VITAMINSHOPPE COM INC, S-1/A, 1999-09-23

VITAMINSHOPPE COM INC
S-1/A, 1999-09-23
CATALOG & MAIL-ORDER HOUSES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1999

REGISTRATION NO. 333-83849
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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VITAMINSHOPPE.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<TABLE>
<S> <C> <C>
DELAWARE 5961 22-3659179
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>

444 MADISON AVENUE, SUITE 802
NEW YORK, NY 10022
(212)308-6730
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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KATHRYN H. CREECH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VITAMINSHOPPE.COM, INC.
444 MADISON AVENUE, SUITE 802
NEW YORK, NY 10022
(212) 308-6730
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPY OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
NANCY E. FUCHS, ESQ. PATRICK J. RONDEAU, ESQ.
MARK S. SELINGER, ESQ. JAMES R. BURKE, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP HALE AND DORR LLP
425 PARK AVENUE 60 STATE STREET
NEW YORK, NY 10022 BOSTON, MA 02109
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 1999

PROSPECTUS

[VITAMIN SHOPPE LOGO]

4,545,455 Shares

Class A Common Stock

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This is an initial public offering of the Class A common stock of
VitaminShoppe.com, Inc. We expect that the initial public offering price for the
Class A common stock will be between $10.00 and $12.00 per share.

We have applied to list the Class A common stock on the Nasdaq National Market
under the symbol "VSHP."

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Investing in the Class A Common Stock involves risks. See "Risk Factors"
beginning on page 4.

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<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Public offering price $ $
Underwriting discounts and commissions $ $
Proceeds $ $
</TABLE>

The underwriters have an option to purchase a maximum of 681,818 additional
shares of Class A common stock from us at the initial public offering price,
less the underwriting discount, to cover over-allotments.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

THOMAS WEISEL PARTNERS LLC
WILLIAM BLAIR & COMPANY
PAINEWEBBER INCORPORATED

Prospectus dated , 1999
<PAGE> 3

[PHOTOGRAPHS OF OUR TARGET CUSTOMERS PURSUING ACTIVE LIFESTYLES

[PHOTOGRAPHS OF OUR OPERATIONS, INCLUDING THE VITAMIN SHOPPE'S DISTRIBUTION
CENTERS]

[SCREEN SHOTS OF THE WWW.VITAMINSHOPPE.COM HOMEPAGE AND PRODUCT SCREENS]

<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Forward-Looking Statements.................................. 16
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Capitalization.............................................. 18
Dilution.................................................... 19
Selected Financial Data..................................... 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22
Business.................................................... 28
Management.................................................. 43
Certain Transactions........................................ 50
Principal Stockholders...................................... 52
Description of Capital Stock................................ 54
Shares Eligible for Future Sale............................. 59
Underwriting................................................ 61
Legal Matters............................................... 63
Experts..................................................... 63
Where You Can Find More Information......................... 63
Index to Financial Statements............................... F-1
</TABLE>

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Except as otherwise indicated, all information in this prospectus:

- reflects a 1.539-to-1 split of our Class A common stock and Class B
common stock;

- reflects the automatic conversion of all outstanding shares of our
preferred stock into shares of Class A common stock upon the closing of
this offering; and

- assumes that the underwriters will not exercise their over-allotment
option.

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

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This page intentionally left blank.
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PROSPECTUS SUMMARY

This summary may not contain all of the information that may be important
to you. You should read the entire prospectus before making a decision to
invest.

VITAMINSHOPPE.COM

VitaminShoppe.com, Inc. is a leading online source for products and content
related to vitamins, nutritional supplements and minerals. Our
www.VitaminShoppe.com website, which was launched in April 1998, provides a
convenient and informative shopping experience for consumers desiring to
purchase products that promote healthy living. We offer an extensive selection
of over 18,000 quality items representing over 400 brands, including The Vitamin
Shoppe premium brand, and a comprehensive line of herbal formulas, homeopathic
products, personal care items, body building supplements, healthcare products
and books on health and nutrition. We sell our entire line of products at
year-round discounts generally ranging from 20% to 40% off suggested retail
prices. Our website links consumers to our own health-related information
website, www.vitaminbuzz.com, as well as features from credible third-party
sources designed to assist consumers in making informed decisions. In addition,
our shopping experience offers customers reliable product delivery and superior
customer service.

Until July 1999, we operated as a division of Vitamin Shoppe Industries
Inc., a leading retail and catalog source that has done business as The Vitamin
Shoppe since it was established in 1977. Based in North Bergen, New Jersey, The
Vitamin Shoppe has over 60 retail stores within the Northeast and Mid-Atlantic
regions and a monthly catalog with an annual circulation of 12 to 14 million
copies. In 1998, The Vitamin Shoppe's total sales were $132 million. We have
entered into intercompany agreements under which The Vitamin Shoppe has licensed
its trademarks to us and provides product supply, fulfillment, promotional,
administrative and other services to us. Our strategy is to become the leading
online source for vitamins, nutritional supplements and minerals by combining
the core competencies and infrastructure of The Vitamin Shoppe with the
functionality, convenience and information resources of the Internet. We believe
that The Vitamin Shoppe's expertise and experience provide us with important
competitive advantages, including:

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

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

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

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

We believe that we deliver a compelling value proposition to customers. We
offer an extensive selection, attractive pricing, superior customer service,
convenience and expert information. Our website integrates advanced
transactional capabilities with easy access to health and nutrition information
from credible third-party sources. By offering quality products and content
through an intuitive and easy-to-use interface and by focusing on customer
service, we believe that we meet a broad spectrum of consumer needs and foster
customer loyalty. We believe that the combination of a wide array of products,
informative content and superior customer service positions VitaminShoppe.com as
a comprehensive resource for the consumer.

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purchases, increase average order size and produce recurring revenues. The key
elements of our growth strategy are:

- acquiring new customers through the acceleration of marketing
initiatives, as well as through the development of existing and new
strategic relationships; and

- promoting customer retention and growth by using our customer database
for target marketing and by enhancing the overall customer experience.

We believe that the combination of our business and growth strategies will
position us as a comprehensive online source for our products and health-related
information.

The successful implementation of our business and growth strategies
involves significant risks, including our reliance on The Vitamin Shoppe,
establishing our brand in online commerce and overcoming intense competition in
the vitamin, nutritional supplement and mineral market. You should carefully
review "Risk Factors" for a discussion of the risks relating to the
implementation of our strategies.

The vitamin, nutritional supplement and mineral market is attractive due to
its growth and margin characteristics, which we believe are high relative to
other consumer product categories. According to industry research, domestic
sales of these products have grown at a 15% compounded annual rate between 1994
and 1998 to $8.9 billion. Through the efficiencies of online commerce and our
relationship with The Vitamin Shoppe, we believe that we have the opportunity to
capture market share and to improve the margins that we have experienced.
Between the April 1998 launch of our website and June 1999, more than 48,000
customers placed over 95,000 orders online. During this period, our average
order excluding shipping charges was approximately $74, which we believe
surpassed the online average for vitamins, nutritional supplements and minerals.
The average number of orders placed on our website each week grew from 381 in
April 1998 to 2,870 in June 1999. The average number of orders placed on our
website grew at a compounded monthly rate of 14% during the six months ended
June 30, 1999. We generated revenues of $2.9 million in 1998 and $4.3 million
during the six months ended June 30, 1999.

Our main offices are located at 444 Madison Avenue, Suite 802, New York,
New York 10022, and our telephone number is (212) 308-6730.

THE OFFERING

Class A common stock offered..... 4,545,455 shares

Class A common stock to be
outstanding upon the closing of
this offering.................... 7,277,574 shares

Class B common stock to be
outstanding upon the closing of
this offering.................... 13,081,500 shares

Use of proceeds.................. For enhancements to our website, capital
expenditures, advertising and marketing
activities, working capital, other general
corporate purposes and repayment of a note
due to The Vitamin Shoppe. See "Use of
Proceeds."

Proposed Nasdaq National Market
symbol........................... "VSHP"

The number of shares of Class A common stock to be outstanding upon the
closing of this offering excludes 1,102,510 shares of Class A common stock
issuable upon the exercise of stock options outstanding as of September 22, 1999
at a weighted average exercise price of $6.40 per share, 32,703 shares issuable
upon the exercise of warrants at an as-converted exercise price of $9.15 per
share, 401,514 shares issuable upon the exercise of options to be granted upon
the closing of this offering at the initial public offering price, which is
assumed to be $11.00 per share, and 1,266,176 shares of Class A common stock
available for future grant under our stock option plans.

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SUMMARY FINANCIAL INFORMATION

You should read the following summary financial information in conjunction
with "Selected Financial Data," "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" and the financial statements and
notes to those statements included elsewhere in this prospectus. Although we
were not operating as a separate company until July 1999, the historical
financial information below presents the operations of The Vitamin Shoppe's
online business as if we had been a separate entity since October 1, 1997, the
date of inception. The historical financial information includes allocations for
supply, fulfillment, promotional, administrative and other expenses incurred by
The Vitamin Shoppe for services rendered to us. The pro forma statement of
operations data give retroactive effect to adjustments resulting from the
implementation of the trademark license agreement and the supply and fulfillment
agreement. See "Business -- Intercompany Agreements" for a summary of the
material terms of these agreements.

The number of shares used to compute pro forma per share amounts includes
(1) 13,081,500 shares of Class B common stock and (2) 2,732,119 shares of Class
A common stock issuable upon conversion of Series A convertible preferred stock
upon the closing of this offering, in each case as if all shares were
outstanding as of January 1, 1998. The pro forma balance sheet data reflect the
sale of Series A convertible preferred stock in July 1999 for net proceeds of
approximately $24 million and the conversion of these securities into 2,732,119
shares of Class A common stock upon the closing of this offering. Pro forma as
adjusted data reflect the sale of 4,545,455 shares of Class A common stock in
this offering at an assumed initial public offering price of $11.00 per share,
after deducting estimated underwriting discounts and commissions and estimated
offering expenses and after applying a portion of the proceeds of the offering
to repay a note due to The Vitamin Shoppe.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------------- ---------------------------
PERIOD FROM
OCTOBER 1, 1997
(DATE OF
INCEPTION) SIX MONTHS SIX MONTHS
THROUGH YEAR ENDED ENDED JUNE 30, YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, -------------------- DECEMBER 31, JUNE 30,
1997 1998 1998 1999 1998 1999
--------------- ------------ ---------- ------- ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales................ $ -- $ 2,861 $ 480 $ 4,303 $ 2,861 $ 4,303
Gross profit............. -- 1,454 241 2,199 1,384 2,093
Loss from operations..... (349) (3,320) (661) (4,204) (4,210) (4,914)
Net loss................. $ (353) $(3,440) $ (688) $(4,425) $ (4,360) $ (5,192)
Pro forma basic and
diluted net loss per
share.................. $ (0.28) $ (0.33)
Shares used to compute
pro forma basic and
diluted net loss per
share.................. 15,813,619 15,813,619
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ -- $24,086 $63,283
Working capital (deficiency)................................ (8,869) 15,217 60,217
Total assets................................................ 817 24,903 64,100
Note due to The Vitamin Shoppe.............................. 5,803 5,803 --
Stockholders' equity (deficit).............................. (8,133) 15,953 60,953
</TABLE>

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RISK FACTORS

You should carefully consider the risks described below before investing in
the Class A common stock. The risks and uncertainties described below may not be
the only risks that we face. The factors discussed below may harm our business,
financial condition and results of operations and could result in a complete
loss of your investment.

RISKS RELATED TO OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY

VitaminShoppe.com is a new company in a new and volatile industry. Our
website was launched in April 1998, and our management team is new. We expect to
encounter difficulties as an early stage company in the rapidly evolving online
commerce industry. Our business strategy is unproven, and we may not be
successful in addressing early stage challenges, such as establishing our
position in the market and expanding our online presence and capabilities. To
implement our business plan, we must increase our marketing initiatives,
identify and enter into additional strategic relationships and incorporate rapid
technological advances.

WE HAVE NO HISTORY AS AN INDEPENDENT COMPANY ON WHICH YOU MAY ASSESS OUR
FINANCIAL PERFORMANCE

VitaminShoppe.com has no operating history as an independent company and
has been and will continue to be substantially dependent upon The Vitamin Shoppe
to provide a number of services. If The Vitamin Shoppe fails to provide adequate
services and we do not develop systems of our own, we will be unable to operate
our business. Until July 1999, The Vitamin Shoppe conducted our online business
as one of its divisions. We have entered into intercompany agreements under
which The Vitamin Shoppe has licensed its trademarks to us for use in online
commerce and provides supply, fulfillment, promotional, administrative and other
services to us. We expect to rely on The Vitamin Shoppe for supply, fulfillment
and promotional services for the foreseeable future. In addition, we expect to
rely on The Vitamin Shoppe through at least June 2000 for human resources,
finance, accounting, management information and other administrative support.

The Vitamin Shoppe also funded our operating losses until July 1999.
Failure to obtain alternative sources to fund our expected operating losses will
limit our ability to make the expenditures necessary to expand our business. See
"Business -- Intercompany Agreements" for a summary of the material terms of
these agreements.

WE EXPECT TO GENERATE OPERATING LOSSES AND TO EXPERIENCE NEGATIVE CASH FLOW FOR
THE FORESEEABLE FUTURE

We have incurred a net loss in each quarter since inception and expect to
incur net losses for the foreseeable future. Our success depends on increasing
awareness of the VitaminShoppe.com brand, providing our customers with a quality
online shopping experience and investing in systems and technology that will
support increased traffic to our website. Accordingly, we intend to increase our
marketing and promotional expenditures dramatically, to make additional payments
in connection with strategic relationships and to make capital expenditures to
develop and maintain the quality of our website and operating systems. Payments
to The Vitamin Shoppe under the intercompany agreements for the use of its
trademarks and for supply, fulfillment and promotional services will also
require greater expenditures than when we operated as a division of The Vitamin
Shoppe.

WE MAY NEED ADDITIONAL CAPITAL TO FUND OUR EXPECTED NEEDS FOR WORKING CAPITAL
AND CAPITAL EXPENDITURES

We require substantial capital to fund our business. Since our inception,
we have experienced negative cash flow from operations and expect to experience
significant negative cash flow from operations for the foreseeable future. We
expect that the net proceeds of this offering, together with our available
funds, will be sufficient to meet our expected needs for working capital and
capital expenditures for at least the next 12 months. We may need to raise
additional funds prior to the end of this period. We cannot be certain
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that additional financing will be available to us when required on favorable
terms or at all. Our inability to obtain adequate capital would limit our
ability to achieve the level of corporate growth that we believe to be necessary
to succeed in our business. If we raise additional funds in the future through
the issuance of equity or debt securities, then these securities may have
rights, preferences or privileges senior to the rights of the Class A common
stock, and holders may experience additional dilution. See "Dilution."

WE MUST ESTABLISH OUR BRAND QUICKLY AND COST-EFFECTIVELY IN ONLINE COMMERCE TO
REMAIN COMPETITIVE

We must establish, maintain and enhance the VitaminShoppe.com brand to
attract more customers to our website and to generate revenues from product
sales. Brand recognition and customer loyalty will become increasingly important
as more companies with established brands in online services or vitamins,
nutritional supplements and minerals offer competing services on the Internet.
Development of the VitaminShoppe.com brand will depend largely on our success in
providing a quality online shopping experience supported by high levels of
customer service. We expect to increase our expenditures on programs designed to
create and maintain strong brand loyalty among customers, but we cannot be
certain that our efforts will be successful.

WE MAY FAIL TO HIRE, RETAIN AND INTEGRATE KEY PERSONNEL TO REMAIN COMPETITIVE IN
OUR INDUSTRY

Our success depends on hiring, retaining and integrating senior management
and skilled employees in order to expand our business. Our president and chief
executive officer, Kathryn H. Creech, joined us in May 1999, and several senior
management positions have not yet been filled. Loss of the services of Ms.
Creech or other members of senior management could slow the growth of our
business. Our senior management may not perform effectively as individuals or
work together as a team. In addition, competition for employees in our industry
is intense. We expect to experience difficulty in hiring and retaining skilled
employees.

WE FACE INTENSE COMPETITION

We compete with numerous resellers, manufacturers and wholesalers,
including other online companies as well as retail and catalog sources. Some of
our competitors may have greater access to capital than we do and may use these
resources to engage in aggressive advertising and marketing campaigns. The
current prevalence of aggressive advertising and promotion may generate pricing
pressures to which we must respond.

CONSUMERS MAY NOT ACCEPT AN ONLINE SOURCE FOR OUR PRODUCTS

Our success depends on attracting and retaining a high volume of online
customers at a reasonable cost. We may not be able to convert a large number of
consumers from traditional shopping methods to online shopping. Factors that
could prevent or delay the widespread consumer acceptance of purchasing
vitamins, nutritional supplements and minerals online, and consequently our
ability to increase our revenues, include:

- shipping charges, which do not apply to shopping at traditional retail
stores;

- delivery time associated with online orders, as compared to the immediate
receipt of products at a physical store;

- pricing that does not meet consumer expectations of finding "the lowest
price on the Internet";

- lack of consumer awareness of our online presence;

- customer concerns about the security of online transactions and the
privacy of personal health information;

- product damage from shipping or shipments of wrong or expired products,
which may result in a failure to establish customer trust in purchasing
our products online;

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- delays in responses to customer inquiries or in deliveries to customers;
and

- difficulty in returning or exchanging orders.

We expect that competition will continue to increase because of the
relative ease with which new websites may be developed. The nature of the
Internet as an electronic marketplace may facilitate competitive entry and
comparison shopping and may also render online commerce inherently more
competitive than traditional retailing formats. Increased competition may reduce
our gross margins, cause us to lose market share and decrease the value of the
VitaminShoppe.com brand. See "Business -- Competition."

WE ARE HEAVILY DEPENDENT UPON ADVERTISING AND STRATEGIC RELATIONSHIPS TO
GENERATE SALES AND THEREFORE REVENUES

We rely on advertising and strategic relationships to attract customers to
our website. This advertising may not attract a significant number of customers
to our website or generate a substantial amount of sales. We intend to increase
our advertising and marketing expenditures dramatically to promote the
VitaminShoppe.com brand through online advertising, through newspaper,
television and radio advertising and through promotional references in The
Vitamin Shoppe print catalogs. Our online advertising may include strategic
relationships that require costly, long-term commitments. In addition, software
is now or will soon be available that permits an Internet user to block online
banner advertising. If customers are able to block the viewing of banner
advertising, then our advertising investment may not generate the expected level
of sales.

EXTENSIVE GOVERNMENTAL REGULATION COULD LIMIT OUR SALES OR ADD SIGNIFICANT
ADDITIONAL COSTS TO OUR BUSINESS

Because the online market for vitamins, nutritional supplements and
minerals is relatively new, there is little common law or regulatory guidance
that clarifies the manner in which government regulation impacts online sales.
Governmental regulation may limit our sales or add significant additional costs
to our business. The two principal federal agencies that regulate dietary
supplements, including vitamins, nutritional supplements and minerals, are the
Food and Drug Administration and the Federal Trade Commission. Among other
matters, FDA regulations govern claims that assert the health or nutritional
value of a product. Many FDA and FTC remedies and processes, including imposing
civil penalties in the millions of dollars and commencing criminal prosecution,
are available under federal statutes and regulations if product claims violate
the law. Similar enforcement action may also result from noncompliance with
other regulatory requirements, such as FDA labeling rules. The FDA also reviews
some product claims that companies must submit for agency evaluation and may
find them unacceptable. State, local and foreign authorities may also bring
enforcement actions for violations of these laws. In addition, because we sell
products outside the United States, our business is also subject to the risks
associated with United States and foreign legislation and regulations relating
to exports. See "Business -- Government Regulation" for additional discussion of
the government regulations impacting our business.

THE SALE OF OUR PRODUCTS INVOLVES PRODUCT LIABILITY AND OTHER RISKS

Like any other distributor or manufacturer of products that are ingested,
we face an inherent risk of exposure to product liability claims if the use of
our products results in illness or injury. If we do not have adequate insurance
or contractual indemnification, product liability claims could have a material
adverse effect on our business. Manufacturers and distributors of vitamins,
nutritional supplements and minerals, including The Vitamin Shoppe, have been
named as defendants in product liability lawsuits from time to time. The
successful assertion or settlement of an uninsured claim, a significant number
of insured claims or a claim exceeding the limits of our insurance coverage
would harm us by adding further costs to our business and by diverting the
attention of our senior management from the operation of our business.

Some of our products contain innovative ingredients or combinations of
ingredients, and there is little long-term experience with human consumption of
these ingredients or combinations in concentrated form.
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In addition, interactions of these products with other similar products,
prescription medicines and over-the-counter drugs have not been fully explored.
Although the manufacturers may perform research and tests in connection with the
formulation and production of the products that we sell, there are no conclusive
clinical studies regarding many of our products.

We depend upon customer perceptions about the safety and quality of our
products and of similar products distributed by our competitors. The mere
publication of reports asserting that a particular product may be harmful may
substantially reduce or eliminate sales of the product, regardless of whether
the reports are scientifically supported and regardless of whether the harmful
effects would be present at recommended dosages.

Vitamins, nutritional supplements and minerals are subject to sharp
increases in consumer interest, which in some cases stems from discussion of
particular products in the popular press. A significant delay in or disruption
of the supply of products to The Vitamin Shoppe from suppliers and distributors
may increase our cost of goods and could result in a substantial reduction or
termination of sales of some products.

WE DEPEND ON THIRD-PARTY SHIPPERS TO DELIVER OUR PRODUCTS IN A TIMELY MANNER

Our customers cannot visit physical stores to pick up our products. Our
product distribution relies instead on third-party delivery services, including
the United States Postal Service and United Parcel Service. Strikes and other
interruptions may delay the timely delivery of customer orders, and customers
may refuse to purchase our products because of this loss of convenience.

WE MAY BE UNABLE TO INCREASE OUR CAPACITY QUICKLY ENOUGH TO SUPPORT INCREASED
TRAFFIC TO OUR WEBSITE

Our success depends on generating a high volume of traffic to our website.
However, growth in the number of users accessing our website may strain or
exceed the capacity of our computer systems and lead to declines in performance
or system failure. We believe that our present systems will not be adequate to
accommodate rapid growth in user demand. Increased sales volume as a result of
increased traffic may exceed our supply and fulfillment capabilities. Failure to
accommodate increased traffic may decrease levels of customer service and
satisfaction.

WE MAY EXPERIENCE A DROP IN SALES IF OUR WEBSITE AND SYSTEMS ARE NOT AS
CONVENIENT TO USE AS THE SITES OF OUR COMPETITORS

We must continually improve and enhance the functionality and performance
of our website, order tracking and other technical systems to provide a
convenient shopping experience. We must also introduce additional or enhanced
features and services from time to time to attract and retain customers. Failure
to improve these systems effectively or within a reasonable period of time may
cause customers to visit our website less frequently or not at all. New services
or features may contain errors, and we may need to modify the design of these
services to correct errors. If customers encounter difficulty with or do not
accept new services or features, they may buy from other online vendors and
cause our sales to decline.

OUR COMPUTER AND COMMUNICATIONS SYSTEMS MAY FAIL OR EXPERIENCE DELAYS

Our success, and in particular our ability to receive and fulfill orders
and provide quality customer service, depends on the efficient and uninterrupted
operation of our computer systems. System interruptions may result from fire,
power loss, water damage, telecommunications failures, vandalism and other
malicious acts and problems related to our equipment. Our website may also
experience disruptions or interruptions in service due to failures by
third-party communications providers. We depend on communications providers and
our website host to provide our customers with access to our website. In
addition, our customers depend on their own Internet service providers for
access to our website. Periodic system interruptions will occur. These
occurrences may cause customers to perceive our website as not functioning
properly and therefore cause them to stop using our services.

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FAILURE OF OUR COMPUTER SYSTEMS TO RECOGNIZE THE YEAR 2000 COULD DISRUPT THE
OPERATION OF OUR BUSINESS AND TECHNICAL SYSTEMS

- failures or miscalculations could cause a total systemwide failure of our
website;

- we could experience increased expenses associated with stabilization of
operations after critical systems failure and execution of contingency
plans; or

- we could experience disruptions to our operations, including an inability
of our customers to access our website to make purchases and our
inability to process customer orders and deliver products.

These disruptions could also impact our ability to operate our website or engage
in similar ordinary business activities.

Our operations also depend on the performance of operating software and
systems used by our vendors and service providers. We cannot assure you that our
vendors and service providers have or will have operating software and systems
that are year 2000 compliant. Year 2000-related failures in the software or
systems of our vendors or third-party service providers could interrupt our
operations or require us to incur significant unexpected expenses. In addition,
disruptions caused by year 2000 problems could affect Internet usage generally.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000 Compliance" for additional information related to our
year 2000 compliance.

QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY

As a result of our limited operating history, our future revenues and the
factors, such as seasonality, which may affect the timing of our revenues are
difficult to forecast. In addition, our revenues and operating results may vary
significantly from quarter to quarter due to a number of factors. Many of these
factors are outside our control and include:

- our ability to retain existing customers, to attract new customers at a
steady rate and to maintain customer satisfaction;

- our ability to maintain gross margins;

- changes in the growth rate of Internet usage and online user traffic
levels;

- the timing and amount of costs relating to the expansion of our
operations;

- improvements to our computer systems from time to time; and

- general economic and market conditions.

Most of our operating expenses are difficult to adjust in the short term. As a
result, quarterly comparisons of our results of operations are not necessarily
indicative of operating results for any future period.

RISKS RELATED TO OUR RELATIONSHIP WITH THE VITAMIN SHOPPE

THE VITAMIN SHOPPE CONTROLS VITAMINSHOPPE.COM

The Vitamin Shoppe owns all of the outstanding shares of our Class B common
stock. The Class A common stock being offered entitles its holders to one vote
per share, while the Class B common stock entitles The Vitamin Shoppe to six
votes per share. Consequently, The Vitamin Shoppe and some of its
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stockholders will be able to elect all but one of the members of our board of
directors and will have a controlling vote in all matters requiring the approval
of our stockholders, including the approval of mergers and business
combinations. The Vitamin Shoppe's control of VitaminShoppe.com may decrease the
value of the Class A common stock and could delay or prevent a change in control
of VitaminShoppe.com.

The Vitamin Shoppe may elect to sell all or a substantial portion of our
Class B common stock to one or more third parties. The Class B common stock will
convert into Class A common stock upon any sale to a person or entity not
affiliated with The Vitamin Shoppe. Although the third parties after such a sale
would have only one vote per share instead of the six votes per share that The
Vitamin Shoppe had, they may hold enough of the voting power of our capital
stock to control VitaminShoppe.com through the election of directors and in
matters requiring stockholder approval.

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

OVERLAPPING MANAGEMENT AND BOARDS OF DIRECTORS COULD CAUSE CONFLICTS OF INTEREST

Jeffrey J. Horowitz is the chairman of the board of directors of
VitaminShoppe.com and the president and chief executive officer of The Vitamin
Shoppe. Larry M. Segall is the chief financial officer of both VitaminShoppe.com
and The Vitamin Shoppe. Jeffrey J. Horowitz, Martin L. Edelman, M. Anthony
Fisher, David S. Gellman and Stephen P. Murray are directors of both
VitaminShoppe.com and The Vitamin Shoppe. Serving as a director or officer of
VitaminShoppe.com and a director or officer of The Vitamin Shoppe could create
or appear to create potential conflicts of interest when those directors and
officers are faced with decisions that could have different implications for
VitaminShoppe.com and The Vitamin Shoppe. These decisions may relate, for
example, to the allocation of manpower resources, potential acquisitions of
businesses, the intercompany agreements, competition, the issuance or
disposition of securities, the election of new or additional directors, the
payment of dividends by VitaminShoppe.com and other matters. These conflicts or
potential conflicts of interest could hinder or delay our management's ability
to make timely decisions regarding significant matters relating to our business.
VitaminShoppe.com and The Vitamin Shoppe have not instituted any formal plan or
arrangement to address potential conflicts of interest that may arise.

Messrs. Horowitz and Segall will be officers of both VitaminShoppe.com and
The Vitamin Shoppe and will expend a substantial amount of their professional
time and effort on behalf of The Vitamin Shoppe. In many instances, their work
for The Vitamin Shoppe will involve activities that are unrelated to, and in
some circumstances may be different from or adverse to, the interests of
VitaminShoppe.com. We have not established any minimum time that Messrs.
Horowitz and Segall will be required to spend on VitaminShoppe.com matters.

