Edgar Filing: NUVIM INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 2006

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT
OF 1934

For the Transition Period from ______ to ______

Commission File No. 000-50508

NUVIM(R), INC.
(Name of Small Business Issuer in Its Charter)

Delaware 13-4083851
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

12 North State Route 17
Paramus, NJ 07652
(Address of principal executive offices) (Zip Code)

(201) 556-1010
(Issuers Telephone Number)

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

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

At October 31, 2006, 10,636,374 shares of the registrant's Common Stock, par
value $0.00001 per share, were outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

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NUVIM, INC.

QUARTERLY REPORT ON FORM 10-QSB

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Balance Sheet -September 30, 2006 (Unaudited) 3
Statements of Operations - For the three and nine months ended
September 30, 2006 and 2005 (Unaudited) 4
Statement of Changes in Stockholders' Deficit for the nine months ended
September 30, 2006 (Unaudited) 5
Statements of Cash Flows for the nine months ended September 30, 2006 and
2005 (Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis or Plan of Operation 18
Item 3. Controls and Procedures 36

PART II - OTHER INFORMATION
Item 1. Legal Proceedings 37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37
Item 3. Defaults upon Senior Securities 37
Item 4. Submission of Matters to a Vote of Security Holders 37
Item 5. Other Information 37
Item 6. Exhibits and Reports on Form 8-K 38
Signatures 39

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
NUVIM, INC.
BALANCE SHEET
(Unaudited)

September 30, 2006
------------------
ASSETS

Current Assets:
Cash and cash equivalents $ 9,266
Accounts receivable, net 75,485
Inventory 171,247
Prepaid expenses and other current assets 306,652
------------------
Total Current Assets 562,650

Offering cost 30,000
Equipment and furniture, net 824
Deposits and other assets 8,547
Distribution rights 90,000
Deferred debt discount, net 41,068
------------------
TOTAL ASSETS $ 733,089
==================

LIABILITIES AND STOCKHOLDERS DEFICIT

Current Liabilities:

Accounts payable $ 879,029
Accounts payable and accrued expenses to related parties 53,606
Accrued expenses 99,597
Accrued compensation 367,889
Short term bank borowings 51,200
Stockholder loans 30,000
Rescinded Series B offering payable 18,920
------------------
TOTAL CURRENT LIABILITIES 1,500,241

Other Liabilities:
Accrued interest - Other Note 23,517
Accrued interest stockholder loans 29,020
Accrued interest - senior notes payable - related parties 159,160
Other note payable 120,000
Stockholder loans - subordinated convertible loans 200,000
Senior notes payable - related parties 500,000
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TOTAL OTHER LIABILITIES 1,031,697
------------------

TOTAL LIABILITIES
2,531,938
Comments and Contingencies
Stockholders' Deficit
Preferred Stock - 65,000,000 shares authorized:
Preferred Stock Series A, convertible, non cumulative,
participating, par value $.00001 per share:
4,875,850 shares designated, 0 issued and outstanding
Preferred Stock Series C, convertible, non cumulative,
participating, par value $.00001 per share:
50,000,0000 shares designated, 0 issued and outstanding
Common Stock, 120,000,000 shares authorized,
$.00001 par value, 10,584,946 shares issued
and outstanding 107
Additional paid-in capital 19,908,274
Accumulated deficit (21,707,230)
------------------
Total Stockholders' Deficit (1,798,849)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 733,089
==================

The Notes to Financial Statements are an integral part of these statements.

NUVIM, INC.
STATEMENTS OF OPERATIONS
(Unaudited)

FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------- -------------------------------
2005 2006 2005 2006
-------------- -------------- -------------- --------------

Gross Sales $ 261,888 $ 366,804 $ 911,396 $ 964,956
Less: Discounts, Allowances and
Promotional Payments 103,452 110,141 395,130 226,700
-------------- -------------- -------------- --------------
Net Sales 158,436 256,663 516,266 738,256
Cost of Sales 138,939 204,110 516,449 513,310
-------------- -------------- -------------- --------------
Gross Profit (Loss) 19,497 52,553 (183) 224,946
Selling, General and Administrative
Expenses 529,045 605,782 1,583,100 1,609,854
-------------- -------------- -------------- --------------
Loss from Operations (509,548) (553,229) (1,583,283) (1,384,908)
Other Income (Expense):
Interest Expense (18,042) (19,371) (406,921) (92,909)
Interest Income 5,936 - 6,089 45
Gain on Forgiveness of Accounts
Payable - 7,000 148,525 15,803
-------------- -------------- -------------- --------------
Total Other Income (Expense) - Net (12,106) (12,371) (252,307) (77,061)
-------------- -------------- -------------- --------------
Net Loss Before Income Tax Benefit (521,654) (565,600) (1,835,590) (1,461,969)
Income Tax Expense - - (1,125) (200)
-------------- -------------- -------------- --------------
Net Loss $ (521,654) $ (565,600) $ (1,836,715) $ (1,462,169)
============== ============== ============== ==============
Basic and Diluted Loss Per Share $ 0.11 $ (0.05) $ (0.80) $ (0.18)
============== ============== ============== ==============
Weighted Average Number of Common
Shares Outstanding - Basic and Diluted 4,630,287 10,584,946 2,287,950 8,282,828
============== ============== ============== ==============

The Notes to Financial Statements are an integral part of these statements.

NUVIM, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)

Preferred Stock Preferred Stock
Series A Series C Common Stock
-------------------------- -------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
--------------- --------- --------------- --------- ------------ -----------

Balance at December 31 2005 - - - - 5,034,995 $ 51

Stock Issued for Services - - - - 50,000 1
Stock Issued for Services - - - - 7,850 -
Stock issued for Compensation - - - - - -
Stock Issued for Accounts Payable - - - - 331,453 3
Stock Issued for Accrued Compensation - - - - 854,455 9
Stock Issued for Loan Payable
& Accrued Interest - - - - 107,631 1
Stock Issued for Services - - - - 385,704 4
Stock Sold to Accredited Investors - - - - 2,970,000 30
Stock Issued to Underwriter for
Commission on Stock Sale - - - - - -
Stock Issued for Senior Notes - - - - 335,000 3
Stock Issued for Services - - - - 75,000 1
Stock Issued for Purchase of
Nuvim Powder, LLC - - - - 450,000 4
Stock Cancellation for cancelled Services - - - - (17,142) -
Warrants Issued for Note Extensions - - - - - -
Net Loss - - - - - -
--------------- --------- --------------- --------- ------------ -----------
Balance at September 30, 2006 - - - - 10,584,946 $ 107
=============== ========= =============== ========= ============ ===========

Additional Total
Paid-In Accumulated Shareholders'
Capital Deficit Deficit
-------------- -------------- ---------------

Balance at December 31 2005 $ 18,167,605 $ (20,245,061) $ (2,077,405)

Stock Issued for Services 28,999 - 29,000
Stock Issued for Services 4,558 - 4,558
Stock issued for Compensation 306,109 - 306,109
Stock Issued for Accounts Payable 110,581 - 110,584
Stock Issued for Accrued Compensation 355,532 - 355,541
Stock Issued for Loan Payable
& Accrued Interest 37,630 - 37,631
Stock Issued for Services 139,173 - 139,177
Stock Sold to Accredited Investors 593,970 - 594,000
Stock Issued to Underwriter for
Commission on Stock Sale (60,125) - (60,125)
Stock Issued for Senior Notes 66,997 - 67,000
Stock Issued for Services 29,249 - 29,250
Stock Issued for Purchase of
Nuvim Powder, LLC 89,996 - 90,000
Stock Cancellation for cancelled Services (6,000) - (6,000)
Warrants Issued for Note Extensions 44,000 44,000
Net Loss - (1,462,169) (1,462,169)

-------------- -------------- ---------------
Balance at September 30, 2006 $ 19,908,274 $ (21,707,230) $ (1,798,849)
============== ============== ===============

The Notes to Financial Statements are an integral part of this statement.

NUVIM, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2006
(Unaudited)

2005 2006
------------ ------------

Cash Flow From Operating Activities:
Net Loss $ (1,836,715) $ (1,462,169)
Adjustment to reconcile net loss to net cash used in
Operating Activities
Depreciation 14,044 678
Beneficial conversions of notes payable 49,755 -
Amortization of debt discount on notes payable - 14,029
Stock issued for services - 201,985
Employee stock based compensation - 306,109
Interest expense in connection with warrants - 2,932
Provision for sales returns 395,130 226,700
Gain on forgiveness of accounts payable (148,525) (15,803)

Changes in Operating Assets and Liabilities:
Accounts receivable (389,999) (266,786)
Inventory (103,085) 1,467
Prepaid expenses and other current assets (31,413) 16,263
Accounts payable including related parties (313,513) (60,651)
Accrued compensation 206,384 303,330
Accrued expenses 18,592 (170,371)
Accrued interest 336,795 62,010
------------ ------------
Net Cash Used in Operating Activities (1,802,550) (840,277)
------------ ------------

Cash Flow From Investing Activities:
Purchase of equipment and furniture (442) -
------------ ------------
Net Cash Used in Investing Activities (442) -
------------ ------------

Cash Flow From Financing Activities:
Net proceeds from issuance of common stock 1,577,466 533,875
Offering cost - (30,000)
Reimbursement of, and reduction in deferred offering cost 441,243 -
Short term bank borrowings - 51,200
Payment of note payable (9,000) (6,000)
Payment of Series B Advances (23,080) -
Proceeds of related party advances (48,000) 30,000
Proceeds from underwriter advance-related party 200,000 -
Repayment of underwriter advance-related party (200,000) -
------------ ------------
Net Cash Provided by Financing Activities 1,938,629 579,075

Net change in Cash and Cash Equivalents 135,637 (261,202)
Cash and Cash Equivalents at Beginning of Period 277,649 270,468
------------ ------------
Cash and Cash Equivalents at End of Period $ 413,286 $ 9,266
============ ============

The Notes to Financial Statements are an integral part of these statements.

