Summons and Complaint against the Baker Girls for
breach of their Artist Recording Contract, Use and Misappropriation of Trade
Secrets, Usurpation of Corporate Assets and Opportunity, Breach of Fiduciary
Obligations, Tortious Interference with Contractual Relations, Tortious
Interference with Prospective Business Relations, Fraud, Unjust Enrichment,
Copyright Infringement and False Designation of Origin under the Lanham
Act.  The Company is seeking a Preliminary and Permanent Injunction,
and Accounting as well as the imposition of a Constructive Trust as well as One
Million Dollars in compensatory and punitive damages before the Court of Maury
County in the State of Tennessee.





In
addition, the Company is party to certain previous material disputes as
follows:





Vibe Records, Inc. and Vibe
Ventures, Inc.:





Vibe
Records, Inc. (Records) and Vibe Ventures, Inc. (Ventures) (an unrelated third
party) are parties to a 1990’s declaratory judgment action. That litigation was
commenced to determine each entity’s entitlement to use the “Vibe” trademark,
and resulted in an agreement regarding the respective rights to the use of the
intellectual property (i.e. Vibe trademark.)  The agreement was
memorialized in a settlement agreement (the “Settlement Agreement”) and an
accompanying





Vibe Records, Inc. and Vibe
Ventures, Inc.:





Licensing
agreement (the “License” entered into on or about May 29, 1998, between the two
unrelated companies.  Pursuant to the Settlement Agreement, Vibe
Records agreed to assign the registration for its mark (as defined in the
Settlement Agreement) to Vibe Ventures, pursuant to an assignment attached to
the Settlement Agreement in exchange for Vibe Venture’s license of Vibe Records
mark, pursuant to the License.  The License set forth in pertinent
parts, Vibe Records’ right, as follows:





1.
            Ventures
      hereby grants to Records the right and license to use the Mark only as the
      name  of a record label and for records distribution, meaning
      wholesale distribution of music by a record company, but except as
      specifically permitted in paragraph 2 of the
  License.





2.
            Nothing
      in the License shall prohibit Records from using the Mark to identify
      Records as a record label on records, tapes, CD’s and/or other media now
      existing or existing in the future used to record music (and on
      merchandise such as clothing sold to promote Records’
      record  label) (the “Licensed Products”) sold through direct
      mail, the Internet and/or in retail
stores.





3.
            Ventures
      will not itself use, nor will it enter into any license or other agreement
      to permit the use of the Mark on Licensed Products, nor will it use the
      word “VIBE” in
      immediate proximity to the exact word Records on any Licensed
      products.




F-15





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007





NOTE
9 - LEGAL PROCEEDINGS (continued)





Based
upon this agreement, it is Vibe Records’ intellectual property counsel’s opinion
that Vibe Ventures is not entitled to create a record label and/or distribute
records under the mark assigned to Vibe Records in as much as such use would
constitute a use of the Mark on a Licensed Product in violation of paragraph 3
of the License.





On July
5, 2006, The Wicks Group of Companies, L.L.C., A New York-based private equity
firm, announced their acquisition of VIBE Ventures, the world’s leading urban
music and lifestyle magazine.  Along with their acquisition,
management expressed a commitment to extend the VIBE brand into multiple media
platforms and distribution channels, while strengthening its unique position
among it base of young and multicultural consumers.  A contemporaneous
full page advertisement in the June 2006 addition of Vibe Magazine which the
Company’s legal counsel believes is clear infringement on Vibe Records valued
licensed rights.  Furthermore, Vibe Magazine is now promoting other
internet music activities available for sale on their website.





On or
about June 14, 2006, Vibe Records, through it intellectual property counsel,
served notice upon Ventures to cease and desist from any further discussions
which reference, utilize or interfere with the license held by Vibe Records,
Inc.  Although Vibe Records is willing to discuss the possibility of a
strategic alliance with Vibe Ventures, a license agreement and/or an alternative
assignment of rights that would result in enhanced revenues for both Ventures
and Records, Vibe Records may seek damages against Vibe Ventures for
infringement on Vibe Records’ intellectual property rights pursuant to the
Agreement.





In
addition to the foregoing, the Company has pledged the Company’s intellectual
property rights in the name “Vibe Records” to Robert S. McCoy pursuant to a
Security Lien Agreement whereby McCoy holds a superior lien against any monies
received regarding the Trademark license Agreement with Vibe Ventures,
LLC.  This lien will be removed when the loans to Mr. McCoy are repaid
in the aggregate principal amount of $600,000.





On
February 11, 2008, the Company’s motion for an extension to discovery was
granted by the United States Patent and Trademark office whereby the Company
received a (90) day extension on discovery until May 12,
2008.  Currently, a Stipulation of Settlement is in discussion between
the parties.





NOTE
10 - COMMITMENTS AND CONTINGENCIES





Leases





The
Company entered into various lease agreements for office space expiring in
December 2007 calling for rent payments of $3,500 per month. Subsequent to the
balance sheet date the company entered into a new lease calling for monthly
payment of $1,850 plus real estate taxes.  Future minimum lease
payments are as follows:




F-16





VIBE
RECORDS, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007








NOTE
10 - COMMITMENTS AND CONTINGENCIES (continued)





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






NOTE
11 - RELATED PARTY TRANSACTIONS


The
Company has advanced approximately $182,709 and $98,343, respectively, as of
September 30, 2008 and 2007 to Off the Hook Records, Inc., an entity controlled
by the Company’s President and other shareholders of the
Company.  These advances were funded through loans made to the Company
by Company shareholders who are also shareholders of Off the Hook Records,
Inc.  These advances were used by Off the Hook Records, Inc. for
office space, producer fees and related studio fees.  The advances are
due on demand and non-interest bearing.  Due to the related party
nature of the transaction, no demand for payment has been made by the
Company.
 
 During
the year ended September 30, 2008, the Company accrued approximately $37,500 to
an accounting firm in Hauppauge, New York for accounting and bookkeeping
services.  Additionally, through September 30, 2008, the Company has
accrued approximately $19,708 for items paid in cash by the accounting firm on
behalf of the Company.  A partner in the accounting firm providing
services and paying amounts on behalf of the Company is a member of the
Company’s Board of Directors.  These amounts are reflected in
“accounts payable and accrued expenses” in the accompanying financial
statements.





F-17





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf on
January 9, 2009 by the undersigned, thereunto authorized.


VIBE
      RECORDS, INC. NEVADABy:
            /s/ 
      Timothy J. OlphieTimothy
      J. Olphie
              Chief
      Executive Officer, President and Chief Financial
  Officer






Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities on the date(s) indicated.




Name
            
            Title
            
            Date/s/ 
      Timothy J. Olphie
              _______________________
            
            Chief
      Executive Officer, President, Chairman of the Board, Director, Secretary
      and Chief Financial Officer
            
            January
      9, 2009/s/
      Michael L. Tyler
              _______________________
            
            Director
            
            January
      9, 2009/s/
      Robert S. McCoy, Jr.
              _______________________
            
            Director
            
            January
      9, 2009/s/
      Thomas G. Kober, Cpas
              _______________________
            
            Director
            
            January
      9, 2009






21