We expect that Mr. Horowitz will continue to be one of the principal
stockholders of both The Vitamin Shoppe and VitaminShoppe.com after the closing
of this offering. We expect that Mr. Segall will continue to hold the options to
acquire The Vitamin Shoppe capital stock that he has been granted. The ownership
interests in VitaminShoppe.com that Messrs. Horowitz and Segall hold might not
be equivalent to the ownership interests that they hold in The Vitamin Shoppe.
Differing ownership interests in VitaminShoppe.com and The Vitamin Shoppe may
present Messrs. Horowitz and Segall with incentives potentially adverse to the
interests of VitaminShoppe.com stockholders.

WE DEPEND ON THE VITAMIN SHOPPE'S TRADEMARKS AND ITS SUPPLY OF PRODUCTS AND
SERVICES

We have entered into intercompany agreements under which The Vitamin Shoppe
has licensed its trademarks to us and provides supply, fulfillment, promotional,
administrative and other services to us. These trademarks and services are
critical to our success. The agreements call for significant payments to
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The Vitamin Shoppe for the foreseeable future. Termination of the intercompany
agreements or the failure of The Vitamin Shoppe to perform its obligations under
these agreements would materially harm our business. See
"Business -- Intercompany Agreements" for a summary of the material terms of
these agreements.

We depend on trademarks licensed from The Vitamin Shoppe. Under the
trademark license agreement, The Vitamin Shoppe has licensed trademarks,
including The Vitamin Shoppe logo and name, to us on an exclusive basis in
connection with our marketing and sale of products and services in online
commerce. If the trademark license agreement terminates, we may be required to
change the domain names of our websites and devote substantial resources to
building a new brand name. The trademark license agreement also contains
restrictions that may prevent us from marketing and selling products and
services as we would if we owned the trademarks ourselves. The Vitamin Shoppe
has the right to demand that we remove from our website any online content that
bears any trademark of The Vitamin Shoppe if The Vitamin Shoppe determines that
the content is detrimental to The Vitamin Shoppe's reputation.

We depend on The Vitamin Shoppe as a supplier. Under the supply and
fulfillment agreement, we will obtain substantially all of the products that we
sell from The Vitamin Shoppe at a cost to us equal to 105% of The Vitamin
Shoppe's product cost. If the supply and fulfillment agreement terminates, we
may not be able to find an alternative supplier capable of providing our
products on terms satisfactory or as favorable to us. As a result, our success
depends on the ability of The Vitamin Shoppe to obtain products from third-party
vendors at competitive prices, in sufficient quantities and of acceptable
quality. During 1998, eight manufacturers supplied 89% of The Vitamin Shoppe's
purchases of bulk vitamins, nutritional supplements and minerals for packaging
into The Vitamin Shoppe brand products. Ten suppliers and four distributors
supplied 58% of the other branded products sold by The Vitamin Shoppe and us. No
other manufacturers, suppliers or distributors accounted for a material amount
of The Vitamin Shoppe's product requirements. The Vitamin Shoppe does not have
long-term contracts with any of its suppliers or distributors, and some of its
smaller sources have limited resources, production capacities and operating
histories. If key vendors fail to meet our product needs, if The Vitamin Shoppe
loses one or more key vendors or if The Vitamin Shoppe's vendor terms change,
The Vitamin Shoppe's cost and therefore our cost will likely increase. Any
increase in costs will be passed on to us, and we may not be able to pass the
increased costs to our customers because of competitive pricing pressures. If
The Vitamin Shoppe does not have sufficient capacity or is unable to satisfy our
increasing requirements on a timely basis, we may be unable to obtain products
to fill customer orders.

We depend on The Vitamin Shoppe for fulfillment. Under the supply and
fulfillment agreement, The Vitamin Shoppe will fulfill substantially all of our
sales orders at a cost to us equal to 105% of The Vitamin Shoppe's actual
average unit cost per package. The Vitamin Shoppe is obligated to use its best
efforts to cause the quality of its fulfillment services to be at least as high
as The Vitamin Shoppe provides when fulfilling orders for its catalog
operations. Our success depends on The Vitamin Shoppe's ability to fulfill our
orders in an accurate and timely manner.

We depend on promotions in The Vitamin Shoppe print catalogs and retail
stores. Under the co-marketing agreement, The Vitamin Shoppe will provide us
with promotional references and advertisements in The Vitamin Shoppe print
catalogs and retail stores. The Vitamin Shoppe makes no guarantee as to the
demographic composition of the target audience of its catalogs. If the
co-marketing agreement terminates, we believe that we would make fewer sales on
our website.

We depend on The Vitamin Shoppe for administrative services. Under the
administrative services agreement, The Vitamin Shoppe will provide human
resources, finance, accounting, management information and other administrative
services. We currently have no administrative infrastructure and rely completely
on The Vitamin Shoppe for these functions. If The Vitamin Shoppe fails to
provide these services satisfactorily, we will be required to perform these
services or to obtain these services from another source. We may incur
additional expenses to obtain these services or be unable to obtain these
services on commercially reasonable terms. If we perform these services with
internal resources, we may not perform them adequately. As a result, we may fail
to retain important personnel and customers.

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WE MAY BE LIABLE FOR THE VITAMIN SHOPPE'S TAX OBLIGATIONS

Under the tax allocation agreement between The Vitamin Shoppe and us, The
Vitamin Shoppe may elect to include us in its "consolidated group" for federal
income tax purposes with respect to taxable periods prior to the closing of this
offering during which The Vitamin Shoppe owned enough of our capital stock to
permit such an election. If such an election is made and thereafter The Vitamin
Shoppe or other members of the group fail to make any federal income tax
payments required by law for any period during which we were included in the
group, then we would be contingently liable for the shortfall. Similar
principles apply for state income tax purposes in many states. Under the tax
allocation agreement, for any taxable period during which we are included in The
Vitamin Shoppe's consolidated group, we will pay The Vitamin Shoppe a portion of
the income tax liability of the group computed as if we were a separate
taxpayer. Notwithstanding the tax allocation agreement, federal law provides
that each member of a consolidated group is liable for the tax obligations of
the entire group.

Prior to the closing of this offering, The Vitamin Shoppe has controlled
all tax decisions relating to us and has had sole authority to respond to and
conduct all tax proceedings, including audits, to file income tax returns on our
behalf and to determine the amount that The Vitamin Shoppe should pay under the
tax allocation agreement.

Under the intercompany indemnification agreement, The Vitamin Shoppe will
indemnify us for tax liabilities resulting from The Vitamin Shoppe's
relationship with us, including the costs of defending against any claims
against us directly. The Vitamin Shoppe may not be able to fulfill its
obligations under the intercompany indemnification agreement. Therefore, we may
not obtain indemnification for tax payments on The Vitamin Shoppe's behalf.

RISKS RELATED TO THE INTERNET AND ONLINE COMMERCE

WE DEPEND ON CONTINUED GROWTH IN USE OF THE INTERNET AND ONLINE COMMERCE

Our success depends upon the ability of the Internet infrastructure to
support increased use. The performance and reliability of the Internet may
decline as the number of online users grows or bandwidth requirements increase.
The Internet has experienced a variety of outages due to damage to portions of
its infrastructure. If outages or delays frequently occur in the future,
Internet usage and usage of our website may grow slowly or decline. Concerns
about inadequate Internet infrastructure, security, reliability, accessibility,
privacy and the availability of cost-effective, high-speed service also may
inhibit growth in Internet usage. Even if the necessary infrastructure or
technologies develop, we may incur significant costs to adapt our operating
strategy. Our success also depends upon acceptance and use of online commerce as
an effective medium of commerce. Widespread use of the Internet and online
commerce is a recent phenomenon. A large base of consumers may not adopt and
continue to use the Internet as a medium of commerce.

WE MAY BE UNABLE TO RESPOND TO RAPID CHANGE IN THE ONLINE COMMERCE INDUSTRY

To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our website. Online commerce has
been characterized by rapid technological change, evolving industry standards,
changes in user and customer requirements and preferences, frequent new product
and service introductions embodying new technologies and the emergence of new
industry standards and practices that could render our website, technology and
systems obsolete. We must obtain licensed technologies useful in our business,
enhance our existing services, develop new services and technologies that
address sophisticated and varied consumer needs, respond to technological
advances and emerging industry standards and practices on a timely and
cost-effective basis and address evolving customer preferences. We may
experience difficulties that delay or prevent our being able to respond to these
changes.

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WE MAY BE SUED OR OUR BUSINESS MAY BE DISRUPTED DUE TO PRIVACY OR SECURITY
CONCERNS AND CREDIT CARD FRAUD

Consumer concerns over the security of transactions conducted on the
Internet or the privacy of users may inhibit the growth of the Internet and
online commerce. To transmit confidential information securely, we rely on
encryption and authentication technology licensed to us by third parties. Events
or developments may result in a compromise or breach of the algorithms that we
use to protect customer transaction data. Any penetration of our network
security or misappropriation of our customers' personal or credit card
information could subject us to liability.

We may also be liable for claims based on unauthorized purchases with
credit card information, impersonation or other similar fraud claims. Under
current credit card practices, a merchant is liable for fraudulent credit card
transactions where, as is the case with the transactions we process, that
merchant does not obtain a cardholder's signature.

Furthermore, our servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions. We may need to expend significant
additional capital and other resources to protect against a security breach or
to alleviate problems caused by any breaches. Our business may be harmed if our
security measures do not prevent security breaches.

Claims could also be based on other misuses of personal information, such
as for unauthorized marketing purposes. Websites typically place identifying
data "cookies" on a user's computer hard drive without the user's express
consent. Most currently available Internet browsers allow users to remove
cookies at any time or to prevent cookies from being stored on their computer
hard drives. Currently, our customers must set their computers to accept cookies
in order to purchase our products. We may use cookies for a variety of reasons,
including the collection of data derived from the user's online activity. Any
reduction or limitation in the use of cookies could limit the effectiveness of
our sales and marketing efforts. In addition, some commentators, privacy
advocates and governmental bodies have suggested that the use of cookies be
limited or eliminated. The Federal Trade Commission and several states have
investigated the use of personal information by online companies. We may incur
expense if regulations regarding the use of personal information are introduced
or if our privacy practices were investigated.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD BRING ADDITIONAL BURDENS TO
DOING BUSINESS ONLINE

Online commerce is new and rapidly changing, and federal and state
regulations relating to the Internet and online commerce are relatively new and
evolving. Due to the increasing popularity of the Internet, it is possible that
laws and regulations may be enacted to address issues such as user privacy,
pricing, content, copyrights, distribution, antitrust matters and the quality of
products and services. The adoption of these laws or regulations could reduce
the rate of growth of the Internet, which could potentially decrease the usage
of our website and could otherwise harm our business. In addition, the
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, libel, obscenity
and personal privacy is uncertain. Most of these laws were adopted prior to the
advent of the Internet and do not contemplate or address the unique issues of
the Internet. New laws applicable to the Internet may impose substantial burdens
on companies conducting online commerce. In addition, the growth and development
of online commerce may prompt calls for more stringent consumer protection laws
in the United States and abroad. We also may be subject to regulation not
specifically related to the Internet, such as laws affecting catalog sellers.

Several telecommunications carriers have asked the Federal Communications
Commission to regulate telecommunications over the Internet. Due to the
increasing use of the Internet and the burden it has placed on the
telecommunications infrastructure, telephone carriers have requested the FCC to
regulate Internet and online service providers and to impose access fees on
those providers. If the FCC imposes access fees, the costs of using the Internet
could increase dramatically. In this event, our margins could be negatively
impacted.

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WE MAY BECOME LIABLE FOR SALES AND OTHER TAXES

Sales tax. Although our online transmissions and order fulfillment take
place in New Jersey and New York, the governments of other states or foreign
countries may attempt to regulate our transmissions or levy sales or other taxes
relating to our activities. In accordance with current industry practice, we do
not collect sales or other taxes in respect of shipments of goods into states
other than New Jersey and New York. Neither New Jersey nor New York imposes
sales tax on any of the products that we sell, other than cosmetics and books.
However, one or more states or foreign countries may seek to impose sales or
other tax collection obligations on out-of-jurisdiction companies like us that
engage in online commerce. A successful assertion that we should collect sales
or other taxes on the sale of merchandise would increase the cost of our
products to customers. While we do not believe that our relationship with The
Vitamin Shoppe would subject us to sales or use taxes in every jurisdiction in
which The Vitamin Shoppe operates a retail store, a jurisdiction may seek to
impose a sales or use tax based on this relationship or some other basis. If
asserted, we may not be successful in any challenge to this assertion.

Other taxes. Recent federal legislation limits the imposition of state and
local taxes on the Internet. In 1998, Congress passed the Internet Tax Freedom
Act, which places a three-year moratorium on state and local taxes on (1)
Internet access, unless such tax was already imposed prior to October 1, 1998,
and (2) discriminatory taxes on online commerce. Congress may not renew this
legislation in 2001, in which case state and local governments would be free to
impose Internet-specific taxes on electronically purchased goods, in addition to
any other taxes that may otherwise be imposed on the transaction. Any such taxes
would harm our business. Due to the high level of uncertainty regarding the
imposition of new Internet-related taxes on online commerce, a number of states
and a Congressional advisory commission are reviewing appropriate tax treatment
for online commerce. We cannot predict the impact of additional laws or
regulations on our business.

WE MAY BE LIABLE FOR INFORMATION DISPLAYED ON AND COMMUNICATED THROUGH OUR
WEBSITE

We may be subjected to claims based on defamation, negligence, copyright or
trademark infringement or other theories relating to the information that we
publish on our website. These claims have been brought against online companies
as well as print publications in the past. Based on hyperlinks that we provide
to other websites, we may also be subjected to claims based upon online content
that we do not control but that is accessible from our website.

CHANGES IN REGISTRATION OF DOMAIN NAMES MAY RESULT IN THE LOSS OF OR CHANGE IN
OUR DOMAIN NAME AND A REDUCTION IN BRAND AWARENESS AMONG OUR CUSTOMERS

The Vitamin Shoppe has transferred the VitaminShoppe.com domain name to us.
Domain names are typically registered by regulatory bodies. The regulation of
domain names in the United States and abroad is subject to change. Regulatory
bodies could establish additional top-level domains, appoint additional domain
name registrars or modify the requirements for holding domain names. As a
result, we may not acquire or maintain the VitaminShoppe.com domain name in
every jurisdiction in which we conduct business. The relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. As a result, we could be unable to prevent third
parties from acquiring domain names that infringe upon or otherwise decrease the
value of our trademarks and other proprietary rights.

RISKS RELATED TO THIS OFFERING

OUR MANAGEMENT HAS BROAD DISCRETION IN USE OF PROCEEDS OF THIS OFFERING

Our management has broad discretion in the use of proceeds of this offering
and may use the proceeds in ways with which our stockholders may not agree. We
intend to use a substantial portion of the net proceeds from the offering for
enhancements to our website, capital expenditures, advertising and

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marketing activities, working capital, other general corporate purposes and
repayment of a note due to The Vitamin Shoppe. See "Use of Proceeds."

WE DO NOT INTEND TO PAY DIVIDENDS

We do not currently intend to pay any dividends on the Class A common stock
or the Class B common stock. Our ability to pay cash distributions may be
restricted by covenants in any future bank credit facility. See "Dividend
Policy."

OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY DISCOURAGE A CHANGE IN CONTROL

Some of the provisions of our certificate of incorporation and bylaws and
Delaware law could have the effect of delaying or preventing a change in control
of VitaminShoppe.com, even if a change in control would be beneficial to some of
our stockholders. In addition, our certificate of incorporation permits us to
issue preferred stock, which may also be used to delay or prevent a change in
control. See "Description of Capital Stock -- Preferred Stock" and
"-- Anti-Takeover Provisions."

WE MAY ISSUE PREFERRED STOCK WITH RIGHTS SENIOR TO THE CLASS A COMMON STOCK

Our certificate of incorporation authorizes the issuance of up to 5,000,000
shares of preferred stock without stockholder approval. These shares may have
dividend, voting, liquidation and other rights and preferences that are senior
to the rights of the Class A common stock. We have no existing plans to issue
shares of preferred stock. The rights and preferences of any such class or
series of preferred stock would be established by our board of directors in its
sole discretion. See "Description of Capital Stock -- Preferred Stock."

INVESTORS IN THIS OFFERING WILL EXPERIENCE SUBSTANTIAL AND IMMEDIATE DILUTION

The initial public offering price for the Class A common stock being
offered will be substantially higher than the net tangible book value per share
of the Class A common stock and the Class B common stock outstanding before this
offering. Investors in this offering will experience immediate and substantial
dilution. See "Dilution" for a discussion of the dilution that investors will
experience.

FUTURE SALES OF COMMON STOCK MAY DEPRESS OUR STOCK PRICE

Sales of the Class A common stock or the Class B common stock following
this offering could adversely affect the market price of the Class A common
stock. All of the shares of Class A common stock being offered will be freely
tradable in the open market. In addition, approximately 130,815 additional
shares of Class A common stock may be sold upon the exercise of stock options
after the expiration of 180-day lock-up agreements.

THE MARKET PRICE OF THE CLASS A COMMON STOCK MAY BE EXTREMELY VOLATILE, AS HAS
BEEN TYPICAL FOR INTERNET-RELATED COMPANIES

Prior to this offering, there has been no public market for the Class A
common stock. The initial public offering price will be determined by
negotiations between us and the representatives of the underwriters and may not
reflect prices that will prevail in the trading market. Some of the factors to
be considered in these negotiations will be our results of operations in recent
periods, estimates of our prospects and the industry in which we compete, an
assessment of our management, the general state of the securities markets at the
time of this offering and the prices of similar securities of generally
comparable companies.

The initial public offering price of the Class A common stock may have no
relation to the price at which the Class A common stock will trade after the
closing of this offering. An active public market for the Class A common stock
may not develop or be sustained after this offering. The market price of the
Class A common stock may be extremely volatile for many reasons, including
actual or anticipated

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variations in our revenues and operating results, announcements of the
development of improved technology, the use of new sales formats by us or our
competitors, changes in financial forecasts by securities analysts, new
conditions or trends in the Internet and online commerce and general market
conditions. In particular, the market price of the Class A common stock could be
materially adversely affected by reports by official or unofficial health and
medical authorities and the general media regarding the potential health
benefits or detriments of products that we sell or of similar products
distributed by other companies, regardless of whether such reports are
scientifically supported and regardless of whether our operating results are
likely to be affected by such reports, as well as by consumer perceptions
regarding the safety and efficacy of nutritional supplements and consumer
preferences generally.

In addition, the stock market in general has experienced wide price and
volume fluctuations in recent periods, and these fluctuations are often
unrelated to the operating performance of the specific issuers whose stock is
affected. Recently, market prices for Internet-based companies have experienced
extreme price and volume fluctuations, particularly after initial public
offerings. These fluctuations are often unrelated or disproportionate to the
operating performance of those companies. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against the company. The institution
of class action litigation against us could result in substantial costs to us
and a diversion of our management's attention and resources.

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FORWARD-LOOKING STATEMENTS

This prospectus includes "forward-looking statements" identified by the use
of words like "believes," "intends," "expects," "may," "will," "should" or
"anticipates," or the negative equivalents of those words or comparable
terminology, and by discussions of strategies that involve risks and
uncertainties.

We base all forward-looking statements upon estimates and assumptions about
future events that are derived from information available to us on the date of
this prospectus. Given the risks and uncertainties of our business, actual
results may differ materially from those expressed or implied by forward-looking
statements. Risks, uncertainties and assumptions that may affect our business,
financial condition and results of operations include our lack of operating
history, the rapidly changing nature of the Internet and online commerce,
changes in general economic conditions in the market for vitamins, nutritional
supplements and minerals and the risks discussed in "Risk Factors."

We cannot assure you that our future results, levels of activity and
achievements will occur as we expect, and neither we nor any person assumes any
responsibility for the accuracy and completeness of our forward-looking
statements.

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USE OF PROCEEDS

We estimate that the net proceeds from the sale of the 4,545,455 shares of
Class A common stock being offered will be approximately $45 million, at an
assumed initial public offering price of $11.00 per share and after deducting
estimated underwriting discounts and commissions and estimated offering expenses
payable by us. If the underwriters exercise their over-allotment option in full,
we estimate that the net proceeds from this offering will be approximately $52
million.

We intend to use approximately $7.3 million of the proceeds of this
offering for enhancements to our website and other capital expenditures and
approximately $5.8 million for the repayment of a note due to The Vitamin
Shoppe. The note due to The Vitamin Shoppe is payable upon demand by The Vitamin
Shoppe and bears interest at The Vitamin Shoppe's cost of funds from time to
time under its bank credit facility, which was 8.75% on June 30, 1999.

We intend to use substantially all of the remainder of the net proceeds of
this offering to increase significantly our advertising and marketing activities
through the end of the year 2000 and the balance for working capital and other
general corporate purposes. A portion of the net proceeds may also be used to
acquire or invest in complementary businesses, technologies, product lines or
products. We have no current plans, agreements or commitments with respect to
any such acquisition. To the extent that we do not use the net proceeds of this
offering immediately, we intend to invest the funds in short-term, investment-
grade, interest-bearing obligations.

DIVIDEND POLICY

We currently intend to retain any earnings to finance the operations and
expansion of our business, and we do not anticipate paying any cash dividends on
our capital stock in the foreseeable future. We may incur indebtedness in the
future, the terms of which may prohibit or effectively restrict the payment of
dividends.

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CAPITALIZATION

The following table sets forth the cash and cash equivalents and
capitalization of VitaminShoppe.com as of June 30, 1999:

(1) on an actual basis;

(2) on a pro forma basis giving effect to:

(a) the issuance and sale of Series A convertible preferred stock in
July 1999 for proceeds of approximately $24 million, net of offering
costs and expenses; and

(b) the automatic conversion of Series A convertible preferred stock
into 2,732,119 shares of Class A common stock upon the closing of
this offering, which reflects a 1.539-to-1 split of the Class A
common stock; and

(3) on a pro forma as adjusted basis giving effect to the sale of the
4,545,455 shares of Class A common stock in this offering at an assumed
initial public offering price of $11.00 per share and after deducting
estimated underwriting discounts and commissions and estimated offering
expenses payable by us, applying a portion of the proceeds to repay a
note due to The Vitamin Shoppe in the principal amount of approximately
$5.8 million as of June 30, 1999 and taking into account a charge
related to the accelerated vesting of options to purchase 130,815
shares of Class A common stock at an exercise price of $3.82 per share.

This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and notes to those statements included elsewhere in this prospectus.
The number of shares of Class A common stock excludes 1,102,510 shares of Class
A common stock issuable upon the exercise of stock options outstanding as of
September 22, 1999 at a weighted average exercise price of $6.40 per share,
32,703 shares issuable upon the exercise of warrants at an as-converted exercise
price of $9.15 per share, 401,514 shares issuable upon the exercise of options
to be granted upon the closing of this offering at the initial public offering
price, which is assumed to be $11.00 per share, and 1,266,176 shares of Class A
common stock available for future grant under our stock option plans. See
"Management -- Non-Employee Director Stock Option Plan," "-- Executive
Compensation," "-- Stock Option Plan," "Description of Capital Stock" and note 7
of notes to financial statements.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ -- $24,086 $63,283
======= ======= =======
Note due to The Vitamin Shoppe.............................. $ 5,803 $ 5,803 $ --
Stockholders' equity (deficit):
Preferred Stock, par value $0.01 per share; no shares
authorized, issued or outstanding (actual); 5,000,000
shares authorized, no shares issued or outstanding (pro
forma and pro forma as adjusted)....................... -- -- --
Class A common stock, par value $0.01 per share; no shares
authorized, issued or outstanding (actual); 30,000,000
shares authorized (pro forma and pro forma as
adjusted); 2,732,119 shares issued and outstanding (pro
forma); 7,277,574 shares issued and outstanding (pro
forma as adjusted)..................................... -- 27 73
Class B common stock, par value $0.01 per share; no shares
authorized, issued or outstanding (actual); 15,000,000
shares authorized, 13,081,500 shares issued and
outstanding (pro forma and pro forma as adjusted)...... 131 131 131
Additional paid-in capital.................................. (5,316) 18,743 63,697
Deferred stock-based compensation........................... (2,948) (2,948) (2,251)
Accumulated deficit......................................... -- -- (697)
------- ------- -------
Total stockholders' equity (deficit)...................... (8,133) 15,953 60,953
------- ------- -------
Total capitalization................................... $(2,330) $21,756 $60,953
======= ======= =======
</TABLE>

18
<PAGE> 24

DILUTION

The pro forma net tangible book value of VitaminShoppe.com as of June 30,
1999 was approximately $16 million, or $1.01 per share of common stock. Pro
forma net tangible book value per share represents the amount of total tangible
assets less total liabilities, divided by the number of shares of Class A common
stock and Class B common stock outstanding as of June 30, 1999, after giving pro
forma effect to our initial capitalization and subsequent recapitalization and
the issuance of Series A convertible preferred stock and warrants to purchase
Series A convertible preferred stock in July 1999. After giving effect to the
issuance and sale of 4,545,455 shares of Class A common stock in this offering
at an assumed initial public offering price of $11.00 per share and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us, the pro forma net tangible book value of
VitaminShoppe.com as of June 30, 1999 would have been $61 million, or $2.99 per
share. This amount represents an immediate increase in pro forma net tangible
book value of $1.98 per share to existing stockholders and an immediate dilution
of $8.01 per share to new investors. The following table illustrates this
per-share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value per share at June 30,
1999................................................... $1.01
Increase in pro forma net tangible book value per share
attributable to new investors.......................... 1.98
-----
Pro forma net tangible book value per share after
offering.................................................. 2.99
------
Dilution per share to new investors......................... $ 8.01
======
</TABLE>

This table summarizes, on a pro forma basis as of June 30, 1999 and after
giving pro forma effect to our initial capitalization and subsequent
recapitalization and the issuance of Series A convertible preferred stock and
warrants to purchase Series A convertible preferred stock in July 1999, the
differences between the number of shares of common stock purchased from
VitaminShoppe.com, the aggregate cash consideration paid and the average price
per share paid by existing stockholders and new investors purchasing shares of
Class A common stock in this offering, before deducting estimated underwriting
discounts and commissions and estimated offering expenses.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 15,813,619 77.1% $25,001,000 33.0% $ 1.58
Options exercisable after
offering..................... 130,815 0.6% 499,713 0.7% $ 3.82
Warrants exercisable after
offering..................... 32,703 0.2% 299,065 0.4% $ 9.15
New investors.................. 4,545,455 22.1% 50,000,005 65.9% $11.00
---------- ----- ----------- -----
Total..................... 20,522,592 100.0% $75,799,783 100.0% $ 3.69
========== ===== =========== =====
</TABLE>

The foregoing table and calculation assumes the exercise of outstanding
stock options and warrants to purchase an aggregate of 163,518 shares of Class A
common stock that will be exercisable upon the closing of this offering. As of
September 22, 1999, there were stock options outstanding to purchase 1,102,510
shares of Class A common stock at a weighted average exercise price of $6.40 per
share and warrants outstanding to purchase an equivalent of 32,703 shares of
Class A common stock at an as-converted exercise price of $9.15 per share. Upon
the closing of this offering, we will grant options to purchase 401,514 shares
of Class A common stock at the initial public offering price, which is assumed
to be $11.00 per share. To the extent that any of these stock options or
warrants are exercised, there will be further dilution to new investors. See
"Capitalization," "Management -- Non-employee Director Stock Option Plan,"
"-- Executive Compensation," "-- Stock Option Plan," "Description of Capital
Stock" and note 7 of notes to financial statements.

19
<PAGE> 25

SELECTED FINANCIAL DATA

You should read the following selected historical and pro forma financial
data in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes to
those statements included elsewhere in this prospectus. Although we were not
operating as a separate company until July 1999, the historical financial
statements present the operations of The Vitamin Shoppe's online businesses as
if we had been a separate entity since October 1, 1997, the date of inception.
The historical statement of operations data presented below for the period from
October 1, 1997, the date of inception, to December 31, 1997, for the year ended
December 31, 1998 and for the six months ended June 30, 1999, and the historical
balance sheet data as of December 31, 1997 and 1998 and as of June 30, 1999, are
derived from financial statements of VitaminShoppe.com that have been audited by
Deloitte & Touche LLP, independent auditors, and are included elsewhere in this
prospectus. Interim financial data for the six months ended June 30, 1998 are
unaudited but, in the opinion of management, include all normal recurring
adjustments necessary for a fair presentation of the data. Results for the six
months ended June 30, 1999 are not necessarily indicative of the results that
may be expected for any other interim period or for 1999 as a whole.