NUVIM, INC.

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Unaudited)

NOTE 1 - BUSINESS AND BASIS OF PRESENTATION

A. BUSINESS

NuVim, Inc. (The "Company") markets and distributes dietary supplement beverages
which enhance the immune system, promote sturdy joints, muscle flexibility and
muscle recovery. The Company distributes its products through supermarkets in
approximately 13 states, predominantly on the East Coast. The Company's beverage
products contain certain micronutrients which Stolle Milk Biologies, Inc.
("SMBI") has patented. Spencer Trask Specialty Group, LLC ("ST") which is a
significant stockholder in the company, is the controlling stockholder of SMBI,
SMBI and ST collectively are micronutrients, which can be terminated by SMBI
under certain conditions.

B. GOING CONCERN

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company incurred net losses of $565,600 and $521,654 for the
three months ended September 30, 2006 and 2005 and $1,462,169 and $1,836,715 for
the nine months ended September 30, 2005 and 2005, respectively. Management also
expects operating losses to continue in 2006 and 2007. The Company has negative
working capital of $937,591 and a Total Stockholders Deficit of $1,863,917. The
Company's continued existence is dependent upon its ability to secure adequate
financing to fund future operations and commence profitable operations. To date,
the Company has supported its activities through equity sales, the sale of
preferred common stock, notes payable and cash advances from related parties and
stockholders. It is the Company's intention to raise additional capital through
additional borrowings and sales of its equity securities. No assurance can be
given that these funding strategies will be successful in providing the
necessary funding to finance operations of the Company. Additionally, there can
be no assurance, even if successful in obtaining financing, the Company will be
able to generate sufficient cash flows to fund future operations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The accompanying financial statements do not include any
adjustment relating to the recoverability and classification of recorded assets
or amounts and classification of liabilities that might be necessary related to
this uncertainty.

C. BASIS OF PRESENTATION

The unaudited consolidated financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The unaudited interim consolidated
financial statements as of September 30, 2006 and 2005 reflect all adjustments
(consisting of normal recurring accruals) which, in the opinion of management,
are considered necessary for a fair presentation of its financial position as of
September 30, 2006 and as of the result of its consolidated operations and its
consolidated cash flows for the periods ended September 30, 2006 and 2005.

The Unaudited Consolidated Statements of Operations for the nine months ended
September 30, 2006 and 2005 are not necessarily indicative of results for the
full year.

While the Company believes that the disclosures presented are adequate to make
the information not misleading, these financial statements should be read in
conjunction with the financial statements and accompanying notes included in the
Company's Current Report on Form 10KSB for the year ended December 31, 2005.

NOTE 2 -CRITICAL ACCOUNTING POLICIES

A. STOCK BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123R (revised 2004),
"Share-Based Payment" which revised Statement of Financial Standards No. 123,
"Accounting for Stock-Based Compensation" This statement supersedes Opinion No.
25, "Accounting for Stock Issued to Employees." The revised statement addresses
the accounting for share-based payment transactions with employees, eliminates
the ability to account for share-based compensation transactions using the
intrinsic value method pursuant to APB 25 and requires that the compensation
costs relating to such transactions be recognized in the statement of
operations. The revised statement has been implemented by the Company effective
January 1, 2006. The Company continued to account for stock awards issued to
non-employees under the fair value method as described in EITF 96-18 "Accounting
for Equity Investments that are Issued to Other than Employees for Acquiring or
in Conjunction with Selling Goods or Services."

The implementation of FAS No. 123R has the following effect on the statement of
operations for the nine month period ending September 30, 2006:

Net loss before stock option expense... $ (1,156,060)
Less Stock Option Expense.............. (306,109)
Net Loss as Reported................... $ (1,462,169)

For the 2005 fiscal year, the Company accounted for its employee incentive stock
option plans using the intrinsic value method in accordance with the recognition
and measurement principles of Accounting Principals Board Opinion No. 25,
"Accounting for Stock Issued to Employees." Had the Company determined
compensation expenses based on the fair value at the grant dates for those
awards consistent with the method of SFAS 123, the Company's net loss per share
would have increased to the following pro forma amounts:

NINE MONTHS
ENDED
SEPTEMBER 30,
2005
--------------

Net income (loss) - as reported ..................................................... $ (1,836,715)
Add: total stock based employee compensation expense determined under fair value
based methods....................................................................... (774,559)
--------------
Net income (loss) - pro forma ....................................................... $ (2,611,274)
==============
Net income (loss) attributable to common stockholders per share:
Basic and diluted net loss per share as reported................................... $ (0.80)
==============
Pro forma and diluted basic loss per share......................................... $ (1.14)
==============

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

SEPTEMBER 30,
2005
-------------
Risk free annual interest rate . 4.30%
Expected volatility ............ 90%
Expected life .................. 7 years
Assumed dividends .............. None

Effective January 1, 2006, the Company adopted FAS No. 123R utilizing the
modified prospective method. FAS No. 123R requires the recognition of stock
based compensation expense in the financial statements.

Under the modified prospective method, the provisions of FAS No. 123R apply to
all awards granted or modified after the date of adoption. In addition, the
unrecognized expense of awards not yet vested at the date of adoption,
determined under the original provisions of FAS 123, "Accounting for Stock Based
Compensation", shall be recognized in net earnings in the periods after the date
of adoption. Stock based compensation consists primarily of stock options. Stock
Options are granted to employees at exercise prices equal to the fair market
value on the dates of grant. Stock options generally vest over three years and
have a term of seven years. Compensation expense for stock options is recognized
over the period for each separate vesting portion of the stock option award.

The fair value for options issued prior to January 2006 was estimated at the
date of grant using a Black-Scholes option-pricing model. The risk free rate was
derived from the U.S. Treasury yield curve in effect at the time of the grant.
The volatility factor was determined based on a comparison to companies with
similar characteristics. The Black-Scholes option-pricing model was developed
for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option-pricing models
require the input of highly subjective assumptions including the expected stock
price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion the existing models do not necessarily provide
a reliable single measure of the fair value of employee stock options

A summary of the status of the Company's options for the nine months ended
September 30, 2006 is as follows:

WEIGHTED AGGREGATE
AVERAGE REMAINING INTRINSIC
SHARES EXERCISE PRICE LIFE VALUE
-------------- -------------- -------------- --------------

Balance at beginning of period ....... 1,643,316 $ 1.01 9.9 years $ 0.00
Granted .............................. 1,940,000 0.31 -- --
Cancelled or Expired ................. (277,169) -- -- --
Exercised ............................ -- -- -- --
-------------- -------------- --------------
Outstanding at the end of the period . 3,306,147 $ 1.01 9.3 years $ 0.00
============== ============== ==============

A summary of the status of the Company's nonvested shares as of September 30,
2006, and changes during the nine months ended September 30, 2006 is presented
below:

WEIGHTED-
WEIGHTED- AVERAGE
AVERAGE REMAINING
FAIR VALUE CONTRACTUAL
NUMBER OF AT GRANT TERM
SHARES DATE (in years)
------------- ------------- -------------

Non-vested shares at December 31, 2005 ............... 492,456 $ 1.00 9.5
Options granted ...................................... 1,940,000 0.31 --
Options vested........................................ (2,107,506) -- --
Options forfeited or expired ......................... (93,287) -- --
------------- ------------- -------------
Non-vested shares at September 30, 2006 .............. 231,663 $ 1.00 9.5
============= ============= =============

As of September 30, 2006, there was approximately $438,000 of unrecognized
compensation cost related to non-vested stock option awards, which is expected
to be recognized over a remaining weighted-average vesting period of 2.50 years.

B. RECLASSIFICATIONS

Certain reclassifications were made to the 2005 financial statements in order to
conform to the 2006 financial statements.

C. LOSS PER SHARE

Loss per share is presented in accordance with the provisions of SFAS No. 128,
Earnings Per Share and SEC Staff Accounting Bulletin No. 98. Basic EPS is
calculated by dividing the income or loss available to common stockholders by
the weighted number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
These common stock equivalents have been omitted from earnings per share because
they are anti-dilutive, accordingly, basic and diluted EPS were the same for the
nine months ended September 30, 2006 and 2005. Common stock equivalents
outstanding at September 30, 2006 consisted of 3,306,147 incentive stock options
and warrants to purchase 7,673,937 shares of common stock.

D. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, and
("SFAS No. 157"), which defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS No. 157 will be effective for the Company beginning January 1, 2008.
Management is currently evaluating the effect SFAS No. 157 will have on the
Company's financial condition or results of operations.

In July 2006, the Financial Accounting Standards Board ("FASB") has published
FASB Interpretation No. 48 ("FIN No. 48"), Accounting for Uncertainty in Income
Taxes, to address the noncomparability in reporting tax assets and liabilities
resulting from a lack of specific guidance in FASB Statement of Financial
Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes, on the
uncertainty in income taxes recognized in an enterprise's financial statements.
FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with
earlier adoption permitted. The adoption of FIN 48 is not expected to have a
material effect on the Company's financial condition or results of operations.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Correction ("SFAS 154"), which replaces Accounting Principles Board Opinions No.
20

"Accounting Changes" and SFAS No 3, "Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28." SFAS 154 provides
guidance on accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest practicable
date, as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning after December
15, 2005 and is required to be adopted by the Company in the first quarter of
fiscal 2006. The adoption of SFAS 154 did not have an impact on the Company's
financial statements.

