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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
     PURSUANT TO SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR
[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ________

                         COMMISSION FILE NUMBER 0-27499

                             VITAMINSHOPPE.COM, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                   22-3659179
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

501 PENHORN AVENUE, SECAUCUS, NEW JERSEY                 07094
(Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (888) 634-8555

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                 CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of class)

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. [ ]

As of March 16, 2001, the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant was approximately
$4,483,525. For purposes of this paragraph only, we have deemed our directors,
executive officers and 10% or greater shareholders to be affiliates.

As of March 16, 2001, the registrant had outstanding 7,277,574 shares of its
Class A common stock and 13,081,500 shares of its Class B common stock.


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                                TABLE OF CONTENTS

TABLE OF CONTENTS............................................................ ii

Part I.......................................................................  1
Item 1.  Business............................................................  1
Item 2.  Properties.......................................................... 13
Item 3.  Legal Proceedings................................................... 13
Item 4.  Submission of Matters to a Vote of Security Holders................. 13

Part II...................................................................... 14
Item 5.  Market for Registrant's Common Equity and Related Stockholder
          Matters............................................................ 14
Item 6.  Selected Financial Data............................................. 17
Item 7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations.............................................. 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......... 28
Item 8.  Financial Statements and Supplementary Data......................... 28
Item 9.  Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosure............................................... 29

Part III..................................................................... 29
Item 10. Directors and Executive Officers of the Registrant.................. 29
Item 11. Executive Compensation.............................................. 32
Item 12. Security Ownership of Certain Beneficial Owners and Management...... 40
Item 13. Certain Relationships and Related Transactions...................... 44

Part IV...................................................................... 48
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.... 48


The information on our Web site is not a part of this report. The Vitamin Shoppe
logo is a registered trademark, and The Vitamin Shoppe name, VitaminShoppe.com
and The Vitamin Shoppe Frequent Buyer Program are the trademarks and service
marks, of Vitamin Shoppe Industries Inc., and are used under license by
VitaminShoppe.com. This report contains other product names, trade names,
trademarks and service marks of these and other organizations, all of which are
the property of their respective owners.

As used in this document, "we," "our," "us" and the "Company" means
VitaminShoppe.com, Inc. and "The Vitamin Shoppe" refers to Vitamin Shoppe
Industries Inc.

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                                     PART I

ITEM 1.  BUSINESS.

VITAMINSHOPPE.COM

VitaminShoppe.com, Inc., a Delaware corporation organized in May 1999, is a
leading online source for products and content related to vitamins, nutritional
supplements and minerals. Our original www.VitaminShoppe.com Web site, which was
launched in April 1998, and our new Web site, which launched in June 2000
replacing the original site, have provided a convenient and informative shopping
experience for consumers desiring to purchase products that promote healthy
living. We offer an extensive selection of vitamins, nutritional supplements and
minerals and a comprehensive line of herbal formulas, homeopathic products,
personal care items, body building supplements, healthcare products and books on
health and nutrition. We sell our entire line of products at year-round
discounts generally ranging from 20% to 40% off suggested retail prices. Our Web
site incorporates our own health-related information and offers features from
credible third-party sources designed to assist consumers in making informed
decisions. In addition, our shopping experience offers customers reliable
product delivery and superior customer service.

Until July 1999, we operated as a division of Vitamin Shoppe Industries Inc., a
leading retail and catalog source that has done business as The Vitamin Shoppe
since it was established in 1977. Based in North Bergen, New Jersey, The Vitamin
Shoppe has 89 retail stores throughout the East Coast region and a monthly
catalog. The Vitamin Shoppe's catalog operations, including purchasing, design,
customer service, warehousing, packaging and shipping, are conducted from its
New Jersey offices.

When we assumed the operations of the online business, we entered into
intercompany agreements with The Vitamin Shoppe pursuant to which The Vitamin
Shoppe agreed to, among other things, perform certain functions to assist our
business, including procurement, merchandising, fulfillment, telephone-based
customer service and other administrative services. Pursuant to these
intercompany agreements, we also (1) license certain intellectual property,
including The Vitamin Shoppe logo, name and certain other marks, (2) market each
other's lines of distribution, (3) share certain databases and (4) indemnify
each other in connection with taxes and the operation of our respective
businesses.

Initially, the primary activities of VitaminShoppe.com consisted of refining our
business model and brand, designing and building our new Web site, recruiting
and training employees and negotiating advertising contracts with several major
Web portals. As our business developed, we focused on building the
infrastructure of our company and expanding customer service operations, and on
the design and building of our enhanced, state-of-the-art Web site which
launched in June 2000. Throughout, we have concentrated our efforts on creating
strategies to acquire new customers, build sales momentum and promote our brand.

PROPOSED MERGER WITH THE VITAMIN SHOPPE

On January 12, 2001, we entered into an Agreement and Plan of Merger with The
Vitamin Shoppe. As a result of the transactions contemplated by the Merger
Agreement, we would be merged with and into The Vitamin Shoppe, and the holders
of our Class A common stock would receive $1.00 per share in cash. At the
effective time of the merger, our separate corporate existence would terminate.

     The merger is subject to certain conditions, including approval of a
majority vote of our stockholders. A meeting of our stockholders to vote on the
merger has been scheduled for April 11, 2001. The Vitamin Shoppe, which holds
64.3% of common stock and 91.5% of the voting power of VitaminShoppe.com's
stock, has agreed to vote in favor of the merger. The Vitamin Shoppe's principal
shareholder has committed to

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provide equity financing for the merger. The merger is not subject to receipt of
financing, but does require the consent of The Vitamin Shoppe's lenders. Both
parties have the option to terminate the agreement of merger if the merger is
not completed by April 12, 2001. If the merger is not completed, we will likely
be forced to seek protection under the Federal bankruptcy laws or enter
liquidation proceedings.

WEB SITE

We believe that our Web site, which integrates commerce with content and
service, offers attractive benefits to consumers, including convenience, ease of
use, privacy, broad product selection and relevant product information,
customization and personalization.

Features and Capabilities. We emphasize ease of use and efficiency. We provide a
wide range of consumers-from the casual to the sophisticated consumer of
vitamins, nutritional supplements and minerals-with immediate access to the
products and information that will promote an informed purchase. Our Web site
features full keyword search functionality and other capabilities that enable
customers to search for and select products reliably. Our database includes
complete product listings with detailed information about ingredients. A keyword
search permits efficient comparisons within or across brands allowing customers
to compare the prices of various options and to select those that best meet
their personal criteria for price, brand and size. We provide consumers with the
ability to shop 24 hours per day, seven days per week, supported by online
customer service and a toll-free number.

Online Ordering. We provide customers with the ability to place their orders
easily and to gather a variety of items in their online shopping carts for rapid
checkout. Customers earn "points" in the Vitamin Shoppe Frequent Buyer Program,
its loyalty program, which they may redeem online or in The Vitamin Shoppe's
retail stores or catalog operations.

Customer Service. From the customer's initial experience with our Web site
through the order process to delivery of the product, we focus on customer
satisfaction. Customer service representatives provide timely responses to
customer inquiries by e-mail or telephone. These inquiries typically involve
questions about products or order status and requests for general support as to
use of the Web site. We have added additional capabilities that allow our
customers to check the status of orders online and enable us to offer special
product promotions that correlate to previous purchases.

Products. Our product selection includes over 18,000 items, representing
approximately 400 brands, including The Vitamin Shoppe brand. We offer consumers
a broad and deep complement of quality products at competitive prices. Our
year-round discounts generally range from 20% to 40% off suggested retail
prices. By carrying both national brands and The Vitamin Shoppe brand, we
believe that we meet the needs of casual, intermediate and sophisticated
consumers of vitamins, nutritional supplements and minerals, as well as both
brand-loyal and value-oriented customers. Our products come in various
formulations and delivery forms, including tablets, capsules, soft gels(R),
liquids and powders. We carry almost every national and popular brand of
vitamins, nutritional supplements and minerals, including TwinLabs(R), Nature's
Way(R) and Schiff(R), as well as The Vitamin Shoppe brand and less well-known
specialty brands. The primary product categories include:

o    Vitamins, Nutritional Supplements and Minerals. Vitamins, nutritional
     supplements and minerals are our largest category. We also feature all
     major and trace minerals, including calcium, boron, zinc, selenium,
     chromium, magnesium and potassium. We offer vitamins and minerals alone and
     in combinations to address the specific lifestyle, age and gender needs of
     our customers. Our nutritional supplement line includes glucosamine and
     chondroitin sulfate, coenzyme Q 10, essential fatty acids, carnitine,
     phosphatidylserine and numerous antioxidants.

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o    Herbal Products. Popular herbals include St. John's wort, ginkgo biloba,
     echinacea and kava kava. Herbals may be sold as a single herb, in
     combinations or as teas.

o    Homeopathic Products. These products draw on natural ingredients to aid
     digestion, blood circulation and ailments like headaches.

o    Personal Care Products. We offer natural alternatives to traditional lines
     of soaps, shampoos, moisturizers, toners, massage oils and other products.

o    Books. Our well-balanced selection of books on health and nutrition permit
     customers to educate themselves about health-related topics.

o    Body Building Products. We offer a wide selection of products designed to
     assist beginner and advanced athletes in achieving higher muscular
     performance and endurance levels.

o    Healthcare Products. We offer over 150 healthcare products and accessories,
     such as massage products, posture and joint products and magnet therapy
     products, that complement our diverse product offerings.

Content. We supplement the product information available on our Web site with
easy access to information on topics related to health and nutrition from
well-respected third-party sources. In our Learning Center, we offer information
on health concerns, nutritional supplements, herbal formulas, drug interactions,
homeopathic medicine, diets and therapies. The Web site also highlights topics
of current interest. Our content is provided by independent third parties; most
is currently provided under a license from Health Notes Online, a well-known
online and CD-ROM encyclopedia of health and nutrition information.

In addition, our e-commerce Web site, www.VitaminShoppe.com, supports our
product listings with factual information, including an ingredient list for
every product that we carry. In recognition of the Food and Drug Administration
and Federal Trade Commission regulations concerning health claims and labeling,
information that could be construed as advisory or prescriptive in nature is
accessible only from credible third-party information sources.

We previously had arrangements with third party online information sources. All
of these were terminated or expired in the last half of 2000. Under these
agreements, we paid advertising fees to the content providers in order to have
access to their audience of potential customers who are interested in health and
wellness topics.

MERCHANDISING STRATEGY

We carry every significant domestic brand of vitamins, nutritional supplements
and minerals, as well as many smaller and less well-known specialty brands.
Consistent with The Vitamin Shoppe's successful strategy, we sell most of the
suppliers' full product lines. We also offer The Vitamin Shoppe brand products,
a premium brand manufactured for The Vitamin Shoppe. The Vitamin Shoppe brand,
which provides higher gross margins to us than other brands, constituted 34% of
our sales during 2000, as compared to 43% and 47% of our sales during 1999 and
1998, respectively. We sell over 18,000 different items. No single item
accounted for more than 2% of our sales during 2000. During 2000, our online
sales mix by product category was vitamins, nutritional supplements and minerals
(69%), body building (14%), herbals (12%), personal care (3%), homeopathic (1%),
books (1%).

We enjoy the economic benefit of The Vitamin Shoppe's relationships with a
diverse group of hundreds of vendors, as well as the purchasing economies
enjoyed by The Vitamin Shoppe as a result of its size and The Vitamin Shoppe
brand products.

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ADVERTISING AND MARKETING

We benefit from the direct marketing knowledge and expertise of our management
team and, under the administrative services agreement, personnel of The Vitamin
Shoppe. During 1999 and into the beginning of 2000, we launched and implemented
comprehensive advertising and marketing campaigns to increase awareness of the
VitaminShoppe.com brand and to acquire new customers through multiple channels,
including traditional and online advertising, direct marketing, and by expanding
and strengthening our strategic relationships. By the end of 2000, we had
discontinued traditional/media-based advertising campaigns, including
television, radio and print, and online sponsorship arrangements, in order to
conserve cash. However, we continue certain targeted advertising programs
including:

Cross-promotion. Through our co-marketing agreement with The Vitamin Shoppe, we
create significant brand awareness through cross-promotion in The Vitamin Shoppe
retail and catalog channels. The Vitamin Shoppe has 92 retail stores and also
distributes a monthly catalog. In addition, the www.vitaminshoppe.com url is
permanently displayed at all retail stores. See "Intercompany Agreements" below
for a description of the co-marketing agreement.

Direct Marketing. We apply direct marketing techniques aimed at attracting and
retaining quality customers and maintaining a high average order size. Direct
marketing programs include e-mail special offers or promotions to targeted
audience segments, including our current customers and those prospective
customers which are obtained through the rental of mailing lists.

Loyalty Programs. Our intercompany agreements with The Vitamin Shoppe permit our
customers to participate in the established Vitamin Shoppe Frequent Buyer
Program. We also target special offers and promotions to customer purchasing
habits reflected in information that we obtain from The Vitamin Shoppe's and our
own transactional histories, and we offer bonus incentives for the introduction
of new customers and the placement of repeat orders.

RELATIONSHIP WITH THE VITAMIN SHOPPE

Our business was conducted by The Vitamin Shoppe from our inception in October
1997 until July 1999, when we began to operate as a separate company.
VitaminShoppe.com was incorporated in May 1999 to operate the business as a
separate company. The Vitamin Shoppe owns all of the outstanding Class B common
stock of VitaminShoppe.com and is currently our principal stockholder.

We benefit from the existing operations of The Vitamin Shoppe and its economies
of scale in purchasing, supplier relationships, inventory management and direct
mail fulfillment. We believe that our intercompany agreements with The Vitamin
Shoppe have provided some competitive advantages over some of our online
competitors, which have enabled us to deliver value to our customers.

We believe that our relationship with The Vitamin Shoppe provides some important
benefits:

o    purchasing and merchandising expertise, including strong relationships with
     hundreds of vendors, which enhances our ability to provide a comprehensive
     selection of products at competitive prices;

o    full integration of order processing and product fulfillment through The
     Vitamin Shoppe's distribution center, which gives us the fulfillment
     capability to support growth;

o    the exclusive right to use The Vitamin Shoppe logo and name in online
     commerce, which provides the superior brand recognition that we believe is
     a strong motivating factor for new customers; and

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o    direct marketing knowledge, including access to information regarding more
     than 700,000 historical catalog and retail customers of The Vitamin Shoppe,
     and the ability to conduct cross-marketing, co-promotions and customer
     acquisition programs with The Vitamin Shoppe.

MANAGEMENT INFORMATION SYSTEMS

Our systems are designed to provide availability 24 hours per day, seven days
per week. Physical hosting and communication services are provided by a
nationally recognized firm, which provides redundant communications lines and
emergency power backup. Our systems have been designed based on industry
standard technologies and have been engineered to minimize system interruptions
in the event of outages or catastrophic occurrences. We have implemented load
balancing systems and redundant servers to provide for fault tolerance.

We launched an enhanced Web site, developed in conjunction with Sapient, a
leading e-services consultancy, in June 2000. It is dynamic, technologically
advanced, redundant and highly flexible with features and functionality which
can be regularly updated with the latest technology to accommodate changes in
our business environment (including new products and promotions as well as new
suppliers and business partners). It integrates our Web content with
personalized and customized marketing activities to acquire and retain new
customers, while preserving the security and integrity of customer information.

During fall 2000 we outsourced our ongoing Web site operations to Sapient,
rather than staffing a full-service technology department.

ORDER PROCESSING AND FULFILLMENT

Processing of our orders is handled by The Vitamin Shoppe's fully integrated
systems, which include product sourcing, warehouse management, inventory
management, order processing and order fulfillment. Our Web site is fully
integrated with The Vitamin Shoppe's warehouse fulfillment system, which
monitors the in-stock status of each item ordered, processes the order and
generates warehouse selection tickets and packing slips for order fulfillment.
The Vitamin Shoppe processes and fulfills our customer orders through its
facilities totaling 72,000 square feet in North Bergen, New Jersey.

Access to The Vitamin Shoppe's order processing and fulfillment systems enables
us to retain greater control over the quality, timeliness and cost of fulfilling
our product orders than competitors that outsource these services. In addition,
the scale of The Vitamin Shoppe's operations enables it to keep a large number
of items in stock. During 2000, The Vitamin Shoppe shipped an average of 27,000
packages weekly from its warehouse and distribution centers. The Vitamin
Shoppe's efficient operations and high levels of in-stock merchandise enabled us
during 1999 to provide same-business-day shipping on approximately 85% of online
orders received by 5:00 p.m. Eastern time. In mid 2000, we changed our default
shipping policy to standard shipping, and customers now generally receive orders
two business days after shipping.

COMPETITION

The vitamin, nutritional supplement and mineral market (VSM) was over $8.9
billion in 1998 and is expected to grow to $16.6 billion by 2003, yet it still
remains highly fragmented and competitive. VSM products are sold in numerous
retailing categories with no single company maintaining significant market
dominance.

We compete in a variety of retailing categories including health/natural
specialty retailers, drugstores, supermarkets and grocery stores, and mass
merchant retailers. Our competitors operate in one or more distribution
channels, including online commerce, retail stores, catalog operations and
direct sales. Most of

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these companies do not focus primarily on VSM retailing. Therefore, they do not
offer the breadth of VitaminShoppe.com's 18,000 products and 400 brands.

Health/Natural Specialty Retailers. This category is highly fragmented and
includes local, regional and national chains selling through retail, catalog, or
online channels. The largest participant in this sector is General Nutritional
Centers (GNC), which has a nationwide retail presence and a Web site, GNC.com
which is part of Drugstore.com's online operations. Another large competitor is
NBTY, which sells its private-label products through its Puritan's Pride and
Nutrition Headquarters mail order catalogs and its Vitamin World retail stores.
NBTY also sells through separate Vitamin World and Puritan's Pride Web sites.

Drugstores. This category is dominated by chains, such as Walgreen's, CVS and
RiteAid. The national chains are expanding their online presence. CVS acquired
soma.com and is expanding its online presence as cvs.com. RiteAid's online
presence is provided through drugstore.com. This category typically offers a
moderate selection of vitamins, nutritional supplements and minerals, focusing
instead on prescriptions and over-the-counter products. Their VSM offerings are
often not all-natural products.

Supermarkets and Grocery Stores. This category includes traditional
supermarkets, such as Safeway and Kroger, and natural-food markets, such as
Whole Foods and Wild Oats. Some of these companies entered the online market
with a limited offering of vitamins, nutritional supplements and minerals. Whole
Foods has created a lifestyle e-commerce site. Online grocery stores, such as
Netgrocer.com, also compete against us. This category generally offers an
extremely limited selection of vitamins, nutritional supplements and minerals
and infrequent discounts.

Mass Merchant Retailers. This category is dominated by companies such as
Wal-Mart, Kmart and Target, which have extensive retail locations but limited
online presence. These chains offer attractive pricing on vitamins, nutritional
supplements and minerals but have limited selection at retail stores and offer
little product information. Their online offerings focus on larger, big-ticket
items and typically do not include VSM products.

Many of our current and potential competitors have long operating histories,
larger customer bases, greater brand recognition and significantly greater
financial, marketing and other resources than we do. Our competitors may develop
products or services that are equal or superior to our solutions and may achieve
greater market acceptance than we do.

GOVERNMENT REGULATION

The formulation, manufacturing, processing, packaging, labeling, advertising,
distribution and sale of dietary supplements are subject to regulation by
federal agencies. The principal governmental agencies that regulate us include
the Food and Drug Administration ("FDA") and the Federal Trade Commission
("FTC"). Dietary supplements are also regulated by governmental agencies for the
states and localities in which we sell our products. Among other matters, the
FDA and FTC prohibit product claims that refer to the value of the product in
treating or preventing disease or other adverse health conditions. Because the
Internet is relatively new, there is limited common law or regulatory guidance
that clarifies the manner in which government regulation impacts online sales of
dietary supplements. This lack of clarity lends uncertainty to the laws
regulating online promotional claims and Web site structure.

Governmental agencies, such as the FDA and FTC, have a variety of remedies and
processes available to them. They may initiate investigations, issue warning
letters and cease-and-desist orders, require corrective labeling or advertising,
require that a company offer to repurchase products, seek injunctive relief or
product seizure, impose civil penalties or commence criminal prosecution. Some
state agencies have similar

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authority, as well as the authority to prohibit or restrict the manufacture or
sale of products within their jurisdictions. In the past, these agencies have
imposed civil penalties in the millions of dollars. Increased sales and
publicity of dietary supplements may result in increased regulatory scrutiny of
the industry.

The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was enacted in
October 1994 as an amendment to the Federal Food, Drug and Cosmetic Act
("FFDCA"). We believe that this statute is generally favorable to the industry.
The statute established a new statutory definition of "dietary supplements,"
which includes vitamins, minerals, herbs, amino acids and other dietary
ingredients for human use to supplement the diet. With respect to all dietary
ingredients already on the domestic market as of October 15, 1994, the
manufacturer or distributor is not required to submit evidence of a history of
use or other evidence of safety establishing that a supplement containing only
these dietary ingredients will reasonably be expected to be safe. In contrast, a
supplement that contains a new dietary ingredient not on the domestic market on
October 15, 1994 does require a submission to the FDA of evidence of a history
of use or other evidence of safety. Among other things, the statute prevented
the further regulation of dietary ingredients as "food additives" and allowed
the use of "statements of nutritional support" on product labels.

In September 1997, the FDA issued final regulations to implement the DSHEA.
Among other things, these regulations established a procedure for manufacturers
and distributors of dietary supplements to notify the FDA about the intended
marketing of a new dietary ingredient or about the use in labeling and
advertising of statements of nutritional support. The regulations also
established a new format for nutrition labeling on dietary supplements, which
became effective on March 23, 1999 for products with labels attached after that
date.

The Nutritional Labeling and Education Act of 1990, which amended the Federal
Food, Drug and Cosmetic Act, prohibits the use of any health claim, which
generally means any statement relating a substance to a reduction in the risk of
disease, for any foods (including dietary supplements), unless the health claim
is supported by "significant scientific agreement" and is preapproved by the
FDA. The FDA Modernization Act of 1997, which also amended the FFDCA, relaxed
this prohibition somewhat by permitting health claims based upon authoritative
statements of specific scientific bodies without FDA preapproval, but only
following notification to the FDA. To date, the FDA has approved or accepted
notification for only a limited number of health claims for dietary supplements.

In January 2000, the FDA released final rules regarding the regulation of claims
with respect to dietary supplements that expressly or implicitly claim to
diagnose, treat, prevent or cure a disease. Dietary supplement manufacturers,
marketers and distributors are allowed to make statements of nutritional
support. Under the DSHEA, manufacturers and marketers must notify the FDA of any
statements of nutritional support no later than 30 days after the first
marketing of a supplement with the statement. Four types of statements of
nutritional support are permissible:

o    a benefit related to a classical nutrient deficiency disease;

o    the role of a nutrient or dietary ingredient that is intended to affect the
     structure or function of the body;

o    the documented mechanism by which a nutrient or dietary ingredient acts to
     maintain a bodily structure or function; and

o    general well-being from consuming a nutrient or dietary ingredient.

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A statement of nutritional support developed by a manufacturer or distributor of
dietary supplements must carry a disclaimer in the labeling, stating that the
claim "has not been evaluated by the FDA" and that the product "is not intended
to diagnose, treat, cure or prevent any disease."

Dietary supplements must also comply with adulteration and misbranding
provisions of laws administered by the FDA. In addition, all ingredients must be
safe and suitable for use. All mandatory labeling information must be presented
in accordance with governing regulations, and no information may be false or
misleading.

The FTC enforces against unfair acts or practices in commerce, including false
or deceptive advertising of dietary supplements. Under the Federal Trade
Commission Act and policies published by the FTC to implement it, product claims
must be properly substantiated and stated in a nondeceptive manner.

Under the DSHEA, retailers are allowed to use "third-party literature" to
educate customers in connection with product sales. The literature must be
balanced, objective, scientific information about the use of the product. The
literature must not be misleading, must be displayed or presented with other
literature to present a balanced view, must not promote a particular brand and,
if in a store, must be physically separate from the associated product. We
believe that the relationship between health and product information and the
product listings on our Web site is consistent with the provisions of this
statute governing the use of third-party literature.

INTELLECTUAL PROPERTY

Under the trademark license agreement, The Vitamin Shoppe has granted us an
exclusive license to use The Vitamin Shoppe's trademarks and service marks,
including The Vitamin Shoppe logo and the name and mark VitaminShoppe.com, in
connection with our marketing and sale of products and services in online
commerce. We believe that The Vitamin Shoppe logo and name are currently the
only trademarks that are material to the conduct of our business, but we regard
all of the licensed trademarks and other proprietary rights as valuable assets.
The Vitamin Shoppe logo is a federally registered trademark. Under the trademark
license agreement, The Vitamin Shoppe is required to register VitaminShoppe.com
as a trademark and to protect its legal rights concerning the licensed
trademarks by appropriate legal action. The Vitamin Shoppe relies on common law
trademark rights to protect its unregistered trademarks and service marks, such
as VitaminShoppe.com and Vitamin Shoppe Frequent Buyer Program. Common law
trademark rights do not provide the same level of protection as that afforded by
a United States federal registration of a trademark. Common law trademark rights
are limited to the geographic area in which the trademark is actually used. With
limited exceptions, a United States federal registration enables the registrant
to stop unauthorized use by any third party anywhere in the United States, even
if the registrant has never used the trademark in the geographic area in which
the unauthorized use is being made. While we believe that The Vitamin Shoppe's
approach to protecting its trademarks is reasonable and customary, it may not be
adequate to protect the interest in The Vitamin Shoppe trademarks and service
marks.