The historical financial information includes allocations for supply,
fulfillment, promotional, administrative and other expenses incurred by The
Vitamin Shoppe for services rendered to us. While we believe these allocations
to be reasonable, they do not necessarily indicate, and it is not practical for
us to estimate, the levels of expenses that would have resulted had we been
operating as an independent company. We have entered into several intercompany
agreements under which The Vitamin Shoppe has licensed its trademarks to us for
use on the Internet and provides supply, fulfillment, promotional,
administrative and other services to us. These agreements involve some charges
that we did not incur in the past. While the intercompany agreements were not
negotiated on an arms-length basis, we believe that their terms are no less
favorable to us than could have been obtained from unaffiliated third parties.
See "Business -- Intercompany Agreements" for a summary of the material terms of
the agreements.

The pro forma statement of operations data give retroactive effect to
adjustments resulting from the implementation of the trademark license agreement
and the supply and fulfillment agreement with The Vitamin Shoppe. The number of
shares used to compute the pro forma per share amounts includes (1) 13,081,500
shares of Class B common stock and (2) 2,732,119 shares of Class A common stock
issuable upon conversion of Series A convertible preferred stock upon the
closing of this offering, in each case as if all shares were outstanding as of
January 1, 1998. Historical and pro forma financial results are not necessarily
indicative of the operating results for any future period.

The pro forma balance sheet data reflect the sale of Series A convertible
preferred stock in July 1999 for net proceeds of approximately $24 million and
the conversion of these securities into 2,732,119 shares of Class A common stock
upon the closing of this offering.

Pro forma as adjusted balance sheet data reflect the sale of 4,545,455
shares of Class A common stock in this offering at an assumed initial public
offering price of $11.00 per share, after deducting estimated underwriting
discounts and commissions and estimated offering expenses and after applying a
portion of the proceeds of the offering to repay a note due to The Vitamin
Shoppe.

20
<PAGE> 26

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------------------------------------- ---------------------------
PERIOD FROM
OCTOBER 1, 1997
(DATE OF INCEPTION) SIX MONTHS SIX MONTHS
THROUGH YEAR ENDED ENDED JUNE 30, YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, --------------------- DECEMBER 31, JUNE 30,
1997 1998 1998 1999 1998 1999
------------------- ------------ ----------- ------- ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............. $ -- $ 2,861 $ 480 $ 4,303 $ 2,861 $ 4,303
Cost of goods sold.... -- 1,407 239 2,104 1,477 2,210
----- ------- ----- ------- ----------- -----------
Gross profit.......... -- 1,454 241 2,199 1,384 2,093
Operating expenses:
Marketing and
sales............ -- 3,215 392 4,367 4,032 4,922
Product
development...... 285 642 195 719 642 719
General and
administrative... 64 917 315 1,317 920 1,366
----- ------- ----- ------- ----------- -----------
Total operating
expenses....... 349 4,774 902 6,403 5,594 7,007
----- ------- ----- ------- ----------- -----------
Loss from
operations.......... (349) (3,320) (661) (4,204) (4,210) (4,914)
Interest expense...... 4 120 27 221 150 278
----- ------- ----- ------- ----------- -----------
Net loss.............. $(353) $(3,440) $(688) $(4,425) $ (4,360) $ (5,192)
===== ======= ===== ======= =========== ===========
Pro forma basic and
diluted net loss per
share............... $ (0.28) $ (0.33)
=========== ===========
Shares used to compute
pro forma basic and
diluted net loss per
share............... 15,813,619 15,813,619
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
AS OF DECEMBER 31, -----------------------------------
------------------ PRO FORMA
1997 1998 ACTUAL PRO FORMA AS ADJUSTED
------ -------- ------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ -- $ -- $ -- $24,086 $63,283
Working capital (deficiency)............ (353) (4,278) (8,869) 15,217 60,217
Total assets............................ -- 614 817 24,903 64,100
Note due to The Vitamin Shoppe.......... 353 3,583 5,803 5,803 --
Stockholders' equity (deficit).......... (353) (3,793) (8,133) 15,953 60,953
</TABLE>

21
<PAGE> 27

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
information included elsewhere in this prospectus. The following discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from the results contemplated by these
forward-looking statements as a result of many factors, including those
discussed below and elsewhere in this prospectus.

OVERVIEW

We began development of our online operations in October 1997 and launched
our website on April 7, 1998. For the period from inception through the launch
of our website, our primary activities consisted of:

- developing our business model;

- developing strategic relationships;

- designing and developing our website;

- recruiting and training employees;

- negotiating advertising contracts with several major web portals; and

- developing the VitaminShoppe.com brand.

Since the launch of our website, we have continued these operating
activities and have also focused on building sales momentum, promoting our
brand, enhancing the search and transactional features of our website, expanding
customer service operations and increasing the information content available to
our customers.

We have incurred net losses of $8.2 million from inception through June 30,
1999. We believe that we will continue to incur net losses for the foreseeable
future as our advertising and marketing expenditures increase and that the rate
at which we will incur such losses will increase significantly from current
levels.

We have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the risks,
expenses and difficulties encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
online commerce. In view of our limited operating history and the rapidly
evolving nature of our business, we believe that period-to-period comparisons of
our operating results should not be relied upon as an indication of future
performance. See "Risk Factors -- Quarterly operating results may fluctuate
significantly."

Net sales. Net sales consist of product sales net of allowances for
product returns. We recognize revenues when the related product is shipped. In
the future, the level of our sales will depend on many factors, including:

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

- the frequency of our customers' purchases;

- the quantity and mix of products that our customers purchase;

- the price that we charge for our products; and

- the level of customer returns that we experience.

Cost of goods sold. Cost of goods sold consists primarily of the costs of
products sold to customers. The Vitamin Shoppe will continue to supply our
inventory on an exclusive basis. Under the supply and fulfillment agreement, we
will pay The Vitamin Shoppe an amount equal to 105% of The Vitamin Shoppe's
product cost. Historically, The Vitamin Shoppe provided our inventory at 100% of
its product
22
<PAGE> 28

cost. As a result, we expect cost of goods sold as a percentage of sales to
increase in the future. We expect cost of goods sold to increase in absolute
dollars to the extent that our sales volume increases. We may in the future
expand or increase the discounts we offer to our customers and may otherwise
alter our pricing structures and policies. These changes would negatively affect
gross margins. Our gross margin will fluctuate based on many factors, including:

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

- our pricing strategy relative to the cost of our products; and

- the mix of products that our customers purchase.

Marketing and sales expenses. Marketing and sales expenses consist
primarily of advertising and promotional expenditures, merchandising, customer
service, distribution expenses, including order processing and fulfillment
charges, net shipping costs, equipment and supplies, and payroll and related
expenses for personnel engaged in these activities. The Vitamin Shoppe will
continue to provide warehousing and fulfillment services for our customer orders
on an exclusive basis. Under the supply and fulfillment agreement, we will pay
The Vitamin Shoppe an amount equal to 105% of The Vitamin Shoppe's actual
average unit cost per package, multiplied by the number of packages shipped to
our customers, plus actual shipping costs that we do not pay directly.
Historically, The Vitamin Shoppe provided us with fulfillment services at 100%
of its cost. Because our fulfillment costs have historically been less than 3%
of sales, we do not believe that the supply and fulfillment agreement will have
a material effect on our results of operations. Under the trademark license
agreement, we have the exclusive right to use The Vitamin Shoppe's trademarks,
including The Vitamin Shoppe logo and name, in connection with our marketing and
sale of products and services in online commerce. We will pay The Vitamin Shoppe
an annual royalty fee equal to $1 million plus a percentage, which ranges from
5% to 1% depending upon volume, of our net sales of The Vitamin Shoppe brand
products and other products identified by or branded with The Vitamin Shoppe's
trademarks. Historically, no royalty fee was charged by The Vitamin Shoppe. We
intend to continue to pursue an aggressive branding and marketing campaign. As a
result, we expect marketing and sales expenses to increase significantly in
absolute dollars. Marketing and sales expenses may also vary considerably from
quarter to quarter, depending on the timing of our advertising campaigns.

Product development expenses. Product development expenses consist
primarily of consulting fees and payroll and related expenses for application
development and information technology personnel, licensing and service
agreements, website hosting and communications charges and website content
development and design expenses. We believe that continued investment in product
development is critical to attaining our strategic objectives. As a result, we
expect product development expenses to increase significantly in absolute
dollars.

General and administrative expenses. General and administrative expenses
consist primarily of payroll and related expenses for executive and
administrative personnel, corporate facility expenses, professional services
expenses, travel and other general corporate expenses. We expect general and
administrative expenses to increase in absolute dollars as we expand our staff
and incur additional costs related to the expected growth of our business.

Interest expense. Interest expense for all periods was allocated from The
Vitamin Shoppe at 8.75% per annum on The Vitamin Shoppe's advances to us. These
advances represent The Vitamin Shoppe's cumulative funding of our cash
requirements since inception.

Amortization of stock-based compensation. In June 1999, we granted options
to Kathryn H. Creech and Eliot D. Russman, two of our executive officers, to
purchase 569,045 shares of Class A common stock at an exercise price of $3.82
per share. These options were granted at an exercise price that was less than
the fair market value of the Class A common stock, based on the price at which
we sold the Series A convertible preferred stock that is convertible into Class
A common stock. Accordingly, VitaminShoppe.com has recorded deferred stock-based
compensation of approximately $3 million during the six months ended
23
<PAGE> 29

June 30, 1999. During the third quarter of 1999, we granted options to one
director and 14 employees to purchase an aggregate of 311,975 shares of Class A
common stock at an exercise price of $9.15 per share. These options were granted
at an exercise price that was less than the fair market value of the Class A
common stock, based on the assumed initial public offering price of $11.00.
Accordingly, VitaminShoppe.com will record deferred stock-based compensation of
approximately $577,000 during the three months ended September 30, 1999. In
addition, we will record deferred compensation expense of approximately $697,000
upon the closing of this offering due to the accelerated vesting of one of these
options with respect to 130,815 shares of Class A common stock. The remaining
deferred compensation expense of approximately $2.3 million will be amortized
over the three-year vesting period.

Income taxes. Our operating results have been included in the consolidated
income tax returns of The Vitamin Shoppe. To date, The Vitamin Shoppe has not
allocated to us our share of income tax liabilities or benefits attributable to
our operating results. Our income tax provisions have been calculated on a
separate return basis and present the effect on operating results as if we had
not been included in the consolidated income tax return of The Vitamin Shoppe.
Because of our operating losses since inception and the uncertainty of future
recoverability, and because The Vitamin Shoppe has not allocated to us any tax
benefits, we have not provided for income tax benefits in our financial
statements.

The Vitamin Shoppe may elect to include us in its "consolidated group" for
federal income tax purposes with respect to taxable periods prior to the closing
of this offering. If such an election is made, then we will pay our
proportionate share of The Vitamin Shoppe's tax liability, computed as if we
were filing a separate return, and the value of any tax loss benefits
attributable to us will be refunded by The Vitamin Shoppe.

After the closing of this offering, we will not be part of The Vitamin
Shoppe's consolidated group and may not be able to realize the tax benefit of
future losses. Losses generated after we cease to be part of The Vitamin
Shoppe's consolidated group will be available to us to offset any future taxable
income for 20 years. Deferred tax assets normally recorded to reflect the future
benefit may or may not be recorded, depending on our ability to demonstrate the
likelihood of future profitability.

Intercompany agreements. We will incur costs associated with some of the
intercompany agreements. The impact of the trademark license agreement and the
supply and fulfillment agreement is discussed above. While the intercompany
agreements were not negotiated on an arms-length basis, we believe that their
terms are no less favorable to us than could have been obtained from
unaffiliated third parties. See "Business -- Intercompany Agreements" for a
summary of the material terms of these agreements.

QUARTERLY RESULTS OF OPERATIONS

Because we were a development stage company from October 1997 through April
7, 1998 and have a short operating history, we believe that period-to-period
comparisons prior to 1999 are less meaningful than an analysis of recent
quarterly operating results. Accordingly, this discussion and analysis of our
results of operations focuses on the five quarters ended June 30, 1999.

The following table sets forth unaudited quarterly statement of operations
data from inception through June 30, 1999. This unaudited quarterly information
has been derived from our unaudited financial statements but, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such information. Results for
any quarter are not necessarily indicative of the operating results for any
future period.

24
<PAGE> 30

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1997 1998 1998 1998 1998 1999 1999
------------ --------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............. $ -- $ -- $ 480 $ 1,045 $ 1,336 $ 1,913 $ 2,390
Cost of goods sold.... -- -- 239 528 640 936 1,168
------- ------- ------- ------- ------- ------- -------
Gross profit........ -- -- 241 517 696 977 1,222
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Marketing and
sales............ -- -- 392 905 1,918 1,832 2,535
Product
development...... 285 84 111 78 369 517 344
General and
administrative... 64 67 248 291 311 416 759
------- ------- ------- ------- ------- ------- -------
Total operating
expenses....... 349 151 751 1,274 2,598 2,765 3,638
------- ------- ------- ------- ------- ------- -------
Loss from
operations.......... (349) (151) (510) (757) (1,902) (1,788) (2,416)
Interest expense...... 4 9 18 33 60 98 123
------- ------- ------- ------- ------- ------- -------
Net loss.............. $ (353) $ (160) $ (528) $ (790) $(1,962) $(1,886) $(2,539)
======= ======= ======= ======= ======= ======= =======
</TABLE>

Net sales. We launched our website on April 7, 1998. Prior to that date,
there were no sales. The increases in net sales for the subsequent five quarters
ended June 30, 1998, September 30, 1998, December 31, 1998, March 31, 1999 and
June 30, 1999 were attributable to a significant increase in the number of
orders. We believe that these increases were attributable to enhancements made
to the website to improve navigation and the overall user experience and to
increased advertising expenditures.

Cost of goods sold. Cost of goods sold has increased in absolute dollars
for the five quarters ended June 30, 1998, September 30, 1998, December 31,
1998, March 31, 1999 and June 30, 1999 due to the increased volume of goods
sold. As a percentage of sales, cost of goods sold was 49.8%, 50.5%, 47.9%,
48.9% and 48.9% for the five quarters ended June 30, 1998, September 30, 1998,
December 31, 1998, March 31, 1999 and June 30, 1999. The fluctuations primarily
resulted from changes in the monthly promotional discounts offered on sales of
our products.

Marketing and sales expenses. Marketing and sales expenses increased in
each of the five quarters ended June 30, 1998, September 30, 1998, December 31,
1998, March 31, 1999 and June 30, 1999 primarily due to expenses associated with
entering into strategic relationships with web portals and health-oriented
channels, including Ask Dr. Weil (April 1998), Infoseek (August 1998), Excite
(September 1998), Netscape (September 1998), Yahoo! (November 1998), drkoop.com
(March 1999) and InteliHealth (April 1999).

Product development expenses. Product development expenses increased in
each of the five quarters ended June 30, 1998, September 30, 1998, December 31,
1998, March 31, 1999 and June 30, 1999 primarily due to increased expenses
associated with the addition of product development personnel and additional use
of third-party service providers, consultants and contract labor.

General and administrative expenses. General and administrative expenses
increased in each of the five quarters ended June 30, 1998, September 30, 1998,
December 31, 1998, March 31, 1999 and June 30, 1999 primarily due to increased
expenses associated with the addition of general and administrative personnel
and additional professional fees.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, our operations have not generated sufficient cash flow to
satisfy our current obligations. The Vitamin Shoppe funded these obligations
through July 1999.

As of June 30, 1999, we had accounts payable and accrued liabilities of
$3.1 million and amounts payable to The Vitamin Shoppe of $5.8 million. Our
principal commitments consisted of obligations outstanding under online
marketing agreements with web portals and strategic partners aggregating

25
<PAGE> 31

$6.2 million through December 31, 2000 and a sublease agreement for office space
aggregating $1.8 million through November 2003.

As of June 30, 1999, we issued to The Vitamin Shoppe a promissory note for
approximately $5.8 million payable upon demand by The Vitamin Shoppe. This
amount represented funds advanced to us by The Vitamin Shoppe for operating
losses and working capital requirements.

In July 1999, we issued, for net proceeds of approximately $24 million,
shares of our Series A convertible preferred stock, par value $0.01 per share,
that are convertible into an aggregate of 2,732,119 shares of Class A common
stock. Approximately $10 million of this amount was paid by the conversion of
promissory notes held by existing security holders of The Vitamin Shoppe and
their affiliates.

We expect a significant increase in expenditures for online, traditional
media and direct advertising to promote the VitaminShoppe.com brand and to
attract and retain customers. We expect a substantial increase in our capital
expenditures and lease commitments consistent with our expected growth in
operations, infrastructure and personnel. During the next six months, we intend
to redesign our website to enhance its functionality. We expect to spend
approximately $7.3 million for capital expenditures and expenses in connection
with the redesign project. In addition, at some point we may need to establish
our own fulfillment and distribution centers either to acquire greater control
over the distribution process or to provide adequate supplies of products for
our customers. This would require significant capital investments in facilities
and equipment.

We expect that the net proceeds of this offering, together with our
available funds, will be sufficient to meet our expected needs for working
capital and capital expenditures for at least the next 12 months. We may need to
raise additional funds prior to the end of this period. If we raise additional
funds in the future through the issuance of equity or debt securities, then
these securities may have rights, preferences or privileges senior to the rights
of the Class A common stock, and holders may experience additional dilution. We
cannot be certain that additional financing will be available to us when
required on favorable terms or at all.

YEAR 2000 COMPLIANCE

Many existing computer programs and systems use only two digits to identify
a year. These programs and systems were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
these computer applications could fail or create erroneous results by, at or
beyond the year 2000. Directly or through The Vitamin Shoppe, we use software,
computer technology and other services internally developed and provided by
third-party vendors that may fail due to the year 2000 problem. For example, we
are dependent upon the financial institutions involved in processing our
customers' credit card payments for online services and a third party that hosts
our web servers. We are also dependent upon telecommunications vendors to
maintain our network and the United States Postal Service and other third-party
carriers to deliver products to our customers.

We are in the process of reviewing the year 2000 compliance of software,
computer technology and other services on which we rely. Since inception, we
have utilized third-party vendors to develop substantially all of the systems
for the operation of our website. These systems include the software used to
provide our online search and navigation capabilities, order entry, transaction
processing, fulfillment and customer service functions, as well as firewall,
security, monitoring and backup capabilities. As part of the assessment of the
year 2000 compliance of these systems, we have sought assurances from these
vendors that their software, computer technology and other services are year
2000 compliant. Based upon our assessment to date, we believe that the software
is year 2000 compliant. We are also assessing the year 2000 compliance of our
internally developed and purchased software, which includes software for use in
order processing and fulfillment, including credit card processing and
distribution functions, accounting and database systems. We have expended
approximately $300,000 in connection with year 2000 assessment through June 30,
1999.

We completed our assessment process during the summer of 1999. Based upon
the results of this assessment, we have developed and implemented a corrective
action plan with respect to internally
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developed software applications, third-party software, third-party vendors and
computer technology and services that may fail to be year 2000 compliant. We
expect to complete any required actions during the fall of 1999. At this time,
the expenses associated with this corrective action are expected to approximate
an additional $200,000. The failure of our software and computer systems or
those of our third-party suppliers to be year 2000 compliant could have a
material adverse effect on us.

The year 2000 compliance of the general infrastructure necessary to support
our operations is difficult to assess. For example, we depend on the integrity
and stability of the Internet to provide our services. We also depend on the
year 2000 compliance of the computer systems and financial services used by
consumers. Thus, the infrastructure necessary to support our operations consists
of a network of computers and telecommunications systems located throughout the
world and operated by numerous unrelated entities and individuals, none of which
individually has the ability to control or manage the potential year 2000 issues
that may impact the entire infrastructure. Our ability to assess the reliability
of this infrastructure is limited and relies solely on generally available news
reports, surveys and comparable industry data. Based on these sources, we
believe that most entities and individuals that rely significantly on the
Internet are reviewing and attempting to address issues relating to year 2000
compliance, but it is not possible to predict whether these efforts will be
successful in reducing or eliminating the potential negative impact of year 2000
issues. A significant disruption in the ability of consumers to access the
Internet or portions of it or to use their credit cards would have an adverse
effect on demand for our products and services.

At this time, we have not yet developed a contingency plan to address
situations that may result if we or our vendors are unable to achieve year 2000
compliance. The cost of developing and implementing such a plan, if necessary,
could be significant. Any failure of our material systems, our vendors' material
systems, our customers' computers or the Internet to be year 2000 compliant
could have negative consequences for us. These consequences could include
difficulties in operating our website effectively, taking customer orders,
making product deliveries or conducting other fundamental parts of our business.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities, which is effective for fiscal
years beginning after December 15, 1998. SOP 98-5 establishes accounting and
reporting standards for start-up activities and requires the costs of start-up
activities, including organization costs, to be expensed as incurred. We adopted
SOP 98-5 effective January 1, 1999, and its adoption did not have a material
effect on our financial statements.

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

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BUSINESS

VITAMINSHOPPE.COM

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

Until July 1999, we operated as a division of The Vitamin Shoppe, a leading
retail and catalog source established in 1977. Based in North Bergen, New
Jersey, The Vitamin Shoppe has over 60 retail stores within the Northeast and
Mid-Atlantic regions and a monthly catalog with an annual circulation of 12 to
14 million copies. The Vitamin Shoppe's catalog operations, including
purchasing, design, customer service, warehousing, packaging and shipping, are
conducted from its New Jersey headquarters. In 1998, The Vitamin Shoppe's total
sales were $132 million. We have entered into intercompany agreements under
which The Vitamin Shoppe has licensed its trademarks to us and provides product
supply, fulfillment, promotional, administrative and other services to us.

Our strategy is to become the leading online source for vitamins,
nutritional supplements and minerals by combining the core competencies and
infrastructure of The Vitamin Shoppe with the functionality, convenience and
information resources of the Internet. We believe that The Vitamin Shoppe's
expertise and experience provide us with important competitive advantages,
including:

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

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

We believe that we deliver a compelling value proposition to our customers.
We offer an extensive selection, attractive pricing, superior customer service,
convenience and expert information. Our website integrates advanced
transactional capabilities with easy access to health and nutrition information
from credible third-party sources. By offering quality products and content
through an intuitive and easy-to-use interface and by focusing on customer
service, we believe that we meet a broad spectrum of consumer needs and foster
customer loyalty. We believe that the combination of a wide array of products,
informative content and superior customer service positions VitaminShoppe.com as
a comprehensive resource for vitamins, nutritional supplements and minerals.

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Vitamin Shoppe, we believe that we have the opportunity to capture market share
and to improve the margins that we have experienced. Between the April 1998
launch of our website and June 1999, more than 48,000 customers placed over
95,000 orders online. During this period, our average order (excluding shipping
charges) was approximately $74, which we believe surpassed the online average
for vitamins, nutritional supplements and minerals. The average number of orders
placed on our website each week grew from 381 in April 1998 to 2,870 in June
1999. The average number of orders placed on our website grew at a compounded
monthly rate of 14% during the six months ended June 30, 1999. We generated
revenues of $2.9 million in 1998 and $4.3 million during the six months ended
June 30, 1999.

VitaminShoppe.com was incorporated in the State of Delaware in May 1999,
and we began to operate as a separate company in July 1999. Our main offices are
located at 444 Madison Avenue, Suite 802, New York, New York 10022, and our
telephone number is (212) 308-6730. Our e-commerce website is located at
www.VitaminShoppe.com.

INDUSTRY OVERVIEW

Vitamins, nutritional supplements and minerals. According to Packaged
Facts, an independent market research company, total domestic retail sales of
vitamins, nutritional supplements and minerals and similar products during 1998
were approximately $8.9 billion. The vitamin, nutritional supplement and mineral
market has grown at a 15% compounded annual rate for the last four years and is
expected to grow at a 13% compounded annual rate from 1998 to 2003. According to
Packaged Facts, this growth stems from the passage of the Dietary Supplement and
Health Education Act, a growing body of scientific research showing the benefits
of vitamins, the introduction of new types of nutritional supplements, increased
consumer interest in nutritional and alternative medicine and changing attitudes
within the medical community. Simmons Market Research Bureau estimates that, in
1998, 56% of adults in the United States used vitamins, nutritional supplements
and minerals, an increase from 43% in 1993. For more information about the
Dietary Supplement and Health Education Act, see "-- Government Regulation."

Channels of distribution. The vitamin, nutritional supplement and mineral
market is highly fragmented. Vitamin, nutritional supplement and mineral
products are sold through a number of channels, including retail, catalog/mail
order, direct selling and, more recently, online commerce. Each of these
channels offers a varying degree of convenience, selection, quality,
information, price and privacy. Retail is the largest of these channels,
accounting for 88% of sales during 1998, according to Packaged Facts. The retail
channel includes food stores, drugstores and mass merchandisers, which together
accounted for 50% of sales during 1998, and health/natural food stores, which
accounted for 39% of sales during 1998. Direct selling accounted for 10% of
sales during 1998, and catalog and online distribution accounted for the
remaining 2%.

Emergence of the Internet. The Internet plays an increasingly significant
role in communication, information and commerce. International Data Corporation,
an independent research company, estimates that the 97 million Internet users
worldwide at the end of 1998 will grow to 320 million users by the end of 2002.
The functionality of the Internet makes it an attractive commercial medium by
providing features and information that have been unavailable in the past.
International Data Corporation estimates that worldwide consumer online commerce
will grow from approximately $11 billion in 1998 to approximately $94 billion by
2002. In addition, International Data Corporation estimates that, as the number
of total Internet users grows, the number of online purchasers will grow at a
compounded annual rate of 46% from 28 million in 1998 to 128 million in 2002.
Baby boomers, who represent 49% of all Internet users, are an attractive
demographic group for online merchandisers.

The online opportunity. We believe that the Internet is uniquely qualified
to become the "channel of choice" for vitamins, nutritional supplements and
minerals. Using the Internet, we offer a highly efficient solution that allows
customers to research a large selection of products in the convenience and
privacy of their own homes so that informed purchase decisions may be made. In
addition, we believe that the privacy of the Internet enables consumers to feel
more comfortable in purchasing personal products, since

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the information conveyed is confidential. These benefits, together with the
convenience of being able to shop 24 hours per day, seven days per week, the
ability to reorder products easily and the availability of a large product
selection make the Internet an excellent distribution channel for these
products. In November 1998, Packaged Facts called the World Wide Web an "ideal
place" to market vitamins, nutritional supplements and minerals, due in part to
the low shipping cost relative to the value of the products, as well as the
capability of providing detailed information about a large number of products.

The number of online consumers is growing rapidly and includes baby boomers
who are concerned about health and nutrition and whose discretionary income is
relatively high. According to a Harris Poll featured in USA Today, nearly 70% of
Internet users have researched a disease or medical condition online. Cyber
Dialogue estimates that the number of adults in the United States searching
online for health and medical information will grow from approximately 17
million during the year ended July 1998 to approximately 30 million during the
year ending July 2000. In addition, 32% of Internet users shopped online for
health-related products during the six months ended February 1999, according to
Forrester Research. We believe that the demographics of those who use vitamins,
nutritional supplements and minerals and those who use the Internet are highly
correlated, with high income, a college degree and a professional occupation
being common traits.

BUSINESS STRATEGY

Our goal is to make VitaminShoppe.com a comprehensive online source for
products and information about vitamins, nutritional supplements and minerals.
We seek to become the leading online source for these products by delivering a
new value proposition to our customers that combines The Vitamin Shoppe's
existing infrastructure and 22 years of experience with the functionality,
convenience and information resources of the Internet. To achieve this goal, we
are focusing on the following objectives:

Offer a large selection of products. Our product selection includes over
18,000 items, representing over 400 brands, including The Vitamin Shoppe brand,
which we believe offers an excellent value as a quality alternative to other
branded products. The Vitamin Shoppe stocks most of its suppliers' entire
product lines, and our product offerings are not constrained by the limitations
of shelf space. We provide year-round discounts generally ranging from 20% to
40% off suggested retail prices. The Vitamin Shoppe's 22 years of experience
provide us with exceptional knowledge about products and suppliers, as well as
insights into customer purchasing patterns.

Provide a convenient shopping experience. By offering an extensive
selection of quality products, together with access to product and
health-oriented information, we believe that we make our products accessible to
a wide range of consumers whose level of interest and knowledge ranges from
casual to sophisticated. The easy-to-use search capabilities of our website and
its flexible database structure allow customers to tailor the breadth of product
choice and depth of product information to their particular needs. We provide
consumers with the ability to shop 24 hours per day, seven days per week,
supported by online customer service and a toll-free number.