The FASB issued FASB Interpretation No. 47 ("FIN 47"), "Accounting for
Conditional Asset Retirement Obligations" in March 2005. FIN 47 clarifies that
an entity must record a liability for a conditional asset retirement obligation
if the fair value of the obligation can be reasonably estimated. This
Interpretation also clarifies the circumstances under which an entity would have
sufficient information to reasonably estimate the fair value of an asset
retirement obligation. This Interpretation is effective no later than the end of
fiscal years ending after December 15, 2005. This guidance did not have a
material affect on the Company's financial statements.

NOTE 3 - EMPLOYEE STOCK OPTIONS

On July 21, 2006, the compensation committee of the board of directors granted
1,650,000 options to purchase shares of common stock at a price of $0.31 per
share. This is in addition to automatic grants of a total of 290,000 options
granted to the outside directors in May and July of this year.

In May 2006, the shareholders approved the 2006 Employee Stock Option Plan. for
the benefit of its outside directors, officers, employees and consultants. The
plan became effective upon shareholder approval. The Plan expires ten years from
the date of adoption. The Company is authorized to grant options for up to
2,000,000 common shares under the Plan. Under the Plan, the option price of an
ISO may not be less than the fair market value of a share of common stock on the
date of grant. An ISO may not be granted to a "ten percent stockholder" (as such
term is defined in Section 422 of the Internal Revenue Code) unless the exercise
price is at least 110% of the fair market value of the common stock and the term
of the option may not exceed five years from the date of grant. Nonqualified
stock options under both plans may be granted at exercise prices equal to or
greater than 100% of the fair market value on the date of grant. The maximum
term of each stock option granted to persons other than ten percent stockholders
is ten years from the date of the grant.

In January 2005, the Board of Directors approved the 2005 Incentive Stock Option
Plan for the benefit of its officers, employees and consultants. The Board also
approved the 2005 Directors' Stock Option Plan for the Company's board members.
These plans became effective concurrently with the closing of the Company's
initial public offering. The Plans expire ten years from the date of adoption.
The Company is authorized to grant options for up to 1,500,000 common shares
under the employee plan, and 200,000 under

the directors plan. Under each Plan, the option price of an ISO may not be less
than the fair market value of a share of common stock on the date of grant. An
ISO may not be granted to a "ten percent stockholder" (as such term is defined
in Section 422 of the Internal Revenue Code) unless the exercise price is at
least 110% of the fair market value of the common stock and the term of the
option may not exceed five years from the date of grant. Nonqualified stock
options under both plans may be granted at exercise prices equal to or greater
than 85% of the fair market value on the date of grant. The maximum term of each
stock option granted to persons other than ten percent stockholders is ten years
from the date of the grant. The Company may also grant options to purchase up to
35,373 shares of common stock under three plans adopted in 2000, 2001 and 2003,
which have similar terms.

The options generally expire 10 years from the date of grant. However, in the
event a participant's employment is terminated for any reason other than the
result of death, disability or retirement, as defined, the options expire 90
days after termination.

If a participant's employment is terminated as a result of death, permanent
disability or retirement, the options expire one year from the date of
termination.

The weighted average remaining contractual life of options outstanding was 9.9
and 9.3 years as of December 31, 2005 and September 30, 2006.

Pro-forma information regarding net loss is required by SFAS No. 123 and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of SFAS No. 123. Since there is not trading history
for the Company's stock, the fair value of the Company's issued options and
warrants were estimated at the date of grant using the fair value method with
the following assumptions:

Assumptions:
Risk-free rate 4.30%
Dividend yield 0
Volatility factor of the expected market 90%
Price of the Company's common stock 1.00
Average life 7 Years

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

NOTE 4 - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Nine Months Ended
---------------------------------------
September 30, 2005 September 30, 2006
------------------ ------------------

Non Cash Investing and Financing Activities

Stock issued for accounts payable -- $ 110,584
Stock issued for accrued compensation -- $ 335,541
Stock issued for senior notes payable -- $ 67,000
Stock issued for management loan and accrued interest -- $ 37,631
Stock issued for interest in NuVim Powder, LLC -- $ 90,000
Warrant issued for extension of senior note payable -- $ 44,000
Assignment of senior secured notes payable and
accrued interest to a related party $ 2,679,498 --
Automatic conversion of notes payable $ 245,000 --
Senior secured note - related party $ 6,141,527 --
Stock issued for accrued salaries $ 593,750 --
Senior secured notes payable - related parties $ 500,000 --
Subordinated notes payable and accrued interest $ 266,639 --
Stock issued for Related party advance $ 69,000 --
Stock issued for Accounts payable $ 109,000 --

NOTE 5 - STOCKHOLDERS DEFICIT

Sales for Cash

On April 10, 2006, Paulsen Investment Company, Inc. the company that
served as underwriter of NuVim's recently completed initial public offering of
securities, and NuVim entered into a Placement Agent Agreement pursuant to which
Paulsen would attempt to place up to 2,500,000 shares (subject to additional
allocations with the consent of Paulsen and NuVim) of NuVim's common stock with
accredited investors. Under the agreement a commission of seven percent would be
paid to the selling broker and Paulsen would receive an unaccountable expense
allowance of three percent of the total amount placed under the agreement. The
agreement also provides that NuVim will use its best efforts to register the
shares to be sold under the Securities Act of 1933, as amended within 120
business days of the sale of 2,500,000 shares.

On April 18, 2006, Paulson Investment Company, Inc., the company that
served as underwriter of NuVim's recently completed initial public offering of
securities, purchased 500,000 shares of NuVim's common stock for $100,000.
Paulson represented itself to be an accredited investor who was purchasing the
common stock for its own investment and not for resale. It agreed in writing to
restrictions on resale placed with the NuVim's transfer agent and the printing
of a legend on its certificate. Because of these factors, this sale was exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6).

On May 18, 2006, NuVim accepted twenty-two additional subscriptions
resulting

from private placements arranged by Paulson Investment Company, Inc. The
investors purchased 2,470,000 shares of common stock for a total of $494,000. In
addition, Paulson purchased an additional 37,500 shares in exchange for the
cancellation of $7,500 of past due fees. The brokers placed each investment
received a 7% commission and Paulson received a 3% unaccountable expense
allowance. Each investor represented himself to be an accredited investor who
was purchasing the common stock for his own investment and not for resale. They
agreed in writing to restrictions on resale placed with the NuVim's transfer
agent and the printing of a legend on its certificate. Because of these factors,
this sale was exempt from registration under the Securities Act as not involving
a public distribution under section 4(2) and 4(6).

All of the cash was used for working capital.

Acquisition of the remainder of NuVim Powder LLC

NuVim originally planned to distribute the powder version of its
product through a subsidiary fifty-one percent of which was to be owned by NuVim
and the balance owned by Santa Fe Productions Inc., the venture's production
company, the entertainer Dick Clark, and NuVim director Stanley Moger.

During the first quarter of 2006, NuVim acquired all of Santa Fe
Productions' 24% interest in the powder subsidiary for a seven year warrant to
purchase 50,000 shares of common stock for a dollar a share. The fair value of
this warrant was not significant to these financial statements.

On April 7, 2006 NuVim agreed with Messrs. Clark and Moger to acquire
their respective 12.5% interests in the powder subsidiary for 225,000 shares of
NuVim common stock each. NuVim executed the agreement on April 18. 2006. The
NuVim shares were exchanged for the interests in the powder subsidiary on April
20, 2006. Clark and Moger are accredited investors who accepted the shares for
their own investment and agreed to restrictions on resale placed with the
Company's transfer agent and the printing of a legend on their certificates.
Because of these factors, this issuance is exempt from registration under the
Securities Act as not involving a public distribution under section 4(2) and
4(6). The value of these shares is approximately $90,000 which represents the
company's sole distribution rights of its powder product.

Common Stock Issued for Services

On May 9, 2006 NuVim issued 75,000 additional shares of its Common
Stock to NuVim's Secretary as payment for additional services for the period
ending December 31, 2006. Mark Siegel's relationship to NuVim qualifies him as
an accredited investor. He accepted the shares for his own investment and agreed
to restrictions on resale placed with NuVim's transfer agent and the printing of
a legend on his certificate. Because of these factors, this issuance is exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6). The services for which the shares were
issued are valued, pursuant to agreement between NuVim and Mr. Siegel at
approximately $29,000.

During May and June, NuVim agreed with several organizations to provide
various services for 385,704 shares of common stock. The services have a value
of approximately $139,000. Each service provider represented itself to be an
accredited investor who was purchasing the common stock for his own investment
and not for resale. They agreed in writing to restrictions on resale placed with
the NuVim's transfer agent and the printing of a legend on its certificate.
Because of these factors, this sale was exempt from registration under the
Securities Act as not involving a public distribution under section 4(2) and
4(6). During September 2006, 17, 142 shares of common stock were returned and
cancelled due to services not performed valued at approximately $6,000.

Common Stock issued for Executive Compensation

On April 20, 2006 NuVim and two current and one retired executives
reached agreement on the number of shares to be granted in lieu of a cash bonus
for 2005 and the additional restrictions to be imposed on their ability to sell
the shares. A total of 661,500 shares were granted, 341,500 to Mr. Kundrat, the
CEO, 200,000 to John L. Sullivan, the Vice-President of Sales, and 120,000 to
Paul J. Young, until April 1, 2006 the Vice President of Operations and now a
member of the Advisory Board. All are accredited investors who have agreed in
writing that they are accepting the shares for investment purposes and will not
sell the shares until after May 1, 2007. Legends indicating that the shares are
unregistered have been placed on the certificates and stop transfer orders with
respect to these certificates have been placed with NuVim's transfer agent. As a
result, this issuance is exempt from registration under the Securities Act as
not involving a public distribution under section 4(2) and 4(6).