GOVERNMENT REGULATION OF INTERNET

Laws and regulations directly applicable to communications or commerce over the
Internet are becoming more prevalent. A recent session of the U.S. Congress
resulted in Internet laws regarding children's privacy, copyrights, taxation and
the transmission of sexually explicit material. The European Union has also
enacted its own privacy regulations. The law of the Internet, however, remains
largely unsettled, even in areas where there has been some legislative action.
It may take years to determine whether and how existing laws such as those
governing intellectual property, privacy, libel, contracts and taxation apply to
the Internet. In addition, the growth and development of the market for online
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on


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companies conducting business online. The adoption or modification of laws or
regulations relating to the Internet could adversely affect our business.

INTERCOMPANY AGREEMENTS

In order to obtain the benefits of The Vitamin Shoppe's expertise and
infrastructure, we have entered into several intercompany agreements with The
Vitamin Shoppe, the material terms of which are summarized here. We have filed
these agreements with the Securities and Exchange Commission as exhibits to our
registration statement on Form S-1, as amended (File No. 333-83849). These
agreements were not negotiated on an arms-length basis; however, management
believed that the terms of these agreements were no less favorable to us than
could have been obtained from an unaffiliated third party. In general, the
intercompany agreements do not have fixed terms, but would terminate upon
consummation of the merger.

As long as The Vitamin Shoppe owns at least 30% of the voting power of our
capital stock, the material terms of the intercompany agreements may not be
amended or waived without the approval of a majority of our directors who are
not directors, officers or more than 5% stockholders of The Vitamin Shoppe (or
the designee of a more than 5% stockholder). In addition, our bylaws prohibit us
from entering into other material agreements with The Vitamin Shoppe, as long as
The Vitamin Shoppe owns at least 30% of the voting power of our capital stock,
unless the agreements are approved by a majority of our directors who are not
directors, officers or holders of 5% or more of the capital stock of The Vitamin
Shoppe. This provision of our bylaws may be amended or rescinded only by a
majority of these directors.

Trademark License Agreement. We have licensed The Vitamin Shoppe logo and name
and certain other marks, including VitaminShoppe.com, on an exclusive basis for
use in connection with our marketing and sale of products and services in online
commerce. We pay The Vitamin Shoppe an annual royalty fee equal to $1 million
plus a percentage of our net sales of The Vitamin Shoppe brand products and
other products identified by or branded with The Vitamin Shoppe's trademarks.
This percentage begins at 5% of net sales up to $25 million and declines to 1%
of net sales above $100 million. The trademark license agreement contains
restrictions with respect to our marketing of products and services. For
example, The Vitamin Shoppe has the right to demand that we remove from our Web
sites any online content that The Vitamin Shoppe determines is detrimental to
its reputation. In addition, unless we obtain the written permission of The
Vitamin Shoppe, we must provide it with prior written notice if we intend to
market and sell The Vitamin Shoppe brand products at less than The Vitamin
Shoppe's monthly promotional prices in effect from time to time. We may not use
the trademark license to market and sell under The Vitamin Shoppe's trademarks
any products not supplied to us by The Vitamin Shoppe.

We have the right to terminate the trademark license agreement at any time upon
180 days prior written notice to The Vitamin Shoppe. Either party has the right
to terminate the trademark license agreement immediately if the other is in
material breach that is not cured within 20 days after written notice, the other
party is in bankruptcy, the business of the other party is liquidated or
terminated or the other party becomes insolvent. Termination of the trademark
license agreement causes the immediate termination of the supply and fulfillment
agreement.

The trademark license agreement also contains covenants not to compete. The
Vitamin Shoppe will not enter the online vitamin, nutritional supplement and
mineral business. In addition, if The Vitamin Shoppe acquires a business that
includes an online vitamin, nutritional supplement and mineral business, it must
offer to sell that portion of the business to us. If we elect not to purchase
that portion of the business and The Vitamin Shoppe does not sell or license
that portion of the business to a third party within 90 days, The Vitamin Shoppe
must cease to operate the online portion of the business. We will not
manufacture vitamin, nutritional supplement or mineral products or market or
distribute these products through retail stores or print


                                       9
<PAGE>

catalogs. In addition, if we acquire a business that includes a retail store or
print catalog business related to vitamins, nutritional supplements or minerals,
we must offer to sell that portion of the business to The Vitamin Shoppe. If The
Vitamin Shoppe elects not to purchase that portion of the business and we do not
sell or license that portion of the business to a third party within 90 days, we
must cease to operate the retail store or print catalog portion of the business.
These covenants not to compete terminate two years after the trademark license
agreement terminates. In addition, we will not install an Internet kiosk within
a one-half mile radius of any urban retail store or a five-mile radius of any
suburban retail store operated by The Vitamin Shoppe.

Supply and Fulfillment Agreement. The Vitamin Shoppe supplies substantially all
of the products that we sell, for which we pay The Vitamin Shoppe an amount
equal to 105% of its product cost. As a result, our success depends on the
ability of The Vitamin Shoppe to obtain products from third-party vendors at
competitive prices, in sufficient quantities and of acceptable quality. In
addition, we pay The Vitamin Shoppe $50,000 per month, subject to annual
adjustments on mutually agreeable terms, for purchasing, merchandising, and
product development related to the products that The Vitamin Shoppe supplies. We
may sell products supplied by The Vitamin Shoppe only in online commerce. The
Vitamin Shoppe has the right to prohibit us from selling products not carried by
The Vitamin Shoppe that in The Vitamin Shoppe's reasonable judgment are of lower
quality than The Vitamin Shoppe brand products or do not comply with applicable
government regulations. We must provide The Vitamin Shoppe with either 10 or 60
days prior written notice of our promotions, depending on their breadth and
duration, in order to allow The Vitamin Shoppe to adjust the amount of promoted
products that it carries in inventory. In general, we may terminate the supply
services under the supply and fulfillment agreement upon 180 days prior written
notice to The Vitamin Shoppe.

The Vitamin Shoppe also provides warehousing and fulfillment services, including
receiving, quality control, storage, picking, packaging and shipping of customer
orders and processing of customer returns, under the supply and fulfillment
agreement. We pay The Vitamin Shoppe an amount equal to 105% of its actual
average unit cost per package, multiplied by the number of packages shipped to
our customers, plus actual shipping costs that we do not pay directly. The
Vitamin Shoppe's actual average unit cost takes into account all warehousing and
fulfillment costs, including overhead items such as rent, depreciation and
operating expenses.

The Vitamin Shoppe is obligated to use its best efforts to cause the quality of
fulfillment services provided to us under the agreement to be at least as high
as The Vitamin Shoppe provides when fulfilling orders for its catalog
operations. If at any time we determine that the quality of fulfillment services
provided by The Vitamin Shoppe fails to meet the standards required to remain
competitive, we may solicit a proposal from a third-party provider of
fulfillment services. If The Vitamin Shoppe elects not to provide fulfillment
services on terms comparable to those specified in the third-party proposal, we
may engage the third-party provider to provide our fulfillment services. If we
engage a third-party provider for fulfillment, we are required to provide The
Vitamin Shoppe with 180 days prior written notice of our termination of its
fulfillment services. This notice period may be reduced to 90 days provided that
we purchase from The Vitamin Shoppe the amount of products, on a one-for-one
basis, that we had purchased over the 60 days preceding our notification to The
Vitamin Shoppe of the receipt of such a proposal. After The Vitamin Shoppe
ceases to handle our fulfillment, it will continue to supply The Vitamin Shoppe
brand products under the agreement, but it will not be required to supply other
products, to fulfill orders for other products or The Vitamin Shoppe brand
products, or to process customer returns.

Either party has the right to terminate the supply and fulfillment agreement
immediately if the other is in material breach that is not cured within 20 days
after written notice, the other party is in bankruptcy, the


                                       10
<PAGE>

business of the other party is liquidated or terminated or the other party
becomes insolvent. The supply and fulfillment agreement terminates immediately
if the trademark license agreement terminates.

Co-marketing Agreement. Unless we otherwise notify The Vitamin Shoppe, The
Vitamin Shoppe provides us with a full-page advertisement and with promotional
references in its print catalogs, for which we will pay $40 per 1,000 catalogs
distributed. The Vitamin Shoppe also provides us with promotional references in
its retail stores and on shopping bags, product labels and store receipts, for
which we pay The Vitamin Shoppe $833 per urban retail store and $417 per
suburban retail store each month. The Vitamin Shoppe pays us $20,000 each year
to list its retail locations on our Web site and to allow a Web site user to
order The Vitamin Shoppe's catalog. All payments under the co-marketing
agreement are subject to annual consumer price index adjustments. Customers of
VitaminShoppe.com and The Vitamin Shoppe may use "points" earned through the
Vitamin Shoppe Frequent Buyer Program to purchase merchandise from either
VitaminShoppe.com or The Vitamin Shoppe. The Vitamin Shoppe may not include
other online advertisers of vitamins, nutritional supplements and minerals in
its catalogs.

We have the right to terminate the co-marketing agreement at any time after June
30, 2001 upon 90 days prior written notice to The Vitamin Shoppe. Either party
has the right to terminate the co-marketing agreement immediately if the other
is in material breach that is not cured within 20 days after written notice, the
other party is in bankruptcy, the business of the other party is liquidated or
terminated or the other party becomes insolvent.

Administrative Services Agreement. The Vitamin Shoppe provides general and
administrative services to us. The Vitamin Shoppe bills us directly for 100% of
the cost of employee benefits, such as medical and dental insurance. We paid The
Vitamin Shoppe $55,000 per month for human resources, management information,
cash management, finance and accounting services through the end of the term for
such services on June 30, 2000. Since that time, we have received human
resources and management information services from The Vitamin Shoppe in
exchange for a payment of $55,000 per month. This agreement will no longer be
necessary upon the merger of Vitamin Shoppe.com with and into The Vitamin
Shoppe. Under the administrative services agreement, The Vitamin Shoppe provides
our employees with a benefit package that includes medical insurance, dental
insurance, life insurance and a contributory 401(k) plan.

Database Agreement. On a non-exclusive, royalty-free basis, we and The Vitamin
Shoppe share with each other available product and customer information,
including transaction histories, for analytical purposes. None of the customer
information exchanged may be used by The Vitamin Shoppe or us to solicit the
other's customers. Neither The Vitamin Shoppe nor we may sell, lease or rent the
other's customer information to a third party.

We have the right to terminate the database agreement at any time upon 180 days
prior written notice. The Vitamin Shoppe is entitled to terminate the database
agreement immediately upon the acquisition of the ownership of 30% or more of
the voting power of the capital stock of VitaminShoppe.com by any person or
entity that engages in the direct or indirect marketing or distribution through
retail or direct marketing channels of vitamins, nutritional supplements,
minerals or any other nutritional or nonprescription health-related product
anywhere in the world or of any other product produced, marketed or distributed
by The Vitamin Shoppe during the term of the database agreement. Either party
has the right to terminate the database agreement immediately if the other is in
material breach that is not cured within 20 days after written notice, the other
party is in bankruptcy, the business of the other party is liquidated or
terminated or the other party becomes insolvent.



                                       11
<PAGE>

Intercompany Indemnification Agreement. Under the intercompany indemnification
agreement, we are required to indemnify The Vitamin Shoppe for liabilities
related to our business after the transfer of the online business to us.

Tax Allocation Agreement. In accordance with our Tax Allocation Agreement with
The Vitamin Shoppe, The Vitamin Shoppe is to reimburse us for the use of any tax
attributes resulting from the filing of a consolidated or combined tax return.
During December 2000, we filed combined New York State and New York City income
tax returns with The Vitamin Shoppe for our fiscal year ending December 31,
1999. As a result of VitaminShoppe.com tax losses used by The Vitamin Shoppe for
1999, The Vitamin Shoppe is required to establish a payable to VitaminShoppe.com
in an amount equal to $1.1 million. Subject to offset for amounts which may
become payable in the future by VitaminShoppe.com to The Vitamin Shoppe under
the Tax Allocation Agreement, the payable is due on December 31, 2004. We did
not recognize this amount as a tax benefit in our financial statements for the
fiscal year ended December 31, 1999, which were included in our Annual Report on
Form 10-K, because we had not expected to file combined returns. We have now
recognized a note receivable in our financial statements for the fiscal year
ended December 31, 2000 in the amount of $1.9 million, which includes the $1.1
million used by The Vitamin Shoppe for the year ended December 31, 1999 and an
estimated amount associated with The Vitamin Shoppe's use of VitaminShoppe.com's
2000 tax loss for New York State and New York City.

Sublease Agreement. We have terminated our sublease agreement for our office
space of approximately 10,000 square feet at 444 Madison Avenue, Suite 802, New
York, New York 10022. The sublease for this space would have expired in November
2003 and provided for a monthly rental of $34,913. We relocated to the offices
of The Vitamin Shoppe in Secaucus and North Bergen, New Jersey in January 2001.
The square footage of our office space in Secaucus and North Bergen is 1,600 and
1,000 square feet, respectively. The Vitamin Shoppe is not charging us rent for
the use of this space.

EMPLOYEES

As of March 16, 2001, we had 37 employees who devote all or substantially all of
their time to our business. From time to time, we employ independent contractors
to supplement our staff. In addition, many of The Vitamin Shoppe's employees
provide services to us. We are not a party to any collective bargaining
agreements. Under the administrative services agreement, The Vitamin Shoppe
provides our employees with a benefit package that includes medical insurance,
dental insurance, life insurance and a contributory 401(k) plan.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this report that are not historical facts
are, or may be considered to be, "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements reflect our expectations regarding our future growth,
results of operations, performance, business prospects, opportunities and
financial condition. Words such as "anticipates," "believes," "plans," "expects"
and "estimates" and similar expressions have been used to identify these
forward-looking statements but are not the exclusive means of identifying these
statements. These statements reflect our current beliefs and are based on
information available to us on the date hereof. We assume no obligation to
update any such forward-looking statement in our press releases, oral
communications or other filings with the Securities and Exchange Commission.
Forward-looking statements are subject to known and unknown risks, uncertainties
and other factors that could cause our actual growth, results of operations,
performance, business prospects, opportunities and financial condition to differ
from those expressed in, or implied by, the forward-looking statements. In
addition, some of our forward-looking statements are based on assumptions
concerning future events that may not prove to be accurate.

                                       12
<PAGE>

Forward-looking statements regarding our growth, results of operations,
performance, business prospects, opportunities and financial condition are
subject to numerous risks and assumptions, including those discussed in "Risk
Factors" in our registration statement on Form S-1, as amended (File No.
333-83849), filed with the Securities and Exchange Commission.

ITEM 2.  PROPERTIES.

We have terminated our sublease agreement for our office space of approximately
10,000 square feet at 444 Madison Avenue, Suite 802, New York, New York 10022.
The sublease for this space would have expired in November 2003 and provided for
a monthly rental of $34,913. We relocated to the offices of The Vitamin Shoppe
in Secaucus and North Bergen, New Jersey in January 2001. The square footage of
our office space in Secaucus and North Bergen is 1,600 and 1,000 square feet,
respectively. The Vitamin Shoppe is not charging us rent for the use of this
space.

ITEM 3.  LEGAL PROCEEDINGS.

On February 22, 2001, a stockholder of VitaminShoppe.com filed a complaint in
the Supreme Court of the State of New York entitled Joseph v. VitaminShoppe.com,
et al., Civil Action No. 103884/01. The action asserts claims against
VitaminShoppe.com, The Vitamin Shoppe and all of the members of
VitaminShoppe.com's board of directors, alleging, among other things, that
VitaminShoppe.com and/or The Vitamin Shoppe and the individual defendants
breached their fiduciary duties to stockholders, and that some defendants
engaged in self-dealing with respect to the merger. The action alleges, among
other things, that the consideration to be received by VitaminShoppe.com
stockholders in the merger is unfair and inadequate. The action seeks class
action certification and injunctive relief against the merger, or, in the
alternative, to obtain recission of the merger or damages, and other relief.
However, no motion for injunctive relief has been filed. VitaminShoppe.com and
The Vitamin Shoppe believe that the action is without merit and intend to defend
it vigorously.

Other than the foregoing, we are not a party to any legal proceeding that we
believe would have a material adverse effect on our business, results of
operations or financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

VitaminShoppe.com common stock is listed on the Nasdaq. VitaminShoppe.com's
ticker symbol is "VSHP." The following table shows the high and low sale prices
for VitaminShoppe.com common stock for each quarterly period to date, in each
case as reported on the Nasdaq National Market. VitaminShoppe.com paid no
dividends on our capital stock during 1999 or 2000, which were the first two
years of our existence. We currently intend to retain any earnings to finance
the operations and expansion of our business, and we do not expect to pay any
cash dividends on our capital stock in the foreseeable future. Moreover, the
agreement of merger prohibits us from paying any dividends. These prices do not
include adjustments for commissions or brokerage fees.

                                       13
<PAGE>

                                                         VITAMINSHOPPE.COM
                                                              CLASS A
                                                           COMMON STOCK
                                                   ----------------------------
                                                            MARKET PRICE
                                                   ----------------------------
                                                      HIGH             LOW
1999
     October 8, 1999 through Fourth Quarter.....     $17.19           $8.00
2000
     First Quarter..............................      $9.38           $3.75
     Second Quarter.............................      $3.97           $1.31
     Third Quarter..............................      $1.94           $0.87
     Fourth Quarter.............................      $1.13           $0.25
2001
     First Quarter through March 16, 2001.......      $0.97           $0.72

On December 19, 2000, the last full trading day prior to the public announcement
of the proposed merger, the closing price for VitaminShoppe.com common stock was
$0.31. On March 16, 2001, the most recent practicable date prior to the printing
of this document, the closing price for VitaminShoppe.com common stock was
$0.97.

As of March 1, 2001, there were 37 holders of record of our Class A common
stock, par value $0.01 per share. This figure does not include an estimate of
the indeterminate number of beneficial holders whose shares may be held of
record by brokerage firms and clearing agencies.

As of March 1, 2001, there was one record holder of our Class B common stock,
par value $0.01 per share. There is no established trading market for the Class
B common stock. The Class B common stock is convertible into Class A common
stock at any time at the option of the holder and will automatically convert to
Class A common stock upon transfer by the holder.

We received notice from Nasdaq that as of February 12, 2001 we would be
de-listed for failing to maintain (i) a minimum market value of public float of
$5,000,000 and (ii) a minimum bid price of $1.00 over the last 30 consecutive
trading days (prior to notice), as required. We requested an oral hearing before
the Nasdaq Listing Qualification Panel, which took place on March 23, 2001, to
extend the time at which VitaminShoppe.com's Class A common stock would be
de-listed from the Nasdaq National Market until the earlier of April 12, 2001 or
the closing of VitaminShoppe.com's merger with and into The Vitamin Shoppe. The
request for the oral hearing stayed the de-listing of the Class A common stock
pending the final determination by the Nasdaq Listing Qualification Panel, which
we are awaiting.

REGISTERED OFFERING AND USE OF PROCEEDS

On October 7, 1999, the Securities and Exchange Commission declared effective a
registration statement on Form S-1 (File No. 333-83849) with respect to our
Class A common stock. Pursuant to the registration statement, we offered and
sold 4,545,455 shares of Class A common stock at $11.00 per share to an
underwriting syndicate. The managing underwriters of this syndicate were Thomas
Weisel Partners LLC, William Blair & Company and PaineWebber Incorporated. The
offering terminated because all shares offered were sold.

The gross proceeds from the offering were $50.0 million. No discounts,
commissions or other offering expenses were paid to directors, officers or
general partners of VitaminShoppe.com, our associates or persons owning 10% or
more of any class of our equity securities. Payments to underwriters, printers,

                                       14
<PAGE>

accountants and legal counsel were made directly to those parties. After
deducting these expenses and the write-off of prepaid offering costs, the net
proceeds of the offering were approximately $45.0 million. We used approximately
$21.9 million in 1999.

During 2000, we used $5.5 million of the net proceeds for enhancements to our
Web site and other capital expenditures and the remainder for advertising and
marketing activities and general working capital. Other than principal and
accrued interest paid to our principal stockholder, none of these payments were
made to directors, officers or general partners of VitaminShoppe.com or our
associates or to persons owning 10% or more of any class of our equity
securities. The remainder of the proceeds of the offering have been invested in
short-term, investment-grade, interest-bearing obligations and we expect that
they will be used for general corporate purposes, including working capital,
capital expenditures and advertising and marketing activities. Based on our
current estimates, we expect our cash to be depleted in April 2001. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

RECENT SALES OF UNREGISTERED SECURITIES

Private Placements of Securities.

On June 11, 1999, we issued 1,000 shares of common stock, par value $0.01 per
share, to The Vitamin Shoppe in connection with our initial capitalization. We
intended this private placement of securities by us to be exempt from
registration pursuant to section 4(2) of the Securities Act of 1933. We
reclassified these shares into 8,500,000 shares of Class B common stock as of
July 9, 1999. We split these shares into 13,081,500 shares of Class B common
stock effective as of October 7, 1999. Each share of Class B common stock is
convertible into one share of Class A common stock at any time at the option of
the holder and will automatically convert into one share of Class A common stock
upon the sale to a person or entity not affiliated with The Vitamin Shoppe.

On July 9, 1999, we issued $10 million in aggregate principal amount of
convertible promissory notes due in June 2000. Four stockholders of The Vitamin
Shoppe and affiliates of these stockholders held these notes. We intended this
private placement of securities to be exempt from registration pursuant to
section 4(2) of the Securities Act of 1933. On July 27, 1999, all of these notes
converted into shares of our Series A convertible preferred stock, par value
$0.01 per share, based on the principal and interest due on the notes divided by
the purchase price of the shares of Series A preferred stock.

In July 1999, we received $15 million from ten stockholders in exchange for
1,053,156 shares of Series A preferred stock. As indicated in the preceding
paragraph, we also exchanged $10 million in aggregate principal amount of
promissory notes for 722,104 shares of Series A preferred stock in the same
transaction. In addition, we issued warrants to purchase shares of Series A
preferred stock to Thomas Weisel Partners LLC in consideration for its services
as placement agent in this transaction. We intended this private placement of
securities to be exempt from registration pursuant to section 4(2) of the
Securities Act of 1933 and/or rule 506 of Regulation D promulgated under the
Securities Act of 1933. Each share of Series A preferred stock converted into
1.539 post-split shares of Class A common stock effective as of the initial
public offering. As a result, the warrant held by Thomas Weisel Partners LLC
became exercisable for 32,703 shares of Class A common stock at an exercise
price per share of $11.00.

                                       15
<PAGE>

Option Grants.

During 2000, we granted options to a total of 79 employees, officers and
directors to purchase a total of 689,375 shares of Class A common stock at an
average exercise price of $4.05 per share. Such options were granted as follows:

In January 2000, we granted options to six employees to purchase 90,500 shares
of Class A common stock at an average exercise price of $8.54 per share.

In February 2000, we granted options to 15 employees to purchase 95,000 shares
of Class A common stock at an average exercise price of $5.59 per share.

In March 2000, we granted options to 14 employees to purchase 49,000 shares of
Class A common stock at an average exercise price of $3.85 per share.

In April 2000, we granted options to four employees and one director to purchase
71,375 shares of Class A common stock at an average exercise price of $3.45 per
share.

In May 2000, we granted options to 22 employees to purchase 322,500 shares of
Class A common stock at an average exercise price of $2.98 per share.

In June 2000, we granted options to two employees and two directors to purchase
44,500 shares of Class A common stock at an average exercise price of $1.62 per
share.

In July 2000, we granted options to 12 employees to purchase 12,000 shares of
Class A common stock at an average exercise price of $1.25 per share.

In October 2000, we granted options to one employee to purchase 4,500 shares of
Class A common stock at an average exercise price of $1.13 per share.

In August, September, November and December 2000, no options were granted to any
employees or directors.

No underwriters were involved in the foregoing sales of securities.

DIVIDENDS

We paid no dividends on our capital stock during 1999 or 2000, which were the
first two years of our existence, and we do not expect to pay any cash dividends
on our capital stock in the foreseeable future. The agreement of merger
prohibits us from paying any dividends.

ITEM 6.  SELECTED FINANCIAL DATA.