Deliver superior customer service. We have the ability to draw upon The
Vitamin Shoppe's 19 years of experience in catalog fulfillment and customer
service. We believe that The Vitamin Shoppe's order processing, fulfillment
operations and call center provide excellent efficiency, reliability and
customer service. The Vitamin Shoppe's efficient operations and high levels of
in-stock merchandise enable us to provide same-business-day shipping on
approximately 85% of online orders received by 5:00 p.m. Eastern time.

Leverage a proven platform and established infrastructure. We leverage the
existing operations of The Vitamin Shoppe brand and The Vitamin Shoppe's
economies of scale in purchasing, supplier relationships, inventory management
and direct mail fulfillment. We believe that our intercompany agreements with
The Vitamin Shoppe provide key competitive advantages over some of our online
competitors. We believe that these advantages will enable us to deliver value to
our customers and provide the infrastructure to sustain rapid growth.

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Offer compelling content and information. We provide information about
vitamins, nutritional supplements and minerals through our companion website,
www.vitaminbuzz.com, and hyperlinks to credible third-party information sources
about health and nutrition on well-known health-related websites, such as
www.drkoop.com, www.drweil.com, www.InteliHealth.com and www.onhealth.com. Our
e-commerce website, www.VitaminShoppe.com, supports our product listings with
factual information, including an ingredient list for every product that we
carry. Information that could be construed as advisory or prescriptive in nature
is accessible from a variety of credible third-party information sources through
our companion health-related website, www.vitaminbuzz.com, in recognition of FDA
and FTC regulations concerning health claims and labeling. We believe that this
separation of our websites provides a strong sense of objectivity and builds
customer trust and loyalty.

GROWTH STRATEGY

Our growth strategy focuses on maximizing the lifetime value of our
customers by establishing ourselves as a "trusted provider" of vitamins,
nutritional supplements and minerals and by creating long-term customer
relationships. We believe that this strategy will build customer loyalty,
encourage repeat purchases, increase average order size and produce recurring
revenues. In order to maximize the lifetime value of our customers, we believe
that we must:

- generate high levels of interest and awareness of the VitaminShoppe.com
brand to encourage consumers to try online purchasing;

- build customer trust in the VitaminShoppe.com brand;

- provide helpful product information to facilitate informed purchases; and

- reward customer loyalty.

We believe that the combination of our business and growth strategies will
position VitaminShoppe.com as a "trusted provider." The key elements of our
growth strategy include:

Acquire new customers. Our objective is to attract new customers through
aggressive marketing initiatives and strategic relationships that generate
awareness of the VitaminShoppe.com brand as a comprehensive online source for
both products and hyperlinks to credible third-party information sources. As of
June 30, 1999, we had over 48,000 customers who had purchased products at least
once on our website.

- Accelerate marketing initiatives. We plan to utilize a broad range of
advertising and marketing programs to build awareness of
VitaminShoppe.com as a comprehensive online source for products and
information. We will use these programs to communicate the value
proposition of our website and to encourage new customers to experience
online buying. Our marketing initiatives will include online and
traditional media, cross-promotions with The Vitamin Shoppe and others
and direct and database marketing.

- Build strategic relationships. We will use existing and new strategic
relationships to enhance the VitaminShoppe.com brand and expand our
customer base. In addition to our relationship with The Vitamin Shoppe,
we have entered into a number of relationships with credible
health-related content websites, such as www.drkoop.com and
www.drweil.com, and online portals, such as Yahoo! and Excite.

Promote customer retention and growth. Our goal is to maximize customer
retention and to increase order frequency and size across our customer base.
Through a combination of superior products, price and service, coupled with the
personalization capabilities of the Internet, we plan to build relationships
with our customers that will meet their lifetime purchasing needs for vitamins,
nutritional supplements and minerals. These lifetime relationships will be
enhanced through the Vitamin Shoppe Frequent Buyer

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Program, which is The Vitamin Shoppe's successful loyalty program. We intend to
promote customer retention and growth by utilizing the following strategies:

- Utilize customer database for target marketing. We plan to target our
growing customer database with e-mail marketing messages designed to
stimulate repeat purchases and increased spending. Our database contains
detailed customer information about the preferences and purchasing
patterns of our online customers. We have also entered into a database
agreement with The Vitamin Shoppe, under which we will conduct marketing
analysis using the customer information in The Vitamin Shoppe's database
of over 700,000 historical retail and catalog customers. The Vitamin
Shoppe's database is unavailable to other online vitamin, nutritional
supplement and mineral sources.

- Enhance customer experience. To enhance the purchasing experience, we
intend to invest in technology, such as customization features, and to
increase our offerings. We will use customer feedback and transaction
histories to expand our product offerings and to pursue additional
revenue opportunities. In addition, we will utilize strategic
relationships and licensing arrangements to expand our content offerings.
Finally, we intend to address the individual interests of our customer
base by targeting specific groups, lifestyles or interests, such as
sports enthusiasts and expectant mothers.

THE VITAMINSHOPPE.COM ONLINE EXPERIENCE

We provide consumers with a comprehensive online source for vitamins,
nutritional supplements and minerals by integrating commerce, content and
service. We believe that our website offers attractive benefits to consumers,
including convenience, ease of use, privacy, broad product selection and
relevant product information.

Features and capabilities. We emphasize ease of use and efficiency. We
intend to provide a wide range of consumers -- from the casual to the
sophisticated consumer of vitamins, nutritional supplements and minerals -- with
immediate access to the products and information that will promote an informed
purchase. Our website features full keyword search functionality and other
capabilities that enable customers to search for and select products quickly and
reliably. Our database includes complete product listings, with detailed
information about ingredients. A keyword search permits efficient comparisons
within or across brands.

- Online ordering. We provide customers with the ability to place their
orders easily and to gather a variety of items in their online shopping
carts for rapid checkout. Website functionality allows customers to
compare the prices of various options and to select those that best meet
their personal criteria for price, brand and size. Customers earn
"points" in the Vitamin Shoppe Frequent Buyer Program, which they may
redeem online or in The Vitamin Shoppe's retail stores or catalog
operations. We provide same-business-day shipping on approximately 85% of
online orders received by 5:00 p.m. Eastern time.

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

Products. We offer consumers a broad and deep complement of quality
products at competitive prices. Our year-round discount generally ranges from
20% to 40% off suggested retail prices. By carrying both national brands and The
Vitamin Shoppe brand, we believe that we meet the needs of casual, intermediate
and sophisticated consumers of vitamins, nutritional supplements and minerals,
as well as both brand-loyal and value-oriented customers. Our products come in
various formulations and delivery

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forms, including tablets, capsules, soft gels, liquids and powders. We carry
almost every national and popular brand of vitamins, nutritional supplements and
minerals, including TwinLabs(R), Nature's Way(R)and Schiff(R), as well as The
Vitamin Shoppe brand and less well-known specialty brands. The primary product
categories include:

- Vitamins, nutritional supplements and minerals. Vitamins, nutritional
supplements and minerals are our largest category. Our extensive vitamin
line includes vitamins A, B, C, D, E and K in a variety of forms and
doses. We also feature all major and trace minerals, including calcium,
boron, zinc, selenium, chromium, magnesium and potassium. We offer
vitamins and minerals alone and in combinations to address the specific
lifestyle, age and gender needs of our customers. Our nutritional
supplement line includes glucosamine and chondroitin sulfate, coenzyme Q
10, essential fatty acids, carnitine, phosphatidylserine and numerous
antioxidants.

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

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

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

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

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

- Healthcare products. We recently added over 150 healthcare products and
accessories, such as massage products, posture and joint products and
magnet therapy products, that complement our diverse product offerings.

Content. We supplement the product information available on our website
with easy access to information on topics related to health and nutrition from
well-respected third-party sources. We have a companion informational website,
www.vitaminbuzz.com, and maintain strategic relationships with credible
health-related information sources.

- www.vitaminbuzz.com. Our companion website is a valuable resource for
online consumers of vitamins, nutritional supplements and minerals. It
offers information on health concerns, nutritional supplements, herbal
formulas, drug interactions, homeopathic medicine, diets and therapies.
The website also highlights topics of current interest and contains a
hyperlink to the FDA's Guide to Dietary Supplements website.
www.vitaminbuzz.com is sponsored and maintained by VitaminShoppe.com, but
all of its content is provided by independent third parties. Most of the
content is currently provided under a license from Health Notes Online, a
well-known online and CD-ROM encyclopedia of health and nutrition
information. We intend to increase significantly the information content
within www.vitaminbuzz.com and to add features that assist customers in
finding relevant information and products. We expect that the expansion
of content will be achieved primarily through licenses with third parties
and through strategic relationships.

- Third-party information sources. We have built relationships with
well-known third-party information sources, including www.drkoop.com,
www.drweil.com, www.InteliHealth.com and www.onhealth.com, that offer
balanced content related to health and nutrition. These information
sources provide additional research opportunities to aid customers in
making informed purchase decisions.

We have entered into several online arrangements with Internet content
providers that establish us as the exclusive or preferred vendor of nutritional
products on the Internet websites of these providers. Under these agreements, we
pay advertising fees to the content providers in order to have access to their
audience

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of potential customers who are interested in health and wellness topics. Some of
these agreements also allow us to link our website to the websites of the
content providers. The agreements provide for fixed monthly or quarterly
payments by us and in some cases require us to share revenues upon the
attainment of stipulated revenue volumes. In addition, some of these agreements
require the Internet service provider to guarantee a minimum level of
impressions and to make up shortfalls in the level of impressions delivered. We
do not have the right to control the content offered on these websites. The
information contained on these websites is developed exclusively by third-party
sources and controlled by the Internet content providers.

MERCHANDISING STRATEGY

We carry every significant domestic brand of vitamins, nutritional
supplements and minerals, as well as many smaller and less well-known specialty
brands. Consistent with The Vitamin Shoppe's successful strategy, we sell most
of the suppliers' full product lines. We also offer The Vitamin Shoppe brand
products, a premium brand manufactured for The Vitamin Shoppe. The Vitamin
Shoppe brand, which provides higher gross margins to us than other brands,
constituted 47% of our sales during 1998. We sell over 18,000 different items.
No single item has accounted for more than 2% of our sales. During 1998, our
online sales mix by product category was vitamins, nutritional supplements and
minerals (71.0%), herbals (16.1%), body building (7.8%), personal care (3.8%),
homeopathic (0.4%), books (0.3%) and all other (0.6%).

Our relationship with The Vitamin Shoppe enables us to offer the large
selection of merchandise carried by The Vitamin Shoppe without the investment in
inventory and the ongoing expense related to the management of inventory. In
addition, we generally do not take legal ownership of the inventory until the
customer order is taken, which reduces the risk of inventory obsolescence and
mark-downs. We enjoy the economic benefit of The Vitamin Shoppe's relationships
with a diverse group of hundreds of vendors, as well as the purchasing economies
enjoyed by The Vitamin Shoppe as a result of its size and The Vitamin Shoppe
brand products. As a result, we believe that we are well positioned to continue
to enjoy favorable gross profit margins while providing our customers with a
broad selection of products.

ADVERTISING AND MARKETING

We intend to use a significant portion of the net proceeds from this
offering to pursue comprehensive advertising and marketing campaigns. We have
begun to implement an aggressive advertising and marketing campaign to increase
awareness of the VitaminShoppe.com brand and to acquire new customers through
multiple channels, including traditional and online advertising, direct
marketing and expansion and strengthening of our strategic relationships. We
believe that the use of multiple marketing channels reduces reliance on any one
source of customers, maximizes brand awareness and promotes customer
acquisition. In addition to the specific strategies discussed below, we will
seek to maximize the lifetime value of our customers by focusing on purchase
frequency and customer retention. We expect to benefit from the direct marketing
knowledge and expertise of our management team and, under the administrative
services agreement, personnel of The Vitamin Shoppe.

Traditional and online advertising. We intend to pursue a traditional
media-based advertising campaign that may include television, radio, print,
outdoor and event-based advertising. We may purchase advertising in the health
and nutrition magazines in which The Vitamin Shoppe has successfully advertised.
We intend to expand our activities to include targeted online advertising to
promote both the VitaminShoppe.com brand name and specific merchandising
opportunities. We also intend to purchase additional banner and other forms of
online advertising to create online awareness, reach new consumers and convert
current vitamin, nutritional supplement and mineral shoppers into our customers.
Our online advertising will include targeted websites oriented to appropriate
health and lifestyle groups, as well as broader campaigns on portals and mass
audience websites.

Cross promotion. Through the co-marketing agreement with The Vitamin
Shoppe, we expect to create significant brand awareness through cross-promotion
in The Vitamin Shoppe retail and catalog

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channels. The Vitamin Shoppe has over 60 retail stores, and in 1998
approximately 14 million copies of its monthly and bi-monthly catalogs were
distributed. See "-- Intercompany Agreements" for a description of the material
terms of the co-marketing agreement.

Direct marketing. We will apply direct marketing techniques aimed at
attracting and retaining customers and increasing order size. Direct mail
programs will include e-mail offers to targeted audience segments, including
special offers or promotions to current and prospective customers reached
through the rental of mailing lists.

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

RELATIONSHIP WITH THE VITAMIN SHOPPE

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

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

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

MANAGEMENT INFORMATION SYSTEMS

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

In response to growing capacity concerns and website development needs, we
have more than quadrupled the number of web servers that run our website since
we launched the website. We intend to invest in additional technologies that
will handle growth in online commerce traffic and website infrastructure to
enhance the functionality of our website.

In the first quarter of 2000, we intend to launch version 2.0 of our
website, which will offer improved ease of use to broaden our appeal as a
shopping destination. We also plan to enhance the functionality of the website
by adding advanced capabilities that support the personalization and
customization of product offerings and promotions. These features will enhance
our ability to market on a one-to-one basis to our customers. For example, we
may offer special promotions based on previous purchases or offer automatic
replenishment of products. We intend to engage a nationally recognized firm for
this work.

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ORDER PROCESSING AND FULFILLMENT

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

Access to The Vitamin Shoppe's order processing and fulfillment systems
enables us to retain greater control over the quality, timeliness and cost of
fulfilling our product orders than competitors that outsource these services. In
addition, the scale of The Vitamin Shoppe's operations enables it to keep a
large number of items in stock. During 1998, The Vitamin Shoppe shipped an
average of 22,000 packages weekly from its warehouse and distribution center.
The Vitamin Shoppe's efficient operations and high levels of in-stock
merchandise enable us to provide same-business-day shipping on approximately 85%
of online orders received by 5:00 p.m. Eastern time. Customers generally receive
orders within two to five business days after shipping.

COMPETITION

The vitamin, nutritional supplement and mineral market is highly fragmented
and competitive. In addition, the online commerce market in which we operate is
new, rapidly evolving and highly competitive. We expect competition to intensify
in the future because current and new competitors can launch websites at a
relatively low cost.

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

- Health/natural specialty retailers. This category is highly fragmented
and includes local, regional and national chains, as well as catalog
marketers and online retailers. The largest participant in this sector is
General Nutritional Centers, which has a nationwide presence and recently
launched a website. Another large competitor is NBTY, which sells
exclusively private-label products through its Puritan's Pride and
Nutrition Headquarters mail order catalogs and its Vitamin World retail
stores. NBTY also sells through separate Vitamin World and Puritan's
Pride websites. In addition, Rexall Sundown, a large manufacturer of
vitamins, nutritional supplements and minerals, sells directly to
consumers through both catalog and direct mail operations. Competitors
focusing exclusively on online operations include www.MotherNature.com
and www.GreenTree.com.

- Drugstores. This category is dominated by national chains, such as
Walgreen's, CVS and RiteAid. Most national chains have a limited online
presence, if any. Others have recently acquired an online presence, as
CVS did when it acquired www.soma.com and RiteAid did when it invested in
www.drugstore.com. Recent online entrants include www.drugstore.com and
www.planetRx.com. This category currently offers a moderate selection of
vitamins, nutritional supplements and minerals, focusing instead on
prescriptions and over-the-counter products.

- Supermarkets and grocery stores. This category includes traditional
supermarkets, such as Safeway and Kroger, and natural-food markets, such
as Whole Foods and Wild Oats. Some of these companies have entered the
online market with a limited offering of vitamins, nutritional
supplements and minerals. Online grocery stores, such as www.Peapod.com
and www.netgrocer.com, also compete against us. This category generally
offers a limited selection of vitamins, nutritional supplements and
minerals and infrequent discounts.

- Mass merchant retailers. This category is dominated by companies such as
Wal-Mart, Kmart and Target, which have extensive retail locations but
limited online presence. These chains offer attractive pricing on
vitamins, nutritional supplements and minerals but have limited selection
at retail stores and offer little product information.
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Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we do. Our competitors may
develop products or services that are equal or superior to our solutions and may
achieve greater market acceptance than we do. In addition, larger,
well-established and well-financed entities may acquire, invest in or form joint
ventures with online competitors or suppliers as the use of the Internet
increases.

GOVERNMENT REGULATION

The formulation, manufacturing, processing, packaging, labeling,
advertising, distribution and sale of dietary supplements are subject to
regulation by federal agencies. The principal governmental agencies that
regulate dietary supplements include the FDA and the FTC. Dietary supplements
are also regulated by governmental agencies for the states and localities in
which we sell our products. Among other matters, the FDA and FTC prohibit claims
with respect to a product that refer to the value of the product in treating or
preventing disease or other adverse health conditions. Because the Internet is
relatively new, there is little common law or regulatory guidance that clarifies
the manner in which government regulation impacts online sales of vitamins,
nutritional supplements and minerals. This lack of clarity lends uncertainty to
the laws regulating online promotional claims and website structure.

Governmental agencies, such as the FDA and FTC, have a variety of remedies
and processes available to them. They may initiate investigations, issue warning
letters and cease-and-desist orders, require corrective labels or advertising,
require that a company offer to repurchase products, seek injunctive relief or
product seizure, impose civil penalties or commence criminal prosecution. Some
state agencies have similar authority, as well as the authority to prohibit or
restrict the manufacture or sale of products within their jurisdictions. In the
past, these agencies have used their remedies to regulate industry participants,
and federal agencies have imposed civil penalties in the millions of dollars.
Increased sales and publicity of dietary supplements may result in increased
regulatory scrutiny of the industry.

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

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

The Nutrition Labeling and Education Act of 1990, which amended the Federal
Food, Drug and Cosmetic Act, prohibits the use of any health claim, which
generally means any statement relating a substance to reducing the risk of
disease, for any foods, including dietary supplements, unless the health claim
is supported by "significant scientific agreement" and is preapproved by the
FDA. The FDA Modernization Act of 1997, which also amended the Federal Food,
Drug and Cosmetic Act, relaxed this prohibition somewhat by permitting health
claims based upon authoritative statements of specific scientific

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bodies without FDA preapproval, but only following notification of the FDA. To
date, the FDA has approved or accepted notification for only a limited number of
health claims for dietary supplements.

Dietary supplement manufacturers, marketers and distributors are allowed to
make statements of nutritional support. Under the Dietary Supplement Health and
Education Act, manufacturers and marketers must notify the FDA of any statements
of nutritional support no later than 30 days after the first marketing of a
supplement with the statement. Four types of statements of nutritional support
are permissible:

- a benefit related to a classical nutrient deficiency disease;

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

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

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

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

In 1998, the FDA released proposed rules regarding the regulation of claims
with respect to dietary supplements that expressly or implicitly claim to
diagnose, treat, prevent or cure a disease. The dietary supplement that is the
basis of the claim would continue to be regarded as a drug and must meet the
safety and effectiveness standards of the Federal Food, Drug and Cosmetic Act.

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

The FDA currently proposes to regulate the sale of nonprescription products
containing ephedra, a natural product that contains a small percentage of the
ephedrine alkaloids that are used in some prescription and over-the-counter
stimulants and antihistamines. Less than 1% of The Vitamin Shoppe's 1998
revenues were derived from products that contain ephedra. We do not believe that
a complete loss of sales of these products or further restrictions in
jurisdictions in which these products may be sold would materially impair our
business.

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

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

INTELLECTUAL PROPERTY

Under the trademark license agreement, The Vitamin Shoppe has granted us an
exclusive license to use The Vitamin Shoppe's trademarks and service marks,
including The Vitamin Shoppe logo and name, in connection with our marketing and
sale of products and services in online commerce. We believe that

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

INTERCOMPANY AGREEMENTS

In order to obtain the benefits of The Vitamin Shoppe's expertise and
infrastructure, we have entered into several intercompany agreements with The
Vitamin Shoppe, the material terms of which are summarized here. Complete copies
of these agreements have been filed with the Securities and Exchange Commission
as exhibits to the registration statement of which this prospectus is a part.
These agreements were not negotiated on an arms-length basis. However, we
believe that the terms of these agreements are no less favorable to us than
could have been obtained from unaffiliated third parties. In general, the
intercompany agreements do not have fixed terms.

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

Trademark License Agreement. We have licensed The Vitamin Shoppe logo and
name on an exclusive basis for use in connection with our marketing and sale of
products and services in online commerce. We will pay The Vitamin Shoppe an
annual royalty fee equal to $1 million plus a percentage of our net sales of The
Vitamin Shoppe brand products and other products identified by or branded with
The Vitamin Shoppe's trademarks. This percentage declines from 5% of net sales
up to $25 million to 1% of net sales above $100 million. The trademark license
agreement contains restrictions with respect to our marketing of products and
services. For example, The Vitamin Shoppe has the right to demand that we remove
from our websites any online content that bears any The Vitamin Shoppe trademark
if The Vitamin Shoppe determines that the content is detrimental to its
reputation. In addition, unless we obtain the written permission of The Vitamin
Shoppe, we must provide it with prior written notice if we intend to market and
sell The Vitamin Shoppe brand products at less than The Vitamin Shoppe's monthly
promotional prices in effect from time to time. We may not use the trademark
license to market and sell under The Vitamin Shoppe's trademarks any products
not supplied to us by The Vitamin Shoppe. We have the right to terminate the
trademark license agreement at any time upon 180 days prior written notice to
The Vitamin Shoppe. Either party has the right to terminate the trademark
license agreement immediately if the other is in material breach that is not
cured within 20 days after written notice, the other party is in bankruptcy, the
business of the other party is liquidated or terminated or the other party
becomes insolvent. Termination of the trademark license agreement causes the
immediate termination of the supply and fulfillment agreement.

The trademark license agreement also contains covenants not to compete. The
Vitamin Shoppe will not enter into the online vitamin, nutritional supplement
and mineral business. In addition, if The Vitamin
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Shoppe acquires a business that includes an online vitamin, nutritional
supplement and mineral business, it must offer to sell or license that portion
of the business to us. If we elect not to purchase that portion of the business
and The Vitamin Shoppe does not sell or license that portion of the business to
a third party within 90 days, The Vitamin Shoppe must cease to operate the
online portion of the business. We will not manufacture vitamin, nutritional
supplement and mineral products or market or distribute these products through
retail stores or print catalogs. In addition, if we acquire a business that
includes a retail store or print catalog business related to vitamins,
nutritional supplements and minerals, we must offer to sell or license that
portion of the business to The Vitamin Shoppe. If The Vitamin Shoppe elects not
to purchase that portion of the business and we do not sell or license that
portion of the business to a third party within 90 days, we must cease to
operate the retail or print catalog portion of the business. In addition, we
will not install an Internet kiosk within a one-half mile radius of any urban
retail store or a five-mile radius of any suburban retail store of the Vitamin
Shoppe. These covenants not to compete terminate two years after the trademark
license agreement terminates.

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

The Vitamin Shoppe will also provide warehousing and fulfillment services,
including receiving, quality control, storage, picking, packing and shipping of
customer orders and processing of customer returns, under the supply and
fulfillment agreement. We will pay The Vitamin Shoppe an amount equal to 105% of
its actual average unit cost per package, multiplied by the number of packages
shipped to our customers, plus actual shipping costs that we do not pay
directly. The Vitamin Shoppe's actual average unit cost will take into account
all warehousing and fulfillment costs, including overhead items such as rent,
depreciation and operating expenses. The Vitamin Shoppe is obligated to use its
best efforts to cause the quality of fulfillment services provided to us under
the agreement to be at least as high as The Vitamin Shoppe provides when
fulfilling orders for its catalog operations. If at any time we determine that
the quality of fulfillment services provided by The Vitamin Shoppe fails to meet
the standards required to remain competitive, we may solicit a proposal from a
third-party provider of fulfillment services. If The Vitamin Shoppe elects not
to provide fulfillment services on terms comparable to those specified in the
third-party proposal, we may engage the third-party provider to provide our
fulfillment services. If we engage a third-party provider for fulfillment, we
are required to provide The Vitamin Shoppe with 180 days prior written notice of
our termination of its fulfillment services. This notice period may be reduced
to 90 days provided that we purchase from The Vitamin Shoppe the amount of
products, on a one-for-one basis, that we had purchased over the prior 60 days.
After The Vitamin Shoppe ceases to handle our fulfillment, it will continue to
supply The Vitamin Shoppe brand products under the agreement, but it will not be
required to supply other products, to fulfill orders for other products or The
Vitamin Shoppe brand products or to process customer returns.

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

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

Co-Marketing Agreement. Unless we otherwise notify The Vitamin Shoppe, The
Vitamin Shoppe will provide us with a full-page advertisement and with
promotional references in its print catalogs, for which we will pay $40 per
1,000 catalogs distributed. The Vitamin Shoppe will also provide us with
promotional references in its retail stores and on shopping bags, product labels
and store receipts, for which we will pay The Vitamin Shoppe $833 per urban
retail store and $417 per suburban retail store each month. The Vitamin Shoppe
will pay us $20,000 each year to list The Vitamin Shoppe's retail locations on
our website and to allow a website user to order The Vitamin Shoppe's catalog.
All payments under the co-marketing agreement are subject to annual consumer
price index adjustments. Customers of VitaminShoppe.com and The Vitamin Shoppe
may use "points" earned through the Vitamin Shoppe Frequent Buyer Program to
purchase merchandise from either VitaminShoppe.com or The Vitamin Shoppe. The
Vitamin Shoppe may not include other online advertisers of vitamins, nutritional
supplements and minerals in its catalogs. Either party has the right to
terminate the co-marketing agreement immediately if the other is in material
breach that is not cured within 20 days after written notice, the other party is
in bankruptcy, the business of the other party is liquidated or terminated or
the other party becomes insolvent. We have the right to terminate the
co-marketing agreement at any time after June 30, 2001 upon 90 days prior
written notice to The Vitamin Shoppe.

Administrative Services Agreement. The Vitamin Shoppe will provide general
and administrative services to us. The Vitamin Shoppe will bill us directly for
100% of the cost of employee benefits, such as medical and dental insurance,
until we establish or are directly billed for these benefits. Through June 30,
2000, we will pay The Vitamin Shoppe $55,000 per month for human resources,
management information, cash management, finance and accounting services. After
June 30, 2000, we may contract with The Vitamin Shoppe to receive these services
for mutually acceptable compensation.

At our request, The Vitamin Shoppe will handle routine customer service
issues, such as order tracking, and provide dedicated customer service for our
toll-free telephone number, for which we will pay 105% of The Vitamin Shoppe's
cost. We will provide online order tracking for The Vitamin Shoppe's print
catalogs. The Vitamin Shoppe is also obligated to assist us in building and
maintaining appropriate links between the computer systems utilized by The
Vitamin Shoppe and us. Either party has the right to terminate the
administrative services agreement immediately if the other is in material breach
that is not cured within 20 days after written notice, the other party is in
bankruptcy, the business of the other party is liquidated or terminated or the
other party becomes insolvent. We have the right to terminate the services
described in this paragraph on 90 days prior written notice, and The Vitamin
Shoppe may terminate the services at any time after June 30, 2000 upon 90 days
prior written notice.

Database Agreement. On a nonexclusive, royalty-free basis, we and The
Vitamin Shoppe will share with each other available product and customer
information, including transaction histories, for analytical purposes. None of
the customer information exchanged may be used by The Vitamin Shoppe to solicit
customers who have only ordered online or by us to solicit The Vitamin Shoppe
customers who have not purchased from us online. Neither The Vitamin Shoppe nor
we may sell, lease or rent the other's customer information to a third party.
Either party has the right to terminate the database agreement immediately if
the other is in material breach that is not cured within 20 days after written
notice, the other party is in bankruptcy, the business of the other party is
liquidated or terminated or the other party becomes insolvent. We have the right
to terminate the database agreement at any time upon 180 days prior written
notice. The Vitamin Shoppe is entitled to terminate the database agreement
immediately upon the acquisition of the ownership of 30% or more of the voting
power of the capital stock of VitaminShoppe.com by any person or entity that
engages in the direct or indirect marketing or distribution through retail or
direct marketing channels of vitamins, minerals, nutritional supplements or any
other nutritional or nonprescription health-related product anywhere in the
world or of any other product produced, marketed or distributed by The Vitamin
Shoppe during the term of the database agreement.