On April 21, 2006 Michael Vesey agreed, in connection with his
resignation reported below in Item 5.02(b), to accept 98,955 shares of NuVim
common stock in payment of accrued salary of $19,791. In addition, he accepted
85,000 shares of common stock in lieu of his executive cash bonus for 2005. Mr.
Vesey also agreed that he will not sell his shares before May 1, 2007. Mr. Vesey
is an accredited investor who is accepting the shares for investment purposes.
Legends indicating that the shares are unregistered have been placed on the
certificates and stop transfer orders with respect to these certificates have
been placed with NuVim's transfer agent. As a result, this issuance is exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6).

Common Stock issued on Conversion of Secured Convertible Promissory Notes

In June 2006, the holders of the Secured Convertible Promissory Notes
agreed to the conversion of their Notes into an aggregate of 335,000 shares of
common stock. In addition, the holders surrendered the warrants that had been
issued in connection with the Notes for cancellation. Each of the Note holders
was an accredited investor. Legends indicating that the shares are unregistered
have been placed on the certificates and stop transfer orders with respect to
these certificates have been placed with NuVim's transfer agent. As the shares
of common stock were issued in exchange for NuVim securities

without the payment of any additional consideration, the issue was exempt under
Section 3(a)9 of the Securities Act.

Also in June 2006, another note holder exchanged $37,631 of principal
and accrued interest for 107,631 shares of common stock. The note holder
represented himself to be an accredited investor who was purchasing the common
stock for his own investment and not for resale. He agreed in writing to
restrictions on resale placed with the NuVim's transfer agent and the printing
of a legend on his certificate. Because of these factors, this sale was exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6).

Common Stock issued for trade debt

Also in June 2006, several creditors agreed to accept 331,453 shares of
common stock at a price of $0.35 per share to settle an aggregate of
approximately $111,000 of current or past due trade debt. Each investor
represented himself to be an accredited investor who was purchasing the common
stock for his own investment and not for resale. They agreed in writing to
restrictions on resale placed with the NuVim's transfer agent and the printing
of a legend on its certificate. Because of these factors, this sale was exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6).

Warrants Issued for Extension of Senior Notes Payable

On August 14, 2006, Messrs Moger and Clark agreed to extend the maturity of the
$500,000 of senior secured notes held by them until January 2009. As
consideration for this, they each received a warrant entitling them to purchase
100,000 shares of common stock at a price of $0.35 per share until 2015. These
warrants were valued using the Black-Sholes method which approximates $44,000.
These warrants, which represent debt discount, will be expensed over the new
maturity life of the loan, or thirty months commencing August 2006.

Registration Statement

In connection with the second quarter 2006 equity transaction for approximately
$600,000 and certain other equity transactions, the Company filed a registration
statement with the Security and Exchange Commission in October 2006.

In connection with this filing, the Company incurred approximately $30,000 of
legal and other professional costs directly related to the filing.

Such costs have been classified as deferred offering cost in the statement of
financial position as of September 30, 2006, and are expected to be reclassified
as a reduction of additional paid in capital at the effective date of the
registration statement.

NOTE 6 - SUBSEQUENT EVENTS

During the third quarter, NuVim entered into an agreement with its new
spokesperson to provide various services for a total of 15,000 shares of common
stock. The services have a value of approximately $5,250. They agreed in writing
to restrictions on resale placed with the NuVim's transfer agent and the
printing of a legend on its certificate. Because of these factors, this sale was
exempt from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6). The shares were issued during the
fourth quarter of 2006.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our financial
statements and related notes included elsewhere in this Quarterly Report on Form
10-QSB. This discussion contains forward-looking statements that are based on
our management's beliefs and assumptions and on information currently available
to our management. Forward-looking statements include, but are not limited to,
statements regarding:

o possible or assumed future results of operations, including statements
regarding revenue mix, cost of revenues, promotion of our products through
advertising, sampling and other programs, changes to our internal financial
controls, trends in our operating expenses and provision for income taxes,
increased costs as a result of becoming a public company and expenses
related to stock-based compensation;

o financing plans, including the adequacy of financial resources to meet
future needs;

o business strategies, including any expansion into new products;

o our industry environment, including our relationships with our significant
customers and suppliers;

o potential growth opportunities; and

o the effects of competition.

Some of our forward-looking statements can be identified by use of
words such as "may," "will," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes" and "estimates."

Forward-looking statements involve many risks, uncertainties and
assumptions. Actual results may differ materially from those expressed in the
forward-looking statements for a number of reasons, including those appearing
under the caption "Factors Affecting Operating Results" and elsewhere in this
Quarterly Report on Form 10-QSB. The cautionary statements contained or referred
to in this report should be considered in connection with any subsequent written
or oral forward-looking statements that may be issued by us or persons acting on
our three quarters. We undertake no obligation to release publicly any revisions
to any forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

OVERVIEW

We produce, market and distribute NuVim(R) dietary supplements in ready
to drink beverage form and in powder for mixing with water or adding to other
beverages. Both forms of our beverages have two exclusive and patented
micronutrients, MunePro(R) and Accuflex(R). MunePro(R) enhances the immune
system and AccuFlex(R) helps build muscle flexibility,

sturdy joints and muscle recovery. These micronutrients have been clinically
proven to enhance the immune system, muscle flexibility and athletic performance
after 19 studies, 8,000 case histories and an expenditure of $50 million.

We focus on developing the NuVim(R) brand through a mix of advertising
and promotional programs that build consumer awareness, trial and repeat
purchases. The marketing consists of newspaper advertising/advertorials, product
sampling, coupon distribution, and promotional price discounts. These marketing
expenditures are essential to build the NuVim(R) brand. We continue to test
various ways to find the most cost efficient means to use these marketing funds
to increase consumer awareness, trial and repeat purchases. We believe that
these advertising and promotional activities are critical to the growth of our
business and expect to continue these programs in the future.

We have distributed our refrigerated beverages since the year 2000 and
are in approximately 2,100 Supermarkets in the Eastern United States. In 2002
company revenues were $3.5 million. However, we eliminated most advertising and
marketing support for our product in the second half of 2002 due to a lack of
funding. We recapitalized our company in June 2005 through the conversion of
approximately $7.7 million of debt into common stock and an initial public
offering of our common stock. Since that time we have concentrated our limited
financial resources on developing and supporting distribution opportunities that
we believe will provide the greatest sales expansion potential. We also
developed a powder version of our product to be sold through direct distribution
such as the internet and infomercials, as well as retail outlets. Sales of the
product to date have not been material.

Our focus is to push forward in six areas: Increase the sales per store
in existing Wal-Mart supercenters and increase the number of Wal-Mart
distribution centers stocking the NuVim(R) 64 ounce size; begin testing in the
first quarter of 2007 with Kroger, the second largest US retailer; introduce a
shelf stable 16 ounce in two varieties for the 1,500 independent shelf stable US
distributors; increase sales of the newly introduced powder version in three
varieties through the internet, retail sales, and fund raising programs with
non-profit organizations; increase profitable sales to current and new
supermarkets; and introduce NuVim to the military commissaries and troop
feeding.

Earlier this year we launched an equity funded print news media
campaign to educate consumers about the benefits of NuVim(R) and create market
awareness for our product. The media program will continue for approximately
eighteen months or until the contracted amount of the newspaper features has
been completed.

We have produced a 30 second television commercial for the refrigerated
products, a 60 second television commercial for the powder product and a 5
minute powder infomercial for the product and plan air these commercials 2,000
times through Platinum Television Group.

Case shipments of our 64 ounce refrigerated product increased by 5,878
or 41% during the third quarter of 2006 compared with the same period in the
prior year. The reasons for the increase included further expansion to
additional Wal-Mart supercenters in mid May, an increase at Pathmark
supermarkets in the New York/New Jersey market, and new business at Giant Eagle

in the western Pennsylvania market. During 2006 we continued to have had limited
cash to fund product sampling and advertising programs, which we believe are
critical to maintain and increase sales of our products. Therefore, with limited
funding we are unable to support all markets and concentrated in certain markets
to attain a level of consumer sales to hold supermarket retail distribution and
in some accounts increase the number of stores carrying NuVim products until we
are able to raise cash for additional marketing programs. In the interim,
advertising program funded by the issuance of stock will continue to be
important.

In late 2003 we began a test program with a single Wal-Mart
supercenter. In late 2004 the test was expanded to one Wal-Mart distribution
center, covering 43 supercenters and then a further expansion in late 2005 to
two additional distribution centers that covered most of the Wal-Mart
supercenters in the State of Florida. During the 2005 expansion, the number of
NuVim(R) varieties carried by the supercenters was increased from two to three.
Third quarter 2005 Wal-Mart sales were 8% of the total 2005 sales for that
quarter. In April 2006, we increased our distribution to two more Wal-Mart
distribution centers and in the third quarter of 2006 one more distribution
center was added. We now serve approximately 300 supercenters and seven
distribution centers in 7 states. Third quarter 2006 Wal-Mart sales were 61% of
total NuVim sales for this quarter. The Wal-Mart initiative has matured much
faster then the others. We expect the other five initiatives to increase their
sales contribution both absolutely and as a percentage of the total sales.

SALES RESULTS

The discussion below covers selected data regarding sales for the third
quarter ended and the year to date through September 30, 2006 and 2005. The data
is not necessarily indicative of continuing trends.

Sales of beverages are expressed in unit case volume. A "unit case"
means a unit of measurement equal to 512 U.S. fluid ounces of finished beverage
(eight 64-ounce containers). Unit case volume means the number of unit cases (or
unit case equivalents) of beverages directly or indirectly sold by us. Gross
cases sold to the customer represent the number of cases shipped to the customer
prior to any returned cases containing product that has not been sold by its
expiration date.

