10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

AMENDMENT NO. 1

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly Period ended June 30, 2011

[  ]	TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______.

Commission File Number:  000-52864

 

Total Nutraceutical Solutions, Inc.

 (Exact name of Registrant as specified in its charter)

Nevada	26-0561199
(State or other jurisdiction	(IRS Employer
of incorporation or organization)	Identification No.)

80 Columbia St., Stevenson, WA 98648

 (Address of principal executive offices)

(509) 427-5132

 (Registrant’s telephone number)

__________________________

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes [X] No [  ]

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

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

On August 30, 2011, 61,976,757 shares of the registrant's common stock, par value $.001 per share, were outstanding.

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EXPLANATORY NOTE

Total Nutraceutical Solutions, Inc. is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to its Form 10-Q for the quarter ended June 30, 2011, which was originally filed August 22, 2011 (the “Original Filing”), to file the Interactive DataFiles required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) in relation to the Form 10-Q.  We also added the 31.1 and 31.2 exhibits to the exhibit list.  Except as otherwise stated herein, no other information contained in the Original Filing has been updated by this Amendment No. 1, and no disclosures have been updated to reflect events that occurred at a later date.  

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Item 6.  Exhibits 

Exhibit Number	Description of Exhibit	Filed Herewith	Form	Exhibit	Filing Date
3.1	Amended and Restated Articles of Incorporation of Registrant		8-K	3.1	10/29/2010
3.2	Amended and Restated Bylaws of Registrant		8-K	3.2	09/22/2010
3.3	Amended Articles of Merger Incorporation as currently in effect		8-K	3.3	10/13/2008
10.1	Exclusive Option Agreement dated May 1, 2006, between The Penn State Research Foundation and Northwest Medical Research Inc.		8-K	10.1	09/04/2008
10.2	Assignment Agreement to the Option Agreement, dated July 31, 2008, among The Penn State Research Foundation, Northwest Medical Research Inc. and Generic Marketing Services, Inc.		8-K	10.2	09/04/2008
10.3	Assignment and Assumption Agreement, dated July 31, 2008, between Northwest Medical Research Inc. and Generic Marketing Services, Inc.		8-K	10.3	09/04/2008
10.4	Form of Common Stock and Warrant Purchase Agreement		8-K	10.1	06/12/2009
10.5	Form of Securities Purchase Agreement		8-K	10.1	09/21/2009
10.6	$50,000 Promissory Note between TNS and Marvin S. Hausman, M.D. and Philip Sobol dated December 30, 2009		8-K	10.1	12/31/2010
10.7	$100,000 Promissory Note between TNS and Larry A. Johnson dated January 12, 2010		8-K	10.1	2/24/2010
10.8	$100,000 Promissory Note between TNS and Mark C. Wolf dated February 18, 2010		8-K	10.2	2/24/2010
10.9	$50,000 Promissory Note between TNS and Mark C. Wolf dated February 18, 2010		10-K	10.9	4/15/2010
10.10	Profit Sharing Agreement between TNS, American Charter & Marketing LLC, and Delta Group Investments, Limited dated March 26, 2010		10-K	10.10	4/15/2010
10.11	Form of Common Stock and Warrant Agreement 2010		8-K	10.1	12/20/2010
10.12	$312,500 Promissory Note between TNS and Delta Group Investments Limited dated January 26, 2011		8-K	10.2	2/22/2010
10.13	Termination of Profit Sharing Agreement dated February 21, 2011		8-K	10.1	2/22/2011
10.14	Lease Agreement between TNS and Sherwood Venture LLC dated March 15, 2011		8-K	10.1	4/6/2011
10.15	Form of Warrant A Agreement 2010		8-K	10.2	12/22/2010
10.16	Form of Warrant B Agreement 2010		8-K	10.3	12/22/2010
10.15	Form of Warrant A Agreement 2010		8-K	10.2	12/22/2010
10.16	Form of Warrant B Agreement 2010		8-K	10.3	12/22/2010

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10.17	Asset Purchase Agreement between TNS, FunGuys, LLC and Mark C. Wolf dated May 27, 2011	X	8-K	10.1	3/3/2011
10.18	Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock of Total Nutraceutical Solutions, Inc. dated May 26, 2011.		8-K	10.3	3/3/2011
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended..	X
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).	X
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).	X

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SIGNATURES

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

	Total Nutraceutical Solutions, Inc.
August 30, 2011	By:	/s/ Marvin Hausman, M.D.
		Marvin Hausman, M.D. Chief Executive Officer (Principal Executive Officer and Acting Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Marvin S. Hausman, M.D., Chief Executive Officer of Total Nutraceutical Solutions, Inc., certify that:

1.