You should read the following selected historical and pro forma financial data
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and notes thereto
included herein. Although we were not operating as a separate company until July
1999, the historical financial statements present the operations of The Vitamin
Shoppe's online business as if we had been a separate entity since October 1,
1997, the date of inception. The historical statement of operations data
presented below for the period from October 1, 1997, the date of inception, to
December 31, 1997 and for the years ended December 31, 1998, 1999 and 2000, and
the historical balance sheet data as of


                                       16
<PAGE>

December 31, 1998, 1999 and 2000, are derived from financial statements of
VitaminShoppe.com, Inc. that have been audited by Deloitte & Touche LLP,
independent auditors, and are included herein.

The historical financial information includes allocations for supply,
fulfillment, promotional, administrative and other expenses incurred by The
Vitamin Shoppe for services rendered to us prior to July 1999. While we believe
these allocations to be reasonable, they do not necessarily indicate, and it is
not practical for us to estimate, the levels of expenses that would have
resulted had we been operating as an independent company. We have entered into
several intercompany agreements effective as of July 1, 1999 under which The
Vitamin Shoppe has licensed its trademarks to us for use on the Internet and
provides us with supply, fulfillment, promotional, administrative and other
services. These agreements provide some charges that we did not incur in the
past. While the intercompany agreements were not negotiated on an arms-length
basis, management believed that their terms were no less favorable to us than
could have been obtained from unaffiliated third parties. The pro forma
statement of operations data give retroactive effect to adjustments resulting
from the implementation of the trademark license agreement and the supply and
fulfillment agreement with The Vitamin Shoppe. Historical and pro forma results
are not necessarily indicative of the operating results for any future period.


                                       17
<PAGE>


                             VITAMINSHOPPE.COM, INC.
                          STATEMENT OF OPERATIONS DATA
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                     October 1,
                                        1997
                                   (inception) to                 Year Ended December 31,
                                    December 31,
                                        1997             1998             1999              2000
                                   --------------     ----------       ----------        ----------
<S>                                  <C>              <C>              <C>               <C>
Net sales                            $        -       $    3,034       $   14,646        $   34,257
Cost of goods sold                            -            1,599            9,480            23,415
                                     ----------       ----------       ----------        ----------
Gross profit                                  -            1,435            5,166            10,842
Operating expenses:
Marketing and sales expenses                  -            3,196           26,701            21,189
Technology development expenses             285              642            3,142             7,951
General and administrative
   expenses                                  64              917            5,425            12,071
                                     ----------       ----------       ----------        ----------
Total operating expenses                    349            4,755           35,268            41,211
                                     ----------       ----------       ----------        ----------
Loss from operations                       (349)          (3,320)         (30,102)          (30,369)
Interest expense (income), net                4              120               (9)           (1,270)
                                     ----------       ----------       ----------        -----------
Loss before income tax provision           (353)          (3,440)         (30,093)          (29,099)
Income tax provision                          -                -              108            (1,828)
                                     ----------       ----------       ----------        -----------
Net loss                             $     (353)      $   (3,440)      $  (30,201)       $  (27,271)
                                     ==========       ==========       ==========        ===========

Basic and diluted net loss per
   share                             $    (0.03)      $    (0.26)      $    (2.05)       $    (1.34)
                                     ==========       ==========       ==========        ===========

Weighted average shares
   outstanding used to compute
   pro forma basic and diluted
   net loss per share                13,081,500       13,081,500       14,756,339        20,359,074
                                     ==========    =============       ==========        ==========

</TABLE>

<TABLE>
<CAPTION>
                                                                 December 31,     December 31,      December 31,
                                                                     1998             1999              2000
                                                                 ------------     ------------      ------------
<S>                                                              <C>              <C>               <C>
BALANCE SHEET DATA:
(In thousands, except per share data)

Cash and cash equivalents..............................            $      -         $ 38,019          $  4,046
Working capital (deficiency)...........................              (4,278)          29,754            (1,777)
Total assets...........................................                 614           49,160            16,839
Due to The Vitamin Shoppe..............................               3,583            2,635             2,245
Stockholders' equity (deficit).........................              (3,793)          35,938             9,258
</TABLE>


                                       18
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Except for the historical information contained in this report, some statements
made herein are "Forward-Looking Statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. These Forward-Looking
Statements reflect our expectations regarding our future growth, results of
operations, performance and business prospects and opportunities. Words such as
"anticipates," "believes," "plans," "expects," "estimates," and similar
expressions have been used to identify these Forward-Looking Statements, but are
not the exclusive means of identifying these statements. These statements
reflect our current beliefs and are based on information currently available to
us. Accordingly, these statements are subject to known and unknown risks,
uncertainties and other factors that could cause our actual growth, results,
performance and business prospects and liquidity to differ from those expressed
in, or implied by, these Forward-Looking Statements. These risks, uncertainties
and other factors are described in our Registration Statement on Form S-1, as
amended (File No. 333-83849), under the caption "Risk Factors". We are not
obligated to update or revise these Forward-Looking Statements to reflect new
events or circumstances.

OVERVIEW

We began development of our online operations in October 1997 and launched our
Web site on April 7, 1998. Initially, our primary activities consisted of
developing our business model and brand, designing and building our Web site,
recruiting and training employees and negotiating advertising contracts with
several major Web portals. As our business developed, we focused on building the
infrastructure of our company and expanding customer service operations, and on
the design and building of our enhanced, state-of-the-art Web site which
launched in June 2000. Throughout, we have concentrated our efforts on creating
strategies to acquire new customers, build sales momentum and promote our brand.

We spent heavily in fourth quarter 1999 on offline advertising and through the
first half of 2000 on contractual commitments for online sponsorship
relationships. We found that these methods of advertising, while responsible for
bringing us new customers, were not cost effective, and therefore were not
sustainable. During the second and third quarters of 2000, all of our online
sponsorship agreements were terminated, which resulted in greatly reduced online
advertising expenditures. We have also terminated plans to launch an offline
media campaign, and are relying instead solely on direct to consumer marketing
through email or printed materials.

While we believe that curtailing on- and offline advertising enables us to
achieve the lowest possible customer acquisition cost and conserve cash, it is
likely that this will continue to have a negative impact on sales, as was the
case in the third and fourth quarters 2000. However, the gross margin as a
percent of net sales was higher in the second half of 2000 than earlier in the
year, the result of generally higher prices from less discounting and fewer
price promotions.

As the chart below illustrates by quarter, the mix of these pricing policies
coupled with lower marketing expenditures has had a significant impact on our
sales and has slowed down customer acquisition, while increasing gross margins.

                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                                       Quarter Ended
                                             --------------------------------------------------------------------
                                             30-Sep      31-Dec       31-Mar      30-Jun      30-Sep      30-Dec
                                              1999        1999         2000        2000        2000        2000
                                             -------     -------      -------     -------     -------     -------
<S>                                         <C>         <C>          <C>         <C>
Net Sales $000                               $ 4,031     $ 6,045      $10,094     $ 9,257     $ 7,132     $ 7,774

Cumulative Customers - end of period          66,000     100,000      155,000     189,000     210,000     228,000

Gross Margin %                                   35%         28%          24%         28%         39%         41%
Gross Margin $000                            $ 1,419     $ 1,664      $ 2,368     $ 2,550     $ 2,737     $ 3,187
</TABLE>

We continued to accumulate net losses in the fourth quarter of 2000. From
inception through December 31, 2000, we have incurred net losses of $61.3
million. As of December 31, 2000, we had $4.0 million in cash and cash
equivalents (as compared to $7.4 million at September 30, 2000). Since
inception, our operations have not generated sufficient cash flow to satisfy our
current obligations. Based on our current estimates, we expect our available
cash to be depleted in April 2001. We hope to complete the merger prior to
depleting all of our cash, but we cannot assure you that we will be able to do
so. If the merger is not completed, we will likely be forced to seek protection
under the Federal bankruptcy laws or enter liquidation proceedings.

RESULTS OF OPERATIONS:  2000 COMPARED TO 1999

Net sales. Net sales for 2000 totaled $34.3 million, an increase of $19.7
million or 135 percent from net sales of $14.6 million during 1999. Orders in
fiscal year 2000 totaled 433,000 as compared to 198,000 orders in 1999; 132,000
new customers were added, slightly more than one and a half times the 80,000 in
1999. Of the 132,000 new customers added in 2000, 93,000 were added in the first
half of the year. Most of our online sponsorship agreements, which brought us
some of our new customers, but at a very high cost per acquisition, concluded in
second quarter 2000. By the end of 2000, all were concluded. The growth in new
customers, although now decelerating, and the repeat buying patterns of our
customers are the main factors in our increased net sales year over year.
Average order size has increased 7% to $74 in 2000 from $69 in 1999, as a result
of a larger proportion of repeat buyers in the 2000 period.

Cost of Goods Sold. Cost of goods sold for 2000 was $23.4 million or 68 percent
of net sales versus $9.5 million or 65 percent of net sales for 1999. The
increase in cost of sales as a percent of net sales is mainly attributable to
two factors: in 2000, we sold a somewhat lower proportion of higher margin
Vitamin Shoppe(R) branded products versus other brands as compared to 1999; and,
beginning July 1, 1999, the cost of inventory supplied to us by The Vitamin
Shoppe increased as a result of the implementation of our supply and fulfillment
agreement with The Vitamin Shoppe, from 100% to 105% of The Vitamin Shoppe's
product cost.

As of October 1, 2000, in accordance with the Emerging Issues Task Force
("EITF") Issue No. 00-10, the Company began to record all amounts billed to
customers related to shipping and handling costs as net revenue and costs
related to shipping and handling as cost of goods sold. Previously these had
been recorded net as operating expense in the Marketing and Sales category. All
prior periods have been restated for this change. When comparing the two fiscal
years, net shipping costs were $1.0 million higher in 2000 versus 1999. The
increase was primarily the result of the Company's shipping policy during the
period from September 1999 through April 2000. During that period, as a
promotional incentive, customers received overnight delivery on all packages at
no additional cost above standard delivery. The policy was subsequently changed,
and VitaminShoppe.com began charging a $2.00 premium for overnight delivery,
which reduced customer demand for this service.

                                       20
<PAGE>

Marketing and Sales Expenses. Marketing and sales expenses consist primarily of
advertising and promotional expenditures including co-marketing with The Vitamin
Shoppe, distribution expenses including order processing and fulfillment
charges, the trademark license agreement, and payroll and related expenses for
personnel engaged in these activities. Some of these expenses represent charges
for services provided by The Vitamin Shoppe which, prior to July 1, 1999, were
in the form of allocations based on The Vitamin Shoppe's best estimate of actual
expenses. As of July 1, 1999 various intercompany agreements were put in place
to cover these expenses. Among the services covered under these agreements The
Vitamin Shoppe provides warehousing and fulfillment services for customer orders
on an exclusive basis. We pay The Vitamin Shoppe for these services an amount
equal to 105 percent of The Vitamin Shoppe's actual average unit cost
(fully-loaded) per package multiplied by the number of packages shipped to our
customers, plus actual shipping costs that we do not pay directly. The trademark
license agreement with The Vitamin Shoppe provides us with the exclusive right
to use The Vitamin Shoppe's trademarks, including the logo and name, in
connection with the marketing and sale of products and services in online
commerce; we pay an annual royalty trademark fee of $1 million plus an
additional amount based on a percentage of net sales volume of The Vitamin
Shoppe(R) branded product.

Prior to July 1, 1999, warehousing and fulfillment services were allocations
based on 100% of best estimates and there was no trademark royalty fee charged
by The Vitamin Shoppe. The increase in the warehousing and fulfillment charges
to 105% of fully-loaded cost from a 100% allocation and the addition of the
trademark fee contributed to higher marketing and sales expenses.

Marketing and sales expenses totaled $21.2 million in 2000, down approximately
$5.5 million from 1999. As a percentage of net sales, marketing expenses
decreased from 182% in 1999 to 62% in 2000. The decrease in marketing expenses
is primarily the result of lower on- and offline media and online sponsorship
expenses, offset by higher selling expenses associated with the 134% increase we
experienced in product sales, and by the addition of the intercompany trademark
agreement with The Vitamin Shoppe. Marketing expenses trended down from first to
fourth quarter 2000 as we employed more direct marketing approaches and relied
less on media advertising. During the second quarter 2000, our contractual Web
portal relationships with Intelihealth and Time Inc. terminated. During the
third quarter 2000, we amended our contractual relationship with America Online,
resulting in a shorter more targeted carriage plan which terminated in mid
October 2000.

Technology Development Expenses. For the fiscal year 2000, technology
development expenses increased to $8.0 million from $3.1 million for 1999, up
$4.9 million. As a percentage of net sales, these expenses were 23 percent in
2000 and 21 percent in 1999. Technology development expenses in both periods
consisted in large part of consulting costs for outsourcing the Web site's
applications development, operations and maintenance, as well as some internal
staff manpower. These costs peaked in second quarter 2000 while we were
simultaneously running our original Web site and completing development and
testing of the new site which launched in June 2000. Site hosting, hardware and
software licensing and service agreements, and communications charges, which
comprise the other major components of technology expense, also increased
consistent with the implementation of a full scale Web commerce business. In the
fourth quarter 2000, after reviewing our options, we made the decision to
outsource our technology operations rather than hire a full internal technology
team at that time.

General and Administrative Expenses. General and administrative expenses consist
primarily of payroll and related expenses for executive, business and content
development, customer service and administrative personnel, corporate facility
expenses, depreciation, professional services, deferred stock-based compensation
and other general corporate expenses. General and administrative expenses
increased by $6.7 million to $12.1 million or 35 percent of net sales for 2000
from $5.4 million or 37 percent of net sales for

                                       21
<PAGE>

1999. This increase was primarily due to the addition of personnel consistent
with building the business, depreciation, primarily of the new Web site, a full
year of facilities expenses, and certain severance charges.

Amortization of stock-based compensation. Amortization of deferred stock-based
compensation expense, included in general and administrative expenses, was
$591,000 in 2000 as compared to $1.2 million in 1999.

Interest expense (income), net. Interest expense (income), net consists of
interest charges allocated from The Vitamin Shoppe in 1999 and interest income
earned on cash and cash equivalents. In the fiscal year 1999, interest expense
was charged to us at the rate of 8.75% on the note due to The Vitamin Shoppe and
other advances of $348,000. Since the note due to The Vitamin Shoppe was repaid
in November 1999, VitaminShoppe.com had no interest expense in 2000. Interest
income was earned since the sale of Series A convertible preferred stock on July
27, 1999 and our initial public offering on October 8, 1999 and amounted to $1.3
million in fiscal year 2000 and $425,000 in the third and fourth quarters 1999.

Intercompany agreements. In summary, the intercompany agreements cover rights
and obligations regarding trademark licenses, inventory supply and fulfillment,
promotional and co-marketing activities, databases and administrative services.
We incurred a total of $19.7 million of merchandise purchases and $5.6 million
of other expenses under the intercompany agreements with The Vitamin Shoppe
during fiscal year 2000. We incurred a total of $5.5 million of merchandise
purchases and $2.3 million of other expenses under the intercompany agreements
with The Vitamin Shoppe during the third and fourth quarters 1999. The
intercompany agreements were not in place during the first two quarters 1999.
During the first two quarters 1999, allocations were made by The Vitamin Shoppe
for services provided to us. These allocations did not include charges for the
trademark license or co-marketing activities. Further, inventory and fulfillment
charges were allocated at the rate of 100% of cost rather than the 105% as
provided in the intercompany agreements. Had the intercompany agreements been in
place during the first two quarters 1999, our net loss for the full year 1999
would have been $31.0 million rather than $30.2 million.

Income taxes. Our operating results through June 30, 1999 were included in the
consolidated income tax returns of The Vitamin Shoppe and The Vitamin Shoppe did
not allocate to us its share of income tax liabilities or benefits attributable
to our proportionate share of operating results.

Since our capitalization on July 1, 1999, when we ceased to be part of The
Vitamin Shoppe's consolidated group, losses generated are available to offset
any future taxable income for 20 years. Deferred tax assets normally recorded to
reflect the future benefit may or may not be shown as realizable, depending on
our ability to demonstrate the likelihood of future profitability.

VitaminShoppe.com and The Vitamin Shoppe are parties to a Tax Allocation
Agreement. During December 2000, we filed combined New York State and New York
City income tax returns with The Vitamin Shoppe for our fiscal year ending
December 31, 1999. As a result of VitaminShoppe.com tax losses used by The
Vitamin Shoppe for 1999, The Vitamin Shoppe was required to establish a payable
to VitaminShoppe.com in an amount equal to $1.1 million. Subject to offset for
any future amounts which may become payable by VitaminShoppe.com to The Vitamin
Shoppe under the Tax Allocation Agreement, the payable is due on December 31,
2004. We did not recognize this amount as a tax benefit in our financial
statements for the fiscal year ended December 31, 1999, which were included in
our Annual Report on Form 10-K, because we had not expected to file combined
returns. We have recognized a note receivable in our financial statements for
fiscal year 2000 in the amount of $1.9 million, which includes the $1.1 million
used by The Vitamin Shoppe for the year ended December 31, 1999 and an estimated
amount associated with The Vitamin Shoppe's use of VitaminShoppe.com's 2000 tax
losses for New York State and New York City.

                                       22
<PAGE>

As of December 31, 2000, we had a net operating loss carry forward that, if
utilized, provides a future tax benefit of approximately $19.8 million. Due to
the uncertainty of the realization of this net operating loss carry forward in
the future, we have provided a valuation allowance to offset this deferred tax
asset.

RESULTS OF OPERATIONS:  1999 COMPARED TO 1998

Net Sales. Net sales consist of product sales net of allowances for product
returns. Revenues are recognized when the related product is shipped. The level
of our sales depends on many factors, including:

o    the number of customers that we are able to attract;

o    the frequency of customers' purchases;

o    the quantity and mix of products that customers purchase;

o    the price that we charge for our products; and

o    the level of customer returns that we experience.

Net sales for 1999 totaled $14.7 million, an increase of $11.7 million or 390%
from net sales of $3.0 million for the nine-month period beginning April 1, 1998
(the date on which we launched our Web site). We have made enhancements to our
Web site to improve navigation and the overall user experience, and we have
significantly increased our advertising, marketing and promotional expenditures
in 1999. We believe these factors have contributed to growth in our customer
base and continuation of a favorable pattern of repeat buying.

Cost of Goods Sold. Cost of goods sold consists primarily of the costs of
products sold to customers. The Vitamin Shoppe supplies inventory to us on an
exclusive basis. Under the supply and fulfillment agreement with The Vitamin
Shoppe beginning July 1, 1999, we pay The Vitamin Shoppe an amount equal to 105%
of The Vitamin Shoppe's product cost. Prior to that time, inventory was provided
to us by The Vitamin Shoppe at 100% of its product cost. As a result, cost of
goods sold as a percentage of sales is higher in 1999 than in 1998. We expect
that it will continue to be higher than in the past both as a percentage of
sales and in absolute dollars to the extent that our volume of sales increases.

In the future, we may expand or increase the discounts we offer to our customers
and may otherwise alter our pricing structures and policies. These changes would
negatively reduce our gross margins. In addition to pricing strategy, our gross
margins will fluctuate based on other factors, including:

o    the cost of our products, including the extent of purchase volume discounts
     that The Vitamin Shoppe is able to obtain from its suppliers;

o    promotions or special offers that we offer to attract new customers;

o    the mix of The Vitamin Shoppe brand products versus other branded products
     that our customers purchase; and

o    the mix of products within each brand category that our customers purchase.

Cost of goods sold for 1999 was $9.5 million, or 65% of net sales, versus $1.6
million, or 53% of net sales for the nine-month period beginning April 1, 1998
(the date on which we launched our Web site). The increase in cost of sales as a
percent of net sales is attributable to the implementation of our supply and
fulfillment agreement with The Vitamin Shoppe, the offering of promotional
discount coupons to customers during 1999 and the sales of a lower proportion of
The Vitamin Shoppe (R) branded products versus other brands as a percent of
total sales in 1999 as compared to 1998. The Vitamin Shoppe brand products carry
a higher gross margin than other brands.

                                       23
<PAGE>

Marketing and Sales Expenses. Marketing and sales expenses consist primarily of
advertising and promotional expenditures, merchandising, customer service,
distribution expenses, including order processing and fulfillment charges, net
shipping costs, equipment and supplies and payroll and related expenses for
personnel engaged in these activities. Some of these expenses represent charges
for services provided by The Vitamin Shoppe. Prior to July 1999, these charges
were in the form of allocations based on The Vitamin Shoppe's best estimate of
actual expenses. As of July 1, 1999 various intercompany agreements were put in
place to cover these expenses. Under these agreements The Vitamin Shoppe will
continue to provide warehousing and fulfillment services for customer orders on
an exclusive basis. We pay The Vitamin Shoppe for fulfillment services an amount
equal to 105% of The Vitamin Shoppe's actual average unit cost per package,
multiplied by the number of packages shipped to our customers, plus actual
shipping costs that we do not pay directly. While this amount is higher than the
100% cost of these services to us under the historical allocation method, we
believe that the increase will not have a material effect on our results of
operations because our fulfillment costs have historically been less than 2% of
our net sales. Under the trademark license agreement with The Vitamin Shoppe
which provides us with the exclusive right to use The Vitamin Shoppe's
trademarks, including the logo and name, in connection with the marketing and
sale of products and services in online commerce, we pay an annual royalty fee
equal to $1 million plus an amount based on a percentage of net sales volume of
The Vitamin Shoppe (R) branded product. Prior to July 1, 1999, there was no
royalty fee charged by The Vitamin Shoppe.

Marketing and sales expenses increased by $23.5 million to $26.7 million in
1999, or 182% of net sales, from $3.2 million in 1998, or 105% of net sales. The
increase is largely attributable to the implementation of our significant
multi-media marketing campaign which began late in third quarter 1999 and
continued through fourth quarter 1999. In addition, we have added to our roster
of strategic relationships with web portals and health-oriented channels.
Subsequent to the third quarter 1998, agreements with Yahoo! (November 1998),
drkoop.com (March 1999), OnHealth (March 1999), InteliHealth (April 1999) and
America Online (October 1999) have been added to the existing list which
included Ask Dr. Weil (April 1998). We expect marketing and sales expenses to
vary considerably from quarter to quarter during future periods depending on the
timing of advertising campaigns, but do not expect quarterly spending in 2000 to
continue at the same rate as the fourth quarter of 1999. In addition, we expect
marketing and sales expenses to remain high as a percentage of sales, but lower
as a percentage of sales than we experienced in 1999.

Technology Development Expenses. Technology development expenses consist
primarily of consulting fees and payroll and related expenses for applications
development and information technology personnel, licensing and service
agreements, Web site hosting and communications charges, and Web site content
development and design expenses. Technology development expenses increased by
$2.5 million to $3.1 million for 1999 from $0.6 million for 1998. As a
percentage of net sales, these expenses were 21% in 1999 and 21% in 1998.
Expenses increased in the areas of technology development personnel and use of
third-party service providers, consultants and contract labor. The increase in
expense and in our overall investment in technology reflects our commitment to
providing a superior web commerce experience to our customers. We believe
strongly that our new Web site, its ongoing technology-based enhancements and
the infrastructure supporting the site will contribute significantly to customer
satisfaction and retention. Continued investment is therefore anticipated, to
provide improvements to the capabilities of the site and to expand the
infrastructure necessary to support it. We also expect to continue to invest in
the development of in-house expertise necessary to effectively manage the
technology of our business. In 1999, we successfully recruited a highly
experienced Chief Technology Officer and a Director of Technology Operations, as
well as several other technology professionals.

General and Administrative Expenses. General and administrative expenses consist
primarily of payroll and related expenses for executive and administrative
personnel, corporate facility expenses, professional services expenses, travel,
deferred stock-based compensation and other general corporate expenses. General

                                       24
<PAGE>


and administrative expenses increased by $4.5 million to $5.4 million, or 37% of
net sales, for 1999 from $0.9 million, or 30% of net sales, for 1998. This
increase was primarily due to the addition of personnel, professional fees and
other expenses associated with building our infrastructure and the addition of
deferred stock-based compensation. As we continue this building process, we
expect that general and administrative expenses will continue to increase during
future periods.

Interest Expense (income), net. Interest expense (income), net consists of
interest charges allocated from The Vitamin Shoppe and interest income earned on
cash and cash equivalents. Interest expense was charged on the note due to The
Vitamin Shoppe and advances to us at the rate of 8.75% per annum which totaled
$416,000 in 1999 as compared to $120,000 in 1998. Interest income has been
earned since the sale of our Series A convertible preferred stock on July 27,
1999 and our initial public offering on October 8, 1999 and amounted to
$425,000. Since the note due to The Vitamin Shoppe was repaid in November 1999,
VitaminShoppe.com no longer anticipates interest expense unless we incur future
borrowings.

Amortization of Stock-Based Compensation. Amortization of deferred stock-based
compensation expense, included in general and administrative expenses, was $1.2
million in 1999 as compared to zero in 1998. Due to the resignations of two
officers during the first quarter 2000, we expect to eliminate approximately
$1.9 million of unamortized deferred stock-based compensation that was
previously recorded as additional paid in capital.