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Intercompany Indemnification Agreement. We will indemnify The Vitamin
Shoppe for liabilities in respect of our business after the transfer of its
online business to us. The Vitamin Shoppe will indemnify us for liabilities in
respect of its businesses and any tax liabilities resulting from any election by
The Vitamin Shoppe to include us in its "consolidated group" for federal income
tax purposes.

EMPLOYEES

As of September 22, 1999, we had 18 employees who devoted all or
substantially all of their time to our business. From time to time, we employ
independent contractors to supplement our staff. In addition, many of The
Vitamin Shoppe's employees provide services to us. We believe that our relations
with our employees are good. We are not a party to any collective bargaining
agreements. Under the administrative services agreement, The Vitamin Shoppe
provides our employees with a benefit package that includes medical insurance,
dental insurance, life insurance and a contributory 401(k) plan.

FACILITIES

Our headquarters consist of approximately 10,000 square feet of space at
444 Madison Avenue, Suite 802, New York, New York 10022. The sublease for this
space expires in November 2003 and provides for an initial monthly rental of
$34,913. We believe that our facilities are adequate for our needs and that
additional suitable space will be available on acceptable terms as required. We
do not own any real estate.

LEGAL PROCEEDINGS

We are not a party to any legal proceeding that management believes would
have a material adverse effect on our business, results of operations or
financial condition.

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MANAGEMENT

This table sets forth information with respect to our directors and
executive officers on the date of this prospectus.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jeffrey J. Horowitz....................... 52 Chairman of the Board of Directors and a
Class III Director
Kathryn H. Creech......................... 47 President, Chief Executive Officer and a
Class I Director
Larry M. Segall........................... 44 Chief Financial Officer, Secretary and
Treasurer
Eliot D. Russman.......................... 43 Chief Marketing Officer
Philip H. Teplitzky....................... 50 Chief Technology Officer
Joel Gurzinsky............................ 43 Vice President -- Operations
Lisa H. Kern.............................. 33 Vice President -- Business Development and
Sales
Michael C. Brooks......................... 54 Class II Director
Martin L. Edelman......................... 57 Class II Director
Barbara S. Feigin......................... 61 Class I Director
M. Anthony Fisher......................... 48 Class III Director
David S. Gellman.......................... 41 Class I Director
Woodson C. Merrell, M.D. ................. 51 Class III Director
Stephen P. Murray......................... 36 Class II Director
</TABLE>

Jeffrey J. Horowitz has been the chairman of our board of directors and a
director of VitaminShoppe.com since June 1999. Mr. Horowitz is the founder,
president and chief executive officer of The Vitamin Shoppe. Mr. Horowitz opened
the first Vitamin Shoppe retail store in 1977 and launched the catalog
operations in 1981. Mr. Horowitz also serves as a director of The Vitamin
Shoppe.

Kathryn H. Creech has been president and chief executive officer and a
director of VitaminShoppe.com since June 1999. From 1994 to 1999, Ms. Creech was
general manager of The HomeArts.com Network, a division of the Hearst
Corporation, where she was responsible for building HomeArts into a leading
website for women. Previously, Ms. Creech was vice president of global marketing
services for The Dun & Bradstreet Corporation and held senior positions in the
cable television industry.

Larry M. Segall has been chief financial officer, secretary and treasurer
of VitaminShoppe.com since June 1999. Mr. Segall has been chief financial
officer of The Vitamin Shoppe since 1997. From 1985 to 1996, Mr. Segall held a
number of financial management positions and was vice president, treasurer and
controller of Tiffany & Co. In 1997, he was senior vice
president -- merchandising planning for Tiffany & Co. and was responsible for
worldwide strategic sales, merchandising, logistics and distribution resource
planning.

Eliot D. Russman has been chief marketing officer of VitaminShoppe.com
since June 1999. From 1998 to 1999, Mr. Russman served as vice president of
marketing for The HomeArts.com Network, a division of the Hearst Corporation
and, from 1997 to 1998, as executive vice president of business development and
client services for Freeride Media LLC, an online promotions company. From 1995
to 1997, he was director of client services for S.R.D.S., Inc., an advertising
agency. Prior to 1995, he was a partner at Ross Culbert Lavery & Russman, a
marketing communications design firm.

Philip H. Teplitzky will become our chief technology officer in September
1999. From 1995 to 1999, Mr. Teplitzsky was a vice president of Citibank, N.A.
in its consumer bank division, where he designed and implemented several
technical and functional areas of an Internet consumer bank initiative. From
1992 to 1995, he was director and then managing director of technology for SHL
Systemhouse, a software development company.

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

Lisa H. Kern has been vice president -- business development and sales of
VitaminShoppe.com since July 1999. From 1998 to 1999, Ms. Kern was most recently
director of sales for Warner Brothers Online. From 1997 to 1998, she was
director of business development for media.com, an interactive advertising
agency. From 1996 to 1997, she was supervisor of retail operations for Sony
Online Ventures Inc., an online entertainment company. She was executive
assistant to the corporate secretary and director of investor relations for The
Seagram Company Ltd. from 1995 to 1996 and manager of councils and segment
services for The Direct Marketing Association from 1993 to 1994.

Michael C. Brooks has been a director of VitaminShoppe.com since July 1999.
Since January 1985, he has been a general partner of J. H. Whitney & Co. and a
managing member of the general partner of Whitney Equity Partners, L.P., two
venture capital investment partnerships. Mr. Brooks also serves as a director of
Media Metrix, Inc., Pegasus Communications Corporation, SunGard Data Systems
Inc., USinternetworking, Inc. and several private companies.

Martin L. Edelman has been a director of VitaminShoppe.com since its
incorporation. Mr. Edelman was a partner in Battle Fowler LLP, a law firm, from
1972 to 1993 and has been of counsel to the firm since 1994. Mr. Edelman serves
as a director for Acadia Trust, Avis Rent A Car, Inc., Capital Trust and Cendant
Corp., as well as several privately held companies, including The Vitamin
Shoppe. As a member of the board of directors of Cendant Corp., Mr. Edelman has
been named as a defendant in a class action filed against the company and
several officers and directors of the company that asserts various claims under
the federal securities laws, state statutes and common law.

Barbara S. Feigin has been a director of Vitamin Shoppe since September
1999. Since 1999, Ms. Feigin has been a consultant to Grey Advertising Inc., an
advertising and marketing communications firm. From 1983 to 1999, she served as
executive vice president and worldwide director of strategic services for Grey
Advertising. Ms. Feigin also serves as a director of Circuit City and VF
Corporation.

M. Anthony Fisher has been a director of VitaminShoppe.com since its
incorporation. Mr. Fisher has been a partner of Fisher Brothers, a real estate
development firm, since 1981 and a general partner of FdG Associates, a private
equity firm, since 1995. Mr. Fisher also serves as a director of Sunpark, Inc.
and The Vitamin Shoppe.

David S. Gellman has been a director of VitaminShoppe.com since its
incorporation. Mr. Gellman has been a managing director of FdG Associates, a
private equity firm, since 1995. From 1988 to 1995, he was an investment
professional with AEA Investors Inc., a private equity firm, with responsibility
for identifying, executing and/or managing private equity investments. Mr.
Gellman also serves as a director of Golf Galaxy, Inc., North American Training
Services, Inc. and The Vitamin Shoppe.

Woodson C. Merrell, M.D. has been a director of VitaminShoppe.com since
August 1999. Since 1993, Dr. Merrell has been the executive director of Beth
Israel Center for Health and Healing, a division of Continuum Health Partners, a
consortium of four hospitals. Dr. Merrell also maintains an active private
practice and is a frequent lecturer on health and wellness topics.

Stephen P. Murray has been a director of VitaminShoppe.com since June 1999.
Mr. Murray has been an investment professional at Chase Venture Capital
Associates, L.P., a private equity firm, since 1990. Mr. Murray also serves as a
director of Advantage Schools, American Floral Services, Cornerstone Brands,
Futurecall Telemarketing, Home Products International, La Petite Academy, LPA
Holdings Inc., Premier Systems Integrators, Regent Lighting Corporation and The
Vitamin Shoppe.

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<PAGE> 50

TERMS OF OFFICE; OFFICERS

Our certificate of incorporation provides that the board of directors will
be divided into three classes, with each class serving a staggered three-year
term. The Class I directors will stand for re-election at the 2000 annual
meeting of stockholders, the Class II directors will stand for re-election at
the 2001 annual meeting of stockholders, and the Class III directors will stand
for re-election at the 2002 annual meeting of stockholders.

All officers are appointed each year by the board of directors at its
annual meeting, which will be held immediately following our annual meeting of
stockholders. The chairman of our board of directors is an executive officer and
with the board of directors oversees our president and chief executive officer.

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

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

BOARD COMMITTEES

Our board of directors has established an audit committee and a
compensation committee. Messrs. Brooks, Gellman and Murray comprise our audit
committee, which is responsible for reviewing our audited financial statements
and accounting practices and for considering and recommending the employment of,
and approving the fee arrangements with, independent accountants for both audit
functions and advisory and other consulting services. Messrs. Brooks, Fisher,
Gellman and Murray comprise our compensation committee, which reviews and
approves the compensation and benefits for our key executive officers,
administers our stock option plan and makes recommendations to the board of
directors regarding such matters. See "-- Stock Option Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee, or in the past our board of directors, has made
all compensation decisions regarding our executive officers. In 1998, Messrs.
Horowitz, Edelman, Fisher, Gellman and Murray were members of The Vitamin
Shoppe's board of directors. No interlocking relationship exists between the
compensation committee and the board of directors or compensation committee of
any other company, nor have any such interlocking relationships existed in the
past.

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

This description is a summary of the material terms of our Stock Option
Plan for Non-Employee Directors dated as of August 1, 1999. This plan has been
filed with the Securities and Exchange Commission as an exhibit to the
registration statement of which this prospectus is a part. Under the plan, we
may grant options to purchase an aggregate of 461,700 shares of Class A common
stock. The plan is administered by our board of directors, which may establish
from time to time regulations, provisions and procedures that are advisable in
its opinion for the administration of the plan.

Each of our directors who is not employed by us in any other capacity and
who was elected or appointed to our board of directors prior to August 1, 1999
will be granted an option to purchase 38,475 shares of Class A common stock upon
the closing of this offering. Each non-employee director who is

45
<PAGE> 51

elected or appointed to our board of directors after August 1, 1999 will be
granted an option to purchase 38,475 shares of Class A common stock on the date
of initial election or appointment. Each of our non-employee directors will be
granted an additional option to purchase 7,695 shares of Class A common stock on
the third anniversary of any previous grant under the director plan. Options
have been granted to Dr. Merrell and Ms. Feigin under the plan in August and
September 1999 to purchase an aggregate of 76,950 shares of Class A common stock
at an exercise price of $9.15 per share.

Under the plan, the exercise price of each option is the fair market value
of Class A common stock on the date of grant. Each option will become
exercisable in three equal yearly installments commencing on the first
anniversary of the date of its grant and will expire ten years after the date of
its grant. Each option granted under the director plan will be evidenced by a
written option agreement between us and the non-employee director.

If the board of directors determines that the non-employee director has
committed a felony or an act of embezzlement, fraud, dishonesty or moral
turpitude, has failed to pay an obligation owed to us, has breached fiduciary
duties owed to us, has made an unauthorized disclosure of our trade secrets or
confidential information or has engaged in any conduct constituting unfair
competition, all unexercised options will terminate. If the non-employee
director's service with us terminates for any other reason, all exercisable but
unexercised options will remain exercisable until the termination of the
exercise period. Upon our dissolution or liquidation or a "change in control" as
defined in the director plan, all options will become exercisable, without
regard to vesting schedules, immediately prior to but not after the effective
date of the dissolution, liquidation or change in control. Options granted under
the plan are not assignable or transferable by the non-employee director, except
by will or the laws of descent and distribution.

EXECUTIVE COMPENSATION

Because VitaminShoppe.com was not incorporated until May 1999, none of its
officers or employees received total compensation, whether paid, deferred or
accrued, in excess of $100,000 during the year ended December 31, 1998 for
services rendered to VitaminShoppe.com. VitaminShoppe.com granted no options to
purchase shares of its capital stock during 1998.

STOCK OPTION PLAN

The following description of our stock option plan is a summary of the
material terms of the VitaminShoppe.com, Inc. Stock Option Plan dated as of July
1, 1999. The stock option plan has been filed with the Securities and Exchange
Commission as an exhibit to the registration statement of which this prospectus
is a part. Under the plan, we may grant options to purchase an aggregate of
2,308,500 shares of Class A common stock. The plan is administered by the
compensation committee of our board of directors, which may establish from time
to time regulations, provisions, procedures and conditions of awards that are
advisable in its opinion for the administration of the plan. The committee will
select which of our employees are eligible to participate in the plan.

The exercise price at which Class A common stock may be purchased under
options is the fair market value of Class A common stock on the date of grant.
After the closing of this offering, in general fair market value will mean the
average over ten business days of the last reported sale price for the Class A
common stock. Each option will expire ten years after the date of its grant.
Among other things, the date or dates upon which an option will become
exercisable will be specified in a written option agreement between us and the
employee.

If the employment of an employee terminates for "good cause," all
unexercised options will terminate. If employment terminates voluntarily or
other than for good cause, then all exercisable but unexercised options will
remain exercisable until the termination of the exercise period. In general,
"good cause" with respect to an employee includes willful or gross negligence,
intentional or habitual neglect of duties, theft or misappropriation from The
Vitamin Shoppe or us, felony conviction, drunkenness, drug addition or any other
definition of the term contained in an employment agreement between us and the
employee. Upon our dissolution or liquidation or a "change in control" as
defined in the plan, all options become
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<PAGE> 52

exercisable, without regard to vesting schedules, immediately prior to but not
after the effective date of the dissolution, liquidation or change in control.
Options granted under the plan are not assignable or transferable by the
employee except by will or the laws of descent and distribution.

As of September 22, 1999, we had granted options under the plan to purchase
an aggregate of 1,025,560 shares of Class A common stock at a weighted average
exercise price of $6.19 per share. These options generally vest in yearly
increments over a three-year period from the date of grant, although vesting of
the options will be accelerated with respect to 130,815 shares upon the closing
of this offering. Under the plan, 1,073,801 shares of Class A common stock are
currently available for future issuance.

EMPLOYMENT AND SEVERANCE AGREEMENTS

As of June 14, 1999, we entered into an employment and noncompetition
agreement, pursuant to which Kathryn H. Creech will serve as a member of our
board of directors and as our president and chief executive officer, reporting
in this capacity to the chairman of our board of directors. We will initially
pay Ms. Creech $100,000 per year as base salary, a $200,000 annual bonus and, if
her performance so merits in the discretion of the board of directors, an annual
discretionary bonus. Ms. Creech is entitled to participate in employee benefit
plans available to The Vitamin Shoppe's or our senior executives.

This employment and noncompetition agreement terminates on June 14, 2001,
but it will be extended in one-year increments after that date unless either
party gives the other 180 days' written notice to the contrary. Severance
payments are provided if Ms. Creech's employment is terminated:

- by us other than for cause, in which case she will be entitled to receive
her base salary and annual bonus through the term of the agreement,
including any extensions of the term;

- by us upon her disability or death, for a period of 90 days after the
date of termination or death;

- by Ms. Creech if:

- there is a material adverse change in her function, duties or
responsibilities without her written consent;

- she is required to change her principal place of business by more
than 40 miles outside Manhattan;

- we breach the agreement; or

- she is not elected or appointed as a member of our board of
directors or as our president and chief executive officer, in which
case she will be entitled to receive her base salary and annual
bonus through the term of the agreement, including any extensions of
the term; or

- if, following a change in control:

- there is a material adverse change in Ms. Creech's function, duties
or responsibilities and she elects to terminate her employment as a
result of the change; or

- the agreement is terminated or permitted to expire within 12 months
after the change in control, in which case Ms. Creech will receive
her base salary and annual bonus through the term of the agreement,
including any extensions of the term, plus an amount equal to one
year of base salary and annual bonus and continued participation for
12 months in our medical plan.

Ms. Creech has agreed, for two years after she receives her last payment
under the agreement:

- not to engage in any business activity that may reasonably be construed
to be competitive with The Vitamin Shoppe's or our principal business
anywhere in the world as conducted on the date of termination of her
employment; and

- not to solicit any of The Vitamin Shoppe's or our customers, business,
officers or employees.

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<PAGE> 53

In June 1999, we granted Ms. Creech an option to purchase 392,445 shares of
Class A common stock at an exercise price of $3.82 per share. The option
generally vests in equal yearly increments over three years from the date of
grant, although vesting of the option with respect to 130,815 shares will be
accelerated upon the closing of this offering. Upon the closing of the sale of
the Series A convertible preferred stock, Ms. Creech was granted an option to
purchase an additional 82,944 shares of Class A common stock at an exercise
price of $9.15 per share, which option vests in equal yearly increments over
three years from the date of grant. Upon the closing of this offering, we have
agreed to grant Ms. Creech an option to purchase 209,139 shares of Class A
common stock at the initial public offering price. This option will vest in
equal yearly increments over three years from the date of grant. In the future,
we may grant Ms. Creech additional options under the agreement or our stock
option plan. See "-- Stock Option Plan."

As of June 4, 1999, we hired Eliot D. Russman as our chief marketing
officer at an annual salary of $215,000. Our offer of employment includes a
promise to continue to pay Mr. Russman's base salary in the event that he is
terminated other than for cause, until the later to occur of June 3, 2000 and
six months after the date of termination. We also granted Mr. Russman an option
to purchase 176,600 shares of Class A common stock at an exercise price of $3.82
per share, which option vests in equal yearly increments over three years from
the date of grant.

As of July 26, 1999, we hired Lisa H. Kern as our vice
president -- business development and sales at an annual salary of $175,000. Our
offer of employment includes a promise to continue to pay Ms. Kern's base salary
in the event that she is terminated other than for cause, until the later to
occur of July 25, 2000 and six months after the date of termination. We also
granted Ms. Kern an option to purchase 91,571 shares of Class A common stock at
an exercise price of $9.15 per share, which option vests in equal yearly
increments over three years from the date of grant.

As of September 24, 1999, Philip H. Teplitzky will become our chief
technology officer at an annual salary of $250,000. Our offer of employment
includes a promise to continue to pay Mr. Teplitzky's base salary in the event
that he is terminated other than for cause, until the later to occur of
September 23, 2000 and six months after the date of termination. We also granted
Mr. Teplitzky an option to purchase 180,000 shares of Class A common stock at an
exercise price of $9.15 per share, which option vests in equal yearly increments
over three years from the date of grant.

INDEMNIFICATION OF DIRECTORS AND OFFICERS; LIMITATION OF LIABILITY

Our bylaws provide that we may indemnify our directors and officers, to the
fullest extent permitted by law, against all costs and expenses, including
attorney fees, judgments, fines, amounts paid or to be paid in settlement and
other disbursements, that are actually and reasonably incurred in connection
with any civil, criminal, administrative or investigative action, suit or
proceeding if the director or officer is or may be made a party to the action,
suit or proceeding because at our request he is or was at any time our director,
officer, employee or other agent or served in a similar capacity for any other
entity, including any employee benefit plan. In accordance with the General
Corporation Law of the State of Delaware, our bylaws permit us to indemnify a
director or officer before the final disposition of an action, suit or
proceeding as long as the director or officer agrees to repay all advanced
amounts if it is later determined that such director or officer is not entitled
to be indemnified.

The General Corporation Law requires that any indemnification of our
directors and officers be authorized:

- by a majority vote of the directors who are not parties to the action,
suit or proceeding, even though less than a quorum;

- by a committee of such directors designated by majority vote of such
directors, even though less than a quorum;

- if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion; or

- by the stockholders.

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<PAGE> 54

Both our bylaws and the General Corporation Law allow us to purchase and
maintain insurance on behalf of any person who is or was at any time our
director, officer, employee or other agent, or who serves or has served in a
similar capacity for another entity, including any employee benefit plan, at our
request, against any liability asserted against or incurred by the person,
whether or not we would have the power to indemnify him against such liability
under the General Corporation Law. We also have obtained director and officer
insurance providing indemnification for our directors, officers and some
employees. We believe that these indemnification provisions and insurance are
necessary to attract and retain qualified directors and executive officers.

The General Corporation Law of the State of Delaware authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages due to breaches of
directors' fiduciary duty of care. Our certificate of incorporation includes a
provision that eliminates the personal liability of our directors for monetary
damages as a result of breach of fiduciary duty as a director, except for
liability:

- for any breach of the director's duty of loyalty to VitaminShoppe.com or
its stockholders;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under section 174 of the General Corporation Law regarding unlawful
dividends and stock purchases; and

- for any transaction from which the director derived an improper personal
benefit.

At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees for which indemnification is sought. We are
unaware of any threatened litigation that may result in claims for
indemnification.

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<PAGE> 55

CERTAIN TRANSACTIONS

Since the inception of VitaminShoppe.com, there has not been, nor is there
currently proposed, any transaction or series of similar transactions to which
we were or are a party in which the amount involved exceeds $60,000 and in which
any director, executive officer, holder of more than 5% of the Class A common
stock or the Class B common stock or immediate family member of any of these
persons had or will have a direct or indirect interest other than the
transactions described in this section. We believe that the terms of these
transactions are no less favorable to us than could have been obtained from
unaffiliated third parties.

ISSUANCE OF COMMON STOCK

On June 11, 1999, we issued 1,000 shares of our common stock, par value
$0.01 per share, to The Vitamin Shoppe for a purchase price of $1,000 in
connection with our initial capitalization. These shares were reclassified into
8,500,000 shares of Class B common stock on July 9, 1999 and will be split into
13,081,500 shares immediately prior to the effective date of the registration
statement of which this prospectus is a part.

ISSUANCE OF INTERCOMPANY NOTES

As of June 30, 1999, we issued to The Vitamin Shoppe a promissory note due
upon demand by The Vitamin Shoppe in the original principal amount of $5.8
million, which was equal to our account payable to The Vitamin Shoppe on that
date. This amount represents funds advanced to us by The Vitamin Shoppe for
operating losses and working capital requirements. The promissory note bears
interest at The Vitamin Shoppe's cost of funds from time to time under its bank
credit facility, which was 8.75% on June 30, 1999. We intend to use a portion of
the net proceeds of this offering to repay this note, plus accrued interest, in
full.

SALE OF SERIES A CONVERTIBLE PREFERRED STOCK

In July 1999, we issued 1,775,260 shares of Series A convertible preferred
stock, par value $0.01 per share, which will automatically convert into
2,732,119 shares of Class A common stock upon the closing of this offering. The
gross proceeds of this private placement were $25 million. Of this amount, $10
million was paid through the conversion of promissory notes issued on July 9,
1999 and held by existing security holders of The Vitamin Shoppe and their
affiliates. J. H. Whitney III, L.P. and Whitney Strategic Partners III, L.P.,
which together hold 1.3% of the voting power of our capital stock prior to the
closing of this offering, acquired their interest in this private placement. See
"Principal Stockholders."

In connection with the offering and sale of the Series A convertible
preferred stock, we entered into a registration rights agreement with The
Vitamin Shoppe, J. H. Whitney III, L.P., Whitney Strategic Partners III, L.P.,
FdG Capital Partners LLC, FdG-Chase Capital Partners LLC, CB Capital Investors
L.P., Jeffrey and Helen Horowitz, Thomas Weisel Partners LLC and several
unaffiliated investors with respect to the Class A common stock. See
"Description of Capital Stock -- Registration Rights Agreement" for a summary of
the material terms of this agreement.

INCOME TAXES

The Vitamin Shoppe may elect, for federal income tax purposes, to include
us among an affiliated group of companies of which The Vitamin Shoppe is a
"common parent" within the meaning of section 1504(a) of the Internal Revenue
Code of 1986. This election is generally permitted for periods during which The
Vitamin Shoppe owned at least 80% of the voting power and value of our capital
stock. The effect of the election is to permit The Vitamin Shoppe to offset any
taxable income of the group against taxable losses that we expect to generate.
Immediately after the closing of this offering, The Vitamin Shoppe will no
longer continue to own the requisite amount of our capital stock. Under the tax
allocation agreement between The Vitamin Shoppe and us, for any period during
which we were included in the consolidated taxpayer group of The Vitamin Shoppe,
we will pay our proportionate share of The
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<PAGE> 56

Vitamin Shoppe's tax liability, computed as if we were filing a separate return,
and the value of any tax loss benefits attributable to us will be refunded to us
by The Vitamin Shoppe. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview -- Income taxes."

HISTORICAL RELATIONSHIPS

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

INTERCOMPANY AGREEMENTS

We have entered into several intercompany agreements with The Vitamin
Shoppe that were not negotiated on an arms-length basis. However, we believe
that the terms of these agreements are no less favorable to us than those that
could have been obtained from unaffiliated third parties. In general, the
intercompany agreements do not have fixed terms. As long as The Vitamin Shoppe
owns at least 30% of the voting power of our capital stock, the material terms
of the intercompany agreements may not be amended or waived without the approval
of a majority of our directors who are not directors, officers or more than 5%
stockholders of The Vitamin Shoppe, or the designee of a more than 5%
stockholder. In addition, our bylaws prohibit us from entering into other
material agreements with The Vitamin Shoppe or any of its subsidiaries, as long
as The Vitamin Shoppe owns at least 30% of the voting power of our capital
stock, unless those agreements are approved by a majority of these directors.
This provision may be amended or rescinded only by a majority of these
directors. See "Business -- Intercompany Agreements" for a summary of the
material terms of these agreements.

RELATIONSHIP WITH ONE OF THE VITAMIN SHOPPE'S SUPPLIERS

Jeffrey J. Horowitz, the chairman of our board of directors and the
president and chief executive officer of The Vitamin Shoppe, owned a 30%
interest in one of The Vitamin Shoppe's suppliers. During 1998, this supplier
provided approximately $4.9 million (7.4%) of the vitamins, nutritional
supplements and minerals sold to The Vitamin Shoppe. The contract between The
Vitamin Shoppe and this supplier was not negotiated on an arms-length basis.
However, we believe that the terms of this agreement were no less favorable to
The Vitamin Shoppe than could have been obtained from unaffiliated third
parties. The Vitamin Shoppe has informed us that it no longer purchases from
this supplier, although The Vitamin Shoppe continues to be obligated to accept
inventory covered by open purchase orders and back-orders. Mr. Horowitz has sold
his interest in the supplier.

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<PAGE> 57

PRINCIPAL STOCKHOLDERS

The Vitamin Shoppe beneficially owns all shares of the Class B common stock
of VitaminShoppe.com outstanding as of the date of this prospectus. Upon the
closing of this offering, The Vitamin Shoppe will continue to own all of the
Class B common stock and, accordingly, will hold approximately 64% of the
outstanding common stock of VitaminShoppe.com. Ownership of all of the Class B
common stock also gives The Vitamin Shoppe approximately 92% of the voting power
of our capital stock immediately after the closing of this offering. If the
underwriters were to exercise in full their option to purchase up to 681,818
additional shares of Class A common stock, The Vitamin Shoppe would hold
approximately 62% of the outstanding common stock of VitaminShoppe.com and 91%
of the voting power of our capital stock immediately after the closing of this
offering. The Class B common stock owned by The Vitamin Shoppe has been pledged
as security under The Vitamin Shoppe's bank credit facility. Each share of Class
B common stock is entitled to six votes, while Class A common stock is entitled
to one vote per share. See "Description of Capital Stock -- Common Stock."

This table sets forth information known to us with respect to the
beneficial ownership of Class A common stock as of the date of this prospectus
and after the offering by (1) each stockholder or group of stockholders known by
us to be the beneficial owner of more than 5% of our Class A common stock, (2)
each of our directors and executive officers and (3) all executive officers and
directors as a group. In this table, the Class A common stock beneficially owned
by The Vitamin Shoppe is the Class A common stock that would be issued if The
Vitamin Shoppe converted the shares of Class B common stock into Class A common
stock. See "Description of Capital Stock -- Common Stock."