I have reviewed this Amended Quarterly Report on Form 10-Q/A of Total Nutraceutical Solutions, Inc;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 30, 2011	By:  /s/ Marvin S. Hausman, M.D.
	Marvin S. Hausman, M.D.
	President and Chief Executive Officer      Acting Chief Financial Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Marvin S. Hausman, M.D., Acting Chief Financial Officer of Total Nutraceutical Solutions, Inc., certify that:

1.

I have reviewed this Amended Quarterly Report on Form 10-Q/A of Total Nutraceutical Solutions, Inc;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 30, 2011	By:  /s/ Marvin S. Hausman, M.D.
	Marvin S. Hausman, M.D.
	President and Chief Executive Officer Acting Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Amended Quarterly Report on Form 10-Q/A of Total Nutraceutical Solutions, Inc. (the “Company”) for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Marvin S. Hausman, M.D., Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 30, 2011	By:  /s/ Marvin S. Hausman, M.D.
	Marvin S. Hausman, M.D.
	President and Chief Executive Officer      Acting Chief Financial Officer

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Amended Quarterly Report on Form 10-Q/A of Total Nutraceutical Solutions, Inc. (the “Company”) for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Marvin S. Hausman, M.D., Acting Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 30, 2011	By:  /s/ Marvin S. Hausman, M.D.
	Marvin S. Hausman, M.D.
	President and Chief Executive Officer      Acting Chief Financial Officer

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Preferred Stock
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock Series A, designated	350,000	0
Preferred stock, issued	21,500	0
Preferred stock, aggregate liquidation value	$ 107,500	$ 0
Common Stock
Common Stock, par value	$ 0.001	$ 0.001
Common stock, authorized	150,000,000	150,000,000
Common stock, Issued	61,976,757	58,362,470

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
REVENUES
REVENUES	$ 116,506	$ 174,134	$ 200,743	$ 199,032
COST OF GOODS SOLD	46,169	64,193	85,616	83,699
GROSS PROFIT	70,337	109,941	115,127	115,333
OPERATING EXPENSES
Advertising and promotion	48,036	127,045	70,691	143,867
Sales commissions	0	6,400	0	16,365
Consulting fees - officer	30,000	30,000	60,000	60,000
Professional fees	70,467	27,638	102,474	63,080
Consulting fees	73,025	37,986	313,646	84,228
Impairment of intangible asset	6,642	0	106,642	0
General and administrative	49,052	74,517	276,502	125,606
Total Operating Expenses	277,222	303,586	929,955	493,146
LOSS FROM OPERATIONS	(206,885)	(193,645)	(814,828)	(377,813)
OTHER (INCOME) EXPENSE
Interest income	(56)	(376)	(191)	(653)
Interest expense	83,222	73,252	158,315	116,168
Gain on disposal of product line	(78,842)	0	(78,842)	0
Total Other (Income) Expense	4,324	72,876	79,282	115,515
LOSS BEFORE TAXES	(211,209)	(266,521)	(894,110)	(493,328)
INCOME TAXES	0	0	0	0
NET LOSS	$ (211,209)	$ (266,521)	$ (894,110)	$ (493,328)
NET LOSS PER COMMON SHARE
- BASIC AND DILUTED:	$ 0.00	$ (0.01)	$ (0.01)	$ (0.01)
Weighted common shares outstanding
- basic and diluted	61,565,000	52,012,470	61,243,257	52,012,470

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Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 30, 2011
Document And Entity Information
Entity Registrant Name	Total Nutraceutical Solutions, Inc.
Entity Central Index Key	0001408299
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		61,976,757
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011

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SHORT-TERM CONVERTIBLE NOTE PAYABLE

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

SHORT-TERM CONVERTIBLE NOTE PAYABLE

NOTE 6 – SHORT-TERM CONVERTIBLE NOTE PAYABLE

Proceeds from the issuance of $250,000 from short-term convertible promissory notes and warrants were allocated between the notes and warrants on a relative fair value basis.  The issuance of $250,000 includes one $100,000 promissory note that bears interest at 6% per annum and matured on December 31, 2010. In addition, two promissory notes were issued with principal of $100,000 and $50,000 which bear interest at 6% per annum and mature on December 31, 2011.