UNIT CASE VOLUME/CASE SALES

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Gross Cases Sold 20,258 14,380 52,790 50,016
Gross Sales $ 366,804 $ 261,888 $ 964,956 $ 911,396
Net Sales $ 256,663 $ 158,436 $ 738,256 $ 516,266

Gross sales are the amount invoiced to customers, while net sales
deduct from gross sales any payment or discount terms, promotional allowances,
slotting fees, warehouse damage and returned goods in accordance with the
Financial Accounting Standards Board Emerging Issues Task Force Issue No. 01-09,
Accounting for Consideration Given by a Vendor to a Customer. In

some accounts we pay slotting fees when our products are initially introduced to
a new account and run price feature promotions to encourage trials of our
product. As brand loyalty grows in a market, we anticipate that we will be able
to run fewer price promotions and will not incur the one time additional
slotting fees to gain new distribution.

20,258 cases sold represents an increase of 5,878, or 41%, for the
three months ended September 30, 2006, when compared to the same quarter in
2005. As discussed above, we believe that the number of cases sold is due to the
increase in the number of Wal-Mart supercenters carrying the product with the
expansion to 7 distribution centers from three in mid-May of 2005. While direct
comparison of most distribution centers is confused by changes of coverage
within the distribution centers area and because two of the distribution centers
last year had sales for only 2 of the three months in the quarter, sales to the
three distribution centers active in both 2006 and 2005 nearly doubled.
Elsewhere we had a slight increase in the quarter from Shoprite, New York's
largest account and new business from Giant Eagle, a Pittsburgh based account.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO
THE THREE MONTHS ENDED SEPTEMBER 30, 2005

Gross Sales. For the three months ended September 30, 2006, gross sales
were $366,804 an increase of $104,916 or 40% than gross sales of $261,888 for
the three months ended September 30, 2005. This is 12% above this year's second
quarter sales which themselves represented a 19% increase over last year's
second quarter. The increase in gross sales is primarily attributable to the
increase in Wal-Mart sales and selected other accounts. We have not had
sufficient funds to support advertising and sampling of our products in our
existing stores since mid 2002. In June of 2005, we restructured our balance
sheet through the issuance of common stock, but were only able to raise a
limited amount of funds for advertising and sampling programs. We have relied on
equity funded advertising programs to raise brand awareness.

Discounts, Allowances and Promotional Payments. For the three months
ended September 30, 2006, promotional allowances and discounts were $110,141, an
increase of $6,689 from the promotional allowances and discounts of $103,452 for
the three months ended September 30, 2005. This 6% increase is reflective of our
ability to generate incremental sales for the quarter of 40% with only a 6%
increase in promotion costs We record the price reductions, which are reimbursed
by us to the retailers, in accordance with Financial Accounting Standards Board
Emerging Issues Task Force, No. 01-09, Accounting for Consideration Given by a
Vendor to a Customer. We expect to continue to use price promotions and coupon
distribution selectively as a means to promote consumer sampling and trial of
our product into the foreseeable future. As the product further matures and a
higher percentage of users of our product are repeat purchasers, we expect
coupon expense, relative to gross sales, to decline although we will continue to
use these marketing programs when needed. Product returned after its expiration
date decreased as a percentage of sales this quarter versus the same quarter a
year ago by 1%. Total Discounts, Allowances and Promotional payments as a
percentage of gross sales decreased from 40% for

the three months ended September 30, 2005 to 30% for the three months ended
September 30, 2006. This is very positive because it is costing less to move
more product off the shelf.

THREE MONTHS ENDED
SEPTEMBER 30,
----------------------- INCREASE
2006 2005 (DECREASE) PERCENTAGE
---------- ---------- ---------- ----------

Discounts for timely payment $ 3,629 $ 4,303 $ (674) (16)%
Product returned after its expiration date 39,375 31,287 8,088 26%
Promotional price allowances, coupons and other
incentives 67,137 59,252 7,885 13%
Slotting fees -- 8,610 (8,610) 100%
---------- ---------- ---------- ----------
Total Discounts, Allowances and Promotional
Payments $ 110,141 $ 103,452 $ 6,689 6%
========== ========== ========== ==========

Net Sales. Net sales for the three months ended September 30, 2006 were
$256,663, an increase of $98,227, or 62% above net sales of $158,436 for the
three months ended September 30, 2005. The increase in net sales is primarily
attributable to the increase in case sales and a decrease in the promotional
pricing as discussed above.

Cost of Sales. For the three months ended September 30, 2006, cost of
sales was $204,110 an increase of $65,171, for the three months ended September
30, 2005. Cost of sales, which includes some categories of promotion spending
like couponing and discounts in pricing to the consumer, increased due to the
case sales increase. However, the cost of sales did not increase as fast as case
sales increased indicating that the efforts in reducing ingredient costs are
beginning to be reflected in the total cost of goods.

Gross Profit. Gross profit was $52,553 for the three months ended
September 30, 2006, an increase of $33,056 from the $19,497 gross profit for the
three months ended September 30, 2005. Gross profit as a percentage of gross
sales was 14% for the three months ended September 30, 2006 compared to the 7%
for the three months ended September 30, 2005. The increase in gross profit as a
percentage of gross sales was primarily due to the increase in volume and the
proportionate decrease in price discounts. as well as the lower cost of goods.
Overall, Gross Profit for the three months ended September 30, 2006 exceed the
2005 Gross Profit for the same period by almost 170%

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $605,782 for the three months ended September 30,
2006 including $241,109 of non-cash expense incurred because of the grant of
options under the Company's employee stock option plans. Selling, general, and
administrative expenses during the three months ended September 30, 2005 of
$529,045. The option expense is included because of FAS 123R governing valuation
of option grants and the timing of their application. If the option expense is
excluded, other selling, general, and administration expense decreased $164,372
or 31%. We are still in an early stage of our development and did show
improvement versus last year same time period and expect to further show
improvement moving forward. We continue to work on

increasing sales to achieve sales volumes sufficient to generate net sales in
excess of our selling, general and administrative expenses. The decrease in
selling, general and administrative expenses is primarily due to decreases
salaries by eliminating a full time Chief Financial Officer, full time Vice
President of Operations. As a result of these factors, Selling, General, and
Administrative Expense decreased by 25% from the same period last year. Further
reductions are planned for the fourth quarter.

Loss from Operations. Loss from operations was $553,229 for the three
months ended September 30, 2006 compared to $509,548 for the three months ended
September 30, 2005. The entire increase of $43,681 is due to $241,109 of
non-cash expense incurred because of the grant of options under the Company's
employee stock option plans. Without this the loss would have been reduced by
$197,428 or 39%, The improvement due to the increase in sale and gross profit
and the reduction of selling, administration costs was offset by the option
expense calculated as required under FAS 123R.

Interest Expense. Interest expense was $19,371 for the three months
ended September 30, 2006; a increase of $1,329 or 7%, from interest expense of
$18,042 for the three months ended September 30, 2005. The increase in interest
expense is primarily attributable to the loans that now have a maturity date of
January 2009.

Net Loss. Net loss was $565,600 for the three months ended September
30, 2006 compared to $521,654 for the three months ended September 30, 2005, an
increase of $43,946 due entirely to $241,109 of non-cash expense incurred
because of the grant of options under the Company's employee stock option plans.
Without the option expense Net Loss decreased $197,163. Gains attributable to
the improved operating results and the lower interest expense discussed above
were entirely offset by the option expense.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2005

Gross Sales. For the nine months ended September 30, 2006, gross sales
were $964,956 an increase of $53,560, or 6% higher than gross sales of $911,396
for the nine months ended September 30, 2005. The increase in gross sales for
nine months includes a first quarter 2006 decline of 29% below 2005 first
quarter gross sales. The entire decline was made up in the second and third
quarters.

Discounts, Allowances and Promotional Payments. For the nine months
ended September 30, 2006, promotional allowances and discounts were $226,700, a
decrease of $168,430 or 43%, from the promotional allowances and discounts of
$395,130 for the nine months ended September 30, 2005. This decrease is
primarily attributable to not couponing and discounting the price as heavily as
2005. We record the price reductions, which are reimbursed by us to the
retailers, in accordance with Financial Accounting Standards Board Emerging
Issues Task Force, No. 01-09, Accounting for Consideration Given by a Vendor to
a Customer. We expect to continue to use price promotions and coupon
distribution selectively as a means to promote consumer sampling and trial of
our product into the foreseeable future. As the product matures and a higher
percentage of users of our product are repeat purchasers, we expect coupon

expense, relative to gross sales, to decline. Product returned after its
expiration date decreased primarily due to the lower sales volume discussed
above. Total Discounts, Allowances and Promotional payments as a percentage of
gross sales decreased from 43% for the nine months ended September 30, 2005 to
23% for the nine months ended September 30, 2006.

NINE MONTHS ENDED
SEPTEMBER 30,
----------------------- INCREASE
2006 2005 (DECREASE) PERCENTAGE
---------- ---------- ---------- ----------

Discounts for timely payment $ 9,523 $ 8,988 $ 535 6%
Product returned after its expiration date 104,486 116,379 (11,893) (10)%
Promotional price allowances, coupons and other
incentives 111,719 246,278 (134,559) (55)%
Slotting fees 972 23,485 (22,513) (96)%
---------- ---------- ---------- ----------
Total Discounts, Allowances and Promotional
Payments $ 226,700 $ 395,130 $ (168,430) (43)%
========== ========== ========== ==========

Net Sales. Net sales for the nine months ended September 30, 2006 were
$738,256 an increase of $221,990, or 43% higher than net sales of $516,266 for
the nine months ended September 30, 2005, despite a decline of about 16% during
the first quarter. The increase in net sales is primarily attributable to the
increase in case sales and lower consumer price discount promotion spending as
discussed above.

Cost of Sales. For the nine months ended September 30, 2006, cost of
sales was $513,310, a decrease of $3,139, or 1% lower than cost of sales of
$516,449 for the nine months ended September 30, 2005. Cost of sales as a
percentage of gross sales decreased to 53% for the nine months ended September
30, 2006, compared to 57% for the nine months ended September 30, 2005. The
decrease in cost of sales as a percentage of gross sales was primarily the
result of lower cost of goods, lower and price discount allowances.