<TABLE>
<CAPTION>
CLASS A SHARES BENEFICIALLY OWNED
------------------------------------------------------
PERCENTAGE OWNED VOTING POWER
------------------- -------------------
BEFORE AFTER BEFORE AFTER
NAME OF BENEFICIAL OWNER NUMBER OFFERING OFFERING OFFERING OFFERING
------------------------ ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Vitamin Shoppe Industries Inc.(1).................. 13,081,500 82.7% 64.3% 96.6% 91.5%
J. H. Whitney III, L.P. and Whitney Strategic
Partners III, L.P.(2)............................ 1,092,849 40.0% 15.0% 1.3% 1.3%
FdG Capital Partners LLC and FdG-Chase Capital
Partners LLC(3).................................. 13,655,249 86.4% 67.1% 97.3% 92.2%
CB Capital Investors, L.P.(4)...................... 651,606 23.8% 9.0% * *
Jeffrey J. Horowitz and Helen Horowitz(5)(6)....... 13,409,354 84.8% 65.9% 97.0% 91.9%
Kathryn H. Creech(7)............................... 130,815 4.6% 1.8% * *
Larry M. Segall.................................... -- -- -- -- --
Eliot D. Russman................................... -- -- -- -- --
Philip H. Teplitzky................................ -- -- -- -- --
Joel Gurzinsky..................................... -- -- -- -- --
Lisa H. Kern....................................... -- -- -- -- --
Michael C. Brooks(8)............................... 1,092,849 40.0% 15.0% 1.3% 1.3%
Martin L. Edelman(5)............................... 13,081,500 82.7% 64.3% 96.6% 91.5%
Barbara S. Feigin.................................. -- -- -- -- --
M. Anthony Fisher(5)(9)............................ 13,655,249 86.4% 67.1% 97.3% 92.2%
David S. Gellman(5)(10)............................ 13,081,500 82.7% 64.3% 96.6% 91.5%
Woodson C. Merrell, M.D. .......................... -- -- -- -- --
Stephen P. Murray(5)(11)........................... 13,733,106 86.8% 67.5% 97.4% 92.3%
All directors and officers as a group (14
persons)......................................... 15,858,373 99.5% 77.4% 99.9% 94.6%
</TABLE>

- ---------------
* Less than 1%.

(1) Its address is 4700 West Side Avenue, North Bergen, New Jersey 07047. The
Vitamin Shoppe currently holds no shares of Class A common stock. However,
if the Class B common stock held by The Vitamin Shoppe were converted into
Class A common stock, The Vitamin Shoppe would hold 82.7% of the then
outstanding shares of Class A common stock immediately prior to the closing
of this offering. VS Investors LLC owns 70% of the

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capital stock of The Vitamin Shoppe, and Jeffrey J. Horowitz and his wife,
Helen Horowitz, directly or through trusts own or control the remaining
30%. The managing member of VS Investors LLC is FdG Associates Acquisition
L.P., which is ultimately controlled in the aggregate by Charles de
Gunzburg and M. Anthony Fisher. Mr. de Gunzburg is a director of The
Vitamin Shoppe, and Mr. Fisher is a director of VitaminShoppe.com and The
Vitamin Shoppe. FdG Capital Partners LLC and FdG-Chase Capital Partners
LLC, which are affiliates of VS Investors LLC and Mr. Fisher, own 573,749
shares of Class A common stock in the aggregate. See footnote 3. The
Vitamin Shoppe expressly disclaims beneficial ownership of the shares of
Class A common stock held by FdG Capital Partners LLC and FdG-Chase Capital
Partners LLC.

(2) Their address is 177 Broad Street, Stamford, Connecticut 06901. The general
partner of both stockholders is J. H. Whitney Equity Partners III, LLC.

(3) Their address is 299 Park Avenue, New York, New York 10171. The managing
member of both limited liability companies is FdG Capital Associates LLC,
which is ultimately controlled by M. Anthony Fisher. FdG Capital Associates
LLC is an affiliate of VS Investors LLC. See footnote 1. As such, it and
these limited liability companies may be deemed to share voting power with
respect to the Class B common stock held by The Vitamin Shoppe and the
Class A common stock into which the Class B common stock may be converted.
Each of these entities expressly disclaims beneficial ownership of the
shares of Class B common stock owned by The Vitamin Shoppe. FdG Capital
Partners LLC and FdG-Chase Capital Partners LLC own 573,749 shares of Class
A common stock in the aggregate.

(4) Its address is 380 Madison Avenue, 12th Floor, New York, New York 10017.

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

(6) Mr. and Mrs. Horowitz's address is 4700 West Side Avenue, North Bergen, New
Jersey 07047. Mr. Horowitz is the president and chief executive officer of
The Vitamin Shoppe. Mr. and Mrs. Horowitz are also directors of The Vitamin
Shoppe. Directly or through trusts, Mr. and Mrs. Horowitz own 30% of the
capital stock of The Vitamin Shoppe. See footnote 1. Because of these
relationships, Mr. and Mrs. Horowitz may be deemed to share voting power
with respect to the Class B common stock held by The Vitamin Shoppe and the
Class A common stock into which the Class B common stock may be converted.
Mr. and Mrs. Horowitz expressly disclaim beneficial ownership of the shares
of Class B common stock owned by The Vitamin Shoppe. Mr. and Mrs. Horowitz
own directly 327,854 shares of Class A common stock.

(7) Represents shares issuable upon the exercise of stock options.

(8) Mr. Brooks is affiliated with J. H. Whitney III, L.P. and Whitney Strategic
Partners III, L.P. As such, he may be deemed to share voting power with
respect to the Class A common stock owned by these limited partnerships.
Mr. Brooks expressly disclaims beneficial ownership of shares of the Class
A common stock owned by J. H. Whitney III, L.P. and Whitney Strategic
Partners III, L.P.

(9) See footnotes 1 and 3.

(10) Mr. Gellman is a managing director of FdG Associates, an affiliate of VS
Investors LLC, FdG Capital Partners LLC and FdG-Chase Capital Partners LLC.
See footnotes 1 and 3.

(11) Mr. Murray is a general partner of Chase Capital Partners, an affiliate of
CB Capital Investors, L.P. See footnote 4. Mr. Murray expressly disclaims
beneficial ownership of the shares of Class A common stock owned by CB
Capital Investors, L.P.

The number of shares of Class A common stock outstanding before this
offering consists of 2,732,119 shares. Shares of Class A common stock that an
individual or group has the right to acquire within 60 days after the date of
this prospectus pursuant to the exercise of options, warrants or conversion
privileges are deemed to be outstanding for the purpose of computing the
percentage ownership of such person or group but are not deemed outstanding for
the purpose of computing the percentage ownership of any other person listed in
this table. Except as indicated in the footnotes to this table, we believe that
the named stockholders have sole voting and investment power with respect to all
of the shares shown to be beneficially owned by them, based on information
provided to us by the stockholders.

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DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock is 30,000,000 shares of Class A common stock,
par value $0.01 per share, 15,000,000 shares of Class B common stock, par value
$0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per
share. Immediately prior to the closing of this offering, we will have 11
stockholders, and we will have issued and outstanding 2,732,119 shares of Class
A common stock, assuming conversion of the Series A convertible preferred stock,
and 13,081,500 shares of Class B common stock.

The following descriptions of our capital stock and selected provisions of
our certificate of incorporation and bylaws are summaries. Complete copies of
our certificate of incorporation and bylaws have been filed with the Securities
and Exchange Commission as exhibits to the registration statement of which this
prospectus is a part.

COMMON STOCK

Voting rights. The holders of Class A common stock and Class B common
stock generally have identical voting rights. However, holders of Class A common
stock are entitled to one vote per share, while holders of Class B common stock
are entitled to six votes per share on matters to be voted on by stockholders.
In general, except as otherwise required by law, all matters to be voted on by
stockholders must be approved by a majority of the votes entitled to be cast by
all shares of the Class A common stock and the Class B common stock present in
person or represented by proxy, voting together as a single class. When electing
directors, those candidates receiving the most votes, even if not a majority of
the votes cast, will be elected. Holders of Class A common stock and Class B
common stock are not entitled to cumulate their votes in the election of
directors.

Except as otherwise provided by law, and after honoring any voting rights
granted to holders of any outstanding preferred stock, amendments to our
certificate of incorporation must be approved by a majority of the voting power
of all shares of Class A common stock and Class B common stock, voting together
as a single class. Any amendment to our certificate of incorporation to increase
or decrease the authorized shares of any class must be approved by the
affirmative vote of the holders of a majority of the voting power of all shares
of Class A common stock and Class B common stock, voting together as a single
class. Amendments to our certificate of incorporation that would alter or change
the powers, preferences or special rights of either the Class A common stock or
the Class B common stock so as to affect them adversely also must be approved by
the holders of a majority of the shares of the class affected by the amendment,
voting as a separate class. For purposes of these provisions, any provision for
the voluntary, mandatory or other conversion or exchange of the Class B common
stock for or into Class A common stock on a one-for-one basis will not be
considered as adversely affecting the rights of holders of the Class A common
stock.

Dividends. Holders of Class A common stock and Class B common stock will
share equally on a per-share basis in any dividend on common stock declared by
the board of directors, after honoring any preferential rights of outstanding
preferred stock. Dividends consisting of shares of Class A common stock or Class
B common stock may be paid only as follows:

- dividend shares of Class A common stock may be issued only to holders of
Class A common stock, and dividend shares of Class B common stock may be
issued only to holders of Class B common stock; and

- dividend shares will be issued proportionally with respect to each
outstanding share of Class A common stock and Class B common stock.

We may not subdivide or combine shares of either Class A common stock or
Class B common stock without at the same time proportionally subdividing or
combining shares of the other class.

Conversion. At the option of the holder, each share of Class B common
stock is convertible into one share of Class A common stock at any time. Each
share of Class B common stock automatically converts

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<PAGE> 60

into one share of Class A common stock upon any sale to a person or entity not
affiliated with The Vitamin Shoppe.

Other Rights. In the event of any merger or consolidation of
VitaminShoppe.com with or into another company in which shares of our common
stock are converted into or exchangeable for shares of stock, other securities,
cash or property of the other company, each share of Class A common stock and
Class B common stock will entitle its holder to receive the same kind and amount
of interest in the other company. Upon the liquidation, dissolution or
winding-up of VitaminShoppe.com, all holders of Class A common stock and Class B
common stock are entitled to share ratably in any assets available for
distribution, after payment in full of the amounts required to be paid to
holders of any preferred stock. No shares of Class A common stock or Class B
common stock are subject to redemption or have preemptive rights to purchase
additional shares of common stock. Upon the closing of this offering, all the
outstanding shares of Class A common stock and Class B common stock will be
validly issued, fully paid and non-assessable.

PREFERRED STOCK

Our board of directors is authorized, subject to limitations prescribed by
Delaware law but without any further vote or action by the stockholders, to
provide for the issuance of preferred stock in one or more series, to establish
from time to time the number of shares to be included in each such series, to
fix the rights, preferences and privileges of the shares of each wholly unissued
series and any qualifications, limitations or restrictions thereon and to
increase or decrease the number of shares of any such series, but not below the
number of shares of such series then outstanding. Our board of directors may
authorize the issuance of preferred stock with voting or conversion rights that
could adversely affect the voting power or other rights of the holders of Class
A common stock. The issuance of preferred stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of delaying, deferring or preventing a change in control of our
ownership. The issuance of preferred stock may also adversely affect the market
price of the Class A common stock and the voting and other rights of the holders
of Class A common stock. We have no existing plans to issue any preferred stock.

REGISTRATION RIGHTS AGREEMENT

We have entered into a registration rights agreement that covers (1) the
shares of Class A common stock issuable upon the automatic conversion of the
Series A convertible preferred stock at the closing of this offering or upon the
exercise of warrants to purchase Series A convertible preferred stock that
become exercisable for Class A common stock after the closing of this offering
and (2) the shares of Class A common stock into which the shares of Class B
common stock are convertible. The material terms of this agreement are
summarized here. A complete copy of this agreement has been filed with the
Securities and Exchange Commission as an exhibit to the registration statement
of which this prospectus is a part. We will bear all registration expenses
incurred in connection with these registration rights. The stockholders who sell
in offerings commenced under the registration rights agreement will pay all
underwriting discounts, selling commissions and stock transfer taxes applicable
to the sale of Class A common stock owned by them. Rights under the registration
rights agreement will terminate when no shares of Class A common stock
registrable under the agreement remain outstanding.

The Vitamin Shoppe demand registration rights. Under the registration
rights agreement, at any time after 180 days after the closing of this offering,
The Vitamin Shoppe may demand that we file a registration statement under the
Securities Act of 1933 covering all or a portion of the Class A common stock
issuable to The Vitamin Shoppe and its permitted transferees upon conversion of
Class B common stock. If The Vitamin Shoppe demands that we file such a
registration statement, other holders who were stockholders prior to the closing
of this offering and their permitted transferees may require us to include all
or a portion of the Class A common stock that they own in this registration. The
Vitamin Shoppe may exercise no more than one demand during any 12-month period.
These registration rights will be limited by our right to delay the filing of a
registration statement in some circumstances. We may cause a delay no more than
once in any 12-month period and for no more than 90 days.
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<PAGE> 61

Other demand registration rights. At any time after 180 days after the
closing of this offering but prior to the date on which we become eligible to
register the registrable securities on Form S-3 or any successor form, holders
other than The Vitamin Shoppe of 50% of the then outstanding registrable shares
held by such holders may demand that we file a registration statement under the
Securities Act of 1933 covering all or a portion of their registrable shares, as
long as the shares to be registered have a fair market value on the date of
demand of at least $15 million. These holders may demand one registration under
this right. In addition, at any time after the closing of this offering but
prior to the third anniversary of the closing of this offering, if we are
eligible to utilize a registration statement on Form S-3 to register a resale of
our securities, then holders other than The Vitamin Shoppe of 25% of the then
outstanding registrable shares held by such holders other than The Vitamin
Shoppe may request that we file a registration statement covering all or a
portion of their registrable shares, as long as the shares to be registered have
a fair market value on the date of demand of at least $5 million. These holders
may exercise one demand during any 12-month period. These registration rights
will be limited by our right to delay the filing of a registration statement in
some circumstances. We may cause a delay no more than once in any 12-month
period and for no more than 90 days. However, the managing underwriter, if any,
of any offering will have limited rights to restrict the number of registrable
shares included in the registration statement.

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

ANTI-TAKEOVER PROVISIONS

Upon the closing of this offering, we will be subject to the provisions of
section 203 of the General Corporation Law of the State of Delaware. Section 203
generally prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless:

- the transaction in which such stockholder became an "interested
stockholder" is approved by the board of directors prior to the date the
"interested stockholder" attained that status;

- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding those shares owned by
affiliated persons; or

- on or subsequent to that date, the "business combination" is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the "interested
stockholder."

For these purposes, "business combinations" include mergers, asset sales and
other transactions resulting in a financial benefit to the "interested
stockholder." Generally, an "interested stockholder" is a person who, together
with his affiliates and associates, owns or within the prior three years did own
15% or more of the corporation's voting stock. The restrictions in this statute
would not apply to a "business combination" with The Vitamin Shoppe or any of
its subsidiaries, but they could prohibit or delay the accomplishment of mergers
or other takeover or change-in-control attempts with respect to us and therefore
discourage attempts to acquire us.

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<PAGE> 62

In addition, some of the provisions of our certificate of incorporation and
bylaws may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider to be in his best interest, including those attempts
that might result in a premium over the market price for the Class A common
stock.

Classified board of directors. Our certificate of incorporation provides
that the board of directors will be divided into three classes, with each class
serving a staggered three-year term. The Class I directors will stand for
re-election at the 2000 annual meeting of stockholders, the Class II directors
will stand for re-election at the 2001 annual meeting of stockholders and the
Class III directors will stand for re-election at the 2002 annual meeting of
stockholders. As a result, approximately one-third of the members of our board
of directors will be elected each year. When coupled with the provision of our
certificate of incorporation authorizing the board of directors to fill vacant
directorships and to increase the size of the board of directors, these
provisions may prevent stockholders from removing incumbent directors and
simultaneously gaining control of the board of directors by filling the
vacancies created by the removals with their own nominees. In addition, under
Delaware law, directors of a corporation with a classified board may only be
removed for cause. For a description of the identity of the directors in each of
the classes, see "Management."

Special meetings of stockholders. Our certificate of incorporation
provides that special meetings of our stockholders may be called only by the
chairman of the board of directors, a vice chairman, the president or a majority
of the members of the board of directors.

Written consent. Under our certificate of incorporation and bylaws, our
stockholders will no longer be allowed to take action in writing without a
meeting of the stockholders on or after the date on which The Vitamin Shoppe no
longer beneficially owns at least 30% of the voting power of our capital stock.

Advance notice requirements for stockholder proposals and director
nominations. Our bylaws require that timely notice in writing be provided by
stockholders seeking to bring business before, or to nominate candidates for
election as directors at, the annual meeting of stockholders. To be timely, a
stockholder's notice must be delivered to or mailed and received at our
principal executive offices not less than 120 days nor more than 150 days prior
to the first anniversary of the date of our notice of annual meeting provided
with respect to the previous year's annual meeting of stockholders. If no annual
meeting of stockholders was held in the previous year or the date of the annual
meeting of stockholders has been changed to be more than 30 days earlier than or
60 days after this anniversary, notice will be timely if received before the
earlier of (1) 60 days prior to the annual meeting of stockholders or (2) the
close of business on the tenth day following the date on which notice of the
date of the meeting is given to stockholders or made public. Our bylaws also
specify requirements as to the form and content of a stockholder's notice. These
provisions may preclude stockholders from timely bringing matters before, or
from making nominations for directors at, an annual meeting of stockholders.

Authorized but unissued shares. The authorized but unissued shares of our
common stock and preferred stock are available for future issuance without
stockholder approval. We may use these additional shares for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and stock option plans. The existence of these
shares could discourage or make more difficult an attempt to obtain control of
VitaminShoppe.com by means of a proxy contest, tender offer, merger or
otherwise.

Limitation of liability and indemnification provisions. Our certificate of
incorporation and bylaws limit the monetary liability of our directors to the
corporation and our stockholders and provide for indemnification of our
directors and officers under specified circumstances. These provisions in our
certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against our directors for breach of their fiduciary duty.
Such provisions may also reduce the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent that we pay the costs of
settlement and damage awards against directors and officers in connection with

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<PAGE> 63

these indemnification provisions. For additional discussion about these
indemnification provisions, see "Management -- Indemnification of Directors and
Officers; Limitation of Liability."

AMENDMENT OF CHARTER DOCUMENTS

The Delaware General Corporation Law provides generally that the
affirmative vote of a majority in interest of the shares entitled to vote on any
matter is required to amend a corporation's certificate of incorporation or
bylaws, unless the certificate of incorporation or bylaws of the corporation
require a greater percentage. Following this offering, The Vitamin Shoppe will
own all of our outstanding Class B common stock, which will represent
approximately 92% of the voting power of our capital stock immediately after the
closing of this offering. As a result, The Vitamin Shoppe will be able to cause
us to amend our certificate of incorporation and bylaws, subject to any
limitations prescribed by law or our bylaws.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A common stock is
ChaseMellon Shareholder Services LLC, which is located at 85 Challenger Road,
Ridgefield Park, New Jersey 07660.

LISTING

We have applied to list the Class A common stock on the Nasdaq National
Market under the symbol "VSHP."

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<PAGE> 64

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Class A common
stock. We cannot assure you that a significant public market for the Class A
common stock will develop or be sustained after this offering. Future sales of
substantial amounts of Class A common stock, including shares issued upon
exercise of outstanding options and warrants, in the public market after this
offering could adversely affect market prices prevailing from time to time and
could impair our ability to raise capital through the sale of equity securities.
As described below, no shares currently outstanding will be available for sale
immediately after this offering due to certain contractual restrictions on
resale. Sales of substantial amounts of Class A common stock in the public
market after the restrictions lapse could adversely affect the prevailing market
price and our ability to raise equity capital in the future.

Upon the closing of this offering, we will have outstanding an aggregate of
7,277,574 shares of Class A common stock, assuming no exercise of outstanding
options or warrants. Of these shares, the shares sold in this offering will be
freely tradable without restrictions or further registration under the
Securities Act of 1933, unless these shares are purchased by one of our
"affiliates," as that term is defined in rule 144 under the Securities Act.

The remaining 2,732,119 shares of Class A common stock held by existing
stockholders are restricted shares or are subject to the contractual
restrictions described below. Restricted shares may be sold in the public market
only if registered or if they qualify for an exemption from registration under
rule 144, rule 144(k) or rule 701 under the Securities Act of 1933. All of these
shares are subject to the lock-up agreements described below. These restricted
shares will be available for resale in the public market in reliance on rule 144
only after expiration of the holding period and other requirements of such sale.

In general, under rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person, or persons whose shares are aggregated,
who has beneficially owned "restricted shares" of Class A common stock for at
least one year, including the holding period of any prior owner except an
affiliate, may sell within any three-month period a number of shares of Class A
common stock that does not exceed the greater of (1) 1% of the number of shares
of Class A common stock then outstanding, which will equal 72,776 shares
immediately after this offering, and (2) the average weekly trading volume of
the Class A common stock during the four calendar weeks preceding the filing of
a form 144 with respect to the sale. Sales under rule 144 are also subject to
requirements regarding the manner of sale, notice requirements and the
availability of current public information about us. Under rule 144(k), a person
who is not deemed to have been our affiliate at any time during the three months
preceding a sale, and who has beneficially owned the shares of Class A common
stock proposed to be sold for at least two years, including the holding period
of any prior owner except an affiliate, may sell the shares without complying
with the manner of sale, public information, volume limitation or notice
provisions of rule 144.

Rule 701 under the Securities Act of 1933 permits resales of a limited
number of shares of Class A common stock that were acquired by our employees,
officers, directors or consultants under a written compensatory benefit plan or
contract prior to the consummation of this offering or that were acquired upon
the exercise of stock options granted prior to the closing of this offering.
Rule 701 provides that non-affiliates may sell rule 701 shares in reliance on
rule 144 without compliance with the holding period, public information, volume
limitation or notice provisions of rule 144. Affiliates may sell rule 701 shares
without complying with the one-year holding period requirement. No rule 701
shares may be sold until 90 days after the date of this prospectus. However, all
shares of Class A common stock eligible for sale pursuant to rule 701 are
subject to 180-day lockup agreements.

We have entered into an agreement with our existing stockholders, including
The Vitamin Shoppe, and Thomas Weisel Partners LLC that grants specified
registration rights applicable to the shares of common stock held by them. See
"Description of Capital Stock -- Registration Rights Agreement."

Prior to the expiration of the 180-day lock-up agreements, we intend to
file a registration statement under the Securities Act of 1933 covering
2,770,200 shares of Class A common stock reserved for issuance under our stock
option plans. Upon the expiration of the lock-up agreements described above,
130,815

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<PAGE> 65

shares of Class A common stock will be subject to vested options. These shares
will be available for sale in the public market subject to rule 144
restrictions.

LOCK-UP ARRANGEMENTS

Except for sales of Class A common stock to the underwriters pursuant to
the underwriting agreement, for a period of 180 days after the date of this
prospectus, our executive officers, directors, existing stockholders and
existing option holders have agreed that, without the prior written consent of
Thomas Weisel Partners LLC, they will not offer, sell, agree to sell directly or
indirectly or otherwise dispose of any shares of Class A common stock or Class B
common stock. In addition, we have agreed that, without the prior written
consent of Thomas Weisel Partners LLC, we will not, during the period ending 180
days after the date of this prospectus, (1) offer, issue, pledge, sell, contract
to issue or sell, issue or sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend
or otherwise issue, transfer or dispose of, directly or indirectly, any shares
of Class A common stock or Class B common stock or any securities convertible
into or exercisable or exchangeable for Class A common stock or Class B common
stock or (2) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the Class
A common stock or Class B common stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Class A common stock,
Class B common stock or other securities, in cash or otherwise. Thomas Weisel
Partners LLC, in its sole discretion at any time or from time to time and
without notice, may release for sale in the public market all or any portion of
the Class A common stock or Class B common stock subject to the lock-up
arrangements. See "Underwriting."

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UNDERWRITING

GENERAL

Subject to the terms and conditions set forth in an agreement among the
underwriters and us, each of the underwriters named below, through their
representatives, Thomas Weisel Partners LLC, William Blair & Company, L.L.C. and
PaineWebber Incorporated, has agreed to purchase from us the aggregate number of
shares of Class A common stock set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Thomas Weisel Partners LLC..................................
William Blair & Company, L.L.C. ............................
PaineWebber Incorporated....................................
---------
Total............................................. 4,545,455
=========
</TABLE>

The underwriting agreement provides that the obligations of the
underwriters are subject to various conditions, such as approval of legal
matters by counsel. The nature of the underwriters' obligations is such that
they are committed to purchase and pay for all of the shares of Class A common
stock listed above if any are purchased.

The underwriting agreement provides that we will indemnify the underwriters
against liabilities specified in the underwriting agreement under the Securities
Act of 1933 or will contribute to payments that the underwriters may be required
to make relating to these liabilities.

OVER-ALLOTMENT OPTION

We have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of 681,818 additional shares of Class A common stock
at the public offering price, less underwriting discounts and commissions as set
forth on the cover page of this prospectus. If the underwriters exercise such
option in whole or in part, then each of the underwriters will be severally
committed, subject to conditions described in the underwriting agreement, to
purchase the additional shares of Class A common stock in proportion to their
respective purchase commitments set forth in the above table.

COMMISSIONS AND DISCOUNTS

The underwriters propose to offer the shares of common stock directly to
the public at the public offering price set forth on the cover page of this
prospectus, and at such price less a concession not in excess of $ per share
of Class A common stock to other dealers specified in a master agreement among
underwriters that are members of the National Association of Securities Dealers,
Inc. The underwriters may allow, and such dealers may reallow, concessions not
in excess of $ per share of Class A common stock to these other dealers.
After this offering, the offering price, concessions and other selling terms may
be changed by the underwriters. The Class A common stock is offered subject to
receipt and acceptance by the underwriters and to other conditions, including
the right to reject orders in whole or in part.

This table summarizes the compensation to be paid to the underwriters by us
and the expenses of approximately $1.5 million payable by us:

<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions....... $ $ $
Expenses.....................................
</TABLE>

The underwriters do not expect to confirm sales of Class A common stock to
any accounts over which they exercise discretionary authority.

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RESERVED SHARES

The underwriters, at our request, have reserved for sale at the initial
public offering price up to 4% of the Class A common stock to be sold in this
offering for sale to persons designated by us. The number of shares available
for sale to the general public will be reduced to the extent that any reserved
shares are purchased. Any reserved shares not purchased in this manner will be
offered by the underwriters on the same basis as the other shares offered in the
offering.

NO SALES OF SIMILAR SECURITIES

All of our directors, officers, existing stockholders and existing option
holders have agreed that they will not offer, sell, agree to sell directly or
indirectly or otherwise dispose of any shares of Class A common stock or Class B
common stock without the prior written consent of Thomas Weisel Partners LLC for
a period of 180 days after the date of this prospectus.

In addition, we have agreed that for a period of 180 days after the date of
this prospectus we will not, without the prior written consent of Thomas Weisel
Partners LLC, offer, sell or otherwise dispose of any shares of our capital
stock, except for the shares of Class A common stock being offered and the
shares of Class A common stock issuable upon the exercise of options and
warrants outstanding on the date of this prospectus.

INFORMATION REGARDING THOMAS WEISEL PARTNERS LLC

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners LLC has been named as a lead manager or co-manager
on 63 filed public offerings of equity securities, of which 33 have been
completed, and has acted as a syndicate member in an additional 32 public
offerings of equity securities. Thomas Weisel Partners LLC does not have any
material relationship with us or any of our officers, directors or controlling
persons, except with respect to its contractual relationship with us under the
underwriting agreement entered into in connection with this offering.

Thomas Weisel Partners LLC acted as our exclusive placement agent in
connection with our private placement of Series A convertible preferred stock in
July 1999. Thomas Weisel Partners LLC received customary placement fees in
connection with its services. In connection with the private placement, Thomas
Weisel Partners LLC received a warrant to purchase Series A convertible
preferred stock convertible into 32,703 shares of Class A common stock at an
exercise price of $9.15 per share of Class A common stock. The warrant may be
exercised at any time prior to July 2004. After the closing of this offering,
the warrant may be exercised only for Class A common stock.