Under an agreement with the note holder and an unrelated entity for the sale of our Equisano dietary supplement product line, on May 27, 2011 we negotiated an extension of the term of the $50,000 note to June 30, 2012. Under the same agreement, the $100,000 note that matured on December 31, 2010 was cancelled and the $100,000 note that matured on December 31, 2011 was converted into Series A preferred stock.

The total value originally allocated to the warrants was approximately $123,750 and was recorded as a debt discount against the proceeds of the notes.  In addition, the beneficial conversion features related to the notes were determined to be approximately $126,250.  As a result, the total discount on the notes totaled $250,000, and is being amortized over term of the notes Amortization of debt discount of approximately $14,530 and $34,530 was recorded for the three months and six months ended June 30, 2011, and amortization of debt discount of approximately $45,600 and $78,700 was recorded for the three months and six months ended June 30, 2010.  The unamortized debt discount on the cancelled and converted notes was written off to the gain on disposal of product line.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

SUBSEQUENT EVENTS

NOTE 11 – SUBSEQUENT EVENTS

In May 2011 we opened a private placement offering to sell up to 300,000 shares of Series A preferred stock at an offering price of $5.00 per share. This private placement offering is still open as of the date of this filing. To date, 41,500 preferred shares were issued under this offering, with 21,500 issued to Mark C. Wolf prior to June 30, 2011 and an aggregate of 20,000 preferred shares were issued to two investors subsequent to June 30, 2011.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The accompanying consolidated unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2010 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on May 18, 2011.

The consolidated financial statements include the accounts of the Company and the accounts of the DMAP for the period from March 26, 2010 (inception) through February 17, 2011.  All inter-company balances and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Inventory

Inventory, which consists primarily of raw materials to be used in the production of our dietary supplement products, is stated at the lower of cost or market using the first-in, first-out method. We regularly review our inventory on hand and, when necessary, record a provision for excess or obsolete inventory. The inventory reserve was $149,602 at both June 30, 2011 and December 31 2010.

Discount on convertible notes payable

We allocate the proceeds received from convertible notes between convertible notes payable and warrants, if applicable. The resulting discount for warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible note payable. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debt instrument. The amortization is recorded as interest expense on the consolidated statement of operations.

Derivatives embedded in certain debt securities

We evaluate financial instruments for freestanding or embedded derivatives. Derivative instruments that have been separated from the host contract and do not qualify for hedge accounting are recorded at fair value with changes in value recognized as other income (expense) in the consolidated statements of operations.

Fair value of financial instruments

We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued officer’s compensation, approximate their fair values because of the short maturity of these instruments. Our lease receivable, notes payable and convertible notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to TNS for similar financial arrangements.

We do not have any assets or liabilities measured at fair value on a recurring. Consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at the reporting date, nor any gains or losses reported in the consolidated statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.

Revenue recognition

We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectibility of amounts is reasonably assured.

Revenues from the sale of products, including shipping and handling fees but excluding statutory taxes collected from customers, as applicable, are recognized when shipment has occurred. We sell our consumer products directly to customers utilizing network marketing programs, direct mail order, internet marketing, and commission sales people and indirectly through resellers. We also sell out ingredients directly to manufacturers of cosmetic and nutraceutical products and indirectly through resellers. Persuasive evidence of an arrangement is demonstrated via order and invoice, product delivery is evidenced by a bill of lading from the third party carrier and title transfers upon shipment, the sales price to the customer is fixed upon acceptance of the order and there is no separate sales rebate, discount, or volume incentive.

Equity instruments issued to parties other than employees for acquiring goods or services

We account for all transactions in which goods or services are the consideration received for the issuance of equity instruments based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. Currently such transactions are primarily awards of warrants to purchase common stock.

The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The assumptions used to determine the fair value of our warrants are as follows:

· The expected life of warrants issued represents the period of time the warrants are expected to be outstanding.

· The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant.

· The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the warrant.

· The expected dividend yield is zero based on our best estimate of projected dividend yield for periods within the contractual life of the warrant.