Intercompany Agreements. The intercompany agreements cover rights and
obligations regarding trademark licenses, inventory supply and fulfillment,
promotional and co-marketing activities, databases and administrative services.
We incurred a total of $5.5 million of merchandise purchases and $2.3 million of
other expenses under the intercompany agreements with The Vitamin Shoppe for the
six months ended December 31, 1999. The intercompany agreements were not in
place during the first three quarters 1998 and the six months ended June 30,
1999 but became effective on July 1, 1999. Had the intercompany agreements been
in place during the full first three quarters 1999 and 1998 (as shown in the pro
forma columns in Item 6 "Selected Financial Data"), our net loss would have been
increased to $31.0 million in 1999 and $4.36 million in 1998.

Income taxes. Our operating results through June 30, 1999 were included in the
consolidated income tax returns of The Vitamin Shoppe. Through June 30, 1999,
The Vitamin Shoppe did not allocate to us its share of income tax liabilities or
benefits attributable to our proportionate share of operating results. Since
July 1, 1999, we are no longer included in the consolidated income tax return of
The Vitamin Shoppe and, therefore, our income tax provisions have been
calculated on a separate return basis.

Since our capitalization on July 1, 1999, when we ceased to be part of The
Vitamin Shoppe's consolidated group, losses generated are available to offset
any future taxable income for 20 years. Deferred tax assets normally recorded to
reflect the future benefit may or may not be shown as realizable, depending on
our ability to demonstrate the likelihood of future profitability.

During December 2000, we filed combined New York State and New York City income
tax returns with The Vitamin Shoppe for our fiscal year ending December 31,
1999. As a result of VitaminShoppe.com tax losses used by The Vitamin Shoppe for
1999, The Vitamin Shoppe is required to establish a payable to VitaminShoppe.com
in an amount equal to $1.1 million. Subject to offset for amounts which may
become payable in the future by VitaminShoppe.com to The Vitamin Shoppe under
the Tax Allocation Agreement, the payable is due on December 31, 2004. We did
not recognize this amount as a tax benefit in our financial statements for the
fiscal year ended December 31, 1999, which were included in our Annual Report on
Form 10-K, because we had not expected to file combined returns. We have
recognized a note receivable in our financial statements for fiscal year 2000 in
the amount of $1.1 million.

                                       25
<PAGE>

As of December 31, 1999, we had a net operating loss carry forward that, if
utilized, provides a future tax benefit of approximately $10.3 million at an
effective tax rate of 40 percent. Due to the uncertainty of the realization of
this net operating loss carry forward in the future, we have provided a
valuation allowance to offset this deferred tax asset.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, our operations have not generated sufficient cash flow to
satisfy our current obligations. The Vitamin Shoppe funded these obligations
through June 1999. On September 30, 1999, we issued a promissory note to The
Vitamin Shoppe for approximately $5.8 million payable upon demand by The Vitamin
Shoppe. This amount represented funds advanced to us by The Vitamin Shoppe for
operating losses and working capital requirements through September 30, 1999 and
was repaid in full in November 1999.

On July 9, 1999, we issued promissory notes of $10 million in aggregate
principal amount due in June 2000. These notes were held by stockholders of The
Vitamin Shoppe or affiliates of these stockholders. Later in July 1999, these
notes were converted into Series A convertible preferred stock and approximately
$13.6 million of additional Series A convertible preferred stock was issued.
Together, these shares of Series A convertible preferred stock were converted
into an aggregate of 2,732,119 shares of Class A common stock.

On October 8, 1999, we sold 4,545,455 shares of our Class A common stock in an
initial public offering at a price of $11.00 per share. The gross proceeds from
this offering were $50 million. The net proceeds were approximately $45 million
after deducting underwriting discounts and commissions of $3.5 million and other
offering expenses of $1.5 million.

We had cash and cash equivalents of $38.0 million at December 31, 1999 and $4.0
million at December 31, 2000. During the first, second, third and fourth
quarters of 2000, net cash used in operating activities was $10.2 million, $8.8
million, $6.2 million and $3.4 million, respectively. Net cash used in investing
activities during the first, second, third and fourth quarters of 2000 was
approximately $2.6 million, $1.9 million, $.9 million and $0.0 million,
respectively, principally to fund expenditures for development of our new Web
site which was launched in June 2000. As of December 31, 2000, we had accounts
payable and accrued liabilities of $5.3 million and amounts payable to The
Vitamin Shoppe under the intercompany agreements of $2.3 million. At December
31, 2000, our principal fixed commitment consisted of a sublease agreement for
our office space aggregating $1.40 million through November 2003. In November
2000, we began negotiations to terminate this lease, and, during January 2001,
we terminated and relocated to the offices of The Vitamin Shoppe in Secaucus and
North Bergen, New Jersey.

We expect that cash flows from operating activities will continue to be
negative, although fourth quarter 2000 losses have decreased from those levels
experienced during the first three quarters of 2000. During the second and third
quarters of 2000, all of our online sponsorship agreements terminated, resulting
in greatly reduced online advertising expenditures for the future. During third
quarter 2000, our presence on AOL Web sites was amended to a shorter more
targeted carriage plan which concluded in mid-October. We have also suspended
plans to launch an offline media campaign. While we believe that curtailing on-
and offline advertising will enable us to achieve the lowest possible customer
acquisition cost and conserve cash, sales have also been negatively impacted by
these changes.

In addition to curtailing marketing, we adjusted our staffing downward from the
higher levels we maintained during the build-up phase of our business. In total,
VitaminShoppe.com's staffing level has been reduced, through a combination of
restructuring and attrition, from a high of 82 to the current level of 37.

                                       26
<PAGE>

In accordance with our Tax Allocation Agreement with The Vitamin Shoppe, The
Vitamin Shoppe is to reimburse us for the use of any tax attributes resulting
from the filing of a consolidated or combined tax return. During December 2000,
we filed combined New York State and New York City income tax returns with The
Vitamin Shoppe for our fiscal year ending December 31, 1999. As a result of
VitaminShoppe.com tax losses used by The Vitamin Shoppe for 1999, The Vitamin
Shoppe is required to establish a payable to VitaminShoppe.com in an amount
equal to $1.1 million. Subject to offset for amounts which may become payable in
the future by VitaminShoppe.com to The Vitamin Shoppe under the Tax Allocation
Agreement, the payable is due on December 31, 2004. We did not recognize this
amount as a tax benefit in our financial statements for the fiscal year ended
December 31, 1999, which were included in our Annual Report on Form 10-K,
because we had not expected to file combined returns. We have recognized a note
receivable in our financial statements for fiscal year 2000 in the amount of
$1.9 million, which includes the $1.1 million used by The Vitamin Shoppe for the
year ended December 31, 1999 and an estimated amount associated with The Vitamin
Shoppe's use of the VitaminShoppe.com's tax losses for New York State and New
York City in 2000.

We continued to accumulate net losses in the fourth quarter of 2000. As of
December 31, 2000, we had $4.0 million in cash and cash equivalents (as compared
to $7.4 million at September 30, 2000). Based on our current estimates, we
expect our cash to be depleted in April 2001. We hope to complete the merger
prior to depleting all of our cash, but we cannot assure you that we will be
able to do so. If the merger is not completed, we will likely be forced to seek
protection under the Federal bankruptcy laws or enter liquidation proceedings.

YEAR 2000 COMPLIANCE

During 1999, we directly or through The Vitamin Shoppe assessed the year 2000
compliance of internally developed and purchased software, which included
software for use in order processing and fulfillment, i.e., credit card
processing and distribution functions, accounting and database systems. Expenses
associated with this assessment and a corrective action plan approximated $0.4
million and was largely borne by The Vitamin Shoppe. We have not experienced any
major disruptions in our operations associated with issues related to the year
2000.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income, which is
effective for fiscal years beginning after December 15, 1997. SFAS No. 130
establishes standards for reporting and display of comprehensive income. The
adoption of SFAS No. 130 as of January 1, 1998 did not have a material effect on
our financial statements or disclosures as we have no reconciling items.
Therefore, net loss and comprehensive loss are the same.

In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 requires that public companies
report information about operating segments in their annual financial statements
and in subsequent condensed financial statements of interim periods issued to
stockholders. This statement also requires that public companies report certain
information about their products and services, the geographic areas in which
they operate and their major customers. Adoption of the standard did not have an
effect on our disclosures for all periods because we currently operate as one
segment.

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
Reporting on the Costs of Start-up Activities, which is effective for fiscal
years beginning after December 15, 1998. SOP 98-5 establishes accounting and
reporting


                                       27
<PAGE>

standards for start-up activities and requires the costs of start-up activities,
including organization costs, to be expensed as incurred. We adopted SOP 98-5
effective January 1, 1999. Its adoption did not have a material effect on our
financial statements.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 requires recognition of all
derivatives on the balance sheet at fair value. Adoption of this standard will
not have a material effect on our financial statements or disclosures.

In July 2000, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-10, Accounting for Shipping and Handling Fees and Costs. The EITF concluded
that all amounts billed to a customer in a sale transaction related to shipping
and handling, represent revenues earned for the goods provided and should be
classified as revenue.

The required implementation date of EITF Issue No. 00-10 for VitaminShoppe.com
was the fourth quarter of fiscal year 2000. VitaminShoppe.com has recorded all
amounts billed to customers related to shipping and handling costs as net sales
and costs related to shipping and handling as cost of goods sold as of October
1, 2000 and has restated prior periods. Previously the shipping and handling
amounts billed to customers and the costs related to shipping and handling had
been recorded net as operating expense in the Marketing and Sales category.

From September 1999 to April 2000, VitaminShoppe.com's shipping policy allowed
overnight delivery on all packages at no additional cost to the customer above
standard delivery. Effective May 1, 2000, VitaminShoppe.com began charging a
$2.00 per order premium for overnight delivery.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We believe that inflation has not had a material impact on our results of
operations since inception for each of our fiscal years ended December 31, 1998,
1999 and 2000. However, there can be no assurance that future inflation would
not have an adverse impact on our operating results and financial condition.

We are not subject to currency fluctuations since we do not have any
international operations. We have limited market risk exposure since we do not
have any outstanding variable rate debt or derivative financial and commodity
instruments as of March 16, 2001.

As of March 16, 2001, we have no outstanding long-term debt instruments.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information called for by this Item 8 is included in Item 14, under
"Financial Statements" appearing at the end of this annual report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

BOARD OF DIRECTORS

                                       28
<PAGE>

Our board of directors is divided into three classes with staggered three-year
terms. There are currently two Class I Directors, three Class II Directors and
three Class III Directors. This table contains information about each of the
Class I, Class II and Class III Directors. For information about the ownership
of Class A common stock by our directors, see "How Much Class A Common Stock Do
Directors and Officers Own?"

<TABLE>
<CAPTION>
<S>                                                                                   <C>                <C>
----------------------------------------------------------------------------------------------------------------------
NAME, AGE, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND DIRECTORSHIPS               DIRECTOR SINCE      TERM EXPIRES
----------------------------------------------------------------------------------------------------------------------
M. Anthony Fisher, age 50                                                                 May 1999        Class III
                                                                                                           Director
     Chairman of the Board of Directors of VitaminShoppe.com since January 17,                               2002
     2000 and a director since its incorporation. Compensation committee
     chairman since October 1999 and finance committee member since January
     2000. Partner in Fisher Brothers, a real estate development firm, since
     1981 and senior managing director in FdG Associates, a private equity firm,
     since 1995. Also a director of Sunpark, Inc. and Vitamin Shoppe Industries
     Inc.

----------------------------------------------------------------------------------------------------------------------
Jeffrey J. Horowitz, age 53                                                               May 1999        Class III
     President and chief executive officer of VitaminShoppe.com since January                              Director
     2000. Chairman of the Board of Directors of VitaminShoppe.com from June 1999                            2002
     to January 17, 2000. President and chief executive officer of Vitamin
     Shoppe Industries Inc. from 1977 to January 2000. Also a director of
     Vitamin Shoppe Industries Inc.

----------------------------------------------------------------------------------------------------------------------
Barbara S. Feigin, age 63                                                              September 1999      Class I
     Audit committee member since September 1999. Independent consultant                                   Director
     specializing in strategic marketing and branding since 1999. From 1983 until                           2003
     her retirement in 1999, Executive Vice President and Worldwide Director of
     Strategic Services of Grey Advertising, Inc., an advertising and marketing
     communications firm. Also a director of Circuit City Stores, Inc., VF
     Corporation and a privately held company. Ms. Feigin is a member of the
     special committee.
----------------------------------------------------------------------------------------------------------------------
David S. Gellman, age 43                                                                  May 1999         Class I
     Audit committee member since October 1999 and finance committee member since                          Director
     January 2000. Managing director of FdG Associates, a private equity fund,                              2003
     since 1995. From 1988 to 1995, an investment professional with AEA Investors
     Inc., a private equity firm, with responsibility for identifying, executing
     and/or managing private equity investments. Also a director of Golf Galaxy,
     Inc. and Vitamin Shoppe Industries Inc.
----------------------------------------------------------------------------------------------------------------------
Martin L. Edelman, age 59                                                                 May 1999         Class II
     Of counsel to Paul, Hastings, Janofsky & Walker LLP, a law firm, since 2000.                          Director
     Of counsel to Battle Fowler, LLP, a law firm, from 1994 to 1999, after having                           2001
     been a partner from 1972 to 1993. President of Chartwell Leisure Associates
     from 1996 to 1998, Partner of Chartwell Hotels Associates since 1992,
     Director and Member of Executive Committee of Chartwell de Mexico. Also a
     director of Acadia Realty Trust, Avis Rent-A-Car, Inc., Capital Trust,
     Cendant Corporation and Delancey Estates PLC, as well as several privately
     held companies. As a member of the board of directors of Cendant



                                       29
<PAGE>
----------------------------------------------------------------------------------------------------------------------
NAME, AGE, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND DIRECTORSHIPS               DIRECTOR SINCE      TERM EXPIRES
----------------------------------------------------------------------------------------------------------------------
     Corporation, named as a defendant in various actions, including two class
     actions, asserting claims under federal and state securities laws and state
     common law against Cendant and certain of its present and former officers
     and directors, and named as a defendant in a derivative action brought
     nominally on behalf of Cendant asserting claims for breach of fiduciary
     duty and waste. Certain of these actions, including both of the class
     actions, have been settled, although the settlement of one class action
     remains subject to court approval.
----------------------------------------------------------------------------------------------------------------------
Woodson C. Merrell, M.D., age 52                                                        August 1999       Class III
     Executive director of Beth Israel Center for Health and Healing, a division                          Director
     of Continuum Health Partners, a consortium of four hospitals, since 1993.                              2002
     Also maintains an active private medical practice and is a frequent
     lecturer on health and wellness topics. Mr. Merrell is a member of the
     special committee.
----------------------------------------------------------------------------------------------------------------------
Stephen P. Murray, age 38                                                                June 1999         Class II
     Audit committee chairman since September 1999, compensation committee member                          Director
     since October 1999 and finance committee member since January 2000. An                                  2001
     investment professional at JP Morgan Partners and its predecessor
     organization, a private equity firm, since 1988. Also a director of
     Advantage Schools, Cornerstone Brands, LPA Holdings Inc., Premier Systems
     Integrators, Eduprise Corporation, Home Advisors Technologies Incorporated,
     USA.net and Vitamin Shoppe Industries Inc.
----------------------------------------------------------------------------------------------------------------------
Paul R. Vigano, age 28                                                                   April 2000        Class II
     Audit, compensation and finance committee member since April 2000. A                                  Director
     principal of Whitney & Co., Mr. Vigano has been an investment professional at                           2001
     Whitney & Co. since 1998. An investment banker at Goldman, Sachs & Co. from
     1994 to 1996. Also a director of several privately held companies. Mr. Vigano
     is a member of the special committee.
----------------------------------------------------------------------------------------------------------------------
</TABLE>

STOCKHOLDER AGREEMENT; J.H. WHITNEY REPRESENTATIVE ON BOARD OF DIRECTORS

In July 1999, we entered into a stockholder agreement with all of our then
existing stockholders, including The Vitamin Shoppe, J.H. Whitney III, L.P. and
Whitney Strategic Partners III, L.P. (the "Whitney Affiliates"), in connection
with the sale of our Series A convertible preferred stock. The agreement
provides that the parties will undertake to cause to be nominated and elected as
a member of our board of directors one individual designated by both of the
Whitney Affiliates. The ability to designate a director ends when the Whitney
Affiliates no longer collectively own at least 50% of the shares of Class A
common stock issued to them upon the conversion of their Series A convertible
preferred stock. The Whitney Affiliates may designate for removal their
representative on the board of directors and may designate for election an
individual to fill the new vacancy. The parties to the agreement will undertake
to remove the old director and elect the new director as requested by the
Whitney Affiliates.



                                       30
<PAGE>

<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
<S>                         <C>             <C>
NAME                        AGE             POSITION WITH VITAMINSHOPPE.COM

Jeffrey J. Horowitz         53              President and Chief Executive Officer

Ann M. Sardini              51              Chief Financial Officer, Secretary and Treasurer

Joel Gurzinsky              45              Vice President-Operations

Lesli Rodgers               51              Vice President-Customer Acquisition and Retention
</TABLE>

Biographical information about Mr. Horowitz is set forth in Item 10 "Directors
and Executive Officers of the Registrant-Board of Directors."

Ann M. Sardini has been the chief financial officer, secretary and treasurer of
VitaminShoppe.com since October 1999. From 1995 to 1999, Ms. Sardini was
executive vice president and chief financial officer of Children's Television
Workshop, a multimedia company that produces Sesame Street. From 1993 to 1995,
she was chief financial officer and vice president-finance and operations for
Q2, an interactive consumer marketing and technology division of retailer QVC,
Inc.

Joel Gurzinsky has been vice president-operations of VitaminShoppe.com since
July 1999. Mr. Gurzinsky joined Vitamin Shoppe Industries in 1979 and has served
in a variety of positions, including retail store management, purchasing, direct
marketing management and distribution management. Before transferring to
VitaminShoppe.com, he was vice president-online operations for The Vitamin
Shoppe.

Lesli Rodgers was vice president-customer acquisition and retention of
VitaminShoppe.com from March 2000 through December 2000. From 1990 to March
2000, Ms. Rodgers was president and chief executive officer of LR Direct Ltd., a
direct marketing consulting and list brokerage firm and an affiliate of Ms.
Rodgers. As of January 2001, Ms. Rodgers is employed by The Vitamin Shoppe as
vice president-database marketing and analysis.

Kathryn H. Creech was president and chief executive officer and a director of
VitaminShoppe.com from June 1999 to January 2000. She is 49 years old.

Philip H. Teplitzky was chief technology officer of VitaminShoppe.com from July
1999 to August 2000. He is 51 years old.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires that our
insiders-directors, executive officers and holders of 10% or more of our Class A
common stock-file reports with the Securities and Exchange Commission regarding
their initial beneficial ownership of Class A common stock and any subsequent
changes. They must also provide us with copies of the reports.

We understand that Lesli Rodgers was required to file Forms 3, 4 and 5 during
calendar year 2000 and such forms were filed after their respective due dates.

ITEM 11.  EXECUTIVE COMPENSATION.

EXECUTIVE OFFICERS COMPENSATION

SUMMARY COMPENSATION TABLE



                                       31
<PAGE>

Because VitaminShoppe.com was not incorporated until May 1999, none of its
officers or employees received compensation, whether paid, deferred or accrued,
in excess of $100,000 during the year ended December 31, 1998 for services
rendered to VitaminShoppe.com, and VitaminShoppe.com granted no options to
purchase shares of its capital stock during 1998. The tables on the next pages
show salaries, bonuses and other compensation paid during 1999 and 2000, options
granted during 1999 and 2000, options exercised during 1999 and 2000 and option
values at the end of 1999 and 2000 for our former chief executive officer and
the most highly compensated executive officers who earned more than $100,000
during 1999 and 2000. All of these officers were employed by us for less than a
full year during 1999. Our current chief executive officer received no
compensation from VitaminShoppe.com during 1999.

<TABLE>
<CAPTION>
<S>                                       <C>         <C>                 <C>          <C>                  <C>
------------------------------------------------------------------------------------------------------------------------------
                                                                                       LONG-TERM
NAME AND PRINCIPAL POSITION                                 ANNUAL COMPENSATION        COMPENSATION AWARDS
------------------------------------------------------------------------------------------------------------------------------
                                           FISCAL
                                            YEAR                                         CLASS A SHARES         ALL OTHER
                                           COVERED          SALARY           BONUS     UNDERLYING OPTIONS     COMPENSATION
------------------------------------------------------------------------------------------------------------------------------
Jeffrey J. Horowitz, President and           2000          $271,154            -                -                     -
Chief Executive Officer
                                             ---------------------------------------------------------------------------------
                                             1999                 -            -                -                     -
------------------------------------------------------------------------------------------------------------------------------
Kathryn H. Creech, former President and      2000            $3,865            -                -              $375,000(1)
Chief Executive Officer
                                             ---------------------------------------------------------------------------------
                                             1999           $55,876            -             815,343            $58,300(2)
------------------------------------------------------------------------------------------------------------------------------
Joel Gurzinsky, Vice President               2000          $184,086            -             25,000                   -
Operations
                                             ---------------------------------------------------------------------------------
                                             1999           $75,644            -             52,300                   -
------------------------------------------------------------------------------------------------------------------------------
Ann M. Sardini, Chief Financial              2000          $263,922            -             100,000            $25,000(3)
Officer, Secretary and Treasurer
                                             ---------------------------------------------------------------------------------
                                             1999           $73,115            -             200,000                  -
------------------------------------------------------------------------------------------------------------------------------
Lesli Rodgers, former Vice President         2000          $154,153            -             25,000                   -
Customer Acquisition and Retention
                                             ---------------------------------------------------------------------------------
                                             1999                 -            -                -                     -
------------------------------------------------------------------------------------------------------------------------------
Philip H. Teplitzky, former Chief            2000          $155,115            -                -                     -
Technology Officer
                                             ---------------------------------------------------------------------------------
                                             1999          $112,600            -             180,000                  -
------------------------------------------------------------------------------------------------------------------------------
Eliot D. Russman, former Chief               2000           $12,371            -                -              $107,801(4)
Marketing Officer
                                             ---------------------------------------------------------------------------------
                                             1999          $125,039            -             176,600                  -
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      Represents payments under a separation agreement in lieu of the
         payments that would have been made to Ms. Creech pursuant to her
         employment agreement.
(2)      Represents payments under a consulting agreement for periods prior to
         Ms. Creech's employment as our president and chief executive officer.
(3)      Represents an employee incentive "stay" bonus to retain Ms. Sardini's
         employment.
(4)      Represents payments under a separation agreement in lieu of the
         payments that would have been made to Mr. Russman pursuant to his offer
         letter.


                                       32
<PAGE>

OPTION GRANTS IN 2000

The following table shows certain required information with respect to options
granted to our executive officers during fiscal year 2000. During 2000 we
granted options to purchase 689,375 shares of Class A common stock. The option
grants were made to 73 employees, three executive officers and three directors.
All grants to purchase options were granted at 100% of the fair market value of
our Class A common stock on the date that the option was granted. The exercise
price may be paid in cash or other property acceptable to the compensation
committee or in shares of Class A common stock.

During fiscal year 2000, VitaminShoppe.com amortized $591,000 of deferred
stock-based compensation. The remaining deferred stock-based compensation is
being amortized over the vesting period of the underlying options. Due to the
resignations of three officers and other employees during 2000, we eliminated
approximately $1.8 million of unamortized deferred stock-based compensation from
additional paid-in capital where it was previously recorded.

The dollar amounts under "Potential Realizable Value at Assumed Annual Rates of
Stock Price Appreciation for Option Term" are the result of calculations at the
0%, 5% and 10% appreciation rates established by the Securities and Exchange
Commission. These values are not intended to forecast possible future increases,
if any, in the price of our Class A common stock. No gain to the holders of
options is possible without an increase in the price of our Class A common
stock, which will benefit all stockholders.

<TABLE>
<CAPTION>
<S>                      <C>           <C>          <C>        <C>           <C>         <C>         <C>          <C>
------------------------------------------------------------------------------------------------------------------------------
NAME                                           INDIVIDUAL GRANTS                            POTENTIAL REALIZABLE VALUE AT
                                                                                         ASSUMED ANNUAL RATES OF STOCK PRICE
                                                                                             APPRECIATION FOR OPTION TERM
------------------------------------------------------------------------------------------------------------------------------
                                       PERCENTAGE
                          NUMBER OF     OF TOTAL
                            SHARES       OPTIONS                 FMV PER
                          UNDERLYING   GRANTED TO   EXERCISE    SHARE ON
                           OPTIONS      EMPLOYEES    PRICE       DATE OF    EXPIRATION
                           GRANTED     DURING 2000  PER SHARE     GRANT        DATE          0%        5%           10%
------------------------------------------------------------------------------------------------------------------------------
Jeffrey J. Horowitz              -          -           -           -            -           -            -            -
------------------------------------------------------------------------------------------------------------------------------
Joel Gurzinsky              25,000         4%         $2.98       $2.98      5/17/2010       0       43,481       118,734
------------------------------------------------------------------------------------------------------------------------------
Ann M. Sardini             100,000         15%        $2.98       $2.98      5/17/2010       0       173,925      474,935
------------------------------------------------------------------------------------------------------------------------------
Lesli Rodgers               25,000(1)      4%         $3.75       $3.75      3/19/2010       0       54,716       149,413
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Due to termination of Ms. Rodgers' employment, the shares granted under
     this option have lapsed.