Gross Profit. Gross profit was $224,946 for the nine months ended
September 30, 2006, an increase of $225,129 from the negative ($183) gross loss
for the nine months ended September 30, 2005. Gross profit as a percentage of
gross sales was 23% for the nine months ended September 30, 2006 compared to the
gross loss of less than 1% for the nine months ended September 30, 2005. The
increase in gross profit as a percentage of gross sales was primarily due to the
lower price discounts and the lower cost of goods.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $1,609,854 for the nine months ended September 30,
2006, including $306,109 of non-cash expense incurred because of the grant of
options under the Company's employee stock option plans. Selling, general, and
administrative expenses during the nine months ended September 30, 2005 were
$1,583,100. The option expense in 2006 is included because of FAS 123R governing
valuation of option grants and the timing of their application. If the option
expense is

excluded, other selling, general, and administration expense decreased $279,355
or 18% from selling, general and administrative expenses for the nine months
ended September 30, 2005. The nine months include two months without a full time
CFO and one month without a full time Vice President for operations. Out
sourcing the financial and operations management functions have decreased cost
without decreasing effectiveness. The decrease in selling, general and
administrative expenses also reflects decreases in product sampling expenses.
These improvements were entirely offset by the option expense. During the fourth
quarter we will implement a new sales force compensation plan which should also
allow additional selling, general, and administrative expense to be further
reduced.

Loss from Operations. Loss from operations was $1,384,908 for the nine
months ended September 30, 2006 compared to $1,583,283 for the nine months ended
September 30, 2005. The entire increase of $198,375 is due to $306,109 of
non-cash expense incurred because of the grant of options under the Company's
employee stock option plans. Without this the loss would have been reduced by
$504,484 or almost 32%. The improvements attributable to the increased gross
profit and decreased operating expenses described above were offset by the
option expense calculated as required under FAS 123R, mostly occurring in the
third quarter.

Interest Expense. Interest expense was $92,909 for the nine months
ended September 30, 2006; a decrease of $314,012 or 77%, from interest expense
of $406,921 for the nine months ended September 30, 2005. The decrease in
interest expense is primarily attributable to the retirement of indebtedness. On
June 24, 2005, in connection with the closing of our initial public offering, we
extinguished approximately $7.7 million of indebtedness through the issuance of
common stock.

Net Loss. Net loss was $1,462,169 for the nine months ended September
30, 2006 compared to $1,836,715 for the nine months ended September 30, 2005.
The $374,546 decrease in net loss was primarily attributable to the improved
operating results and the lower interest expense discussed above offset by the
option expense.

LIQUIDITY AND CAPITAL RESOURCES

Our operations to date have generated significant operating losses that
have been funded through the issuance of common stock and external borrowings.
We will require additional sources of outside capital to continue our
operations. Additionally secured convertible promissory notes with a face amount
of $67,600 were due September 23, 2006 and senior secured promissory notes with
a principal amount of $500,000 are due on November 30, 2006. All the notes due
September 23, 2006 were converted into 335,000 shares of common stock and the
warrants issued at the time of the sale of the notes were cancelled. In
addition, during this quarter, the maturity of the Senior Secured Notes was
extended to January 2009.

We also have outstanding notes payable with a principal balance of
approximately $320,000. The maturity of $120,000 of these notes was also
extended by agreement with the holder to January 2009. The remaining $200,000 is
subordinated to the Senior Secured Notes; as a result, their maturity of was
automatically extended to January 2009. We are currently seeking

additional financing through the sale of equity securities, and negotiating
modified payment terms with our creditors, but there can be no assurance we will
be successful in this endeavor.

In March 2006 the board and compensation committee authorized a total
of 661,500 shares of common stock in lieu of the executive cash bonuses for 2005
and agreed with these executives to defer the payment of their 2005 accrued
salaries until 2007 and established the parameters for settling these accruals
in common stock. Also in March 2006, 50,000 shares of common stock was issued to
the new corporate secretary for a portion of his 2006 fees. Finally, in March
2006, NuVim issued 8,750 shares of common stock to SmallCapVoice.com, for
investor relations services.

In April 2006 Paulsen Investment Company, Inc. privately placed
2,970,000 restricted shares of our common stock at a price of twenty cents per
share. A total of $594,000 was received.

Also in April 2006, our former CFO agreed to accept a total of 183,955
shares of common stock for a portion of the salary remaining due to him on the
date of his resignation and in lieu of this 2005 bonus.

In May and June 2006, several creditors agreed to accept 302,954 shares
of restricted common stock at a price of $0.35 per share to settle an aggregate
of approximately $107,000 of current or past due accounts payable obligations
and several organizations agreed to accept 383,563 shares of common stock for
future services valued at approximately $138,000.

In June 2006 a note holder agreed to accept 107,631 shares of
restricted common stock for approximately $38,000 in principal and interest.

We will need to raise additional financing to pay our past due
obligations, fund operating losses and to support sales and marketing programs
to increase sales of our products. If we are not able to identify additional
sources of financing, we may not be able to continue operations beyond September
2006. We have participated in the New Jersey Economic development Authority Tax
Transfer program for the past 4 years and will again this year. The funds from
this program are received in December and therefore expect that approximately
$250,000 to $270,000 will be received from this program in December of 2006.

Net cash used in operating activities for the nine months ended
September 30, 2006 was $870,277, respectively, compared to cash used in
operating activities of $1,802,550 during the same period in 2005. The decrease
in cash used by operating activities during the first nine months of $932,273
was primarily attributable to lower administrative expenses, less promotional
spending, and higher contributions from product sales. The $870,277 for the nine
months included a one time payment of $202,000 to SMBI, the exclusive provider
of the proprietary whey protein concentrate used in our products, in full
settlement of past due balances due to them.

$609,075 was provided by financing activities during the nine months
ended September 30, 2006, compared to $31,000 provided by related party advances
offset by an expenditure of

213,637 for deferred offering costs during the nine months ended September 31,
2005.

APPLICATION OF RECENT AND CRITICAL ACCOUNTING POLICIES AND PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans -- an amendment of FASB
Statements No. 87, 88, 106, and 132(R) ("SFAS No. 158"). SFAS No. 158 requires
companies to recognize the over-funded or under-funded status of their defined
benefit postretirement plans as an asset or liability and to recognize changes
in that funded status in the year in which the changes occur through
comprehensive income. The Company will adopt SFAS No. 158 on December 31, 2006.
The adoption of SFAS No. 158 is not expected to have a material effect on the
Company's financial condition or results of operations.In July 2006, the
Financial Accounting Standards Board ("FASB") has published FASB Interpretation
No. 48 ("FIN No. 48"), Accounting for Uncertainty in Income Taxes, to address
the noncomparability in reporting tax assets and liabilities resulting from a
lack of specific guidance in FASB Statement of Financial Accounting Standards
("SFAS") No. 109, Accounting for Income Taxes, on the uncertainty in income
taxes recognized in an enterprise's financial statements. FIN No. 48 will apply
to fiscal years beginning after December 15, 2006, with earlier adoption
permitted. The adoption of FIN 48 is not expected to have a material effect on
the Company's financial condition or results of operations.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Correction ("SFAS 154"), which replaces Accounting Principles Board Opinions No.
20 "Accounting Changes" and SFAS No 3, "Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28." SFAS 154 provides
guidance on accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest practicable
date, as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning after December
15, 2005 and are required to be adopted by the Company. in the first quarter of
fiscal 2006. The adoption of SFAS 154 did not have an impact on the Company's
consolidated results of operations and financial condition.

The FASB issued FASB Interpretation No. 47 ("FIN 47"), "Accounting for
Conditional Asst Retirement Obligations" in March 2005. FIN 47 clarifies that an
entity must record a liability for a conditional asset retirement obligation if
the fair value of the obligation can be reasonably estimated. This
Interpretation also clarifies the circumstances under which an entity would have
sufficient information to reasonably estimate the fair value of an asset
retirement obligation. This

Interpretation is effective no later than the end of fiscal years ending after
December 15, 2005. This guidance did not have a material affect on the Company's
financial statements.

CRITICAL ACCOUNTING ESTIMATES

The discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities, revenues and expenses, and related disclosure on contingent assets
and liabilities at the date of our financial statements. Actual results may
differ from these estimates under different assumptions and conditions.

Critical accounting policies are defined as those that are reflective
of significant judgments, estimates and uncertainties and potentially result in
materially different results under different assumptions and conditions. For a
detailed discussion on the application of these and other accounting policies,
see Note 2 to our annual financial statements for the year ended December 31,
2005.

PLACEMENT AND PROMOTIONAL ALLOWANCES AND CREDITS FOR PRODUCT RETURNS

As an inducement to our customers to promote our products in preferred
locations of their stores, we provide placement and promotional allowances to
certain customers. We also provide credits for customer coupon redemptions,
consumer price reductions, and product which has not been sold by its expiration
date. These allowances and credits are reflected as a reduction of revenue in
accordance with Emerging Issues Task Force ("EITF") No. 01-9, which requires
certain sales promotions and customer allowances previously classified as
selling, general and administrative expenses to be classified as a reduction of
sales or as cost of goods sold. Provisions for promotional allowances are
recorded upon shipment and are typically based on shipments to the retailer
during an agreed upon promotional period. We expect to offer promotional
allowances at historical levels in the near future as an incentive to our
customers. One time per account slotting or placement fees are deducted from
revenue in the period paid. Provisions for coupon redemptions and product
returned that has reached its expiration date are based on historical trends.
Information such as the historical number of cases returned per unit shipped,
product shelf life, current sales volume, and coupons distributed during the
period are used to derive estimates of the required allowance. As we expand
production and introduce new products, we may incur increased levels of returned
goods. Also, our estimates assume we will continue as a going concern and
maintain distribution with wholesalers and supermarkets that currently carry our
product. If a supermarket or wholesaler discontinues our product, we may
experience return rates in excess of our historical trend. This could result in
material charges to future earnings for reimbursements to our customers for
returned, unsold product.