Net loss per common share

Basic and diluted net loss per share has been computed by dividing our net loss by the weighted average number of common shares issued and outstanding. Options and warrants to purchase our common stock as well as debt which is convertible into common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share for 2011 and 2010. The following table presents a reconciliation of basic and diluted loss per share:

		For the three months ending June 30,			For the six months ending June 30,
		2011		2010	2011	2010
Numerator:
	Net loss applicable to common shareholders	$	(211,209)	$ (266,521)	$ (894,110)	$ (493,328)
Denominator:
	Weighted-average common shares outstanding		61,565,000	52,012,470	61,243,257	52,012,470
	Basic and diluted net loss per share	$	(0.00)	$ (0.01)	$ (0.01)	$ (0.01)
Common stock warrants			16,897,474	7,682,800	16,897,474	7,682,800
Convertible debt including interest			5,880,417	2,764,500	5,880,417	2,764,500
Excluded dilutive securities			22,777,891	10,447,300	22,777,891	10,447,300

Reclassifications

Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation.

Segments

We have determined that we operate in one segment for financial reporting purposes.

Recently issued accounting pronouncements

From time to time, new accounting guidance is issued by the Financial Accounting Standards Board that we adopt as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our financial statements.

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CONVERTIBLE NOTES PAYABLE

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

CONVERTIBLE NOTES PAYABLE

NOTE 8 – CONVERTIBLE NOTES PAYABLE

Proceeds from the issuance of a $312,500 convertible promissory note and warrants were allocated between the note and warrants on a relative fair value basis.  This note bears interest at 5% per annum and matures on June 30, 2012. This note was issued in replacement of a $300,000 convertible promissory note which had a maturity date of March 26, 2013. The total value allocated to the warrants was approximately $45,900.  The fair value of the warrants was determined using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield of 0%, risk-free interest rate of 1.05%, volatility of 192.8% and a contractual life of 3 years.  In addition, approximately $49,600 of the value of the warrants issued under the previous note remained unamortized. The value of the warrants was recorded as a debt discount against the proceeds of the note.  The beneficial conversion feature related to the note was determined to be approximately $216,600.  As a result, the total discount on the note totaled $312,100, and is being amortized over term of the note.  Amortization of debt discount of approximately $55,100 and $95,600 was recorded for the three months and six months ended June 30, 2011, and amortization of debt discount of zero was recorded for the three months and six months ended June 30, 2010.  The balance of the note payable, net of unamortized discount, was $127,763 at June 30, 2011, and is reported as a current liability on the accompanying consolidated balance sheets.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

Consulting services from Chairman and CEO

Consulting services provided by and compensation to the Chairman and CEO were $30,000, $60,000, $30,000 and $60,000 for the three months and six months ended June 30, 2011 and 2010, respectively.

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CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

NOTE 7 – CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

Proceeds from the issuance of a $50,000 convertible promissory note and warrants from related parties was allocated between the notes and warrants on a relative fair value basis.  This note bears interest at 6% per annum and matures on December 31, 2011. The related party note holders are (i) Marvin Hausman, M.D., Chief Executive Officer, Director and Stockholder of TNS and (ii) Philip Sobol, a Director of the TNS. The total value allocated to the warrants was approximately $22,200.   The value of the warrants was recorded as a debt discount against the proceeds of the note.  In addition, the beneficial conversion feature related to the note was determined to be approximately $27,800.  As a result, the total discount on the note totaled $50,000, and is being amortized over term of the note.  Amortization of debt discount of approximately $6,250, $12,500, $6,250 and $12,500 was recorded for the three months and six months ended June 30, 2011 and 2010, respectively.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (894,110)	$ (493,328)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on disposal of product line	(78,842)	0
Bad debt expense	2,059	0
Depreciation	7,391	2,224
Impairment of intangible asset	106,642	0
Amortization of discount on convertible notes	154,406	104,218
Stock-based compensation	419,932	25,928
Changes in operating assets and liabilities:
Accounts receivable	(12,756)	(42,655)
Inventory	12,334	(12,005)
Prepaid expenses	22,940	(19,448)
Other current assets	14,654	(882)
Accounts payable and accrued expenses	86,788	17,698
Accrued compensation - officer	89,398	43,979
NET CASH USED IN OPERATING ACTIVITIES	(69,164)	(374,271)
CASH FLOWS FROM INVESTING ACTIVITIES:
Note receivable	0	(62,185)
Purchase of furniture and equipment	(3,708)	(17,616)
Acquisition of patents and patents pending, net	(16,238)	(26,258)
Collections on lease receivable	5,472	9,577
Payments of lease receivable	0	(5,261)
NET CASH USED IN INVESTING ACTIVITIES	(14,474)	(101,743)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants	43,000	0
Proceeds from convertible notes payable short-term	0	100,000
Repayment of note payable	(13,134)	(12,472)
Proceeds from convertible notes payable long-term	0	450,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	29,866	537,528
NET CHANGE IN CASH	(53,772)	61,514
Cash at beginning of period	65,061	48,141
Cash at end of period	11,289	109,655
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	1,674	575
Taxes paid	0	0
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOWS FINANCING AND INVESTING ACTIVITIES:
Conversion of notes payable to preferred stock	107,500	0
Warrants issued for services	$ 42,844	$ 22,530