AGGREGATED OPTION EXERCISES DURING 2000 AND YEAR-END OPTION VALUES

The following table sets forth certain required information with respect to
options exercised by our executive officers during fiscal year 2000.

The value of unexercised in-the-money options at year end is calculated based on
a $0.72 closing bid for the Class A common stock on December 31, 2000. Options
are "in-the-money" if the market value of the shares covered by the option is
greater than the exercise price of the option.



                                       33
<PAGE>

<TABLE>
<CAPTION>
<S>                            <C>             <C>            <C>                         <C>
-----------------------------------------------------------------------------------------------------------------------
                                                                   NUMBER OF SHARES           VALUE OF UNEXERCISED
                                                                UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS
                                                                 OPTIONS AT YEAR END              AT YEAR END
-----------------------------------------------------------------------------------------------------------------------
                                  SHARES
                                 ACQUIRED          VALUE             EXERCISABLE/                 EXERCISABLE/
NAME                            ON EXERCISE      REALIZED           UNEXERCISABLE                UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------

Jeffrey J. Horowitz                  -               -                   -/-                          -/-
-----------------------------------------------------------------------------------------------------------------------

Kathryn H. Creech                    -               -                180,815/0                      $0/$0
-----------------------------------------------------------------------------------------------------------------------
Joel Gurzinsky
                                     -               -              17,433/59,867                    $0/$0
-----------------------------------------------------------------------------------------------------------------------

Ann M. Sardini                       -               -              66,666/233,334                   $0/$0
-----------------------------------------------------------------------------------------------------------------------

Lesli Rodgers(1)                     -               -                 0/25,000                      $0/$0
-----------------------------------------------------------------------------------------------------------------------

Philip H. Teplitzky(2)               -               -                   0/0                         $0/$0
-----------------------------------------------------------------------------------------------------------------------
Eliot D. Russman
                                     -               -                 25,000/0                      $0/$0
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Due to termination of Ms. Rodgers' employment, the shares granted under
     this option have lapsed.
(2)  Due to termination of Mr. Teplitzky's employment, the shares granted under
     this option have lapsed.

BOARD OF DIRECTORS

COMPENSATION

Directors who are employed by VitaminShoppe.com receive no additional
compensation for serving as directors. Non-Employee directors are compensated by
participation in the Amended and Restated Stock Option Plan for Non-Employee
Directors, as amended ("Director Plan"). Each non-employee director who was
elected or appointed to our board of directors after August 1, 1999 has been
granted an option to purchase 38,475 shares of Class A common stock on the date
of initial election or appointment. Each of our non-employee directors will be
granted an additional option to purchase 7,695 shares of Class A common stock on
the third anniversary of any previous grant under the plan. As of December 31,
2000, we had granted options under the Director Plan to purchase an aggregate of
309,325 shares of Class A common stock at an average exercise price of $8.38 per
share. Barbara S. Feigin and Woodson C. Merrell each hold options to purchase an
additional 20,000 shares of Class A common stock at an exercise price of $1.53
per share.

Barbara S. Feigin, Woodson C. Merrell and Paul R. Vigano will each receive
$15,000 from VitaminShoppe.com as compensation for the additional time and
effort required for service on the Special Committee of the Board of Directors.

Barbara S. Feigin, Woodson C. Merrell and Paul R. Vigano are each parties to
indemnification agreements with us in connection with their service on the
Special Committee of the Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Since October 1999, the compensation committee, and before that time our Board
of Directors, made all compensation decisions regarding our executive officers.
Since October 1999, Messrs. Brooks, Fisher, Gellman and Murray have comprised
the compensation committee. On April 20, 2000, Mr. Brooks resigned from the
Board of Directors and compensation committee. Mr. Vigano was elected to the
Board of Directors


                                       34
<PAGE>

and compensation committee on April 21, 2000. During 2000, Messrs. Horowitz,
Edelman, Fisher, Gellman and Murray were members of the Board of Directors of
The Vitamin Shoppe. As of October 7, 1999, Mr. Edelman is no longer a member of
the Board of Directors of The Vitamin Shoppe. No interlocking relationship
exists between the compensation committee and the Board of Directors or
compensation committee of any other company, nor have any such interlocking
relationships existed in the past.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The compensation committee of the Board of Directors consists of Messrs. Fisher,
Gellman, Murray and Vigano. This committee also administers the grants of stock
options to officers under our Employee Plan.

EXECUTIVE COMPENSATION PROGRAMS

Our Chief Financial Officer, Ann Sardini, and our Vice President Operations,
Joel Gurzinsky, began their employment during 1999. Our current President and
Chief Executive Officer, Jeffrey Horowitz, began his employment in January 2000.
Our former Vice President Customer Acquisition and Retention, Lesli Rodgers, was
employed from March 20, 2000 to December 31, 2000. Our former Chief Technology
Officer, Philip Teplitzky, began his employment during 1999 and was employed
until August 3, 2000. Other than those who were hired from Vitamin Shoppe
Industries Inc. ("The Vitamin Shoppe"), all of our executive officers are
compensated under the terms of the offer letters that were extended to them at
the time of their hiring, each of which specifies a base salary for their first
year of employment. Mr. Horowitz and Mr. Gurzinsky were officers at The Vitamin
Shoppe prior to joining us and were hired pursuant to oral arrangements.

During fiscal year 1999, Mr. Horowitz received salary and bonus in the amount of
$600,000 from The Vitamin Shoppe. Beginning in 2000 when Mr. Horowitz became the
President and Chief Executive Officer of VitaminShoppe.com, he received half of
his salary from The Vitamin Shoppe and half from VitaminShoppe.com, for an
aggregate of $600,000. As of January 1, 2001, Mr. Horowitz's salary is again
being paid entirely by The Vitamin Shoppe.

At the expiration of the one-year term of each of the offer letters and at or
near the anniversaries of the oral agreements described above, the compensation
of our executive officers is set by the Board of Directors after consideration
of the recommendations of the compensation committee. Prior to making its
recommendations, the compensation committee reviews historical compensation
levels of the executives, evaluates past performance and assesses expected
future contributions of the executives. In making the determinations regarding
base salaries, the compensation committee generally considers available
information regarding salaries prevailing in our industry but does not tie
salaries to any particular index.

In order to maintain the incentive of certain of our employees following the
decline of our stock price and given the fact that all options previously
granted were no longer "in the money", in May 2000, at the recommendation of the
compensation committee, the Board of Directors granted in excess of 300,000
options to selected employees at fair market value which vest in accordance with
the Employee Plan. During the first half of 2000, the company also granted Mr.
Gurzinsky a salary increase.

In September 2000 VitaminShoppe.com entered into severance arrangements related
to the elimination of certain positions which management felt were no longer
required. At that time, in light of the number of persons who had recently left
or were being asked to leave employment, the need to keep the company running
efficiently and the lack of value of the VitaminShoppe.com stock options
previously granted, VitaminShoppe.com paid stay bonuses aggregating $70,800 and
granted salary increases aggregating $166,000 as incentives to retain certain
key members of the VitaminShoppe.com staff, including Ms. Sardini


                                       35
<PAGE>

and Mr. Gurzinksy. As a result first of the pursuit of strategic alternatives
and later of the pending agreement of merger, as well as industry trends and the
company's cash position, the compensation committee did not perform annual
reviews.

VitaminShoppe.com has provided long-term incentives through stock option grants
at the time of hiring and at subsequent dates. Given the pending merger with The
Vitamin Shoppe, VitaminShoppe.com has ceased granting options. No options have
been granted since October 2000. The agreement of merger with The Vitamin Shoppe
prohibits the issuance of any additional options to purchase securities of
VitaminShoppe.com.

COMPENSATION DEDUCTIBILITY

Section 162(m) of the Internal Revenue Code of 1986 imposes a limit on tax
deductions for annual compensation in excess of $1 million paid by a corporation
to its chief executive officer and the other four most highly compensated
executive officers of the corporation. This provision excludes some forms of
"performance based compensation," including stock options, from the compensation
taken into account for the purposes of the limit. Although it is desirable for
executive compensation to be tax deductible when in the judgment of the
compensation committee deductibility is consistent with the objectives pursuant
to which the particular compensation is paid, the compensation committee
believes that we should compensate our executive officers fairly in accordance
with the guidelines discussed in this report and not be unduly limited by
expected federal income tax treatment. Accordingly, the total compensation paid
to an executive officer in any year may exceed the amount that is deductible.
While no executive officer is currently compensated at or near $1 million of
annual compensation, the compensation committee will continue to assess the
impact of section 162(m) on its compensation practices and determine when action
is appropriate.

CHIEF EXECUTIVE OFFICER COMPENSATION

Ms. Creech ceased to be employed by us in January 2000 at which time Mr.
Horowitz became President and Chief Executive Officer. As a result of the
pending merger with The Vitamin Shoppe and that as of January 1, 2001, Mr.
Horowitz's salary is being paid by The Vitamin Shoppe, the compensation
committee did not review Mr. Horowitz's performance in 2000 for the purposes of
establishing his compensation.

                                          By order of the Compensation Committee
                                                     M. Anthony Fisher, Chairman
                                                                David S. Gellman
                                                               Stephen P. Murray
                                                                  Paul R. Vigano

The foregoing report of the compensation committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Annual Report on Form 10-K into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent that VitaminShoppe.com specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.



                                       36
<PAGE>

STOCK PERFORMANCE GRAPH

This stock performance graph compares (1) the cumulative stockholder return on
our Class A common stock from January 1, 2000 to December 31, 2000, with (2) the
cumulative total return of the NASDAQ National Market Index and (3) the
cumulative total return of the NASDAQ Computer Index over the same period. The
graph assumes that the value of an investment in our Class A common stock and
the common stock of each of the comparison groups was $100 on January 1, 2000
and assumes the reinvestment of dividends. We have never declared a dividend on
our Class A common stock. The stock price performance depicted in the graph
below is not necessarily indicative of future price performance.

                              Relative Performance

[GRAPHIC OMITTED]


<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN

                                     10/8/99     1/7/00     4/7/00     7/7/00     10/6/00     12/29/00
                                     -------     ------     ------     ------     -------     --------
<S>                                   <C>          <C>        <C>        <C>        <C>          <C>
VitaminShoppe.com, Inc.               100.00       86.54      36.38      19.87      10.26        7.37
Nasdaq Composite Index                100.00      134.51     154.04     139.38     116.44       85.59
Nasdaq Computer Index                 100.00      140.48     166.31     150.18     123.28       82.53
</TABLE>




                                       37
<PAGE>

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

AGREEMENT WITH MS. CREECH

Our employment agreement with Ms. Creech terminated in January 2000, when we
entered into a separation agreement with Ms. Creech. Under the terms of the
separation agreement, we paid Ms. Creech $375,000 during 2000 and will pay her
$165,308 during 2001 in lieu of the payments that would have been made pursuant
to her employment agreement. In addition, the separation agreement provides for
the accelerated vesting of options granted in June 1999 to purchase 50,000
shares of Class A common stock with an exercise price per share of $3.82.
Options to purchase 634,528 shares of Class A common stock lapsed as a result of
the termination of Ms. Creech's employment. We provided Ms. Creech with office
space at a monthly cost not to exceed $2,500 for a period of six months after
the date on which her employment ceased or her earlier new employment.

AGREEMENT WITH MS. SARDINI

Our offer letter to Ms. Sardini provides for a salary of $250,000 and includes a
promise to continue to pay base salary in the event that she is terminated other
than for cause six months after the date of termination. In connection with the
salary increases and stay bonuses granted in September 2000, Ms. Sardini's base
salary was increased to $300,000.

AGREEMENT WITH MS. RODGERS

Our offer letter to Ms. Rodgers provides for a salary of $200,000 and includes a
promise to continue to pay base salary in the event that she was terminated
other than for cause, until the later to occur of March 20, 2001 and six months
after the date of termination. Ms. Rodgers terminated her employment with the
company on December 31, 2000. No additional payments were made and options to
purchase 25,000 shares of Class A common stock lapsed as a result of the
termination of Ms. Rodgers' employment.

AGREEMENT WITH MR. TEPLITZKY

Our offer letter to Mr. Teplitzky provided for a salary of $250,000 and includes
a promise to continue to pay base salary in the event that he was terminated
other than for cause, until the later to occur of September 23, 2000 and six
months after the date of termination. Mr. Teplitzky terminated his employment
with the company on August 3, 2000. No additional payments were made and options
to purchase 270,000 shares of Class A common stock lapsed as a result of the
termination of Mr. Teplitzky's employment.

AGREEMENT WITH MR. RUSSMAN

Mr. Russman's employment terminated in January 2000, when we entered into a
separation agreement with Mr. Russman. Under the terms of the separation
agreement, we paid Mr. Russman $107,500 during 2000 in lieu of the payments that
would have been made pursuant to his employment offer letter. In addition, the
separation agreement provides for the accelerated vesting of options granted in
July 24, 2000 to purchase 25,000 shares of Class A common stock with an exercise
price per share of $3.82. Options to purchase 151,600 shares of Class A common
stock lapsed as a result of the termination of Mr. Russman's employment. We
provided Mr. Russman with office space at a monthly cost not to exceed $2,000
for a period of three months after the date on which his employment ceased or
his earlier new employment.



                                       38
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

INFORMATION ABOUT CLASS A COMMON STOCK OWNERSHIP

WHICH STOCKHOLDERS OWN AT LEAST 5% OF OUR CLASS A COMMON STOCK?

As of March 16, 2001, The Vitamin Shoppe beneficially owns all shares of the
Class B common stock of VitaminShoppe.com, which represents 64.3% of our
outstanding shares of common stock. Each share of Class B common stock is
entitled to six votes, while each share of Class A common stock is entitled to
one vote. As a result, ownership of all of the Class B common stock gives The
Vitamin Shoppe 91.5% of the voting power of our capital stock. The Class B
common stock owned by The Vitamin Shoppe has been pledged as security under the
bank credit facility of The Vitamin Shoppe.

The following table sets forth all persons and entities whom we know to be
beneficial owners of at least 5% of our Class A common stock as of March 16,
2001. "Beneficial owners" are those who have the power to vote or to sell the
stock. Our information is based solely on reports filed with the Securities and
Exchange Commission by the stockholders.

On March 16, 2001, 7,277,574 shares of Class A common stock were outstanding. In
the following table, shares that a person or entity has the right to acquire by
May 15, 2001 by exercising options, warrants or conversion privileges are deemed
to be outstanding for the purpose of computing the percentage ownership of that
person or entity but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person or entity listed in the table. Except
as indicated in the footnotes to the table, we believe that the named
stockholders have sole voting and investment power with respect to the shares
shown to be beneficially owned by them, based on information provided by these
stockholders.

<TABLE>
<CAPTION>
<S>                                                                     <C>            <C>              <C>
----------------------------------------------------------------------------------------------------------------------
                                                                             CLASS A SHARES BENEFICIALLY OWNED
----------------------------------------------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER                                                   NUMBER        PERCENTAGE     VOTING POWER
----------------------------------------------------------------------------------------------------------------------
Vitamin Shoppe Industries Inc. (1)                                         13,081,500            64.3%          91.5%
----------------------------------------------------------------------------------------------------------------------
FdG Capital Associates LLC and                                                573,749             7.9%
     M. Anthony Fisher (2)                                                    589,074             8.1%        *
----------------------------------------------------------------------------------------------------------------------
J.H. Whitney III, L.P. and
     Whitney Strategic Partners III, L.P. (3)                               1,092,849            15.0%           1.3%
----------------------------------------------------------------------------------------------------------------------
S.A.C. Capital Advisors, LLC and
     S.A.C. Capital Management, LLC (4)                                       928,375           12.76%           1.1%
----------------------------------------------------------------------------------------------------------------------
J.P. Morgan Partners (23A SBIC), L.L.C. (f/k/a CB Capital                     690,081             9.0%        *
Investors, L.L.C.) (5)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Less than 1%.

(1)  Its address is 4700 Westside Avenue, North Bergen, New Jersey 07047.
     Vitamin Shoppe Industries Inc. is referred to in this Annual Report on Form
     10-K as The Vitamin Shoppe. The shares of Class A common stock beneficially
     owned by The Vitamin Shoppe are not yet issued but are issuable upon the
     conversion of the 13,081,500 shares of Class B common stock, par value
     $0.01 per share currently held by The Vitamin Shoppe. At the option of the
     holder, each share of Class B common stock is convertible into one share of
     Class A common stock. Each share of Class B common stock automatically
     converts into one share of Class A common stock upon any sale to a person
     or entity not affiliated with The Vitamin Shoppe. Holders of Class A common
     stock are entitled to one vote per share; holders of Class B common stock
     are entitled to six votes per share.



                                       39
<PAGE>

     VS Investors LLC, a Delaware limited liability company, owns 70% of the
     capital stock of The Vitamin Shoppe. FdG Associates Acquisition L.P., a
     Delaware limited partnership, is the managing member of VS Investors LLC.
     FdG Acquisition Corp., a Delaware corporation, is the general partner of
     FdG Associates Acquisition L.P. Each of VS Investors LLC, FdG Associates
     Acquisition L.P. and FdG Acquisition Corp. may be deemed to beneficially
     own 70% of the capital stock of The Vitamin Shoppe. Each of VS Investors
     LLC, FdG Associates Acquisition L.P. and FdG Acquisition Corp. expressly
     disclaims beneficial ownership of those shares. Charles de Gunzburg is on
     the board of directors of FdG Acquisition Corp. and The Vitamin Shoppe, and
     is also the president and 50% owner of the capital stock of FdG Acquisition
     Corp. M. Anthony Fisher is on the board of directors of FdG Acquisition
     Corp., The Vitamin Shoppe and VitaminShoppe.com, and is also the owner of
     50% of the capital stock of FdG Acquisition Corp. None of VS Investors LLC,
     FdG Associates Acquisition L.P., FdG Acquisition Corp., Mr. de Gunzburg or
     Mr. Fisher has the power to vote or dispose of the Class B common stock
     held by The Vitamin Shoppe or the underlying shares of Class A common stock
     as beneficially owned by The Vitamin Shoppe.

(2)  Their address is c/o FdG Associates, 299 Park Avenue, New York, New York
     10171. These persons beneficially own 576,249 shares of Class A common
     stock in the aggregate. The foregoing shares represent approximately 7.9%
     of the outstanding shares of Class A common stock (calculated in accordance
     with Rule 13d-3 under the Securities Exchange Act of 1934, as amended). FdG
     Capital Partners LLC holds of record and thereby directly beneficially owns
     and has the sole direct power to vote and dispose of 531,767 shares of
     Class A common stock (the "FdG Partners Reported Shares"). FdG Capital
     Associates LLC and M. Anthony Fisher each have the indirect power to vote
     and dispose of the FdG Partners Reported Shares. FdG-Chase Capital Partners
     LLC holds of record and thereby directly beneficially owns and has the sole
     direct power to vote 41,982 shares of Class A common stock (the "FdG Chase
     Reported Shares"). FdG Capital Associates LLC and Mr. Fisher each have the
     indirect power to vote and dispose of the FdG Chase Reported Shares. Each
     of five children of Mr. Fisher owns 500 shares of Class A common stock and
     Mr. Fisher may therefore be deemed to be the owner of those 2,500 shares of
     Class A common stock. Mr. Fisher disclaims beneficial ownership of those
     2,500 shares of Class A common stock and of all other shares described in
     this paragraph which he has indirect power to vote or dispose of.

     Mr. Fisher also has 12,825 shares of Class A common stock issuable upon the
     exercise of stock options. The exercise price of these options is greater
     than the $1.00 payable to holders of Class A common stock as a result of
     the merger.

     In addition to shares of stock of VitaminShoppe.com beneficially owned by
     these persons, The Vitamin Shoppe owns 13,081,500 shares of Class B common
     stock. Each share of Class B common stock is convertible into an equal
     number of shares of Class A common stock. VS Investors LLC, a Delaware
     limited liability company, owns 70% of the capital stock of The Vitamin
     Shoppe. FdG Associates Acquisition L.P., a Delaware limited partnership, is
     the managing member of VS Investors LLC. FdG Acquisition Corp., a Delaware
     corporation, is the general partner of FdG Associates Acquisition L.P. Mr.
     Fisher is on the board of directors of FdG Acquisition Corp., The Vitamin
     Shoppe and VitaminShoppe.com, and is also the owner of 50% of the capital
     stock of FdG Acquisition Corp. Neither Mr. Fisher nor any of these entities
     has the power to vote or dispose of the Class B common stock.

(3)  Their address is 177 Broad Street, Stamford, Connecticut 06901. The sole
     general partner of both stockholders is J.H. Whitney Equity Partners III,
     L.L.C., a Delaware limited liability company. The members of J.H. Whitney
     Equity Partners III, L.L.C. are Peter M. Castleman, Joseph D. Carrabino,
     Jr., James H. Fordyce, Jeffrey R. Jay, William Laverack, Jr., Daniel J.
     O'Brien and Michael R. Stone. The figures for the amounts beneficially
     owned by J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. do
     not include 38,475 shares of Class A common stock issuable upon the
     exercise of options granted on April 21, 2000 to Paul R. Vigano, a
     principal of Whitney & Co. J.H. Whitney III, L.P. and Whitney Strategic
     Partners III, L.P. disclaim beneficial ownership of the shares of Class A
     common stock issuable upon the exercise of the options granted to Mr.
     Vigano. Each of J.H. Whitney III, L.P. and Whitney Strategic Partners III,
     L.P. disclaims the existence of a group with respect to the Class A common
     stock of the issuer, and each disclaims beneficial ownership of the shares
     of Class A common stock owned by the other.

(4)  Their address is 777 Long Ridge Road, Stamford, Connecticut 06902. The
     securities reported on herein are held by S.A.C. Capital Associates, LLC,
     an Anguillan limited liability company ("SAC Capital Associates"). Pursuant
     to investment agreements, each of SAC Capital Advisors and SAC Capital
     Management share all investment and voting power with respect to the
     securities held by SAC Capital Associates. Accordingly, each of SAC Capital
     Advisors


                                       40
<PAGE>

     and SAC Capital Management may be deemed to be the beneficial owner of the
     securities covered by this statement for purposes of Rule 13d-3 under the
     Securities Exchange Act of 1934 (the "Exchange Act").

     Steven A. Cohen is the Managing Member, President and Chief Executive
     Officer of SAC Capital Advisors and the owner, directly and through a
     wholly owned subsidiary, of 100% of the membership interests of SAC Capital
     Management. Accordingly, Mr. Cohen may be deemed to be the beneficial owner
     of the securities covered by this statement for purposes of Rule 13d-3
     under the Exchange Act. Mr. Cohen disclaims beneficial ownership of any of
     the securities covered.

(5)  J.P. Morgan Partners (23A SBIC), L.L.C. (f/k/a CB Capital Investors,
     L.L.C.), a Delaware limited liability company ("JPMP (23A SBIC)"), with
     their principal office located at 1221 Avenue of the Americas, New York,
     New York 10020. The number of shares beneficially owned by JPMP (23A SBIC)
     includes 38,475 shares of Class A common stock issuable upon the exercise
     of options granted on October 14, 1999 to Stephen P. Murray, an investment
     professional.

HOW MUCH CLASS A COMMON STOCK DO DIRECTORS AND OFFICERS OWN?

The following table sets forth the VitaminShoppe.com common stock beneficially
owned by our directors and by the executive officers named in the section
captioned "Information About Executive Officers - Who are Our Officers?", as
well as all directors and executive officers as a group, as of March 16, 2001.
All of our directors and executive officers are U.S. citizens.

During the last five years, neither VitaminShoppe.com, nor to the best knowledge
of VitaminShoppe.com, any of its executive officers or directors has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).

During the last five years, neither VitaminShoppe.com, nor to the best knowledge
of VitaminShoppe.com, any of its executive officers or directors has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.

On March 16, 2001, there were 7,277,574 shares of our Class A common stock
outstanding. In the following table, shares that a person or entity has the
right to acquire by May 15, 2001 by exercising options, warrants or conversion
privileges are deemed to be beneficially owned and outstanding for the purpose
of computing the percentage ownership of Class A common stock and voting power
of VitaminShoppe.com. The equity percentage is computed based on the outstanding
Class A common stock only. Voting power is computed based on the entire voting
power of VitaminShoppe.com. Except as indicated in the footnotes to the table,
we believe that the named stockholders have sole voting and investment power
with respect to the shares shown to be beneficially owned by them, based on
information provided by these stockholders.