NASDAQ NATIONAL MARKET LISTING

Prior to this offering, there has been no public market for the Class A
common stock. The initial offering price will be determined by negotiations
between us and the representatives of the underwriters. Some of the factors to
be considered in these negotiations will be our results of operations in recent
periods, estimates of our prospects and the industry in which we compete, an
assessment of our management, the general state of the securities markets at the
time of this offering and the prices of similar securities of generally
comparable companies. We have applied for approval for listing of the Class A
common stock on the Nasdaq National Market under the symbol "VSHP." We cannot
assure you, however, that an active or orderly trading market will develop for
the Class A common stock or that the Class A common stock will trade in the
public market subsequent to this offering at or above the initial offering
price.

MARKET STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

In order to facilitate this offering, persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the Class A common stock during and after this

62
<PAGE> 68

offering. Specifically, the underwriters may over-allot or otherwise create a
short position in the Class A common stock for their own account by selling more
shares of Class A common stock than we have sold to them. The underwriters may
elect to cover any short position by purchasing shares of Class A common stock
in the open market or by exercising the over-allotment option granted to the
underwriters. In addition, the underwriters may stabilize or maintain the price
of the Class A common stock by bidding for or purchasing shares of Class A
common stock in the open market and may impose penalty bids. Under these penalty
bids, selling concessions that are allowed to syndicate members or other
broker-dealers participating in this offering are reclaimed if shares of Class A
common stock previously distributed in this offering are repurchased, usually in
order to stabilize the market. The effect of these transactions may be to
stabilize or maintain the market price at a level above that which might
otherwise prevail in the open market. No representation is made as to the
magnitude or effect of any such stabilization or other transactions. These
transactions may be effected on the Nasdaq National Market or otherwise and may
be discontinued at any time after they are commenced.

LEGAL MATTERS

Kaye, Scholer, Fierman, Hays & Handler, LLP, New York, New York will pass
upon the validity of the issuance of the Class A common stock being offered.
Hale and Dorr LLP, Boston, Massachusetts will pass upon certain legal matters in
connection with this offering for the underwriters.

EXPERTS

The financial statements as of December 31, 1997 and 1998 and June 30, 1999
and for the period from October 1, 1997, the date of inception, to December 31,
1997, for the year ended December 31, 1998 and for the six months ended June 30,
1999 included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in its report appearing elsewhere in this
prospectus and have been so included in reliance upon the report of that firm
given upon its authority as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act of 1933 with respect to the Class
A common stock being offered. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules to the registration statement. For further information about us and
the Class A common stock, you should refer to the registration statement and its
exhibits and schedules.

You may inspect a copy of the registration statement and the exhibits and
schedules to the registration statement without charge at the offices of the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain copies of all or any part of the
registration statement from the Public Reference Section of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon the
payment of the prescribed fees. You may obtain information on the operation of
the Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
website (www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants like us that file electronically
with the Securities and Exchange Commission.

63
<PAGE> 69

VITAMINSHOPPE.COM, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of December 31, 1997 and 1998 and June 30,
1999...................................................... F-3
Statements of Operations for the period from October 1, 1997
(inception) to December 31, 1997, for the year ended
December 31, 1998 and for the six months ended June 30,
1998 (unaudited) and 1999................................. F-4
Statements of Stockholder's Equity (Deficit) for the period
from October 1, 1997 (inception) to December 31, 1997, for
the year ended December 31, 1998 and for the six months
ended June 30, 1999....................................... F-5
Statements of Cash Flows for the period from October 1, 1997
(inception) to December 31, 1997, for the year ended
December 31, 1998 and for the six months ended June 30,
1998 (unaudited) and 1999................................. F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 70

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of VitaminShoppe.com, Inc.
(the "Company") as of December 31, 1997 and 1998 and June 30, 1999, and the
related statements of operations, stockholder's equity (deficit) and cash flows
for the period from October 1, 1997 (inception) to December 31, 1997, the year
ended December 31, 1998 and the six months ended June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of VitaminShoppe.com, Inc. as of December 31,
1997 and 1998 and June 30, 1999, and the results of its operations and its cash
flows for the period from October 1, 1997 (inception) to December 31, 1997, the
year ended December 31, 1998 and the six months ended June 30, 1999 in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

New York, New York

August 19, 1999 [except as to Notes 6, 7 and 8 as to which the date is September
23, 1999]

F-2
<PAGE> 71

VITAMINSHOPPE.COM, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, JUNE 30, 1999
----------------- -------- ------------------------
PRO FORMA
1997 1998 1999 PRO FORMA AS ADJUSTED
------ ------- -------- --------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................. $ -- $ -- $ -- $24,086 $24,086
Accounts receivable........................ -- 35 50 50 50
Prepaid expenses........................... -- 94 31 31 31
------ ------- ------- ------- -------
Total current assets.................. -- 129 81 24,167 24,167
Property and equipment, net..................... -- 485 736 736 736
------ ------- ------- ------- -------
Total assets............................... $ -- $ 614 $ 817 $24,903 $24,903
====== ======= ======= ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities... $ -- $ 824 $ 3,147 $ 3,147 $ 3,147
Due to The Vitamin Shoppe.................. 353 3,583 5,803 5,803 5,803
------ ------- ------- ------- -------
Total current liabilities............. 353 4,407 8,950 8,950 8,950
Stockholder's Equity (Deficit)
Series A Convertible Preferred Stock, $.01
par value, no shares authorized, issued
and outstanding at June 30, 1999;
1,775,260 shares outstanding on a pro
forma basis.............................. -- -- -- 24,000 --
Class A common stock, $.01 par value; no
shares authorized, issued and outstanding
at June 30, 1999; 30,000,000 shares
authorized, 2,732,119 shares outstanding
on a pro forma as adjusted basis......... -- -- -- -- 27
Class B common stock, $.01 par value;
15,000,000 shares authorized, 13,081,500
shares issued and outstanding at June 30,
1999..................................... -- -- 131 131 131
Additional paid in capital................. -- -- (5,316) (5,230) 18,743
Deferred stock-based compensation.......... -- -- (2,948) (2,948) (2,948)
Accumulated deficit........................ (353) (3,793) -- -- --
------ ------- ------- ------- -------
Total stockholder's equity
(deficit)........................... (353) (3,793) (8,133) 15,953 15,953
------ ------- ------- ------- -------
Total liabilities and stockholder's
equity (deficit).................... $ -- $ 614 $ 817 $24,903 $24,903
====== ======= ======= ======= =======
</TABLE>

See notes to financial statements.
F-3
<PAGE> 72

VITAMINSHOPPE.COM, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
OCTOBER 1,
1997 SIX MONTHS ENDED
(INCEPTION) TO YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, --------------------------
1997 1998 1998 1999
-------------- ------------ ----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................. $ -- $ 2,861 $ 480 $ 4,303
Cost of goods sold.................... -- 1,407 239 2,104
----------- ----------- ----------- -----------
Gross profit.......................... -- 1,454 241 2,199
Operating expenses:
Marketing and sales expenses........ -- 3,215 392 4,367
Product development expenses........ 285 642 195 719
General and administrative
expenses......................... 64 917 315 1,317
----------- ----------- ----------- -----------
Total operating expenses......... 349 4,774 902 6,403
----------- ----------- ----------- -----------
Loss from operations.................. (349) (3,320) (661) (4,204)
Interest expense...................... 4 120 27 221
----------- ----------- ----------- -----------
Net loss.............................. $(353) $(3,440) $(688) $(4,425)
=========== =========== =========== ===========
Pro forma net loss.................... $(4,360) $(5,192)
=========== ===========
Pro forma basic and diluted net loss
per share........................... $(.28) $(.33)
=========== ===========
Weighted average shares outstanding
used to compute pro forma basic and
diluted net loss per share.......... 15,813,619 15,813,619
=========== ===========
</TABLE>

See notes to financial statements.
F-4
<PAGE> 73

VITAMINSHOPPE.COM, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL DEFERRED
-------------------- ------------------- PAID IN STOCK-BASED ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT
--------- -------- ---------- ------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1997
(inception)................. -- $ -- -- $ -- $ -- $ -- $ -- $ --
Net loss.................... -- -- -- -- -- -- (353) --
--------- -------- ---------- ---- ------- ------- ------- -----
Balance, December 31, 1997.... -- -- -- -- -- -- (353) --
Net loss.................... -- -- -- -- -- -- (3,440) --
--------- -------- ---------- ---- ------- ------- ------- -----
Balance, December 31, 1998.... -- -- -- -- -- -- (3,793) --
Net loss.................... -- -- -- -- -- -- (4,425) --
Capitalization of the
Company by The Vitamin
Shoppe.................... -- -- 13,081,500 131 (8,348) -- 8,218 --
Deferred stock-based
compensation.............. -- -- -- -- 3,032 (3,032) -- --
Amortization of deferred
stock-based
compensation.............. -- -- -- -- -- 84 -- --
--------- -------- ---------- ---- ------- ------- ------- -----
Balance, June 30, 1999........ -- $ -- 13,081,500 $131 $(5,316) $(2,948) $ --
========= ======== ========== ==== ======= ======= ======= =====

TOTAL
-------
<S> <C>
Balance, October 1, 1997
(inception)................. $ --
Net loss.................... (353)
-------
Balance, December 31, 1997.... (353)
Net loss.................... (3,440)
-------
Balance, December 31, 1998.... (3,793)
Net loss.................... (4,425)
Capitalization of the
Company by The Vitamin
Shoppe.................... 1
Deferred stock-based
compensation.............. --
Amortization of deferred
stock-based
compensation.............. 84
-------
Balance, June 30, 1999........ $(8,133)
=======
</TABLE>

See notes to financial statements.
F-5
<PAGE> 74

VITAMINSHOPPE.COM, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
OCTOBER 1,
1997 SIX MONTHS ENDED
(INCEPTION) TO YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, --------------------------
1997 1998 1998 1999
-------------- ------------ ----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................ $(353) $(3,440) $(688) $(4,425)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization........ -- 21 5 62
Amortization of stock-based
compensation....................... -- -- -- 84
Changes in operating assets and
liabilities:
Accounts receivable..................... -- (35) -- (15)
Prepaid expenses........................ -- (94) -- 63
Accounts payable and accrued
liabilities.......................... -- 824 -- 2,323
----- ------- ----- -------
Net cash used in operating
activities......................... (353) (2,724) (683) (1,908)
----- ------- ----- -------
Cash flows from investing activities:
Capital expenditures.................... -- (506) (88) (313)
----- ------- ----- -------
Net cash used in investing
activities......................... -- (506) (88) (313)
----- ------- ----- -------
Cash flows from financing activities:
Due to The Vitamin Shoppe............... 353 3,230 771 2,220
Issuance of common stock................ -- -- -- 1
----- ------- ----- -------
Net cash provided by financing
activities........................... 353 3,230 771 2,221
----- ------- ----- -------
Net increase in cash and cash
equivalents............................. -- -- -- --
Cash and cash equivalents -- beginning of
period.................................. -- -- -- --
----- ------- ----- -------
Cash and cash equivalents -- end of
period.................................. $ -- $ -- $ -- $ --
----- ------- ----- -------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest............................. $ -- $ -- $ -- $ --
===== ======= ===== =======
Income taxes......................... $ -- $ -- $ -- $ --
===== ======= ===== =======
</TABLE>

See notes to financial statements.
F-6
<PAGE> 75

VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS
OCTOBER 1, 1997 (INCEPTION) TO DECEMBER 31, 1997, YEAR ENDED DECEMBER 31, 1998

AND SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999

1. DESCRIPTION OF BUSINESS

VitaminShoppe.com, Inc. (the "Company") is a leading online source for
products and content related to vitamins, nutritional supplements and minerals.
Until July 1999, the Company was wholly owned by Vitamin Shoppe Industries Inc.
("The Vitamin Shoppe"). The Company commenced operations effective October 1,
1997 as a division of The Vitamin Shoppe and operated in the development stage
until April 1998, when it began sales through its website. The Company was
incorporated in Delaware in May 1999 and capitalized by The Vitamin Shoppe in
June 1999 (Note 7).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Since the Company's inception, The Vitamin Shoppe has provided the Company
with funding for working capital. The Company participates in The Vitamin
Shoppe's cash management system. As a part of The Vitamin Shoppe's central cash
management system, all cash generated from and cash required to support the
Company's operations are deposited and received through The Vitamin Shoppe's
corporate operating cash accounts. As a result, there are no separate bank
accounts or records for these transactions. Accordingly, the amounts represented
by the caption "Due to The Vitamin Shoppe" in the Company's balance sheets and
statements of cash flows represent the net effect of all cash transactions
between the Company and The Vitamin Shoppe. Effective with the financing
transactions described in Note 7, the Company opened its own bank accounts and
no longer participates in The Vitamin Shoppe's cash management system.

For all periods presented, certain expenses reflected in the financial
statements include allocations of expenses incurred by The Vitamin Shoppe. These
allocations take into consideration personnel, business volume and other
appropriate factors and generally include costs related to fulfillment,
marketing, administrative, general management and other services provided to the
Company by The Vitamin Shoppe. Interest expense shown in the financial
statements reflects interest at a rate of 8.75% per annum on the average amounts
due to The Vitamin Shoppe. Allocations of expenses are estimates based on
management's best assessment of actual expenses incurred on behalf of the
Company. It is management's opinion that the expenses charged to the Company are
reasonable.

The financial statements have been prepared as if the Company operated as a
stand-alone entity since inception. The financial information included herein
may not necessarily reflect the financial position, results of operations or
cash flows of the Company in the future or what the balance sheets, results of
operations or cash flows of the Company would have been if it had been a
separate, stand-alone entity.

Online Marketing Arrangements

The Vitamin Shoppe, on behalf of the Company, has entered into several
online marketing arrangements with Internet content providers whereby the
Company is established as the exclusive or preferred vendor of nutritional
products on the Internet websites of these providers. The agreements are for
terms of 12 to 24 months, provide for fixed monthly or quarterly payments by the
Company and in some cases contain revenue-sharing provisions upon the attainment
of stipulated revenue amounts. Certain agreements provide for guaranteed minimum
levels of impressions delivered by the Internet service providers and certain
make-good provisions in the event of a shortfall. At December 31, 1998, the
Company's remaining base payments under such arrangements were $6,381,000 and
$2,905,000 for the years ending December 31, 1999 and 2000, respectively. At
June 30, 1999, the Company's remaining base payments under such arrangements
were $3,245,000 and $2,905,000 for the years ending December 31,

F-7
<PAGE> 76
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1999 and 2000, respectively. The Company's fixed payments under such
arrangements are recognized as expenses either on a straight-line basis over the
term of the agreement, or on an impression delivered basis, depending upon the
terms of the agreement. Expense accruals relating to revenue sharing provisions
are made when projections indicate that revenue thresholds will be attained.

Use of Estimates

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

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation and
amortization. Software acquired, computers and equipment are depreciated using
the straight-line method over their estimated useful lives of three to ten
years. Effective January 1, 1999, the Company adopted the AICPA's Statement of
Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. Accordingly, direct internal and external costs
associated with the development of the features, content and functionality of
the Company's online store, transaction-processing systems, telecommunications
infrastructure and network operations, incurred during the application
development stage, are capitalized and are amortized over the estimated lives of
three years.

Impairment of Long-Lived Assets

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

Revenue Recognition

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

Advertising Costs

The costs of advertising for online marketing arrangements, magazines,
television, radio and other media are expensed the first time advertising takes
place. Advertising expense for the period from October 1, 1997 (inception) to
December 31, 1997 and for the year ended December 31, 1998 was $0 and
$2,959,000, respectively, and $375,000 and $3,898,000 for the six months ended
June 30, 1998 and 1999, respectively.

Income Taxes

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

F-8
<PAGE> 77
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

VitaminShoppe.com, operating as a division of The Vitamin Shoppe, has been
included in The Vitamin Shoppe's income tax returns. As such, any benefit for
income taxes due to losses generated by VitaminShoppe.com were realized and
recognized by The Vitamin Shoppe. To date, The Vitamin Shoppe has not allocated
to VitaminShoppe.com its share of income tax benefits attributable to its
operating results.

Had the Company's income tax provisions been calculated on a separate
return or stand-alone basis, as required for the unaudited pro forma results
presented on the statements of operations, the Company would have established a
valuation allowance for its deferred tax assets (consisting of net operating
loss carryforwards) since it believes it is more likely than not that they would
not have been realized in the future. Therefore, given the uncertainty of the
future recoverability of operating losses incurred and the fact that The Vitamin
Shoppe has not allocated any tax benefits to the Company, the Company has not
provided for income tax benefits in its historical financial statements or its
unaudited pro forma results.

Start-Up Costs

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

Concentrations

The Company's customers are consumers who utilize the Company's website and
purchase products. Financial instruments, which potentially subject the Company
to concentrations of credit risk, consist principally of accounts receivable
from credit card processors. As of December 31, 1997 and 1998, there were no
significant concentrations of accounts receivable or related credit risks.

Fair Value of Financial Instruments

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

Interim Financial Information

The financial statements and footnotes for the six months ended June 30,
1998 are unaudited; however, in the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial statements for the interim periods have been
included. The results of operations for the six months ended June 30, 1999 are
not necessarily indicative of the results to be achieved for the full fiscal
year.

Stock-Based Compensation

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

F-9
<PAGE> 78
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

to provide a pro forma disclosure of the impact of applying the fair value
method of SFAS No. 123 (see Note 7).

Net Loss Per Share

Net loss per share for periods prior to the capitalization of the Company
are not presented as the entity operated as a division of The Vitamin Shoppe.

Pro Forma Net Loss and Net Loss Per Share

Pro forma net loss gives retroactive effect to adjustments resulting from
the implementation of the trademark license agreement and the supply and
fulfillment agreement (Note 4) as if such agreements had been in effect at the
beginning of the periods presented. The number of shares used to compute the pro
forma per share amounts includes (1) 13,081,500 shares of Class B common stock
issued upon the recapitalization of the Company in July 1999 (Note 7) and (2)
2,732,119 shares of Class A common stock issuable upon conversion of Series A
convertible preferred stock upon the closing of this offering, in each case as
if all shares were outstanding as of January 1, 1998.

For the six months ended June 30, 1999, there were 569,045 stock options
that were excluded from the computation of pro forma diluted net loss per share
as their effect was antidilutive. If the Company had reported net income, the
calculation of these per share amounts would have included the dilutive effect
of these common stock equivalents using the treasury stock method.

Recent Accounting Pronouncements

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

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

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, which is effective for fiscal
years beginning after June 15, 2000, requires the Company to recognize all
derivatives on the balance sheet at fair value. The Company has determined that
adoption of this new standard will not have a material effect on the Company's
financial statements or disclosure.

F-10
<PAGE> 79
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. LIQUIDITY

Operations since inception did not generate sufficient cash flow to satisfy
current obligations. The Vitamin Shoppe funded such obligations. At June 30,
1999, the Company issued to The Vitamin Shoppe a promissory note due upon demand
by The Vitamin Shoppe in the original principal amount of $5.8 million, which
was equal to the Company's payable to The Vitamin Shoppe on that date. This
amount represents funds advanced to the Company by The Vitamin Shoppe for
operating losses, capital expenditures and working capital requirements. The
promissory note bears interest at The Vitamin Shoppe's cost of funds from time
to time under its bank credit facility, which was 8.75% on June 30, 1999.
Amounts due to The Vitamin Shoppe reflected in the balance sheet include the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------- JUNE 30,
1997 1998 1999
---- ------ --------
<S> <C> <C> <C>
Amounts advanced to fund operating activities..... $353 $3,077 $4,984
Amounts advanced for capital expenditures......... -- 506 819
---- ------ ------
$353 $3,583 $5,803
==== ====== ======
</TABLE>

As described in Note 7, the Company sold 1,775,260 shares of Series A
convertible preferred stock in July 1999 for gross proceeds of $25 million.

4. RELATED PARTY TRANSACTIONS

All merchandise sold from inception through June 30, 1999 was purchased
from The Vitamin Shoppe at an amount equal to The Vitamin Shoppe's cost. The
Vitamin Shoppe charges the Company the costs associated with such purchases,
including the cost of freight.

As a subsidiary of The Vitamin Shoppe, the Company also receives and is
charged its proportionate share of various services from The Vitamin Shoppe,
including fulfillment, marketing, administrative, general management and other
services. Such charges were $49,000 and $816,000 for the period from October 1,
1997 (inception) to December 31, 1997 and for the year ended December 31, 1998,
respectively, and $281,000 and $786,000 for the six months ended June 30, 1998
and 1999, respectively. In the opinion of management, all allocations of such
costs have been made on a reasonable and consistent basis; however, they are not
necessarily indicative of, nor is it practical for management to estimate the
level of, expenses that might have been incurred had the Company been operating
as a separate, stand-alone entity.

In connection with the sale of Series A convertible preferred stock
described in Note 7, the Company and The Vitamin Shoppe entered into several
intercompany agreements. These agreements cover rights and obligations regarding
trademark licenses, supply, fulfillment, promotional activities, databases and
administrative services. The terms of these agreements contain provisions for
charges which have not been provided for historically.

The trademark license agreement will provide the Company with the exclusive
right to use The Vitamin Shoppe's trademarks in connection with its marketing
and sale of products and services in online commerce. The Company will pay The
Vitamin Shoppe an annual royalty fee equal to $1 million plus a percentage
(which ranges from 5% to 1% depending upon volume) of the Company's net sales of
The Vitamin Shoppe brand products, and other products identified by or branded
with The Vitamin Shoppe's trademarks. Under the supply and fulfillment
agreement, The Vitamin Shoppe will supply inventory to the Company at a cost
equal to 105% of The Vitamin Shoppe's product cost and will fulfill customer
orders at a cost equal to 105% of The Vitamin Shoppe's actual average unit cost
per package, plus actual shipping costs not paid directly by the Company.

F-11
<PAGE> 80
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------- JUNE 30,
1997 1998 1999
---- ----- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Software.......................................... $-- $200 $252
Computer hardware................................. -- 268 524
Fixtures and equipment............................ -- 28 30
Leasehold improvements............................ -- 10 13
--- ---- ----
-- 506 819
Accumulated depreciation and amortization......... -- (21) (83)
--- ---- ----
$-- $485 $736
=== ==== ====
</TABLE>

6. COMMITMENTS

At June 30, 1999, the Company is obligated under online marketing
agreements with web portals and strategic partners for future payments
aggregating $6.2 million through December 2000.

In June 1999, the Company entered into an employment agreement with an
executive for an initial two-year term. Under the terms of this agreement, the
Company is committed to compensate this executive in the amount of $300,000
annually, unless the executive is dismissed for cause or upon disability or
death.

In August 1999, the Company entered into a noncancellable operating lease
for its corporate office facility and issued a standby letter of credit in the
amount of $600,000 as security for its lease commitment. Rental payments under
this lease for the period from September 1999 through November 2003 approximate
$35,000 per month and aggregate $1.8 million over the lease term.

7. STOCKHOLDERS' EQUITY

a. Recapitalization

In May 1999, the Company was incorporated, and in June 1999 was capitalized
through the issuance to The Vitamin Shoppe of 1,000 shares of common stock, par
value $.01 per share, for a purchase price of $1,000 and the contribution by The
Vitamin Shoppe of net liabilities of approximately $8.2 million. In July 1999,
the Company effected a recapitalization through the authorization of 30,000,000
shares of Class A common stock and 15,000,000 shares of Class B common stock and
the issuance of 13,081,500 shares of Class B common stock in exchange for the
1,000 shares of common stock previously issued to The Vitamin Shoppe. The
recapitalization has been retroactively reflected in the accompanying financial
statements. Prior to June 30, 1999, the Company was operated as a division of
The Vitamin Shoppe. On July 27, 1999, the Company filed a registration statement
with the Securities and Exchange Commission to offer shares of Class A common
stock to the public. In addition, the Company authorized 5,000,000 shares of
preferred stock. Holders of Class A common stock are entitled to one vote per
share, while holders of Class B common stock are entitled to six votes per
share.

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

On July 27, 1999, the Company issued 1,775,260 shares of Series A
convertible preferred stock, par value $.01 per share, that are convertible into
2,732,119 shares of Class A common stock ($9.15 fair value per share) for gross
proceeds of $25 million. The proceeds (net of commissions and offering costs) of
this transaction were approximately $24 million. Of the gross proceeds, $10
million was paid through the

F-12
<PAGE> 81
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

conversion of promissory notes referred to in the preceding paragraph into
Series A convertible preferred stock. The remaining shares were sold to other
private investors and the noteholders for cash consideration of $15 million. The
Company also issued warrants to purchase an equivalent of 32,703 shares of Class
A common stock at a price of $9.15 per share to Thomas Weisel Partners LLC in
consideration for its services as placement agent in this transaction. All
shares of the Series A convertible preferred stock are automatically convertible
into an aggregate of 2,732,119 shares of the Class A common stock upon the
closing of the offering contemplated by the registration statement. Such
automatic conversion feature is contingent upon an offering price that is not
less than 120% of the conversion price ($9.15) and an aggregate offering of not
less than $30 million. The unaudited pro forma balance sheet as of June 30, 1999
reflects the sale of the Series A convertible preferred stock for net proceeds
of $24 million (pro forma) and the automatic conversion into Class A common
stock concurrently with the closing of the initial public offering (pro forma as
adjusted). The estimated fair value of the warrants issued to the placement
agent of approximately $86,000 was credited to additional paid-in capital in the
unaudited pro forma balance sheets.

b. Stock Options

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

In August 1999, the Company established the VitaminShoppe.com, Inc. Stock
Option Plan for Nonemployee Directors (the "Director Plan") which provides for
the granting of options to purchase 38,475 shares of Class A common stock to
each elected or appointed nonemployee director, and reserved 461,700 shares of
Class A common stock for grant. In August 1999, the Company granted to one
director an option to purchase 38,475 shares at an exercise price of $9.15 per
share. Such option vests ratably over a period of three years and is exercisable
for a period not to exceed 10 years from date of grant. In connection with the
initial public offering, the Company will grant to five additional directors
options under the Director Plan to purchase 192,375 shares of Class A common
stock at the initial public offering price.

During June 1999, the Company granted to two employees options to purchase
569,045 shares of Class A common stock at an exercise price of $3.82 per share.
The options expire 10 years from the date of grant and vest ratably over a
period of three years. Under APB No. 25, no compensation expense is recognized
when the exercise price of the Company's employee stock options equals the fair
value of the underlying stock on the date of grant. Deferred stock-based
compensation is recorded for those situations where the exercise price of an
option was lower than the deemed fair value for financial reporting purposes of
the underlying common stock. The Company recorded aggregate deferred stock-based
compensation of $3,031,950 during the six months ended June 30, 1999. The
deferred stock-based compensation is being amortized over the vesting period of
the underlying options. Total amortization of stock-based compensation
recognized was $84,000 during the six months ended June 30, 1999. The Company
will record approximately $697,000 in expense upon the closing of the initial
public offering due to the accelerated vesting of 130,815 of those options. The
remaining deferred stock-based compensation will be amortized over the
three-year vesting period. During July and August, the Company granted to one
director and 5 employees options to purchase 199,215 shares of Class A common
stock at an exercise price of $9.15 per share. During September 1999, the
Company granted to one director and 12 employees options to purchase 295,775
shares of Class A common stock at an exercise price of $9.15 per share. The

F-13
<PAGE> 82
VITAMINSHOPPE.COM, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Company will record additional deferred stock-based compensation of
approximately $577,000 during the quarter ended September 30, 1999. The deferred
stock-based compensation will be amortized over the three-year vesting period.
In connection with the initial public offering, the Company will grant to one
employee an option to purchase 209,139 shares of Class A common stock at the
initial public offering price. The options expire 10 years from the date of
grant and vest ratably over a period of three years.

c. SFAS No. 123 Disclosures

Had the stock-based compensation for the Company's stock option grants been
determined in accordance with SFAS No. 123 the Company's net loss would have
been adjusted to the following pro forma amount for the six months ended June
30, 1999 (in thousands):

<TABLE>
<S> <C>
Pro forma net loss -- as reported........................... $(5,192)
Incremental pro forma compensation expense under SFAS No.
123....................................................... $ (9)
-------
Net loss -- pro forma....................................... $(5,201)
=======
Pro forma basic and diluted net loss per share -- as
reported.................................................. $ (.33)
=======
Pro forma basic and diluted net loss per share -- pro
forma..................................................... $ (.33)
=======
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model, assuming no expected dividends and with
the following weighted average assumptions at June 30, 1999:

<TABLE>
<S> <C>
Average risk-free interest rate............................. 5.0%
Average expected life....................................... 3.0 years
Volatility.................................................. 33%
</TABLE>

For purposes of the pro forma disclosures, the estimated weighted average
fair value of the options granted, estimated to be $5.90 per share at the date
of grant, is amortized to expense over the options' vesting period. This amount
has been reduced by the amount of deferred stock-based compensation already
recorded in the accompanying financial statements of $5.33 per share.

d. Dividend Restrictions

The Vitamin Shoppe is a party to a credit agreement that imposes various
restrictions on The Vitamin Shoppe, including restrictions that limit the
incurrence of additional debt, and the payment of dividends, among other things,
as well as the ability of The Vitamin Shoppe to merge, consolidate or dispose of
substantial assets. In addition, substantially all of the assets of The Vitamin
Shoppe are pledged as security under the credit agreement. In July 1999, The
Vitamin Shoppe and the lenders amended the credit agreement to exclude the
Company from these terms and restrictions in exchange for The Vitamin Shoppe's
pledge of its shares in the Company and other monetary consideration.