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INVENTORY

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

INVENTORY

NOTE 3 – INVENTORY

Inventory at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
Raw materials	$	259,064	$	293,391
Finished goods		34,238		33,309
		293,302		326,700
Less reserve for excess and obsolete inventory		(149,602)		(149,602)
	$	143,700	$	177,098

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PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
Office equipment	$	23,072	$	19,364
Production equipment		30,964		30,964
Leasehold improvements		2,192		2,192
		56,228		52,520
Less accumulated depreciation		(16,694)		(9,303)
	$	39,534	$	43,217

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NOTE PAYABLE

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

NOTE PAYABLE

NOTE 5 – NOTE PAYABLE

Note payable at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
On November 18, 2010 we entered into a short term financing agreement for principal of $13,810 for director’s and officer’s insurance.  Payments are due monthly, with interest at 4.85% per annum.	$	1,610	$	12,300
On August 11, 2010 we entered into a short term financing agreement for principal of $4,796 for property insurance.  Payments are due monthly, with interest at 9.65% per annum. This note was paid in full in June 2011.		-		2,444
	$	1,610	$	14,744

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $)	Preferred Stock	Common Stock	Additional Paid In Capital	Deferred Compensation	Accumulated Deficit	Total
Beginning Balance, Amount at Dec. 31, 2009	$ 0	$ 52,013	$ 1,148,009	$ (20,303)	$ (1,046,959)	$ 132,760
Beginning Balance, Shares at Dec. 31, 2009	0	52,012,470
Issuance of warrants in connection with convertible notes payable			192,450			192,450
Beneficial conversion feature in connection with convertible notes payable			194,950			194,950
Shares issued for cash, Shares		3,050,000
Shares issued for cash, Amount		3,050	25,870			28,920
Issuance of warrants in connection with the sale of common shares in December			91,580			91,580
Issuance of warrants for future services			32,555	(32,555)		0
Issuance of common stock for services, Shares		3,300,000
Issuance of common stock for services, Amount		3,300	274,048			277,348
Amortization of deferred compensation				43,154		43,154
Net loss					(1,266,315)	(1,266,315)
Ending Balance, amount at Dec. 31, 2010	0	58,363	1,959,462	(9,704)	(2,313,274)	(305,153)
Ending Balance, shares at Dec. 31, 2010	0	58,362,470
Issuance of warrants in connection with convertible notes payable			45,937			45,937
Beneficial conversion feature in connection with convertible notes payable			167,030			167,030
Issuance of common stock for services, Shares		2,000,000
Issuance of common stock for services, Amount		2,000	208,000			210,000
Conversion of note payable into preferred stock, Shares	21,500
Conversion of note payable into preferred stock, Amount	22		107,478			107,500
Issuance of common stock for license agreement, Shares		1,000,000
Issuance of common stock for license agreement, Amount		1,000	99,000			100,000
Issuance of common stock and warrants for cash, Shares		614,287
Issuance of common stock and warrants for cash, Amount		615	42,385			43,000
Stock compensation			164,511			164,511
Issuance of warrants for services			42,844	(42,844)		0
Amortization of deferred compensation				45,265		45,265
Net loss					(894,110)	(894,110)
Ending Balance, amount at Jun. 30, 2011	$ 22	$ 61,978	$ 2,836,647	$ (7,283)	$ (3,207,384)	$ (316,020)
Ending Balance, shares at Jun. 30, 2011	21,500	61,976,757