<TABLE>
<CAPTION>
<S>                                                       <C>                  <C>               <C>
--------------------------------------------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER**                                      NUMBER          PERCENTAGE OF     VOTING POWER OF
                                                                                CLASS A SHARES        COMPANY
--------------------------------------------------------------------------------------------------------------------
M. Anthony Fisher(1)(2)(4)                                      589,074                8.1%              *
--------------------------------------------------------------------------------------------------------------------
Jeffrey J. Horowitz(1)(3)                                       327,854                4.5%              *
--------------------------------------------------------------------------------------------------------------------
Martin L. Edelman(4)                                            12,825                 *                 *
--------------------------------------------------------------------------------------------------------------------
Barbara S. Feigin(4)                                            12,825                 *                 *
--------------------------------------------------------------------------------------------------------------------
David S. Gellman(1)(2)(4)(5)                                    13,225                 *                 *
--------------------------------------------------------------------------------------------------------------------
Woodson C. Merrell, M.D.(4)                                     12,825                 *                 *
--------------------------------------------------------------------------------------------------------------------
Stephen P. Murray(1)(4)(6)                                      664,431                9.1%              *
--------------------------------------------------------------------------------------------------------------------
Paul R. Vigano(4)(7)                                           1,105,674              15.0%             1.3%
--------------------------------------------------------------------------------------------------------------------


                                       41
<PAGE>
--------------------------------------------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER**                                      NUMBER          PERCENTAGE OF     VOTING POWER OF
                                                                                CLASS A SHARES        COMPANY
--------------------------------------------------------------------------------------------------------------------
Joel Gurzinsky(8)                                               17,433                *                  *
--------------------------------------------------------------------------------------------------------------------
Lesli Rodgers                                                     200                 *                  *
--------------------------------------------------------------------------------------------------------------------
Ann M. Sardini(9)                                               66,866                *                  *
--------------------------------------------------------------------------------------------------------------------
Kathryn H. Creech(10)                                           181,315                2.4%              *
--------------------------------------------------------------------------------------------------------------------
All directors and executive officers as a group (13            3,004,547              39.26%            3.5%
persons)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

*    Less than 1%.
**   The business address for all executive officers and directors is c/o
     VitaminShoppe.com, Inc., 501 Penhorn Avenue, Secaucus, New Jersey 07094.

(1)  These individuals are also directors of The Vitamin Shoppe. As such, they
     may be deemed to share voting power with respect to the Class B common
     stock held by The Vitamin Shoppe and the 7,277,574 shares of Class A common
     stock into which the Class B common stock may be converted. Each of these
     individuals expressly disclaim beneficial ownership of the shares of Class
     B common stock owned by The Vitamin Shoppe.

(2)  Mr. Fisher ultimately controls FdG Capital Associates LLC, the managing
     member of FdG Capital Partners LLC and FdG-Chase Capital Partners LLC. FdG
     Capital Associates LLC is an affiliate of VS Investors LLC. Mr. Gellman is
     a managing director of FdG Associates, an affiliate of VS Investors LLC,
     FdG Capital Partners LLC and FdG-Chase Capital Partners LLC. See the table
     under "Which Stockholders Own at Least 5% of the Class A Common Stock?" and
     footnotes 1 and 2 to that table.

(3)  Mr. Horowitz holds of record 327,854 shares of Class A common stock with
     Mrs. Horowitz. Mr. and Mrs. Horowitz are directors of The Vitamin Shoppe,
     and directly or through trusts they own 30% of the capital stock of The
     Vitamin Shoppe. See footnote 1. Mr. and Mrs. Horowitz expressly disclaim
     beneficial ownership of the shares of Class B common stock owned by The
     Vitamin Shoppe.

(4)  These individuals have 12,825 shares of Class A common stock issuable upon
     the exercise of stock options. The exercise price of these options is
     greater than the $1.00 payable to holders of Class A common stock as a
     result of the merger.

(5)  Each of four children of Mr. Gellman owns 100 shares of Class A common
     stock and Mr. Gellman may therefore be deemed to be the owner of those 400
     shares of Class A common stock. Mr. Gellman expressly disclaims beneficial
     ownership of those 400 shares of Class A common stock.

(6)  Mr. Murray is a partner of J.P. Morgan Partners and its predecessor
     organization. See the table under "Which Stockholders Own at Least 5% of
     the Class A Common Stock?". As such, he may be deemed to share voting power
     with respect to the 651,606 shares of Class A common stock held by J.P.
     Morgan Partners (23A SBIC), L.L.C. (f/k/a CB Capital Investors, L.L.C.).
     Mr. Murray expressly disclaims beneficial ownership of the shares of Class
     A common stock owned by this stockholder.

(7)  Mr. Vigano is a principal of Whitney & Co., an affiliate of J.H. Whitney
     III, L.P. and Whitney Strategic Partners III, L.P. (the "Whitney
     Entities"). See the table under "Which Stockholders Own at Least 5% of the
     Class A Common Stock?". Mr. Vigano expressly disclaims beneficial ownership
     of Class A common stock held by these stockholders.

(8)  Mr. Gurzinsky has 17,433 shares of Class A common stock issuable upon the
     exercise of stock options. The exercise price of these options is greater
     than the $1.00 payable to holders of Class A common stock as a result of
     the merger.

(9)  Ms. Sardini has 66,666 shares of Class A common stock issuable upon the
     exercise of stock options. The exercise price of these options is greater
     than the $1.00 payable to holders of Class A common stock as a result of
     the merger.

(10) This number represents 180,815 shares of Class A common stock issuable upon
     the exercise of stock options. The exercise price of these options is
     greater than the $1.00 payable to holders of Class A common stock as a
     result of


                                       42
<PAGE>

     the merger. The remaining 500 shares of Class A common stock were purchased
     by Ms. Creech's husband and Ms. Creech may therefore be deemed to be the
     owner of those 500 shares of Class A common stock.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

INFORMATION ABOUT INSIDER RELATIONSHIPS

During fiscal year 2000, there has not been, nor is there currently proposed,
any transaction or series of similar transactions, except as set forth below, to
which we were or are a party in which the amount involved exceeds $60,000 and in
which any director, executive officer, holder of 5% of more of the Class A
common stock or the Class B common stock or immediate family member of any of
these persons had or will have a direct or indirect interest other than the
transactions described in this section.

PROPOSED MERGER WITH THE VITAMIN SHOPPE

On January 12, 2001, we entered into an Agreement and Plan of Merger with The
Vitamin Shoppe. As a result of the transactions contemplated by the Merger
Agreement, we would be merged with and into The Vitamin Shoppe, and the holders
of our Class A common stock would receive $1.00 per share in cash. At the
effective time of the merger, our separate corporate existence would terminate.

The merger is subject to certain conditions, including approval of a majority
vote of our stockholders. A meeting of our stockholders to vote on the merger
has been scheduled for April 11, 2001. The Vitamin Shoppe, which holds 64.3% of
common stock and 91.5% of the voting power of the Company's stock, has agreed to
vote in favor of the merger. The Vitamin Shoppe's principal shareholder has
committed to provide equity financing for the merger. The merger is not subject
to receipt of financing, but does require the consent of The Vitamin Shoppe's
lenders. Both parties have the option to terminate the agreement of merger if
the merger is not completed by April 12, 2001. If the merger is not completed,
we will likely be forced to seek protection under the Federal bankruptcy laws or
enter liquidation proceedings.

RECENT SALES OF UNREGISTERED SECURITIES

Private Placements of Securities

During 1999, we issued shares to certain affiliates through the private
placement of securities intended by us to be exempt from registration under the
Securities Act of 1933. See the section entitled "Market for Registrant's Common
Equity and Related Stockholder Matters - Recent Sales of Unregistered
Securities."

Option Grants

During 2000, we granted options to a total of 79 employees, officers and
directors to purchase a total of 689,375 shares of Class A common stock at an
average exercise price of $4.05 per share. No underwriters were involved in the
foregoing sales of securities.

REGISTRATION RIGHTS AGREEMENT

In connection with the offering and sale of the Series A preferred stock, we
entered into a registration rights agreement with Vitamin Shoppe Industries
Inc., J.H. Whitney III, L.P., Whitney Strategic Partners III, L.P., FdG Capital
Partners LLC, FdG-Chase Capital Partners LLC, Jeffrey and Helen Horowitz, Thomas
Weisel Partners LLC and several unaffiliated investors that covers (1) the
shares of Class A common stock issued upon the conversion of the Series A
preferred stock or upon the exercise of warrants to purchase Series A


                                       43
<PAGE>

preferred stock that became exercisable for Class A common stock after the
closing of our initial public offering and (2) the shares of Class A common
stock into which the shares of Class B common stock are convertible.

We filed the registration rights agreement with the Securities and Exchange
Commission as an exhibit to our registration statement on Form S-1 (File No.
333-83849). The material terms of this agreement are summarized here. We will
bear all registration expenses incurred in connection with the registration
rights. Stockholders who sell in an offering commenced under the registration
rights agreement will pay all underwriting discounts, selling commissions and
stock transfer taxes applicable to the sale of shares owned by them. Rights
under the registration rights agreement will terminate when no shares of Class A
common stock registrable under the agreement remain outstanding.

VITAMIN SHOPPE INDUSTRIES INC. DEMAND REGISTRATION RIGHTS

Under the registration rights agreement, at any time after April 11, 2000, The
Vitamin Shoppe may demand that we file a registration statement under the
Securities Act of 1933 covering all or a portion of the Class A common stock
issuable to The Vitamin Shoppe and its permitted transferees upon conversion of
Class B common stock. If The Vitamin Shoppe demands that we file such a
registration statement, other holders who were stockholders prior to the closing
of our initial public offering in October 1999 and their permitted transferees
may require us to include all or a portion of the Class A common stock that they
own in this registration. The Vitamin Shoppe may exercise no more than one
demand during any 12-month period. These registration rights will be limited by
our right to delay the filing of a registration statement in some circumstances.
We may cause a delay no more than once in any 12-month period and for no more
than 90 days.

OTHER DEMAND REGISTRATION RIGHTS

At any time after April 11, 2000 but prior to the date on which we become
eligible to register the registrable securities on Form S-3 or any successor
form, holders other than The Vitamin Shoppe of 50% or more of the then
outstanding registrable securities held by such holders may demand that we file
a registration statement under the Securities Act of 1933 covering all or a
portion of their registrable shares, as long as the shares to be registered have
a fair market value on the date of demand of at least $15 million. These holders
may demand one registration under this right. In addition, at any time prior to
October 14, 2002, if we are eligible to utilize a registration statement on Form
S-3 to register a resale of our securities, then holders other than The Vitamin
Shoppe of 25% of the then outstanding registrable shares held by these holders
may request that we file a registration statement covering all or a portion of
their registrable shares, as long as the shares to be registered have a fair
market value on the date of demand of at least $5 million. These holders may
exercise one demand during any 12-month period. These registration rights will
be limited by our right to delay the filing of a registration statement in some
circumstances. We may cause a delay no more than once in any 12-month period and
for no more than 90 days. However, the managing underwriter, if any, of any
offering will have limited rights to restrict the number of registrable shares
included in the registration statement.

PIGGYBACK REGISTRATION RIGHTS

In addition to the rights described above, holders of registrable shares will
have registration rights that apply if we propose to file a registration
statement for Class A common stock for our own account, other than in connection
with a dividend reinvestment program or in connection with a merger, acquisition
or similar corporate transaction or for the account of any other holder of Class
A common stock, including The Vitamin Shoppe, or for the account of any holder
of securities of the same type as the registrable shares. In that case, the
holders of registrable shares may require us to include all or a portion of the
Class A common stock that


                                       44
<PAGE>

they own in a registration statement. However, the managing underwriter, if any,
of the offering will have limited rights to restrict the number of registrable
shares included in the registration statement.

INCOME TAXES

VitaminShoppe.com's operating results through June 30, 1999 were included in the
consolidated income tax returns of The Vitamin Shoppe. Through June 30, 1999,
The Vitamin Shoppe did not allocate to VitaminShoppe.com its share of income tax
liabilities or benefits attributable to VitaminShoppe.com's proportionate share
of operating results. From July 1, 1999, VitaminShoppe.com was not included in
the consolidated income tax return of The Vitamin Shoppe and, therefore,
VitaminShoppe.com's income tax provisions were calculated on a separate return
basis. Since the capitalization of VitaminShoppe.com on July 1, 1999, when
VitaminShoppe.com ceased to be part of The Vitamin Shoppe's consolidated group,
losses generated are available to offset any future taxable income for 20 years.
Deferred tax assets normally recorded to reflect the future benefit may or may
not be shown as realizable, depending on VitaminShoppe.com's ability to
demonstrate the likelihood of future profitability.

During December 2000, we filed combined New York State and New York City income
tax returns with The Vitamin Shoppe for our fiscal year ending December 31,
1999. As a result of VitaminShoppe.com tax losses used by The Vitamin Shoppe for
1999, The Vitamin Shoppe is required to establish a payable to VitaminShoppe.com
in an amount equal $1.1 million. Subject to offset for amounts which may become
payable in the future by VitaminShoppe.com to The Vitamin Shoppe under the Tax
Allocation Agreement, the payable is due on December 31, 2004. We did not
recognize this amount as a tax benefit in our financial statements for the
fiscal year ended December 31, 1999, which were included in our Annual Report on
Form 10-K, because we had not expected to file combined returns. We have now
recognized a note receivable in our financial statements for the fiscal year
ended December 31, 2000 in the amount of $1.9 million, which includes the $1.1
million used by The Vitamin Shoppe for the year ended December 31, 1999 and an
estimated amount associated with The Vitamin Shoppe's use of VitaminShoppe.com's
2000 tax loss for New York State and New York City.

HISTORICAL RELATIONSHIPS

As a former division of The Vitamin Shoppe, we have received and continue to
receive various services from The Vitamin Shoppe, including supply, fulfillment,
promotional and administrative services. Prior to July 1, 1999, our financial
information reflected expense allocations for these services rendered by The
Vitamin Shoppe. We believe that these allocations have been made on a reasonable
and consistent basis. However, the allocations are not necessarily indicative
of, nor is it practicable for us to estimate, the level of expenses that would
have resulted had we been operating as an independent company. In addition, we
relied on The Vitamin Shoppe to provide financing for our cash flow until July
1999.

INTERCOMPANY AGREEMENTS

We have entered into several intercompany agreements with The Vitamin Shoppe
that were not negotiated on an arms-length basis; however, management believed
that the terms of these agreements were no less favorable to us than could have
been obtained from unaffiliated third parties. In general, the intercompany
agreements do not have fixed terms. As long as The Vitamin Shoppe owns at least
30% of the voting power of our capital stock, the material terms of the
intercompany agreements may not be amended or waived without the approval of a
majority of our directors who are not directors, officers or more than 5%
stockholders of The Vitamin Shoppe, or the designee of a more than 5%
stockholder. In addition, our bylaws prohibit us from entering into other
material agreements with The Vitamin Shoppe or any of its subsidiaries as long
as The Vitamin Shoppe owns at least 30% of the voting power of our capital
stock,


                                       45
<PAGE>

unless those agreements are approved by a majority of these directors. This
provision may be amended or rescinded only by a majority of these directors. For
a summary of the material terms of the intercompany agreements, see section
entitled "Business--Intercompany Agreements."
























                                       46
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

FINANCIAL STATEMENTS

The following financial statements have been filed as required by Item 8 of this
report:

Independent Auditors' Report

Balance Sheets as of December 31, 1999 and 2000

Statement of Operations for the years ended December 31, 1998, 1999 and 2000

Statements of Stockholders' Equity (Deficit) for the years ended December 31,
1998, 1999 and 2000

Statement of Cash Flows for the years ended December 31, 1998, 1999 and 2000

Notes to Financial Statements

Exhibits (see Exhibit Index)








                                       47
<PAGE>

                                   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 by the undersigned, thereunto duly authorized.


                            VITAMINSHOPPE.COM, INC.
                            (Registrant)


Date:  April 2, 2001        By: /s/ Jeffrey J. Horowitz
                               -----------------------------------------
                               Jeffrey J. Horowitz
                               President and Chief Executive Officer


                            By:  /s/ Ann M. Sardini
                                ------------------------------------------------
                                Ann M. Sardini
                                Chief Financial Officer, Treasurer and Secretary


                                       48
<PAGE>

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


Date:  April 2, 2001            /s/ M. Anthony Fisher
                                -----------------------------------
                                M. Anthony Fisher
                                Chairman of the Board of Directors
                                and a Director

Date:  April 2, 2001            /s/ Jeffrey J. Horowitz
                                -----------------------------------
                                Jeffrey J. Horowitz
                                Director

Date:  April 2, 2001            /s/ Martin L. Edelman
                                -----------------------------------
                                Martin L. Edelman
                                Director

Date:  April 2, 2001            /s/ Barbara S. Feigin
                                -----------------------------------
                                Barbara S. Feigin
                                Director

Date:  April 2, 2001            /s/ David S. Gellman
                                -----------------------------------
                                David S. Gellman
                                Director

Date:  April 2, 2001            /s/ Woodson C. Merrell
                                -----------------------------------
                                Woodson C. Merrell, M.D.
                                Director

Date:  April 2, 2001            /s/ Stephen P. Murray
                                -----------------------------------
                                Stephen P. Murray
                                Director

Date:  April 2, 2001            /s/ Paul R. Vigano
                                -----------------------------------
                                Paul R. Vigano
                                Director


                                       49
<PAGE>

                             VITAMINSHOPPE.COM, INC.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                        Page

<S>                                                                                                     <C>
Independent Auditors' Report                                                                             F-2
Balance Sheets as of December 31, 1999 and 2000                                                          F-3
Statements of Operations for the years ended December 31, 1998, 1999 and 2000                            F-4
Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1998, 1999 and             F-5
2000
Statements of Cash Flows for the years ended December 31, 1998, 1999 and 2000                            F-6
Notes to Financial Statements                                                                            F-7
</TABLE>




                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
VitaminShoppe.com, Inc.
New York, New York

We have audited the accompanying balance sheets of VitaminShoppe.com, Inc. (the
"Company") as of December 31, 1999 and 2000, and the related statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 2000. These financial statements are the
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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit 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, such financial statements present fairly, in all material
respects, the financial position of VitaminShoppe.com, Inc. as of December 31,
1999 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's recurring losses from operations and its
inability to raise additional capital raise substantial doubt about its ability
to continue as a going concern. Management's plans concerning these matters are
also described in Notes 2 and 9. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Deloitte & Touche LLP

New York, New York
February 22, 2001




                                      F-2
<PAGE>

                      VITAMINSHOPPE.COM, INC.
                           BALANCE SHEETS
          (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                1999        2000
                                                              --------    --------

Assets
Current assets:
<S>                                                           <C>         <C>
  Cash and cash equivalents                                   $ 38,019    $  4,046
  Accounts receivable                                              259         438
  Inventory                                                         35         108
  Prepaid expenses and other current assets                      4,663       1,212
                                                              --------    --------
     Total current assets                                       42,976       5,804
  Tax benefits due from The Vitamin Shoppe                        --         1,892
  Property and equipment, net                                    6,184       9,143
                                                              --------    --------
     Total assets                                             $ 49,160    $ 16,839
                                                              ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities                    $ 10,587    $  5,336
  Due to The Vitamin Shoppe                                      2,635       2,245
                                                              --------    --------
     Total current liabilities                                  13,222       7,581
                                                              --------    --------

Stockholders' Equity:
Series A preferred Stock, $.01 par value,
    2,000,000 authorized, no shares issued or outstanding
    at December 31, 1999 and December 31, 2000                    --          --
  Class A common stock, $.01 par value, 30,000,000 shares
    authorized; 7,277,574 shares issued and outstanding at
    December 31, 1999 and December 31, 2000                         73          73
  Class B common stock, $.01 par value, 15,000,000 shares
    authorized; 13,081,500 shares issued and outstanding at
    December 31, 1999 and December 31, 2000                        131         131
  Additional paid-in capital                                    64,242      62,415
  Deferred stock-based compensation                             (2,732)       (314)
  Deficit                                                      (25,776)    (53,047)
                                                              --------    --------
     Total stockholders' equity                                 35,938       9,258
                                                              --------    --------
     Total liabilities and stockholders' equity               $ 49,160    $ 16,839
                                                              ========    ========
</TABLE>

See notes to financial statements


                                      F-3
<PAGE>

                VITAMINSHOPPE.COM, INC.
                STATEMENTS OF OPERATIONS
    (In thousands, except share and per share data)




<TABLE>
<CAPTION>
                                                 Year Ended December 31,

                                            1998            1999            2000
                                        ------------    ------------    ------------

<S>                                     <C>             <C>             <C>
Net sales                               $      3,034    $     14,646    $     34,257
Cost of goods sold                             1,599           9,480          23,415
                                        ------------    ------------    ------------
Gross profit                                   1,435           5,166          10,842
Operating expenses:
  Marketing and sales expenses                 3,196          26,701          21,189
  Technology development expenses                642           3,142           7,951
  General and administrative expenses            917           5,425          12,071
                                        ------------    ------------    ------------
     Total operating expenses                  4,755          35,268          41,211
                                        ------------    ------------    ------------
Loss from operations                          (3,320)        (30,102)        (30,369)
Interest expense (income), net                   120              (9)         (1,270)
                                        ------------    ------------    ------------
Loss before income taxes                      (3,440)        (30,093)        (29,099)
Income tax provision (benefit)                  --               108          (1,828)
                                        ------------    ------------    ------------
Net loss                                $     (3,440)   $    (30,201)   $    (27,271)
                                        ============    ============    ============

Basic and diluted net loss per share    $      (0.26)   $      (2.05)   $      (1.34)
                                        ============    ============    ============

Weighted average shares outstanding
  used to compute basic and diluted
  net loss per share                      13,081,500      14,756,339      20,359,074
                                        ============    ============    ============
</TABLE>

See notes to financial statements.







                                      F-4
<PAGE>

                             VITAMINSHOPPE.COM, INC.
                  STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                         SERIES A                  CLASS A
                               CONVERTIBLE PREFERRED STOCK      COMMON STOCK
                               ---------------------------- ---------------------
                                    SHARES        AMOUNT       SHARES     AMOUNT
                               --------------- ------------ ------------ --------
<S>                            <C>             <C>          <C>          <C>
Balance, December 31, 1997                --    $       --          --      $--
 Net Loss                                 --            --          --       --
                                  ----------    ----------   ---------      ---
Balance, December 31, 1998                --            --          --       --
 Net loss (1/1/99-6/30/99)                --            --          --       --
 Capitalization of the
  Company by The Vitamin
  Shoppe on June 30, 1999                 --            --          --       --
Sale of Series A convertible
 preferred stock                   1,775,260        23,472          --       --
Sale of common stock                      --            --   4,545,455       46
Issuance of commons stock
 upon conversion of
 preferred stock                  (1,775,260)      (23,472)  2,732,119       27
Deferred stock-based
 compensation                             --            --          --       --
Amortization of deferred
 stock-based compensation                 --            --          --       --
Net loss (7/19/99-12/31/99)               --            --          --       --
                                  ----------    ----------   ---------      ---
Balance, December 31, 1999                --            --   7,277,574       73
 Amortization of deferred
   stock-based comensation                --            --          --       --
 Elimination of deferred
   stock-based compensation               --            --          --       --
 Net loss                                 --            --          --       --
                                  ----------    ----------   ---------      ---
Balance, December 31, 2000                --    $       --   7,277,574      $73
                                  ==========    ==========   =========      ===

<CAPTION>
                                      CLASS B
                                    COMMON STOCK       ADDITIONAL     DEFERRED
                               ----------------------    PAID-IN     STOCK BASED
                                   SHARES     AMOUNT     CAPITAL    COMPENSATION     DEFICIT       TOTAL
                               ------------- -------- ------------ -------------- ------------ ------------
<S>                            <C>           <C>      <C>          <C>            <C>          <C>
Balance, December 31, 1997              --     $ --     $     --     $      --     $    (353)   $    (353)
 Net Loss                               --       --           --            --        (3,440)   $  (3,440)
                               -----------     ----     --------     ---------     ---------    ---------
Balance, December 31, 1998              --       --           --            --        (3,793)      (3,793)
 Net loss (1/1/99-6/30/99)              --       --           --            --        (4,425)      (4,425)
 Capitalization of the
  Company by The Vitamin
  Shoppe on June 30, 1999       13,081,500      131       (8,348)           --         8,218            1
Sale of Series A convertible
 preferred stock                        --       --           86            --            --       23,558
Sale of common stock                    --       --       45,080            --            --       45,126
Issuance of commons stock
 upon conversion of
 preferred stock                        --       --       23,445            --            --           --
Deferred stock-based
 compensation                           --                 3,979        (3,979)           --           --
Amortization of deferred
 stock-based compensation               --       --           --         1,247            --        1,247
Net loss (7/19/99-12/31/99)             --       --           --            --       (25,776)     (25,776)
                                ----------     ----     --------     ---------     ---------    ---------
Balance, December 31, 1999      13,081,500      131       64,242        (2,732)      (25,776)      35,938
 Amortization of deferred
  stock-based comensation               --       --           --           591            --          591
 Elimination of deferred
  stock-based compensation              --       --       (1,827)        1,827            --           --
 Net loss                               --       --           --            --       (27,271)     (27,271)
                                ----------     ----     --------     ---------     ---------    ---------
Balance, December 31, 2000      13,081,500     $131     $ 62,415     $    (314)    $ (53,047)   $   9,258
                                ==========     ====     ========     =========     =========    =========
</TABLE>

See notes to financial statements.