8. SUBSEQUENT EVENT

On September 9, 1999, the Company's Board of Directors approved a
1.539-for-1 stock split of its Class A common stock and Class B common stock
which was effective on September 22, 1999. The respective share and per-share
amounts and conversion ratios included in the financial statements reflect the
stock split for all periods presented.

* * *

F-14
<PAGE> 83

[EXAMPLES OF OUR MARKETING MATERIALS UTILIZED IN PRINT MEDIA]
<PAGE> 84

PROSPECTUS

[VITAMIN SHOPPE.COM LOGO]

4,545,455 Shares
Class A Common Stock

THOMAS WEISEL PARTNERS LLC
WILLIAM BLAIR & COMPANY
PAINEWEBBER INCORPORATED

Prospectus dated , 1999

- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. Neither we
nor any underwriter has authorized anyone to provide you with information that
is different. This prospectus may only be used where it is legal to sell these
securities. The information in this prospectus may be accurate only on the date
of this prospectus, even if this prospectus is delivered to you or you buy our
Class A common stock after that date.

Until , 1999 (25 days after the commencement of this offering),
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a prospectus when acting as an
underwriter and with respect to unsold allotments or subscriptions.
<PAGE> 85

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following are the estimated expenses, other than underwriting discounts
and commissions, to be borne by the registrant in connection with the issuance
and distribution of the Class A common stock being offered.

<TABLE>
<CAPTION>
ITEM AMOUNT
- ---- -------------
<S> <C>
Securities and Exchange Commission registration fee......... $ 17,439.00
NASD filing fee............................................. 6,773.00
Nasdaq National Market listing fee.......................... 70,000.00
Blue sky fees and expenses.................................. 10,000.00
Printing and engraving expenses............................. 300,000.00
Legal fees and expenses..................................... 500,000.00
Accounting fees and expenses................................ 225,000.00
Transfer agent and registrar fee............................ 15,000.00
Miscellaneous............................................... 355,788.00
-------------
Total............................................. $1,500,000.00
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware
authorizes a court to award, or a corporation's board of directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.

As permitted by the General Corporation Law, the second amended and
restated certificate of incorporation of the registrant includes a provision
that eliminates the personal liability of its directors to the registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
registrant or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of the General Corporation Law (regarding unlawful dividends and
stock purchases) or (iv) for any transaction from which the director derived an
improper personal benefit.

As permitted by the General Corporation Law, the bylaws of the registrant
provide that (i) the registrant must indemnify its directors and officers to the
fullest extent permitted by the General Corporation Law, subject to limited
exceptions, (ii) the registrant may indemnify its other employees and agents as
set forth in the General Corporation Law, (iii) the registrant must advance
expenses, as incurred, to its directors and executive officers in connection
with a legal proceeding to the fullest extent permitted by the General
Corporation Law, subject to limited exceptions, and (iv) the rights conferred in
the bylaws are not exclusive. The indemnification provisions in the certificate
of incorporation and bylaws of the registrant may be sufficiently broad to
permit indemnification of the directors and executive officers of the registrant
for liabilities arising under the Securities Act of 1933.

There is no pending litigation or proceeding involving a director, officer
or employee of the registrant regarding which indemnification is sought, nor is
the registrant aware of any threatened litigation that may result in claims for
indemnification.

Reference is also made to section 8 of the form of underwriting agreement,
which provides for the indemnification of officers, directors and controlling
persons of the registrant against certain liabilities.

With the approval of its board of directors, the registrant expects to
obtain director and officer liability insurance.

II-1
<PAGE> 86

Reference is made to exhibits 1.1, 3.1, 3.2 and 3.4 to this registration
statement regarding relevant indemnification provisions described above and
elsewhere herein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On June 11, 1999, the registrant issued 1,000 shares of Common Stock, par
value $0.01 per share, to Vitamin Shoppe Industries Inc. in connection with the
initial capitalization of the registrant. This sale of securities by the
registrant was intended to be exempt from registration pursuant to section 4(2)
of the Securities Act of 1933. These shares were reclassified into 8,500,000
shares of Class B Common Stock, par value $0.01 per share, as of July 9, 1999.
These shares will be split into 13,081,500 shares of Class B common stock
immediately prior to the effective date of this registration statement.

On July 9, 1999, the registrant issued $10 million in aggregate principal
amount of promissory notes due in June 2000. These notes are held by four
stockholders of Vitamin Shoppe Industries Inc. or affiliates of such
stockholders. This sale of securities by the registrant was intended to be
exempt from registration pursuant to section 4(2) of the Securities Act of 1933.
In July 1999, all of these notes were converted in the Series A convertible
preferred stock, par value $0.01 per share, of the registrant.

In June 1999, the registrant granted options to two employees to purchase
569,045 post-split shares of Class A common stock at a post-split exercise price
of $3.82 per share.

In July 1999, the registrant received $15 million in exchange for 1,053,156
shares of the Series A convertible preferred stock, par value $0.01 per share,
of the registrant to ten stockholders. As indicated in the preceding paragraph,
$10 million in aggregate principal amount of promissory notes were also
exchanged for 722,104 shares of Series A convertible preferred stock in the same
transaction. The registrant also issued warrants to purchase 21,250 shares of
Series A convertible preferred stock to Thomas Weisel Partners LLC in
consideration for its services as placement agent in this transaction. This sale
of securities by the registrant was intended to be exempt from registration
pursuant to section 4(2) of the Securities Act of 1933 and/or Rule 506 of
Regulation D promulgated thereunder. All shares of the Series A convertible
preferred stock will be automatically converted into shares of the Class A
common stock of the registrant upon the closing of the offering of Class A
common stock being offered pursuant to the registration statement. The
prospectus which forms a part of this registration statement assumes that such
conversion will have occurred.

In July 1999, the registrant granted to three employees options to purchase
183,015 post-split shares of Class A common stock at a post-split exercise price
of $9.15 per share.

In August 1999, the registrant granted to a director and two employees
options to purchase 54,675 post-split shares of Class A common stock at an
exercise price of $9.15 per share.

In September 1999, the registrant granted to one director and 12 employees
options to purchase 295,775 post-split shares of Class A common stock at an
exercise price of $9.15 per share.

No underwriters were involved in the foregoing sales of securities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
1.1 Form of Underwriting Agreement.*
1.2 Form of Lock-up Agreement.*
3.1 Second Amended and Restated Certificate of Incorporation of
the registrant.*
3.2 Bylaws of the registrant.*
3.3 Certificate of Designation, Powers, Preferences and Rights
of Series A Convertible Preferred Stock of the registrant.*
3.4 Form of Certificate of Amendment of Second Amended and
Restated Certificate of Incorporation of the registrant.*
4.1 Specimen Class A common stock certificate.
</TABLE>

II-2
<PAGE> 87

<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
4.2 See exhibits 3.1, 3.2, 3.3 and 3.4 for the provisions of the
certificate of incorporation and bylaws of the registrant
that govern the rights of holders of the securities being
registered.
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP as to
the legality of the securities being registered.***
10.1 Assignment and Assumption of Contracts dated as of June 30,
1999 between the registrant and Vitamin Shoppe Industries
Inc.*
10.2 Bill of Sale dated as of June 30, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.3 Assignment of Domain Name dated as of June 30, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.4 Intercompany Note dated as of June 30, 1999 made by the
registrant and payable to Vitamin Shoppe Industries Inc.*
10.5 Convertible Subordinated Note Purchase Agreement dated as of
July 9, 1999 between the registrant and the purchasers named
therein.*
10.6 Form of Convertible Subordinated Note dated as of July 9,
1999 made by the registrant.*
10.7 Stock Purchase Agreement dated as of July 27, 1999 among the
registrant and the holders of Series A convertible preferred
stock, par value $0.01 per share, of the registrant.*
10.8 Stockholders Agreement dated as of July 27, 1999 among the
registrant, Vitamin Shoppe Industries Inc. and the holders
of Series A convertible preferred stock, par value $0.01 per
share, of the registrant.*
10.9 Registration Rights Agreement dated as of July 27, 1999
among the registrant, Vitamin Shoppe Industries Inc. and the
holders of Series A convertible preferred stock, par value
$0.01 per share, of the registrant.*
10.10 Series A Convertible Preferred Stock Purchase Warrant dated
as of July 27, 1999 of the registrant in favor of Thomas
Weisel Partners LLC.*
10.11 Trademark License Agreement dated as of July 1, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.12 Supply and Fulfillment Agreement dated as of July 1, 1999
between the registrant and Vitamin Shoppe Industries Inc.*
10.13 Co-Marketing Agreement dated as of July 1, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.14 Administrative Services Agreement dated as of July 1, 1999
between the registrant and Vitamin Shoppe Industries Inc.*
10.15 Database Agreement dated as of July 1, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.16 Intercompany Indemnification Agreement dated as of July 1,
1999 between the registrant and Vitamin Shoppe Industries
Inc.*
10.17 Tax Allocation Agreement dated as of July 1, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.18 Sublease Agreement dated as of July 14, 1999 between Yahoo!
Inc. and Vitamin Shoppe Industries Inc.*
10.19 Employment and Noncompetition Agreement dated as of June 14,
1999 between the registrant and Kathryn H. Creech.*
10.20 Consulting Agreement dated as of June 14, 1999 between the
registrant and Kathryn H. Creech.*
10.21 VitaminShoppe.com, Inc. Stock Option Plan for Employees
dated as of July 1, 1999.*
10.22 Nonqualified Stock Option Agreement dated as of July 1, 1999
between the registrant and Kathryn H. Creech.***
10.23 Nonqualified Stock Option Agreement dated as of July 1, 1999
between the registrant and Eliot D. Russman.***
10.24 Nonqualified Stock Option Agreement dated as of July 27,
1999 between the registrant and Kathryn H. Creech.***
10.25 Distribution Agreement dated as of August 17, 1998 between
Vitamin Shoppe Industries Inc. and Infoseek Corporation, as
amended by Amendment No. One thereto dated as of September
29, 1998.***
</TABLE>

II-3
<PAGE> 88

<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
10.26 Sponsorship Agreement dated as of September 23, 1998 between
Vitamin Shoppe Industries Inc. and Excite, Inc.*/**
10.27 Advertising Insertion Order dated as of November 1, 1998
between Vitamin Shoppe Industries Inc. and Yahoo!*/**
10.28 NetGravity AdServer Network License Agreement dated as of
December 17, 1998 between Vitamin Shoppe Industries Inc. and
NetGravity, Inc.*
10.29 Letter agreement dated as of December 17, 1998 between
Vitamin Shoppe Industries Inc. and Time Inc. New Media
related to Ask Dr. Weil website.*/**
10.30 Agreement dated as of February 1, 1999 between Vitamin
Shoppe Industries Inc. and Virtual Communities, Inc.*
10.31 Sponsorship Agreement dated as of March 11, 1999 between
Vitamin Shoppe Industries Inc. and drkoop.com, inc.*/**
10.32 Sponsorship Agreement dated as of March 31, 1999 between
Vitamin Shoppe Industries Inc. and OnHealth Network
Company.*/**
10.33 Strategic Planning Services Agreements dated as of April 29,
1999 between Vitamin Shoppe Industries Inc. and Jupiter
Communications, L.L.C.*
10.34 Letter agreement dated as of May 24, 1999 between Vitamin
Shoppe Industries Inc. and Time Inc. New Media related to
Dr. Bernie Siegel website.*/**
10.35 Sponsorship and Advertising Agreement dated as of April 16,
1999 between Vitamin Shoppe Industries Inc. and
InteliHealth, Inc.*/**
10.36 Memorandum of Engagement dated as of June 7, 1999 between
Compelling Content and the registrant.*
10.37 License Agreement dated as of October 5, 1998 between
HealthNotes, Inc. and Vitamin Shoppe Industries Inc.*/**
10.38 Stock Option Plan for Non-employee Directors dated as of
August 1, 1999.***
10.39 Irrevocable Commitment to Convert by the holders of Series A
Convertible Preferred Stock of the registrant.
10.40 Nonqualified Stock Option Agreement dated as of July 26,
1999 between the registrant and Lisa H. Kern.***
10.41 Nonqualified Stock Option Agreement dated as of August 6,
1999 between the registrant and Woodson Merrell, M.D.***
10.42 Nonqualified Stock Option Agreement dated as of September
15, 1999 between the registrant and Joel Gurzinsky.***
10.43 Nonqualified Stock Option Agreement dated as of September
15, 1999 between the registrant and Philip H. Teplitzsky.***
10.44 Nonqualified Stock Option Agreement dated as of September
20, 1999 between the registrant and Barbara S. Feigin.***
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP is
included in its opinion filed as exhibit 5.1.
23.3 Consent of Michael C. Brooks.*
27.1 Financial Data Schedule.*
</TABLE>

- ---------------
* Previously filed.

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

*** To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The registrant hereby undertakes to provide to the underwriters, at the
closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

II-4
<PAGE> 89

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in item 14 or otherwise, the
registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will (unless in
the opinion of its counsel the matter has been settled by controlling precedent)
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration statement in reliance upon
rule 430A under the Securities Act of 1933 and contained in a form of prospectus
filed by the registrant pursuant to rule 424(b)(1), 424(b)(4) or 497(h) under
the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.

II-5
<PAGE> 90

The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities being offered therein and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on September 22, 1999.

VITAMINSHOPPE.COM, INC.

By: /s/ KATHRYN H. CREECH
------------------------------------
Name: Kathryn H. Creech
Title: President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following person in
the capacity and on the date indicated.

The person whose signature appears below hereby authorizes Kathryn H.
Creech with full power of substitution and resubstitution, as her true and
lawful attorney-in-fact, to sign and file with the Securities and Exchange
Commission on her behalf all amendments and post-effective amendments to the
registration statement, with exhibits thereto, and other documents in connection
therewith.

<TABLE>
<CAPTION>
SIGNATURE NAME TITLE DATE
- --------- ---- ----- ----
<C> <S> <C> <C>

/s/ BARBARA S. FEIGIN Barbara S. Feigin Director September 22, 1999
- ------------------------------------------
</TABLE>

II-6
<PAGE> 91

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
1.2 Form of Lock-up Agreement.*
3.1 Second Amended and Restated Certificate of Incorporation of
the registrant.*
3.2 Bylaws of the registrant.*
3.3 Certificate of Designation, Powers, Preferences and Rights
of Series A Convertible Preferred Stock of the registrant.*
3.4 Form of Certificate of Amendment of Second Amended and
Restated Certificate of Incorporation of the registrant.*
4.1 Specimen Class A common stock certificate.
4.2 See exhibits 3.1, 3.2, 3.3 and 3.4 for the provisions of the
certificate of incorporation and bylaws of the registrant
that govern the rights of holders of the securities being
registered.
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP as to
the legality of the securities being registered.***
10.1 Assignment and Assumption of Contracts dated as of June 30,
1999 between the registrant and Vitamin Shoppe Industries
Inc.*
10.2 Bill of Sale dated as of June 30, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.3 Assignment of Domain Name dated as of June 30, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.4 Intercompany Note dated as of June 30, 1999 made by the
registrant and payable to Vitamin Shoppe Industries Inc.*
10.5 Convertible Subordinated Note Purchase Agreement dated as of
July 9, 1999 between the registrant and the purchasers named
therein.*
10.6 Form of Convertible Subordinated Note dated as of July 9,
1999 made by the registrant.*
10.7 Stock Purchase Agreement dated as of July 27, 1999 among the
registrant and the holders of Series A convertible preferred
stock, par value $0.01 per share, of the registrant.*
10.8 Stockholders Agreement dated as of July 27, 1999 among the
registrant, Vitamin Shoppe Industries Inc. and the holders
of Series A convertible preferred stock, par value $0.01 per
share, of the registrant.*
10.9 Registration Rights Agreement dated as of July 27, 1999
among the registrant, Vitamin Shoppe Industries Inc. and the
holders of Series A convertible preferred stock, par value
$0.01 per share, of the registrant.*
10.10 Series A Convertible Preferred Stock Purchase Warrant dated
as of July 27, 1999 of the registrant in favor of Thomas
Weisel Partners LLC.*
10.11 Trademark License Agreement dated as of July 1, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.12 Supply and Fulfillment Agreement dated as of July 1, 1999
between the registrant and Vitamin Shoppe Industries Inc.*
10.13 Co-Marketing Agreement dated as of July 1, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.14 Administrative Services Agreement dated as of July 1, 1999
between the registrant and Vitamin Shoppe Industries Inc.*
</TABLE>

<PAGE> 92

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
10.15 Database Agreement dated as of July 1, 1999 between the
registrant and Vitamin Shoppe Industries Inc.*
10.16 Intercompany Indemnification Agreement dated as of July 1,
1999 between the registrant and Vitamin Shoppe Industries
Inc.*
10.17 Tax Allocation Agreement dated as of July 1, 1999 between
the registrant and Vitamin Shoppe Industries Inc.*
10.18 Sublease Agreement dated as of July 14, 1999 between Yahoo!
Inc. and Vitamin Shoppe Industries Inc.*
10.19 Employment and Noncompetition Agreement dated as of June 14,
1999 between the registrant and Kathryn H. Creech.*
10.20 Consulting Agreement dated as of June 14, 1999 between the
registrant and Kathryn H. Creech.*
10.21 VitaminShoppe.com, Inc. Stock Option Plan for Employees
dated as of July 1, 1999.*
10.22 Nonqualified Stock Option Agreement dated as of July 1, 1999
between the registrant and Kathryn H. Creech.***
10.23 Nonqualified Stock Option Agreement dated as of July 1, 1999
between the registrant and Eliot D. Russman.***
10.24 Nonqualified Stock Option Agreement dated as of July 27,
1999 between the registrant and Kathryn H. Creech.***
10.25 Distribution Agreement dated as of August 17, 1998 between
Vitamin Shoppe Industries Inc. and Infoseek Corporation, as
amended by Amendment No. One thereto dated as of September
29, 1998.***
10.26 Sponsorship Agreement dated as of September 23, 1998 between
Vitamin Shoppe Industries Inc. and Excite, Inc.*/**
10.27 Advertising Insertion Order dated as of November 1, 1998
between Vitamin Shoppe Industries Inc. and Yahoo!*/**
10.28 NetGravity AdServer Network License Agreement dated as of
December 17, 1998 between Vitamin Shoppe Industries Inc. and
NetGravity, Inc.*
10.29 Letter agreement dated as of December 17, 1998 between
Vitamin Shoppe Industries Inc. and Time Inc. New Media
related to Ask Dr. Weil website.*/**
10.30 Agreement dated as of February 1, 1999 between Vitamin
Shoppe Industries Inc. and Virtual Communities, Inc.*
10.31 Sponsorship Agreement dated as of March 11, 1999 between
Vitamin Shoppe Industries Inc. and drkoop.com, inc.*/**
10.32 Sponsorship Agreement dated as of March 31, 1999 between
Vitamin Shoppe Industries Inc. and OnHealth Network
Company.*/**
10.33 Strategic Planning Services Agreements dated as of April 29,
1999 between Vitamin Shoppe Industries Inc. and Jupiter
Communications, L.L.C.*
10.34 Letter agreement dated as of May 24, 1999 between Vitamin
Shoppe Industries Inc. and Time Inc. New Media related to
Dr. Bernie Siegel website.*/**
10.35 Sponsorship and Advertising Agreement dated as of April 16,
1999 between Vitamin Shoppe Industries Inc. and
InteliHealth, Inc.*/**
10.36 Memorandum of Engagement dated as of June 7, 1999 between
Compelling Content and the registrant.*
</TABLE>

<PAGE> 93

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
10.37 License Agreement dated as of October 5, 1998 between
HealthNotes, Inc. and Vitamin Shoppe Industries Inc.*/**
10.38 Stock Option Plan for Non-employee Directors dated as of
August 1, 1999.***
10.39 Irrevocable Commitment to Convert by the holders of Series A
Convertible Preferred Stock of the registrant.
10.40 Nonqualified Stock Option Agreement dated as of July 26,
1999 between the registrant and Lisa H. Kern.***
10.41 Nonqualified Stock Option Agreement dated as of August 6,
1999 between the registrant and Woodson Merrell, M.D.***
10.42 Nonqualified Stock Option Agreement dated as of September
15, 1999 between the registrant and Joel Gurzinsky.***
10.43 Nonqualified Stock Option Agreement dated as of September
15, 1999 between the registrant and Philip H. Teplitzsky.***
10.44 Nonqualified Stock Option Agreement dated as of September
20, 1999 between the registrant and Barbara S. Feigin.***
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP is
included in its opinion filed as exhibit 5.1.
23.3 Consent of Michael C. Brooks.*
27.1 Financial Data Schedule.*
</TABLE>

- ---------------
* Previously filed.

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

*** To be filed by amendment.

<PAGE> 1
Exhibit 4.1

VitaminShoppe.com(TM)

NUMBER SHARES
A- VitaminShoppe.com, Inc.

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 92848M 10 4
TOTAL AUTHORIZED ISSUE 30,000,000 SHARES OF SEE REVERSE FOR CERTAIN
CLASS A COMMON STOCK PAR VALUE $0.01 DEFINITIONS

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF THE CLASS A COMMON STOCK, PAR VALUE
$0.01 PER SHARE, OF VitaminShoppe.com, Inc. (hereinafter the "Corporation"),
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

/s/ Jeffrey Horowitz [VitaminShoppe.com /s/ Larry M. Segall
CORPORATE SEAL
CHAIRMAN OF THE BOARD OF 1999 CHIEF FINANCIAL OFFICER,
DIRECTORS DELAWARE] TREASURER AND SECRETARY

COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT
AND REGISTRAR
BY

AUTHORIZED OFFICER
<PAGE> 2
VITAMINSHOPPE.COM,INC.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common

UNIF GIFT MIN ACT - ___________ Custodian ______________
(Cust) (Minor)

under Uniform Gifts to Minors
Act ___________________
(State)

Additional abbreviations may also be used though not in the above list.

For value received, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________

______________________________________

____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

____________________________________________________________________________

_____________________________________________________________________ shares
of the Class A Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

___________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated ___________________________

________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:

______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 10.39

IRREVOCABLE COMMITMENT TO CONVERT

WHEREAS, the Certificate of Designation, Powers, Preferences and Rights
of the Series A Convertible Preferred Stock (the "Certificate of Designation")
of VitaminShoppe.com, Inc., a Delaware corporation ("VitaminShoppe.com"), was
filed with the Secretary of State of the State of Delaware on July 26, 1999; and

WHEREAS, paragraph 4(a) of the Certificate of Designation entitles each
holder of shares of Series A Preferred to convert at any time prior to a
Qualified IPO all or any portion of the shares of Series A Preferred held by
such holder into shares of Class A Common Stock; and

WHEREAS, subject to the terms and conditions hereof, each holder of
Series A Preferred desires to commit to convert his shares of Series A Preferred
upon the occurrence of the event described below;

NOW, THEREFORE, in consideration of $10.00 and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each holder of Series A Preferred agrees as follows:

1. Terms used but not defined herein shall have the meanings ascribed in
the Certificate of Designation, the terms of which are incorporated
herein by reference.

2. Subject to paragraph 3 hereof, upon the closing on or before December
31, 1999 of a firm commitment underwritten initial public offering of
the Class A Common Stock pursuant to an effective registration
statement under the Securities Act, other than a registration statement
relating solely to an employee benefit plan or transactions covered by
Rule 145 of the Securities Act, at an offering price per share of Class
A Common Stock that is not less than 120% of the Conversion Price
immediately prior to the completion of such offering and which offering
yields proceeds to VitaminShoppe.com (net of underwriting discounts and
commissions) of not less than $30,000,000, each holder of Series A
Preferred hereby irrevocably commits to convert all shares of Series A
Preferred held by such holder into shares of Class A Common Stock at
the then Conversion Price by surrendering the shares to be converted in
the manner provided in paragraph 4(b) of the Certificate of
Designation.

3. If the event described in paragraph 2 hereof has not occurred by
December 31, 1999, then no holder of shares of Series A Preferred shall
be obligated to convert the Series A Preferred held by such holder
except as otherwise provided by the Certificate of Designation.

4. As further assurance, each holder of Series A Preferred hereby
constitutes Jeffrey J. Horowitz his lawful agent and attorney-in-fact
to take such action as may be necessary or appropriate to effect the
provisions hereof. This grant shall constitute a power coupled with an
interest and shall be irrevocable. Jeffrey J. Horowitz covenants
promptly to take such action as may be necessary or appropriate to
effect the provisions hereof.
<PAGE> 2
5. Each holder of Series A Preferred acknowledges that VitaminShoppe.com
is relying upon the covenants contained herein in connection with
statements made in its registration statement on Form S-1 filed with
the Securities and Exchange Commission on July 27, 1999, as such
registration statement may be amended, and the related prospectus. Each
holder of Series A Preferred acknowledges that money damages would be
inadequate to compensate VitaminShoppe.com for the harm that would
result if any holder of Series A Preferred failed to comply with the
provisions hereof and hereby consents to the imposition of equitable
relief, including without limitation injunctive relief and specific
performance, to effect the covenants contained herein.

IN WITNESS WHEREOF, the undersigned have executed this Irrevocable
Commitment to Convert as of September 13, 1999.

J.H. WHITNEY III, L.P.

By: J.H. Whitney Equity Partners III, LLC, its
General Partner

By: /s/ Daniel J. O'Brien
------------------------------------------
Name: Daniel J. O'Brien
Title: Member

WHITNEY STRATEGY PARTNERS III, L.P.

By: J.H. Whitney Equity Partners III, LLC, its
General Partner

By: /s/ Daniel J. O'Brien
------------------------------------------
Name: Daniel J. O'Brien
Title: Member

FDG-CHASE CAPITAL PARTNERS LLC

By: FDG Capital Associates LLC,
its Managing Members

By: /s/ M. Anthony Fisher
------------------------------------------
Name: M. Anthony Fisher
Title: Manager
<PAGE> 3
FDG CAPITAL PARTNERS LLC

By: FDG Capital Associates LLC,
its Managing Members

By: /s/ M. Anthony Fisher
--------------------------------------
Name: M. Anthony Fisher
Title: Manager

JEFFREY HOROWITZ AND HELEN
HOROWITZ, AS JOINT TENANTS WITH
RIGHT OF SURVIVORSHIP

/s/ Jeffrey Horowitz
------------------------------------------
Jeffrey Horowitz, Joint Tenant

/s/ Helen Horowitz
------------------------------------------
Helen Horowitz, Joint Tenant

CB CAPITAL INVESTORS, L.P.

By: CB Capital Investors, Inc.,
its General Partner

By: /s/ John R. Baron
--------------------------------------
Name: John R. Baron
Title: General Partner

THE FLATIRON FUND 1998/1999, LLC

By: /s/ Fred Wilson
---------------------------------------
Name: Fred Wilson
Title: Managing Member

FLATIRON ASSOCIATES, LLC

By: /s/ Fred Wilson
---------------------------------------
Name: Fred Wilson
Title: Managing Member
<PAGE> 4
BANKAMERICA INVESTMENT CORPORATION

By: /s/ Robert F. Perille
--------------------------------------
Name: Robert F. Perille
Title: Managing Director

MIG PARTNERS IV

By: /s/ Robert F. Perille
--------------------------------------
Name: Robert F. Perille
Title: General Partner

<PAGE> 1
Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of VitaminShoppe.com, Inc.
on Form S-1 of our report dated August 19, 1999 (September 23, 1999 as to
Notes 6, 7 and 8 of Notes to Financial Statements), appearing in the prospectus
which is a part of this registration statement.

We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such prospectus.

- --------------------------
DELOITTE & TOUCHE LLP
New York, New York
September 23, 1999