ACCOUNTS RECEIVABLE

We evaluate the collectablity of our trade accounts receivable based on
a number of factors. Accounts receivable are unsecured, non-interest bearing
obligations that are typically due from

customers within 30 days of the invoice date. We apply collections in accordance
with customer remittance advices or to the oldest outstanding invoice if no
remittance advice is presented with payment. We provide an incentive to
customers for paying in less than 30 days which results in our overall
receivables to be approximately 17 days.

We estimate an allowance for doubtful accounts and revenue adjustments
based on historical trends and other criteria. We have had only one account that
could not be collected since the inception of the company in 2000. The amount
was less than $10,000.. Further, as accounts receivable outstanding are deemed
uncollectible or subject to adjustment, these allowances are adjusted
accordingly. In circumstances where we become aware of a specific customer's
inability to meet its financial obligations to us, a specific reserve for bad
debts is estimated and recorded which reduces the recognized receivable to the
estimated amount we believe will ultimately be collected. In addition to
specific customer identification of potential bad debts, bad debt charges are
recorded based on our recent past history and an overall assessment of past due
trade accounts receivable outstanding. We also estimate the amount of credits
for product placement, promotion and expired product that are expected to be
issued for product sold based on an evaluation of historical trends and record
an allowance when the sale is recorded.

VALUATION OF DISTRIBUTION RIGHTS

During 2006, the Company acquired the remaining interest in NuVim
Powder, LLC.

In connection with this purchase transaction, the Company allocated the
fair value of the purchase price of $90,000 to an intangible asset called
Distribution Rights.

The Company completed this transaction as part of an overall effort to
promote the distribution of its powder product through such channels as the
internet, infomercials and retail outlets.

There can be no assurance that the Company will be successful of its
promotion of its powder products. In the event the Company is not successful,
there could be a future impairment of the Company's intangible asset,
Distribution Rights.

INFLATION

We do not believe that inflation had a significant impact on our
results of operations for the periods presented.

OFF-BALANCE SHEET TRANSACTIONS

At September 30, 2006, we did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes.

FACTORS AFFECTING OPERATING RESULTS

Investing in our shares involves a high degree of risk. You should
carefully consider the following risks, as well as the other information in this
report, before deciding whether to invest in our shares. If any of the following
risks actually occur, our business, financial condition, results of operations
and liquidity could suffer. In that event, the trading price of our shares could
decline and you might lose all or part of your investment.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL.

We are currently operating at a loss and expect our expenses to
continue to increase as we expand our product line as well as our geographic
presence throughout the United States. To date, we have relied primarily on
financing transactions to fund operations. We could face unforeseen costs such
as an increase in transportation costs resulting from the recent significant
increases in the cost of fuel; or our revenues could fall short of our
projections because retail

outlets discontinue ordering our products or for reasons unrelated to our
products, such as a revenue decline due to changes in consumer habits and
preferences or we may achieve lower margins than planned on our products due to
cost increases or competitive pricing pressure.

During 2006 Paulsen Investment Company, Inc. privately placed 2,470,000
restricted shares of our common stock at a price of twenty cents per share. A
total of $594,000 was received. The holders of $67,600 of convertible notes due
September 23, 2006 agreed to surrender their warrants and accept common stock at
the same price in lieu of cash. The holder of another note accepted
approximately 108,000 shares of restricted common stock for approximately
$38,000 of principal and interest.

We will still continue to need additional funds to continue operations.
New sources of capital may not be available to us when we need it or may be
available only on terms we would find unacceptable. If such capital is not
available on satisfactory terms, or is not available at all, we will be unable
to continue to fully develop our business and our operations and financial
condition will be materially and adversely affected. Such a lack of additional
funding could force us to cease operations altogether. Debt financing, if
obtained, could increase our expenses and would be required to be repaid
regardless of operating results. In addition, if we raise additional funds
through the issuance of equity, equity-related or convertible debt securities,
these securities may have rights, preferences or privileges senior to those of
the rights of our ordinary shares and our shareholders may experience additional
dilution. Any such developments can adversely affect your investment in our
company, harm our financial and operating results, and cause our share price to
decline.

OUR AUDITORS HAVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.

In their report in connection with our 2005 financial statements, our
auditors included an explanatory paragraph stating that, because we have
incurred net losses and have a net capital deficiency for the years ended
December 31, 2004 and 2005, and, as of September 30, 2006. Our continued
existence will depend in large part upon our ability to successfully secure
additional financing to fund future operations. Our initial public offering was
not sufficient to completely alleviate these concerns; the proceeds have been
adequate to fund operations to date, but we will need to raise additional
funding to continue operations. If we are not able to achieve positive cash flow
from operations or to secure additional financing as needed, we will continue to
experience the risk that we will not be able to continue as a going concern.

Our continued existence will depend in large part upon our ability to
successfully secure additional financing to fund future operations. Our initial
public offering was not sufficient to completely alleviate these concerns. If we
are not able to achieve positive cash flow from operations or to secure
additional financing as needed, we will continue to experience the risk that we
will not be able to continue as a going concern.

We have not had sufficient capital to operate our business for
approximately three years, and as a result, we have negotiated extended payment
terms on approximately $820,000 of notes payable which are due and payable upon
receipt of additional financing.

These outstanding obligations may make it difficult to raise additional
financing.

OUR LIMITED OPERATING HISTORY MAKES EVALUATION OF OUR BUSINESS DIFFICULT.

We have a limited operating history and have encountered, and expect to
continue to encounter, many of the difficulties and uncertainties often faced by
early stage companies. We commenced our business operations in 1999 and began
marketing our initial products in 2000 on a limited basis. Accordingly, we have
only a limited operating history with which you can evaluate our business and
prospects. An investor in our units must consider our business and prospects in
light of the risks, uncertainties and difficulties frequently encountered by
early stage companies, including limited capital, delays in product development,
possible marketing and sales obstacles and delays, inability to gain customer
acceptance or to achieve significant distribution of our products to customers
and significant competition. We cannot be certain that we will successfully
address these risks. If we are unable to address these risks, our business may
not grow, our stock price may suffer and/or we may be unable to stay in
business.

WE HAVE A HISTORY OF LOSSES AND WE EXPECT TO CONTINUE TO OPERATE AT A LOSS FOR
THE FORESEEABLE FUTURE.

Since our inception in 1999, we have incurred net losses in every year,
including net losses of $2,239,440 for the year ended December 31, 2003,
$2,131,581 for the year ended December 31, 2004, 2,396,902 for the year ended
December 31, 2005 and $1,248,128 for the nine months ended September 30, 2006.
We had a working capital deficit of $838,220 at September 30, 2006 and have
negative cash flows from operations. As a result of ongoing operating losses, we
also had an accumulated deficit of $21,493,189 and a stockholders' deficit of
$1,869,917 at the same date. We expect to incur losses until at least through
2006 and may never become profitable. We also expect that our expenses will
increase substantially for the foreseeable future as we seek to expand our
product line and sales and distribution network, implement internal systems and
infrastructure and comply with the legal, accounting and corporate governance
requirements imposed upon public companies. These ongoing financial losses may
adversely affect our stock price.

OUR SUCCESS SUBSTANTIALLY DEPENDS ON MAINTAINING OUR RELATIONSHIPS WITH SMBI.

SMBI is the holder of certain patents that cover the micronutrients
that we use in our products and is our only supplier of those micronutrients. We
have a license agreement and a supply agreement with SMBI, both of which are
critical to our business and expire in 2014. Under the SMBI license agreement,
we have the right to use SMBI's intellectual property for the production and
distribution of carbonated and noncarbonated beverages incorporating the
micronutrients that provide the health benefits of our products. SMBI also
supplies the key ingredient in our products under the terms of the supply
agreement. These agreements contain cross-termination provisions, and therefore,
we risk losing both our rights to the licensed use of the micronutrients and
other SMBI intellectual property needed for our business, as well as our sole
source of supply, if either agreement is terminated in accordance with its
terms. Furthermore, any exclusive rights we enjoy under the license and supply
agreements may be jeopardized if we fail to satisfy certain minimum purchase
requirements. In addition, SMBI and

its affiliate, Spencer Trask Specialty Group, LLC ("Spencer Trask"), are
founders stockholders of our company. If we are unable to obtain the whey
protein concentrate from SMBI for any reason, our manufacturing and distribution
processes could be severely disrupted, and our operations could be adversely
affected. We are aware of only one other source that might be able to provide an
immune enhancement whey protein but we are not certain of its effectiveness.
Moreover, it is our understanding that this ingredient would not provide the
muscle flexibility health benefit that we achieve by using the SMBI whey protein
concentrate. In addition, even if we are able to find acceptable alternative
sources of supply, the new terms would likely be less favorable than those that
we receive from SMBI. Accordingly, it is critical that we continue to meet all
of our material obligations under both the license agreement and the supply
agreement. In the past, we have not always been able to do so because of a lack
of financial resources. We are currently on net 30 day payment terms for the
SBMI whey protein.

OUR BUSINESS DEPENDS ON THE ACCEPTANCE OF OUR PRODUCTS IN BOTH EXISTING AND NEW
MARKETING AREAS.