                                      F-5

<PAGE>


              VITAMINSHOPPE.COM, INC.
              STATEMENTS OF CASH FLOWS
                   (In thousands)

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,

                                                                                   1998        1999         2000
                                                                                 ---------   ---------   ---------
<S>                                                                              <C>         <C>         <C>
Cash flows from operating activities:
  Net loss                                                                       $ (3,440)   $(30,201)   $(27,271)
  Adjustments to reconcile net loss to net cash
      used in operating activities:
      Depreciation and amortization                                                    21         226       2,263
      Amortization of deferred stock-based
        compensation                                                                 --         1,247         591
      Other                                                                           102         482         816
      Restructuring costs                                                            --          --         1,615
    Changes in operating assets and liabilities:
      Accounts and notes receivable                                                   (35)       (224)       (179)
      Tax benefits due from the Vitamin Shoppe                                       --          --        (1,892)
      Inventory                                                                      --           (35)        (73)
      Prepaid expenses and other current assets                                       (94)     (4,569)      3,451
      Accounts payable and accrued liabilities                                        722      11,916      (7,844)
                                                                                 --------    --------    --------
  Net cash used in operating activities                                            (2,724)    (21,158)    (28,523)
                                                                                 --------    --------    --------

Cash flows from investing activities:
  Capital expenditures                                                               (506)     (5,925)     (5,450)
                                                                                 --------    --------    --------
  Net cash used in investing activities                                              (506)     (5,925)     (5,450)
                                                                                 --------    --------    --------
Cash flows from financing activities:
  Increase in Note due to The Vitamin Shoppe                                        3,230       2,220        --
  Repayment of Note due to The Vitamin Shoppe                                        --        (5,803)       --
  Issuance of Series A convertible preferred stock                                   --        23,558        --
  Issuance of common stock                                                           --        45,127        --
                                                                                 --------    --------    --------
  Net cash provided by financing activities                                         3,230      65,102        --
                                                                                 --------    --------    --------
Net increase (decrease) in cash and cash equivalents                                 --        38,019     (33,973)
Cash and cash equivalents - beginning of period                                      --          --        38,019
                                                                                 --------    --------    --------
Cash and cash equivalents - end of period                                        $   --      $ 38,019    $  4,046
                                                                                 ========    ========    ========

Supplemental disclosures of cash flow information:
Cash paid during the period for:
    Interest                                                                     $   --      $    531    $   --
                                                                                 ========    ========    ========
    Income taxes                                                                 $   --      $   --      $    184
                                                                                 ========    ========    ========
</TABLE>

See notes to financial statements.



                                      F-6
<PAGE>

                             VITAMINSHOPPE.COM, INC.
                          NOTES TO FINANCIAL STATEMENTS
              For the years ended December 31, 1998, 1999 and 2000
                 (in thousands, except share and per share data)

1.       DESCRIPTION OF BUSINESS

VitaminShoppe.com, Inc. (the "Company" or "VitaminShoppe.com") is an online
provider of products and content related to vitamins, nutritional supplements
and minerals. Until July 1999, the Company was wholly owned by Vitamin Shoppe
Industries Inc. ("The Vitamin Shoppe"). The Company commenced operations
effective October 1, 1997 as a division of The Vitamin Shoppe and operated in
the development stage until April 1998, when it began sales through its Web
site. The Company was incorporated in Delaware in May 1999 and capitalized by
The Vitamin Shoppe in June 1999. See Note 6.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company continues to
accumulate net losses, which total $61.3 million from inception through December
31, 2000. The Company's available cash balance has been depleted to $4.0 million
at December 31, 2000, while the current liabilities total $7.6 million at
December 31, 2000. The Company has taken steps to reduce its costs, mitigate
operating losses and preserve available cash. The Company has terminated all of
its online sponsorship agreements, resulting in reduced future advertising
expenditures. In addition to curtailing its marketing activities, the Company
reduced its staffing levels by approximately 42 people from its highest staffing
level. As discussed in Note 9, the Company has entered into an Agreement and
Plan of Merger with The Vitamin Shoppe. Following the proposed merger of the
Company with and into The Vitamin Shoppe, the Company will cease to exist. As a
result of the merger, each share of Class A common stock of the Company (except
shares held by holders who properly perfect their dissenters' rights) will be
canceled and converted into the right to receive $1.00 in cash. Based on current
projections the Company expects its cash to be depleted in April 2001, but it
could be earlier than that time. The Company expects to complete the merger
prior to depleting all of its cash, but no assurances can be given that it will
be able to do so. If the merger is not completed, the Company will likely be
forced to seek protection under the Federal bankruptcy laws or enter liquidation
proceedings. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Basis of Presentation

For all periods prior to July 1, 1999, the financial statements have been
prepared as if the Company operated as a stand-alone entity since inception.
Thus, the financial information related to those periods may not necessarily
reflect the financial position, results of operations or cash flows of the
Company in the future or what the balance sheets, results of operations or cash
flows of the Company would have been if it had actually been a separate,
stand-alone entity.

For the periods prior to July 1, 1999, the financial statements include
allocations of expenses incurred by The Vitamin Shoppe in support of the
Company. These allocations took into consideration personnel, business volume
and other appropriate factors and generally included costs related to
fulfillment,


                                      F-7
<PAGE>

marketing, administrative, general management and other services provided to the
Company by The Vitamin Shoppe. Such allocated charges were $816 and $786 for the
year ended December 31, 1998 and the six months ended June 30, 1999,
respectively. Interest expense, net, shown in the financial statements reflects
interest expense at a rate of 8.75 percent per annum on the average amounts due
to The Vitamin Shoppe until November 1999 when the Note balance was paid, offset
by interest income in the amount of $217 and $1.3 million earned from interest
bearing deposit accounts for the years ended December 31, 1999 and 2000,
respectively. Allocations of expenses are estimates based on The Vitamin Shoppe
management's best assessment of actual expenses incurred on behalf of the
Company. It is management's opinion that the expenses charged to the Company
were reasonable. In addition to these allocations, The Vitamin Shoppe supplied
the Company with inventory on an exclusive basis at a charge of 100 percent of
cost.

Effective July 1, 1999 the Company and The Vitamin Shoppe entered into several
intercompany agreements which replaced the expense allocations covering
inventory supply, fulfillment, marketing and administration that were in effect
prior to July 1, 1999 and which cover additional rights and obligations
regarding trademark licenses, co-marketing and databases. Under the intercompany
agreements for inventory supply and fulfillment, The Vitamin Shoppe supplies
inventory to the Company at a cost equal to 105 percent of The Vitamin Shoppe's
product cost and fulfills customer orders at a cost equal to 105 percent of The
Vitamin Shoppe's actual average unit cost per package, plus actual shipping
costs not paid directly by the Company. Both of these services were provided at
100 percent of cost under the allocation approach used prior to July 1, 1999.

The rights and obligations which were added when the intercompany agreements
became effective July 1, 1999 include trademark licenses and co-marketing. The
trademark license agreement provides the Company with the exclusive right to use
The Vitamin Shoppe's trademarks in connection with its marketing and sale of
products and services in online commerce. Under this agreement, the Company pays
The Vitamin Shoppe an annual royalty fee equal to $1 million plus a percentage
(which ranges from 5 percent to 1 percent depending upon volume) of the
Company's net sales of The Vitamin Shoppe brand products, and other products
identified by or branded with The Vitamin Shoppe's trademarks. Under the
co-marketing agreements, The Vitamin Shoppe and the Company provide certain
advertising and promotional references to each other in their respective
catalogue, retail store and web businesses for mutually agreed upon fees.

For the six months ended December 31, 1999 and the year ended December 31, 2000,
charges for services provided to the Company by The Vitamin Shoppe were in
accordance with the intercompany agreements and totaled $2.3 million and $5.6
million, as shown in the chart below. Total current liabilities on the
accompanying balance sheet at December 31, 1999 and December 31, 2000 include
amounts due to The Vitamin Shoppe related to these services in the amount of
$1.1 million and $900, respectively.

<TABLE>
<CAPTION>
                                        Six months ended          Year ended
                                        December 31, 1999         December 31, 2000
                                      (in thousands)            (in thousands)

<S>                                           <C>                       <C>
Trademark license                             $   703                   $ 1,571
Co-marketing                                      614                     1,439
Administrative                                    369                       660
Supply and fulfillment                            335                     1,382
Merchandising                                     300                       500
                                              -------                   -------
Total Expense                                 $ 2,321                   $ 5,552
                                              =======                   =======
</TABLE>



                                      F-8
<PAGE>

All merchandise purchases are made from The Vitamin Shoppe under the
intercompany supply agreement. Such purchases aggregated $1.4 million, $7.6
million and $19.7 million for the years ended December 31, 1998, 1999 and 2000,
respectively. Total current liabilities on the accompanying balance sheet at
December 31, 1999 and 2000 include amounts due to The Vitamin Shoppe related to
these merchandise purchases in the amount of $1.5 million and $1.3 million,
respectively.

By implementing the intercompany agreements, new charges were created that were
not provided for in the historical financial statements prior to July 1, 1999.
On a pro forma basis, had the trademark license and the supply and fulfillment
agreements been in place for all periods presented, the net loss would have been
$4.36 million and $31.0 million for the years ended December 31, 1998 and 1999,
respectively. Since July 1, 1999, the charges related to these intercompany
agreements are included in the results of operations.

Online Marketing Arrangements

The Company has entered into several online marketing arrangements with Internet
content providers that established the Company as the exclusive or preferred
vendor of nutritional products on the providers' Internet websites. The
agreements were established for terms of 12 to 24 months, and provided for fixed
monthly or quarterly payments by the Company and, in some cases, revenue-sharing
upon the attainment of stipulated revenue amounts. Certain agreements provided
that the Internet service providers deliver guaranteed minimum levels of
impressions and included make-good provisions in the event of a shortfall. The
Company's fixed payments under such arrangements were recognized as expenses
either on a straight-line basis over the term of the agreement, or on an
impression delivered basis, depending upon the terms of the agreement. Expense
accruals relating to revenue sharing provisions were made when projections
indicated that revenue thresholds would be attained. At December 31, 2000, all
online marketing arrangements have either been completed or terminated early,
and the Company has no future obligations with respect to these agreements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and footnotes thereto.
Actual results could differ from those estimates.

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less
are considered to be cash equivalents.

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation and
amortization. Acquired software, computers, fixtures and equipment are
depreciated using the straight-line method over their estimated useful lives of
three to ten years. Leasehold improvements are amortized over the lesser of
their estimated useful lives or the lease term. Effective January 1, 1999, the
Company adopted the AlCPA's Statement of Position 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use. Accordingly, the
direct internal and external costs associated with the development of the
features and functionality of the Company's Website 2.0, which launched on June
1, 2000, transaction-processing systems, telecommunications infrastructure and
network operations, are capitalized and are amortized over the estimated lives
of five years.



                                      F-9
<PAGE>

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets is measured by a comparison of the
carrying amount of an asset to undiscounted pre-tax future net cash flows
expected to be generated by that asset. An impairment loss is recognized for the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. To date, no such impairment has been recognized.

Revenue Recognition

Sales of products purchased from The Vitamin Shoppe are recognized, net of
discounts and estimated returns, at the time the products are shipped to
customers.

Advertising Costs

The costs of advertising related to online marketing arrangements, magazines,
television, radio and other media are expensed the first time advertising takes
place. Advertising expense for the years ended December 31, 1998, 1999 and 2000
were $3.0 million, $19.9 million and $11.1 million, respectively.

Deferred Rent

Rent expense under the Company's operating lease, which includes fixed
non-contingent escalations, is recognized on a straight-line basis over the term
of the lease. The cumulative net excess of recorded rent expense over lease
payments made was included in accounts payable and accrued expenses on the
accompanying balance sheet. In connection with the termination of the Company's
lease agreement, a reversal of previously recognized deferred rent expense in
the amount of $21 has been reflected as a reduction of the lease termination
costs (see Note 5).

Income Taxes

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes, the Company uses the asset and liability method to
provide for all book/tax differences that are expected to reverse in the future.
This method requires that the effect of tax rate changes as well as other
changes in income tax laws be recognized in earnings for the period in which
such changes are enacted and that valuation allowances be established to reduce
deferred tax assets to amounts expected to be realized.

Computation of Basic and Diluted Net Loss Per Share

Net loss per share has been calculated under SFAS No. 128, Earnings per Share.
SFAS No. 128 requires companies to compute earnings per share under two
different methods (basic and diluted). Basic net loss per share is calculated by
dividing the net loss by the weighted average shares of common stock outstanding
during the period. Shares used for this computation consist of 13,081,500 shares
of Class B common stock issued in connection with the Company's initial
capitalization in June 1999 as if all shares were outstanding for all periods
presented. For the years ended December 31, 1999 and 2000, diluted net loss per
share is equal to basic net loss per share since potential common shares from
the exercise of the stock options and warrants are antidilutive. Securities, the
issuance or exercise of which may result in dilution, consisted of 32,703 shares
of Series A common stock issuable upon the exercise of a warrant at December 31,
1999 and 2000; and 1,842,768 and 1,079,440 options to purchase shares of Class A
common stock at December 31, 1999 and 2000, respectively. The Company evaluated
the requirements


                                      F-10
<PAGE>

of the Securities and Exchange Commission Staff Accounting Bulletin (SAB) No.
98, and concluded that there are no nominal issuances of common stock or
potential common stock required to be shown as outstanding for all periods as
outlined in SAB No. 98.

Start-Up Costs

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-5, Reporting on the Costs of Start-Up Activities. This SOP establishes
accounting and reporting standards for start-up activities and states that costs
of start-up activities, including organization costs, should be expensed as
incurred. The SOP is effective for fiscal years beginning after December 15,
1998. The Company adopted this statement effective January 1, 1999, and the
adoption did not have a material effect on the financial statements.

Concentrations

The Company's customers are consumers who utilize the Company's website and
purchase products. Financial instruments, which potentially subject the Company
to concentrations of credit risk, consist principally of accounts receivable
from credit card processors. As of December 31, 1999 and 2000, there were no
significant concentrations of accounts receivable or related credit risks.

Fair Value of Financial Instruments

Financial instruments, including accounts receivable, accounts payable and
accrued liabilities, are reflected in the financial statements at carrying or
contract value. Those values were not materially different from their fair
values.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB No. 25), and related
interpretations, in accounting for employee stock options rather than the
alternative fair value accounting allowed by SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS No. 123). APB No. 25 provides that the
compensation expense relative to the Company's employee stock options is
measured based on the intrinsic value of the stock option. SFAS No. 123 requires
companies that continue to follow APB No. 25 to provide a pro forma disclosure
of the impact of applying the fair value method of SFAS No. 123. See Note 6.

Comprehensive Income

The Company has no reconciling items to comprehensive income, therefore, net
loss and comprehensive loss are the same.

Disclosures About Segments of an Enterprise and Related Information

The Company currently operates as one segment.

Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 as amended by SFAS No. 138, is
effective for fiscal years beginning after June 15, 2000, requires the Company
to recognize all derivatives on the balance sheet at fair value. The


                                      F-11
<PAGE>

Company has determined that adoption of this new standard will not have a
material effect on the Company's financial statements or disclosures.

In July 2000, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-10, Accounting for Shipping and Handling Fees and Costs. The EITF concluded
that all amounts billed to a customer in a sale transaction related to shipping
and handling represent revenues earned for the goods provided and should be
classified as revenue.

As of October 1, 2000, the Company began to record all amounts billed to
customers related to shipping and handling costs as net sales and has restated
all prior periods presented.

Previously, the Company had presented revenues and costs from shipping and
handling activities as a net amount within marketing and sales expenses.
Included in net sales and cost of goods sold are the following revenues and
costs associated with shipping and handling activities for each of the periods
presented:

           Year Ended December 31,
            1998     1999     2000
                (in thousands)

Revenues   $  173   $1,008   $2,383
           ======   ======   ======
Costs      $  192   $1,886   $4,235
           ======   ======   ======



3.       PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                        December 31,
                                                      1999        2000
                                                       (in thousands)

<S>                                                  <C>          <C>
Website development costs                            $ 4,340      $ 8,788
Computer hardware                                      1,169        1,615
Software                                                 652          822
Leasehold improvements                                   137            -
Fixtures and equipment                                   133          348
                                                        ----          ---
                                                       6,431       11,573

Accumulated depreciation and amortization               (247)      (2,430)
                                                     -------      -------
                                                     $ 6,184      $ 9,143
                                                     =======      =======
</TABLE>

Depreciation and amortization of property and equipment was approximately $21,
$226 and $2,263 for the years ended December 31, 1998, 1999 and 2000,
respectively.

4.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consists of the following:



                                      F-12
<PAGE>

<TABLE>
<CAPTION>
                                                               December 31,
                                                             1999         2000
                                                              (in thousands)

<S>                                                         <C>           <C>
Accounts payable                                            $  2,611      $ 1,835
Accrued expenses                                               7,976        2,352
Restructuring costs                                                -        1,149
                                                            --------      -------
Total accounts payable and other accrued expenses           $ 10,587      $ 5,336
                                                            ========      =======
</TABLE>

As discussed in Note 2, the Company's available cash balance has been depleted
to $4.0 million. In response, the Company has taken steps to reduce its costs,
mitigate operating losses and preserve available cash while pursuing strategic
alternatives for the Company. The Company incurred restructuring charges
totaling $1.6 million in connection with its efforts, including termination of
its leased office space, termination of employees, and engagement of investment
bankers, attorneys and other professionals in connection with the contemplated
transaction described in Note 9. These costs have been included in selling,
general and administrative expenses in the accompanying statement of operations.
The major components of the restructuring costs and the activity through
December 31, 2000 were as follows:

<TABLE>
<CAPTION>
(in thousands)                             Severance       Write
                                             and          off of
                                         termination    leasehold     Lease       Proxy
                                           benefits     improvement termination   costs       Total
                                       ---------------------------------------------------------------
<S>                                        <C>            <C>         <C>         <C>        <C>
Provision                                  $ 640          $ 228       $ 263       $ 484      $ 1,615
Paid or charged                                -           (228)       (238)          -         (466)
                                           -----          -----       -----       -----      -------
Balance at December 31, 2000               $ 640          $   -       $  25       $ 484      $ 1,149
                                           =====          =====       =====       =====      =======
</TABLE>

5.       COMMITMENTS

At December 31, 1999, the Company was obligated under online marketing
agreements with web portals and strategic partners for future payments
aggregating $9.8 million through February 2001. During 2000, such future
commitments were terminated, without a penalty.

In June 1999, the Company entered into an employment agreement with an executive
for an initial two-year term. Under the terms of this agreement, the Company is
committed to compensate this executive in the amount of $300 annually, unless
the executive is dismissed for cause or upon disability or death. See Note 8.

In August 1999, the Company entered into a noncancellable operating lease for
its corporate office facility and issued a standby letter of credit in the
amount of $600 as security for its lease commitment. Rental payments under this
lease for the period from September 1999 through November 2003 approximate $35
per month and aggregate $1.8 million over the lease term. Rental expense was
$182 and $420 for the years ended December 31, 1999 and 2000. During December
2000, the Company entered into a lease termination agreement with the landlord
whereby the Company will pay a termination fee plus one month's rent for release
of its obligation under the lease and return of the letter of credit. The
release was obtained in February 2001. The Company relocated to the offices of
The Vitamin Shoppe in January 2001. The Vitamin Shoppe is not charging the
Company rent for the use of this space.



                                      F-13
<PAGE>

6.       STOCKHOLDERS' EQUITY

A.       CAPITAL TRANSACTIONS

The Company was incorporated in May 1999 and was capitalized in June 1999. The
Company was capitalized by the issuance to The Vitamin Shoppe of 1,000 shares of
common stock, par value $.01 per share, for a purchase price of $1,000 and the
contribution by The Vitamin Shoppe of net liabilities of approximately $8.2
million. In July 1999, the Company effected a recapitalization through the
authorization of 30,000,000 shares of Class A common stock and 15,000,000 shares
of Class B common stock and the issuance of 13,081,500 shares of Class B common
stock in exchange for the 1,000 shares of common stock previously issued to The
Vitamin Shoppe. The recapitalization has been retroactively reflected in the
accompanying financial statements. In addition, the Company authorized 5,000,000
shares of preferred stock of which 3,000,000 shares are currently undesignated.
Holders of Class A common stock are entitled to one vote per share, while
holders of Class B common stock are entitled to six votes per share. Prior to
July 1, 1999, the Company was operated as a division of The Vitamin Shoppe.
Through its ownership of the Class B common stock, The Vitamin Shoppe currently
holds approximately 91.5 percent of the voting power of all outstanding common
stock.

On July 9, 1999, the Company issued $10 million in aggregate principal amount of
promissory notes due in June 2000. These notes were held by stockholders of The
Vitamin Shoppe or affiliates of these stockholders. As described below, in July
1999 these notes were converted into shares of Series A convertible preferred
stock.

On July 27, 1999, the Company issued 1,775,260 shares of Series A convertible
preferred stock, par value $.01 per share, that were convertible into 2,732,119
shares of Class A common stock ($9.15 fair value per share) for gross proceeds
of $25 million. The proceeds (net of commissions and offering costs) of this
transaction were approximately $23.6 million. Of the gross proceeds, $10.0
million was paid through the conversion of promissory notes referred to in the
preceding paragraph into Series A convertible preferred stock. The remaining
shares were sold to the note holders and other persons for cash consideration of
$15.0 million. The Company also issued warrants to purchase an equivalent of
32,703 shares of Class A common stock at a price of $9.15 per share,
subsequently amended to $11.00, to Thomas Weisel Partners LLC in consideration
for its services as placement agent in this transaction. All shares of the
Series A convertible preferred stock converted into an aggregate of 2,732,119
shares of the Class A common stock upon the closing of the Company's initial
public offering; the carrying amount of the Series A convertible preferred stock
was credited to Class A common stock par value and to additional paid-in
capital. The estimated fair value of the warrants issued to the placement agent
of approximately $86 was recorded as an additional expense of the issuance and
was credited to additional paid-in capital in the balance sheet.

On September 9, 1999, the Company's Board of Directors approved a 1.539-for-l
stock split of its Class A common stock and Class B common stock, which was
effective on September 22, 1999. The respective share and per-share amounts and
conversion ratios included in the financial statements and footnotes reflect the
stock split for all periods presented.

On October 8, 1999, the Company sold 4,545,455 shares of its Class A common
stock in an initial public offering at a price of $11.00 per share. The gross
proceeds from the offering were $50 million. The net proceeds were $45.1 million
after deducting the underwriting discounts and commissions of $3.5 million and
other offering expenses of $1.4 million.



                                      F-14
<PAGE>

B.       STOCK OPTIONS

In July 1999, the Company established the VitaminShoppe.com, Inc. Stock Option
Plan for Employees dated as of July 1, 1999 (the "Employee Plan"), which
provides for the granting of stock options, including incentive stock options
and non-qualified stock options. The Company reserved 2,308,500 shares of Class
A common stock for grant. Either the board of directors or the compensation
committee of the board of directors may determine the type of award, when and to
whom awards are granted, the number of shares and terms of the awards and the
exercise prices. Stock options are exercisable for a period not to exceed 10
years from the date of grant and, to the extent determined at the time of grant,
may be paid for in cash or shares of Class A common stock, or by a reduction in
the number of shares issuable upon exercise of the option.

In August 1999, the Company established the VitaminShoppe.com, Inc. Stock Option
Plan for Nonemployee Directors (the "Director Plan"), which provides for the
granting of options to purchase 38,475 shares of Class A common stock to each
elected or appointed nonemployee director. The Company reserved 461,700 shares
of Class A common stock for grant.