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ORGANIZATION AND OPERATIONS

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

ORGANIZATION AND OPERATIONS

NOTE 1 - ORGANIZATION AND OPERATIONS

Generic Marketing Services, Inc. was incorporated on July 19, 2007 under the laws of the State of Nevada as a subsidiary of Basic Services, Inc., also a Nevada corporation. On December 31, 2007, Basic Services spun off Generic Marketing Services. On October 8, 2008, Generic Marketing Services changed its name to Total Nutraceutical Solutions, Inc. (TNS, the Company, us, we, or our). We engage in the distribution of organic dietary supplement nutraceutical products in the United States of America.

Effective May 27, 2011, we sold our Equisano dietary supplement product line and related rights, as defined, to an unrelated party.  Under the terms of the sale, we transferred our Equisano inventory to the purchaser, and negotiated the extension and conversion of notes payable into preferred stock with a note holder as described in Note 6.  In addition, we are to receive cash consideration of $18,000 in connection with the sale.  The product line did not represent a reportable segment, operating segment, or asset group, and as such is not presented as discontinued operations in the consolidated financial statements.

On March 26, 2010 we entered into a Profit Sharing Agreement or Direct Marketing Affiliates Project (DMAP) with American Charter & Marketing LLC (ACM) and Delta Group Investments Limited (DGI), with the primary focus of undertaking a direct mail marketing campaign designed to sell nutraceutical products developed and manufactured by TNS. We acted as Managing Affiliate. DGI provided $300,000 in the form of a loan, as starting capital for the project. The net profits of the DMAP project were to be shared with 25% going to the Company, 25% to DGI, 25% to ACM and 25% as a return on the initial loan. This agreement was terminated effective February 17, 2011.

While the Company is attempting to generate sufficient revenues, our cash position may not be sufficient to support our daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon our ability to generate sufficient revenues.

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

STOCKHOLDERS' EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock

On May 26, 2011, our board of directors designated 350,000 shares of preferred stock as Series A preferred stock, $0.001 par value. The Series A preferred stock is entitled to a liquidation preference in the amount of $5 per share, votes on an as converted basis with the common stock on all matters as to which holders of common stock shall be entitled to vote, and is convertible into common stock on a one-for-one hundred basis.

Under the agreement for the sale of our Equisano dietary product line dated May 27, 2011 described above, 21,500 shares of Series A preferred stock were issued for conversion of an outstanding promissory note in the amount of $100,000 plus $7,500 in accrued interest.

Common stock

In February 2011 we opened a private placement offering to sell up to 2,142,857 units at an offering price of $0.07 per unit. Each unit is comprised of one share of common stock $0.001 par value, and an “A” warrant to purchase one share of common stock exercisable at $0.20 per share and a “B” warrant to purchase one share of common stock exercisable at $0.40 per share. This private placement offering closed on May 31, 2011 and 614,287 shares of common stock were issued for an aggregate funding amount of $43,000.

On August 26, 2010, we entered into a consulting agreement for marketing services. Under this agreement the consultant will provide certain marketing services in exchange for 4,000,000 shares of our common stock valued at $420,000 at the date of grant, based upon the stock price on the date of grant. 2,000,000 shares were issued at signing and 2,000,000 shares were issued on January 3, 2011.

On February 3, 2011, our board of directors approved a grant of 1,000,000 shares of common stock to a third party in consideration for an Assignment and Assumption Agreement. The stock was valued at $100,000 at the date of grant based upon the stock price on the grant date. The shares were issued in April, 2011. Upon the acquisition of the intangible asset, management determined the asset was impaired and recorded an impairment loss of $100,000..

Stock incentive plan

During the first quarter of 2011, we granted 2,379,998 options under our 2010 Stock Incentive Plan with a contractual term of 5 to 10 years and an aggregate fair value on the date of grant of $231,465. The vesting schedule of these options ranges from immediate vesting to vesting over two years.

Stock-based compensation expense is recognized using the straight-line attribution method over the optionees’ requisite service period. Stock-based compensation expense of approximately $18,300 and $164,500 was recorded for three months and six months ending June 30, 2011 and stock compensation expense of zero was recorded for both the three and six months ending June 30, 2010, as a component of general and administrative expense.