We intend to expand into new geographic areas and broaden our product
offerings to generate additional sales. Our refrigerated beverage products are
currently available from southern Connecticut to Miami and as far West as
Pittsburgh including such supermarket chains as ShopRite, Pathmark, A&P,
Gristedes, Food Emporium, Walbaums, Stop N Shop, Acme Giant, Giant Eale, Publix
and Wal-Mart. Although marketing funds have been limited we have been able to
maintain distribution due to our loyal consumer base who have felt the NuVim
difference and continue to buy NuVim on a regular basis. The supermarket chain
accounts see NuVim as a one of a kind product that offers the consumer a
healthily choice to high sugar and high caffeine carbonated and non- carbonated
beverages.. We do not know whether the level of market acceptance we have
received in our current markets for our products will be matched or exceeded in
the geographic locations we are newly serving or in other areas of the country
as we expand our distribution in the future. We also will need to raise
additional financing to support this expansion.

We have test produced a shelf stable sports drink that tastes like the
two market leaders sports drink products and has our trademarked points of
differentiation of immune enhancement and helping muscle flexibility, sturdy
joints, and athletic performance through the two exclusive micronutrients
MunePro(R) and AccuFlex(R). We will face the additional uncertainty of whether
these new products will gain market acceptance in any market.

We can give no assurance that we will expand into new geographic areas
or successfully expand our product line. It is unlikely that we will achieve
profitability and otherwise have a successful business unless we are able to
gain market acceptance of our existing and future products over a wide
geographic area.

CONSUMERS WHO TRY OUR PRODUCTS MAY NOT EXPERIENCE THE HEALTH BENEFITS WE CLAIM,
WHICH MAY CAUSE THEM TO DISCONTINUE USING OUR PRODUCTS.

There have been 19 independent clinical studies that have demonstrated
the health benefits of the micronutrient components of our products. However,
there has been only one,

small-scale study of the effects of NuVim beverages directly. That study
required the subjects to consume 12 ounces of NuVim daily for nine weeks. While
the study did validate the positive health claims we believe our products
provide, it did not consider whether a smaller quantity of the beverage or a
shorter period of continued usage might provide similar benefits. Therefore, we
currently cannot confirm that the health benefits of our products will be
evident to casual consumers of our products. Consumers may determine that
drinking 12 ounces of NuVim per day for a minimum of nine weeks requires more
discipline and expense than they are willing to devote. If consumers do not use
our product in the quantity or for the duration we recommend, they may not
achieve the health benefits we claim, which may cause them to make alternative
nutritional beverage and/or dietary supplement purchasing decisions.

OUR BUSINESS MAY SUFFER FROM LACK OF DIVERSIFICATION.

Our business is centered on nutritional beverages. The risks associated
with focusing on a limited product line are substantial. If consumers do not
accept our products or if there is a general decline in market demand for, or
any significant decrease in, the consumption of nutritional beverages, we are
not financially or operationally capable of introducing alternative products
within a short time frame. As a result, such lack of acceptance or market demand
decline could cause us to cease operations.

EXPANSION OF OUR BUSINESS IS DEPENDENT ON OUR ABILITY TO EXPAND PRODUCTION.

We currently manufacture our refrigerated product line at Clover Farms
Dairy in Reading, Pennsylvania. Our ability to expand beyond our current
marketing areas depends on, among other things, the ability to produce our
product in commercial quantities sufficient to satisfy the increased demand.
Although our present production capacity is sufficient to meet our current and
short-term future production needs, production capacity may not be adequate to
supply future needs. If additional production capacity becomes needed, it will
be necessary to engage additional co-packers or to expand production capacity at
our present co-packer facility. If we expand production at Clover Farms Dairy,
we risk having to pay significantly greater transportation costs to transport
our products to warehouses in other regions of the United States. Any new
co-packing arrangement raises the additional risk of higher marginal costs than
we currently enjoy since we would be required to negotiate new terms with any
new co-packer. We may not be able to pass along these higher costs to our
customers. If we are unable to pass along the higher production costs imposed by
new co-packers to our customers, we either will suffer lower gross margins and
lower profitability, once achieved, or we may be unable to expand our business
as we have planned, which could disappoint our stockholders.

OUR BUSINESS CONTAINS RISKS DUE TO THE PERISHABLE NATURE OF OUR PRODUCT.

Our current refrigerated product is a perishable beverage that has a
limited shelf-life of approximately 83 days. This restricted shelf life means
that we do not have any significant finished goods inventory and our operating
results are highly dependent on our ability to accurately forecast near term
sales in order to adjust our raw materials sourcing and production needs. When
we do not accurately forecast product demand, we are either unable to meet
higher than anticipated demand or we produce excess inventory that cannot be
profitably sold.

Additionally, our customers have the right to return products that are not sold
by their expiration date. Therefore, inaccurate forecasts that either mean that
we are unable meet higher than anticipated demand or that result in excess
production, or significant amounts of product returns on any of our products
that are not sold by the expiration date could cause customer dissatisfaction,
unnecessary expense and a possible decline in profitability.

GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR BUSINESS.

Our business is subject to government regulation, principally the
United States Food and Drug Administration (the "FDA"), which regulates the
processing, formulation, packaging, labeling and advertising of dietary
products, and to a lesser extent, state governments, where state attorneys
general have authority to enforce their state consumer protection acts.
Specifically, we are subject to the Dietary Supplement and Health Education Act
("DSHEA"). Under DSHEA, dietary supplements are permitted to make "statements of
nutritional support" with notice to the FDA, but without FDA pre-approval. The
FDA does not allow claims that a dietary product may mitigate, treat, cure or
prevent disease. There can be no assurance that at some future time the FDA will
not determine that the statement of nutritional support we make on our packaging
is a prohibited claim rather than an acceptable nutritional support statement.
Such a determination by the FDA would require deletion of the treatment, cure or
prevention of disease claim, or, if it is to be used at all, submission by our
company and the approval by the FDA of a new drug application, which would
entail costly and time-consuming clinical studies, or revision to a health
claim, which would require demonstration of substantiated scientific evidence to
support such claim and would also consume considerable management time and
financial resources.

Our advertising of dietary supplement products is also subject to
regulation by the Federal Trade Commission (the "FTC") under the Federal Trade
Commission Act, which prohibits unfair or deceptive trade practices, including
false or misleading advertising. The FTC in recent years has brought a number of
actions challenging claims made by companies that suggest that their products
are dietary supplements. No assurance can be given that actions will not be
brought against us by the FTC or any other party challenging the validity of our
product advertising claims.

OUR BUSINESS MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS RELATING TO CONSUMER USE
OF OUR PRODUCTS.

As a marketer of beverages that are ingested by consumers, we face an
inherent risk of exposure to product liability claims if the use of our products
results in injury or our labeling contains inadequate warnings concerning
potential side effects. With respect to product liability claims, we have
obtained a $2.0 million liability insurance policy ($2.0 million per
occurrence), which we believe is adequate for our kind of business activity. The
policy contains certain exclusions that would pertain to food products such as
the additional products exclusion for bodily injury or property damage arising
out of the manufacture, handling, distribution, sale, application or use of
certain specified products (e.g., silicone, latex, and dexfenfluramine, among
others), the intended injury and the willful and intentional acts exclusions.
There can be no assurance that such insurance will continue to be available at a
reasonable cost, or, if available,

that it will be adequate to cover potential liabilities. If we are found liable
for product liability claims that exceed our coverage or are subject to a policy
exclusion, such liability could require us to pay financial losses for which we
have not budgeted and may not have adequate resources to cover. If the uninsured
losses were significantly large enough to impact our ability to continue our
then-existing level of operations, we might experience a decline in net income
and earnings per share, and our stock price might suffer. In an effort to limit
any liability, we generally obtain contractual indemnification from parties
supplying raw materials or marketing our products. Such indemnification is
limited, however, by the terms of each related contract and, as a practical
matter, by the creditworthiness of the indemnifying party.

Despite the insurance coverage that we plan on maintaining, it is
possible that we may be sued if one or more consumers believe our products have
caused them harm. While no such claims have been made to date, the results of
any such suit could result in significant financial damages to us, as well as
serious damage to the reputation and public perception of our company, even if
we are ultimately found not to be at fault.

ITEM 3. CONTROLS AND PROCEDURES.

The Company's Chief Executive Officer and accounting firm of Hendel &
Hendel have reviewed the disclosure controls and procedures relating to the
Company at September 30, 2006 and concluded that such controls and procedures
were designed to and were, indeed, effective to provide reasonable assurance
that all material information about the financial and operational activities of
the Company was made known to them. There were no changes in the Company's
internal control over financial reporting during the nine months ended September
30, 2006 that materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There are at present no legal proceedings pending against the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Sales for Cash

None

All of the cash was used for working capital.

Common Stock Issued for Services

During the third quarter, NuVim agreed with its new spokesperson to
provide various services for a total of 15,000 shares of common stock. The
services have a value of approximately $5,250. They agreed in writing to
restrictions on resale placed with the NuVim's transfer agent and the printing
of a legend on its certificate. Because of these factors, this sale was exempt
from registration under the Securities Act as not involving a public
distribution under section 4(2) and 4(6). The shares were issued during the
fourth quarter of 2006.

Warrant issued in connection with debt extension

During the third quarter, Richard Clark, the entertainer, and Stanley
Moger, one of our directors, agreed to extend the maturity of their $500,000
Senior Secured Note until 2009. As consideration for this, they each are to
receive a warrant entitling them to purchase 100,000 shares of common stock at a
price of $0.35 per share until 2015. These warrants representing debt discount,
were valued at $44,000 and will be expensed over the new maturity life of thirty
months commencing August 2006.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None in the third quarter 2006

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

(a) Current Reports on Form 8-K: None

(b) The following exhibits are filed as part of this report:

EXHIBIT NO. DESCRIPTION
----------- -----------------------------------------------------------------
31.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

NUVIM, INC.

Date: November __ , 2006 By: /s/ RICHARD P. KUNDRAT
-----------------------------
Richard P. Kundrat
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)

Date: November __ , 2006 By: /s/ RICHARD P. KUNDRAT
-----------------------------
Richard P. Kundrat
Chief Financial Officer
(Principal Financial and
Accounting Officer)