During the period from June 14, 1999 through October 7, 1999, the Company
granted to twenty employees and two directors options to purchase 1,302,510
shares of Class A common stock at exercise prices of $3.82 and $9.15 per share.
The options expire 10 years from the date of grant and vest ratably over a
period of three years. Under APB No. 25, no compensation expense is recognized
when the exercise price of the Company's employee stock options equals the fair
value of the underlying stock on the date of grant. Deferred stock-based
compensation is recorded for those situations where the exercise price of an
option was lower than the deemed fair value for financial reporting purposes of
the underlying common stock. The Company recorded aggregate deferred stock-based
compensation of approximately $3.9 million during the year ended December 31,
1999. The deferred stock-based compensation is being amortized over the vesting
period of the underlying options. Total amortization of stock-based compensation
recognized during the year ended December 31, 1999 and 2000 was approximately
$1.2 million and $0.6 million, respectively inclusive of approximately $697 of
expense recorded upon the closing of the initial public offering due to the
accelerated vesting of 130,815 of those options. The remaining deferred
stock-based compensation will be amortized over the three-year vesting period.
Subsequent to December 31, 1999, the Company no longer employs two of the
executive officers that were granted stock options prior to October 7, 1999.
Accordingly, during the first quarter 2000, the Company eliminated approximately
$1.6 million of unamortized deferred stock based compensation by removing it
from the additional paid in capital where it was originally recorded and there
will no longer be expense associated with these options. During the fourth
quarter of 2000, the Company terminated the employment of 9 employees that were
granted stock options prior to October 7, 1999. An additional $222 of
unamortized deferred stock based compensation was eliminated from additional
paid in capital.

For the period from October 8, 1999 through December 31, 1999, the Company
granted to 20 employees and 5 directors options to purchase 631,829 shares of
Class A common stock at exercise prices ranging from $8.53 to $14.47 (the then
current fair market value on the dates of grant). The options expire 10 years
from the date of grant and vest ratably over a period of three years.

During the year ended December 31, 2000, the Company has granted to 66 employees
and 3 directors options to purchase 692,975 shares of Class A common stock at
exercise prices ranging from $1.13 to $9.72 (the then current fair market value
on the dates of grant). The options expire 10 years from the date of grant and
vest ratably over a period of three years.

Stock option transactions during the years ended December 31, 1999 and 2000 are
summarized as follows:



                                      F-15
<PAGE>

<TABLE>
<CAPTION>
                                                     1999                              2000
                                            -----------------------------     ----------------------------
                                                          Weighted-                              Weighted-
                                                           Average                                Average
                                                           Exercise                               Exercise
                                              Shares         Price              Shares              Price

<S>                                                            <C>             <C>                  <C>
Outstanding, beginning of year                       -         $ -             1,842,768            $ 8.20
Granted                                      1,934,339        8.24               692,975              4.05
Exercised                                            -           -                     -                 -
Forfeited                                      (91,571)       9.15            (1,416,303)             7.40
                                               --------      -----            -----------             ----
Outstanding, end of year                     1,842,768       $ 8.20             1,119,440            $ 6.62
                                             =========      =======            ==========            ======
Options exercisable at year end                130,815       $ 3.82               347,032            $ 6.50
                                               =======      =======              ========            ======
Options available for future grant             927,432                          1,650,760
                                               =======                          =========
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
      Options Outstanding                                                         Options Exercisable
-----------------------------------------------------------------------     -------------------------------
                                   Weighted -
                                    Average             Weighted -                             Weighted -
   Range of                        Remaining              Average                               Average
   exercise         Options       Contractual            Exercise                Options        Exercise
    prices        Outstanding     Life (Yrs)               Price               Exercisable       Price

<S>                   <C>             <C>                <C>                     <C>            <C>
 $1.13 - $5.00        537,790         9.10               $ 3.38                  205,815        $ 3.82
 $6.50 - $9.72        418,750         8.89                 9.04                  113,917          9.15
$11.00 - $12.51       162,900         8.76                11.08                   54,300         11.08
                     --------        -----               ------                  -------         -----
                    1,119,440         8.95               $ 6.62                  374,032        $ 6.50
                   ==========        =====              =======                 ========        ======
</TABLE>

C.       SFAS NO. 123 DISCLOSURES

Had the stock-based compensation for the Company's stock option grants been
determined in accordance with SFAS No. 123 the Company's net loss would have
been adjusted to the following pro forma amounts for the years ended December
31, 1999 and 2000 (in thousands):


<TABLE>
<CAPTION>
                                                                                          1999           2000
                                                                                          ----           ----

<S>                                                                                    <C>             <C>
Net loss - as reported                                                                 $ (30,201)      $ (27,271)
                                                                                       ==========      ==========
Incremental pro forma compensation expense under SFAS No. 123                          $    (242)      $    (932)
                                                                                       ==========      ==========
Net loss - pro forma                                                                   $ (30,443)      $ (28,203)
                                                                                       ==========      ==========
Basic and diluted net loss per share - as reported                                     $   (2.05)      $   (1.34)
                                                                                       ==========      ==========
Basic and diluted net loss per share - pro forma                                       $   (2.07)      $   (1.39)
                                                                                       ==========      ==========
</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model, assuming no expected dividends and with the
following weighted average assumptions at December 31, 1999 and 2000:



                                      F-16
<PAGE>

                                       1999                  2000

Average risk-free interest rate         5.21%                6.44%
Average expected life                   3.0 years            3.0 years
Volatility                             33.33%              101.4%

For purposes of the 1999 pro forma disclosures, the estimated weighted average
fair value of the options granted, estimated to be $5.54 per share at the date
of grant, is amortized to expense over the options' vesting period. This amount
has been reduced by the amount of deferred stock-based compensation already
recorded in the accompanying financial statements of $4.86 per share for those
options that were granted below the fair market value on the date of grant.

For purposes of the 2000 pro forma disclosures, the estimated weighted average
fair value of the options granted, estimated to be $2.37 per share at the date
of grant, is amortized to expense over the options' vesting period.

D.       PARENT COMPANY RESTRICTIONS

Under the agreements that govern The Vitamin Shoppe's bank credit facility, all
of our Class B common stock has been pledged by The Vitamin Shoppe as security
for its obligations. If The Vitamin Shoppe defaults under its bank credit
facility, its lenders could take ownership of the Class B common stock, which
would convert to Class A common stock. In that case, the lender may be able to
control VitaminShoppe.com through the election of directors and in matters
requiring stockholder approval.

7.       INCOME TAXES

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                         1998           1999            2000
Federal:
<S>                                                    <C>           <C>             <C>
   Current                                             $  -          $     -         $     -
   Deferred                                               -           (7,472)         (8,723)
                                                       ----          -------         -------
                                                          -           (7,472)         (8,723)
State:
   Current                                                -              108            (696)
   Deferred                                               -           (2,550)         (2,155)
                                                       ----          -------         -------
                                                          -           (2,442)         (2,851)
                                                       ----          -------         -------
Subtotal                                                  -           (9,914)        (11,574)
Less: Increase in valuation allowance                     -           10,022           9,746
                                                       ----          -------         -------

Income tax provision (benefit)                         $  -          $   108         $(1,828)
                                                       ====          =======         ========
</TABLE>



                                      F-17
<PAGE>

At December 31, 1999 and 2000 deferred income taxes consist of the following:

                                                  1999            2000

Assets:
Net operating loss carryforwards               $ 10,022        $ 19,768
Valuation allowance                             (10,022)        (19,768)
                                               ---------       ---------
Deferred tax asset                             $      -        $     -
                                               =========       =========

A reconciliation of the statutory Federal income tax rate and the effective rate
of the provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                                 1998           1999            2000

<S>                                                               <C>       <C>              <C>
Tax at statutory Federal income tax rate                          $ -       $ (10,232)       $ (9,894)
Losses prior to capitalization of the Company                       -           1,505               -
Permanent differences - deferred stock-based
  compensation and meals and entertainment                          -             508              241
State taxes, net of Federal benefit                                 -          (1,612)          (1,882)
Increase in valuation allowance                                     -          10,022            9,746
Other                                                               -             (83)             (39)
                                                                 ----          ------        ---------
                                                                 $  -           $ 108         $ (1,828)
                                                                 ====          ======        =========
</TABLE>

The Company's operating results through June 30, 1999 were included in the
combined income tax returns of The Vitamin Shoppe. The Vitamin Shoppe did not
allocate to the Company its share of income tax liabilities or benefits
attributable to the Company's proportionate share of operating results.

Since the capitalization of the Company on July 1, 1999, when the Company ceased
to be part of The Vitamin Shoppe's consolidated group, losses generated are
available to offset any future Federal taxable income for 20 years. Deferred tax
assets normally recorded to reflect the future benefit may or may not be shown
as realizable, depending on the Company's ability to demonstrate the likelihood
of future profitability.

In December 2000, the Company and The Vitamin Shoppe filed combined income tax
returns for New York State, New York City and MTA Surcharge taxes for the year
ended December 31, 1999. The Company and The Vitamin Shoppe are parties to a Tax
Allocation Agreement that, as a result of the Company's tax losses used by The
Vitamin Shoppe for 1999, requires The Vitamin Shoppe to establish a payable to
the Company in an amount equal to $1.13 million. Accordingly, during the fourth
quarter 2000, the Company recorded an income tax benefit and a receivable from
The Vitamin Shoppe in the amount of $1.13 million; the payable is due on
December 31, 2004. Also included in the fourth quarter of 2000 is an estimated
income tax benefit associated with The Vitamin Shoppe's use of the Company's
2000 tax losses for New York State, New York City and MTA Surcharge taxes in the
amount of $760. Such amount has been included in the balance of the tax benefit
due from The Vitamin Shoppe on the accompanying balance sheet. Deferred tax
assets primarily consist of the tax benefits associated with net operating loss
carryforwards. The Company's net operating loss carry forwards expire in the
years 2006


                                      F-18
<PAGE>

through 2020. Due to the uncertainty of the realization of these net operating
loss carry forwards in the future, the Company has provided a valuation
allowance to offset the deferred tax asset.

8.       SIGNIFICANT TRANSACTIONS

Included in general and administrative expenses, the Company recorded
approximately $855 of severance expense related to the resignation of two
executive officers during the first quarter 2000 representing approximately $620
of cash compensation in accordance with their employment agreements, and
approximately $235 of non-cash compensation due to the accelerated vesting of
stock options. Additionally, with respect to forfeited stock options the Company
eliminated approximately $1.6 million of unamortized deferred stock based
compensation that was previously recorded as additional paid in capital.

9.       SUBSEQUENT EVENTS

On January 12, 2001, the Company, and The Vitamin Shoppe entered into an
Agreement and Plan of Merger (the "Merger Agreement"). As a result of the
transactions contemplated by the Merger Agreement, the Company would be merged
with and into The Vitamin Shoppe, and the Class A stockholders of the Company,
other than The Vitamin Shoppe, would receive $1.00 per share in cash. The value
of the merger to the public stockholders is approximately $7.3 million.

The merger is subject to certain conditions, including approval of a majority
vote of the Company's stockholders. The Vitamin Shoppe, which holds 64.3% of
common stock and 91.5% of the voting power of the Company's stock, has agreed to
vote in favor of the merger. The Vitamin Shoppe's principal shareholder has
committed to provide equity financing for the merger. The merger is not subject
to receipt of financing, but does require the consent of The Vitamin Shoppe's
lenders.

On January 22, 2001, the Company filed a proxy statement with the Securities and
Exchange Commission seeking shareholder vote and approval of the Merger
Agreement.

On February 22, 2001, a stockholder of the Company filed a complaint in the
Supreme Court of the State of New York entitled Joseph v. VitaminShoppe.com, et
al. The action asserts claims against VitaminShoppe.com, The Vitamin Shoppe and
members of VitaminShoppe.com's board of directors, alleging, among other things,
that VitaminShoppe.com and/or The Vitamin Shoppe and the individual defendants
breached their fiduciary duties to stockholders, and that some defendants
engaged in self-dealing with respect to the merger. The action alleges, among
other things, that the consideration to be received by VitaminShoppe.com
stockholders in the merger is unfair and inadequate. The action seeks class
action certification and injunctive relief against the merger, or, in the
alternative, to obtain recission of the merger or damages, and other relief.
However, no motion for injunctive relief has been filed.

The Company believes that the action is without merit and intends to defend it
vigorously.

                                     ******


                                      F-19
<PAGE>

EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K

The following exhibits are filed as part of this report.

EXHIBIT         DESCRIPTION

2.1             Agreement and Plan of Merger dated as of January 12, 2001 by and
                between registrant and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 2.1 of the Form 8-K (File
                No. 0-27499).

3.1             Second Amended and Restated Certificate of Incorporation of the
                registrant, incorporated by reference to exhibit 3.1 of the
                Registration Statement on Form S-1 of the registrant (File. No.
                333-83849).

3.2             Amended and Restated Bylaws of the registrant, incorporated by
                reference to exhibit 3.2 of the Annual Report on Form 10-K for
                1999 (File No. 0-27499).

3.3             Certificate of Designation, Powers, Preferences and Rights of
                Series A Convertible Preferred Stock of the registrant,
                incorporated by reference to exhibit 3.3 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

3.4             Certificate of Amendment of Second Amended and Restated
                Certificate of Incorporation of the registrant, incorporated by
                reference to exhibit 3.4 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

4.1             Specimen Class A common stock certificate of the registrant,
                incorporated by reference to exhibit 4.1 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

4.2             See exhibits 3.1, 3.2 and 3.4 for provisions of the certificate
                of incorporation and bylaws of the registrant that govern the
                rights of holders of the securities registered.

10.1            Assignment and Assumption of Contracts dated as of June 30, 1999
                between the registrant and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.1 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.2            Bill of Sale dated as of June 30, 1999 between the registrant
                and Vitamin Shoppe Industries Inc., incorporated by reference to
                exhibit 10.2 of the Registration Statement on Form S-1 of the
                registrant (File No. 333-83849).

10.3            Assignment of Domain Name dated as of June 30, 1999 between the
                registrant and Vitamin Shoppe Industries Inc., incorporated by
                reference to exhibit 10.3 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.4            Intercompany Note dated as of June 30, 1999 made by the
                registrant and payable to Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.4 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.5            Convertible Subordinated Note Purchase Agreement dated as of
                July 9, 1999 between the registrant and the purchasers named
                therein, incorporated by reference to exhibit 10.5 of the
                Registration Statement on Form S-1 of the registrant (File No.
                333-83849).

10.6            Form of Convertible Subordinated Note dated as of July 9, 1999
                made by the registrant with attached schedule describing
                purchaser and principal amount of note, incorporated by
                reference to exhibit 10.6 of the Annual Report on Form 10-K for
                1999 (File No. 0-27499).



                                       53
<PAGE>

EXHIBIT         DESCRIPTION

10.7            Stock Purchase Agreement dated as of July 27, 1999 among the
                registrant and the holders of Series A convertible preferred
                stock, par value $0.01 per share, of the registrant,
                incorporated by reference to exhibit 10.7 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.8            Stockholders Agreement dated as of July 27,1999 among the
                registrant, Vitamin Shoppe Industries Inc. and the holders of
                Series A convertible preferred stock, par value $0.01 per share,
                of the registrant, incorporated by reference to exhibit 10.8 of
                the Registration Statement on Form S-1 of the registrant (File
                No. 333-83849).

10.9            Registration Rights Agreement dated as of July 27, 1999 among
                the registrant, Vitamin Shoppe Industries Inc. and the holders
                of Series A convertible preferred stock, par value $0.01 per
                share, of the registrant, incorporated by reference to exhibit
                10.9 of the Registration Statement on Form S-1 of the registrant
                (File No. 333-83849).

10.10           Irrevocable Commitment to Convert by holders of Series A
                Convertible Preferred Stock of the registrant, incorporated by
                reference to exhibit 10.39 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.11           Series A Convertible Preferred Stock Purchase Warrant dated as
                of July 27, 1999 of the registrant in favor of Thomas Weisel
                Partners LLC, incorporated by reference to exhibit 10.10 of the
                Registration Statement on Form S-1 of the registrant (File No.
                333-83849).

10.12           Amendment No. 1 dated as of September 22, 1999 to the Series A
                Convertible Preferred Stock Purchase Warrant A-1 of the
                registrant in favor of Thomas Weisel Partners LLC, incorporated
                by reference to exhibit 10.46 of the Registration Statement on
                Form S-1 of the registrant (File No. 333-83849).

10.13           Trademark License Agreement dated as of July 1, 1999 between the
                registrant and Vitamin Shoppe Industries Inc., incorporated by
                reference to exhibit 10.11 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.14           Supply and Fulfillment Agreement dated as of July 1, 1999
                between the registrant and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.12 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.15           Co-Marketing Agreement dated as of July 1, 1999 between the
                registrant and Vitamin Shoppe Industries Inc., incorporated by
                reference to exhibit 10.13 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.16           Administrative Services Agreement dated as of July 1, 1999
                between the registrant and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.14 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.17           Database Agreement dated as of July 1, 1999 between the
                registrant and Vitamin Shoppe Industries Inc., incorporated by
                reference to exhibit 10.15 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.18           Intercompany Indemnification Agreement dated as of July 1, 1999
                between the registrant and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.16 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).



                                       54
<PAGE>

EXHIBIT         DESCRIPTION

10.19           Tax Allocation Agreement dated as of July 1, 1999 between the
                registrant and Vitamin Shoppe Industries Inc., incorporated by
                reference to exhibit 10.17 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.20           Sublease Agreement dated as of July 14, 1999 between Yahoo! Inc.
                and Vitamin Shoppe Industries Inc., incorporated by reference to
                exhibit 10.18 of the Registration Statement on Form S-1 of the
                registrant (File No. 333-83849).

10.21           Consulting Agreement dated as of June 14, 1999 between the
                registrant and Kathryn H. Creech, incorporated by reference to
                exhibit 10.20 of the Registration Statement on Form S-1 of the
                registrant (File No. 333-83849).

10.22           Employment and Noncompetition Agreement dated as of June 14,
                1999 between the registrant and Kathryn H. Creech, incorporated
                by reference to exhibit 10.19 of the Registration Statement on
                Form S-1 of the registrant (File No. 333-83849).

10.23           VitaminShoppe.com, Inc. Amended and Restated Stock Option Plan
                for Employees dated as of July 1, 1999 and amended and restated
                as of March 16, 2000, incorporated by reference to exhibit 10.23
                of the Annual Report on Form 10-K for 1999 (File No. 0-27499).

10.24           Form of Nonqualified Stock Option Agreement between the
                registrant and employee with attached schedule describing actual
                option grants.

10.25           Amended and Restated Stock Option Plan for Non-Employee
                Directors dated as of August 1, 1999 and amended and restated as
                of March 16, 2000, incorporated by reference to exhibit 10.25 of
                the Annual Report on Form 10-K for 1999 (File No. 0-27499).

10.26           Form of Non-Employee Director Stock Option Agreement between the
                registrant and Non-Employee Director with attached schedule
                describing actual option grants.

10.27           Sponsorship Agreement dated as of September 23, 1998 between
                Vitamin Shoppe Industries Inc. and Excite, Inc., incorporated by
                reference to exhibit 10.26 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).#

10.28           Advertising Insertion Order dated as of November 1, 1998 between
                Vitamin Shoppe Industries Inc. and Yahoo!, incorporated by
                reference to exhibit 10.27 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).#

10.29           NetGravity AdServer Network License Agreement dated as of
                December 17, 1998 between Vitamin Shoppe Industries Inc. and
                NetGravity, Inc., incorporated by reference to exhibit 10.28 of
                the Registration Statement on Form S-1 of the registrant (File
                No. 333-83849).

10.30           Letter agreement dated as of December 17, 1998 between Vitamin
                Shoppe Industries Inc. and Time Inc. New Media related to Ask
                Dr. Weil Web site, incorporated by reference to exhibit 10.29 of
                the Registration Statement on Form S-1 of the registrant (File
                No. 333-83849).#

10.31           Agreement dated as of February 1, 1999 between Vitamin Shoppe
                Industries Inc. and Virtual Communities, Inc., incorporated by
                reference to exhibit 10.30 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).

10.32           Sponsorship Agreement dated as of March 11, 1999 between Vitamin
                Shoppe Industries Inc. and drkoop.com, Inc., incorporated by
                reference to exhibit 10.31 of the Registration


                                       55
<PAGE>

EXHIBIT         DESCRIPTION
                Statement on Form S-1 of the registrant (File No. 333-83849).#

10.33           Sponsorship Agreement dated as of March 31, 1999 between Vitamin
                Shoppe Industries Inc. and OnHealth Network Company,
                incorporated by reference to exhibit 10.32 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).

10.34           Strategic Planning Services Agreements dated as of April 29,
                1999 between Vitamin Shoppe Industries Inc. and Jupiter
                Communications, L.L.C., incorporated by reference to exhibit
                10.33 of the Registration Statement on Form S-1 of the
                registrant (File No. 333-83849).

10.35           Letter Agreement dated as of May 24, 1999 between Vitamin Shoppe
                Industries Inc. and Time Inc. New Media related to Dr. Bernie
                Siegel Web site, incorporated by reference to exhibit 10.34 of
                the Registration Statement on Form S-1 of the registrant (File
                No. 333-83849).#

10.36           Sponsorship and Advertising Agreement dated as of April 16, 1999
                between Vitamin Shoppe Industries Inc. and InteliHealth, Inc.,
                incorporated by reference to exhibit 10.35 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).#

10.37           Memorandum of Engagement dated as of June 7, 1999 between
                Compelling Content and the registrant, incorporated by reference
                to exhibit 10.36 of the Registration Statement on Form S-1 of
                the registrant (File No. 333-83849).

10.38           License Agreement dated as of October 5, 1998 between
                HealthNotes, Inc. and Vitamin Shoppe Industries Inc.,
                incorporated by reference to exhibit 10.37 of the Registration
                Statement on Form S-1 of the registrant (File No. 333-83849).#

10.39           AOL Advertising Insertion Order dated as of August 27, 1999
                between the registrant and America Online, Inc., incorporated by
                reference to exhibit 10.45 of the Registration Statement on Form
                S-1 of the registrant (File No. 333-83849).#

10.40           Offer Letter dated as of September 15, 1999 between the
                registrant and Philip Teplitzky, incorporated by reference to
                exhibit 10.40 of the Annual Report on Form 10-K for 1999 (File
                No. 0-27499).

10.41           Offer Letter dated as of October 6, 1999 between the registrant
                and Ann M. Sardini, incorporated by reference to exhibit 10.41
                of the Annual Report on Form 10-K for 1999 (File No. 0-27499).

10.42           Separation and Release Agreement dated as of January 17, 2000
                between the registrant and Kathryn Creech, incorporated by
                reference to exhibit 10.42 of the Annual Report on Form 10-K for
                1999 (File No. 0-27499).

10.43           Separation and Release Agreement dated as of February 8, 2000
                between the registrant and Eliot D. Russman, incorporated by
                reference to exhibit 10.43 of the Annual Report on Form 10-K for
                1999 (File No. 0-27499).

10.44           Letter agreement dated as of June 15, 1999 between the
                registrant and Time Inc. New Media related to Ask Dr. Weil, Dr.
                Ruth Westheimer and Alice Waters Web sites, incorporated by
                reference to exhibit 10.44 of the Annual Report on Form 10-K for
                1999 (File No. 0-27499).#



                                       56
<PAGE>

EXHIBIT         DESCRIPTION

10.45           Letter agreement dated as of August 16, 1999 between the
                registrant and Sapient Corporation, incorporated by reference to
                exhibit 10.45 of the Annual Report on Form 10-K for 1999 (File
                No. 0-27499).#

10.46           Non-Employee Director Stock Option Agreement dated as of June
                22, 2000 by and between registrant and Barbara S. Feigin,
                incorporated by reference to exhibit (d)(7) of the Schedule
                13e-3 (File No. 5-58277).

10.47           Non-Employee Director Stock Option Agreement dated as of June
                22, 2000 by and between registrant and Woodson C. Merrell, M.D.,
                incorporated by reference to exhibit (d)(8) of the Schedule
                13e-3 (File No. 5-58277).

10.48           Indemnification Agreement dated as of November 16, 2000 by and
                between the registrant and Barbara S. Feigin.

10.49           Indemnification Agreement dated as of November 16, 2000 by and
                between the registrant and Woodson C. Merrell, M.D.

10.50           Indemnification Agreement dated as of November 21, 2000 by and
                between the registrant and Paul R. Vigano.

11.1            Statement regarding computation of per share earnings of the
                registrant.

27.1            Financial data schedule.

#    Request for confidential treatment granted. Confidential portions of this
     document have been redacted and filed separately with the Securities and
     Exchange Commission.

**   Confidential treatment requested. Confidential portions of this document
     have been redacted and filed separately with the Securities and Exchange
     Commission.

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the three months ended December 31,
2000.


                                       57
<PAGE>

                                  EXHIBIT INDEX

EXHIBIT         DESCRIPTION

10.24           Form of Nonqualified Stock Option Agreement between the
                registrant and employee with attached schedule describing actual
                option grants.

10.48           Indemnification Agreement dated as of November 16, 2000 by and
                between the registrant and Barbara S. Feigin.

10.49           Indemnification Agreement dated as of November 16, 2000 by and
                between the registrant and Woodson C. Merrell, M.D.

10.50           Indemnification Agreement dated as of November 21, 2000 by and
                between the registrant and Paul R. Vigano.

11.1            Statement regarding computation of per share earnings of the
                registrant.

27.1            Financial data schedule.