We use the Black-Scholes option-pricing model to determine the fair value of options on the date of grant. In determining the fair value of options, we employed the following key assumptions.

	Six months ended
	March 31, 2011
Expected dividend yield		—
Expected stock price volatility		187.22% - 187.30	%
Risk-free interest rate		1.98% – 2.03	%
Expected term (in years)		5 – 5.4 years
Weighted-average grant date fair-value	$	0.097

There were no stock option grants during the three months ending June 30, 2011 or the three months or six months ending June 30, 2010.

Warrants

During the second quarter of fiscal 2011, we issued warrants to purchase 1,016,100 shares of common stock under agreements for consulting services. These warrants have exercise prices of $0.05 to $0.25 per share and have terms from five to seven years. The fair value of warrants issued under consulting agreements is recorded as deferred compensation. The amortization of deferred compensation is recorded as consulting expense and was approximately $36,600 and $44,800 for the three months and six months ending June 30, 2011.

In connection with the private placement of common stock on May 31, 2011, we issued warrants to purchase common stock to the investors. There were a total of 614,287 warrants to purchase shares of common stock exercisable at $0.20 per share and 614,287 warrants to purchase shares of common stock exercisable at $0.40 per share. These warrants have a term of three years.

During the first quarter of fiscal 2011, we issued warrants to purchase 600,000 shares of common stock at $0.12 per share in conjunction with the issuance of convertible promissory notes. The warrants have a term of three years. The fair value of these warrants was recorded as debt discount. The amortization related to these warrants is recorded as interest expense and was $55,100 and $95,600 for the three and six months ending June 30, 2011 and zero for the both the three and six months ending June 30, 2010.

In the first quarter of fiscal 2011, we changed the methodology for determining certain inputs to the Black-Scholes model. The methodology for determining the volatility was changed from using an average volatility of comparable companies within TNS’ industry to using an average of TNS’ volatility and the comparable companies’ volatility. There were no changes to the methodology for determining the remaining Black-Scholes inputs.

We use the Black-Scholes option-pricing model to determine the fair value of warrants on the date of grant. In determining the fair value of warrants, we employed the following key assumptions:

	Six months ended	Six months ended
	June 30, 2011	June 30, 2011
Expected dividend yield	—		—
Expected stock price volatility	189.60 to 193.64%		189.60 to 193.64%	%
Risk-free interest rate	0.79 to 2.53%		0.79 to 2.53	%
Expected term (in years)	3 to 7 years		3 to 7years
Weighted-average grant date fair-value	$ 0.04 to 0.10		$ 0.04 to 0.10

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current Assets
Cash	$ 11,289	$ 65,061
Accounts receivable, net	45,430	10,469
Inventory, net	143,700	177,098
Prepaid expenses	14,874	37,814
Current maturities of lease receivable	7,467	11,861
Other current assets	296	14,950
Total Current Assets	223,056	317,253
Property and Equipment, net	39,534	43,217
Patents and license, net	90,590	80,994
Lease receivable, net of current maturities	0	1,078
Total Assets	353,180	442,542
Current Liabilities:
Accounts payable and accrued expenses	255,901	183,973
Accrued compensation - officer	246,426	157,028
Short-term convertible notes payable, net of discount-related party	37,500	25,000
Short-term convertible notes payable, net of discount	127,763	170,000
Notes payable	1,610	14,744
Total Current Liabilities	669,200	550,745
Long Term Liabilities:
Convertible notes payable, net of discount	0	196,950
Total Long Term Liabilities	0	196,950
Total Liabilities	669,200	747,695
Stockholders' Equity (Deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized, Series A preferred stock, 350,000 and zero shares designated, respectively, 21,500 and zero shares issued and outstanding, resepecively, aggregare liquidation value of $107,500 and zero, respectively	22	0
Common stock, $.001 par value, 150,000,000 shares authorized, 61,976,757 and 58,362,470 shares issued and outstanding, respectively	61,978	58,363
Additional paid-in capital	2,836,647	1,959,462
Deferred compensation	(7,283)	(9,704)
Accumulated deficit	(3,207,384)	(2,313,274)
Total Stockholders' Equity (Deficit)	(316,020)	(305,153)
Total Liabilities and Stockholders' Equity (Deficit)	$ 353,180	$ 442,542