Naturade 10Q 2007 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2007

o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________to __________

Commission File Number: 33-7106-A

________________

NATURADE, INC.

(Exact name of registrant as specified in its charter)

Delaware		23-2442709
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

2099 S. State College Blvd., Suite 210, Anaheim, CA		92806
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (714) 860-7600

________________

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

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

Large accelerated filer R

Accelerated filer R

Non-accelerated filer £

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

As of November 14, 2007 43,332,733 shares of the registrant’s Common Stock were issued and outstanding.

FORM 10-Q

QUARTERLY REPORT

Quarter Ended September 30, 2007

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Balance Sheets as of September 30, 2007 and December 31, 2006	3
	Condensed Statements of Operations for the three and nine months ended September 30, 2007 and September 30, 2006	4
	Condensed Statements of Cash Flows for the nine months ended September 30, 2007 and September 30, 2006	5
	Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Submission of Matters to a Vote of Security Holders	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

	SIGNATURES	37

Part I. Financial Information

Item 1. Financial Statements

NATURADE, INC.

Debtor in Possession

Condensed Balance Sheets

As of September 30, 2007 (Unaudited) and December 31, 2006

ASSETS
	September 30, 2007			December 31, 2006
	(Unaudited)

Current assets:
Cash and cash equivalents	$	166,526		$	80,713
Accounts receivable, net		568,537			838,381
Inventories, net		356,541			258,981
Prepaid expenses and other current assets		81,376			56,101
Total current assets		1,172,980			1,234,176

Property and equipment, net		39,542			51,547
Customer lists, trademarks and formulations, net		189,964			419,266
Deferred financing fees, net		292,601			1,239,900
Other assets		42,071			3,664
Total assets	$	1,737,158		$	2,948,553

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

Liabilities not subject to compromise:
Current liabilities:
Accounts payable	$	2,719,337		$	777,307
Accrued liabilities		637,604			499,428
Revolving credit line		1,231,810			1,276,570
Current portion of long-term debt		721,037			409,095
Total current liabilities		5,309,788			2,962,400

Long-term debt, less current maturities		1,703,963			2,015,905

Total liabilities not subject to compromise					4,978,305

Liabilities subject to compromise (Note 2)		6,746,112			9,344,422

Total Liabilities		13,759,863			14,322,727

COMMITMENTS AND CONTINGENCIES

REDEEMABLE CONVERTIBLE PREFERRED STOCK
Redeemable convertible preferred stock, Series C including accumulated preferred
stock dividends of $5,980,000 at September 30, 2007 and $3,910,000 at December 31, 2006;
par value $0.0001 per share: authorized 50,000,000 shares; issued and outstanding,
21,000,000 shares at September 30, 2007 and December 31, 2006 ($21,000,000 redemption
value).		7,660,000			5,590,000

STOCKHOLDERS' DEFICIT:
Common stock, par value $0.0001 per share; authorized, 100,000,000
shares; issued and outstanding, 43,332,733 at September 30, 2007 and
December 31, 2006.		4,334			4,334
Non-Voting Common stock, par value $0.0001 per share; authorized,
2,000,000 shares; issued and outstanding, 117,284 shares at September 30, 2007 and
December 31, 2006.		12			12

Additional paid-in capital		22,990,945			22,990,945
Accumulated deficit		(42,677,996	)		(39,959,465	)
Total stockholders' deficit		(19,682,705	)		(16,964,174	)
Total liabilities, redeemable convertible preferred stock and stockholders' deficit	$	1,737,158		$	2,948,553

See accompanying notes to condensed financial statements.

NATURADE, INC.

(DEBTOR-IN-POSSESSION)

Condensed Statements of Operations for the Three and Nine Months

Ended September 30, 2007 and September 30, 2006(Unaudited)

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30, 2007			September 30, 2006			September 30, 2007			September 30, 2006
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net sales	$	1,772,871		$	1,769,464			4,501,155		$	8,351,598
Cost of sales		1,118,218			1,056,433			2,984,564			4,426,704
Gross profit		654,653			713,031			1,516,591			3,924,894

Costs and expenses:
Selling, general and administrative expenses		854,581			1,967,570			3,366,921			6,338,332
Depreciation		3,647			9,440			12,005			52,021
Amortization		65,323			233,333			229,302			700,000

Total operating costs and expenses		923,551			2,210,343			3,608,228			7,090,353

Operating loss		(268,898	)		(1,497,312	)		(2,091,637	)		(3,165,459	)

Other income(expense):
Impairment of Goodwill		-0-			(666,040	)		-0-			(3,360,397	)
Reorganization income (expense)		-0-			(104,298	)		2,172,644			(104,298	)
Other income (expense)		740			(253,289	)		17,274			(261,107	)
Total other income(expense)		740			(1,023,627	)		2,189,918			(3,725,802	)

Interest expense:
Interest		67,350			134,579			195,583			508,604
Amortization of deferred financing fees		152,779			480,596			551,229			1,667,088
Total Interest Expense		220,129			615,175			746,812			2,175,692

Loss before provision for income taxes		(488,287	)		(3,136,114	)		(648,531	)		(9,066,953	)
Provision for income taxes		-0-			-0-			-0-			800

Net loss	$	(488,287	)	$	(3,136,114	)		(648,531	)	$	(9,067,753	)
Less:
Deemed Dividend-Series C	$	(690,000	)	$	(690,000	)	$	(2,070,000	)	$	(2,070,000	)

Net Loss Attributable to Common Shareholders	$	(1,178,287	)	$	(3,826,114	)	$	(2,718,531	)	$	(11,137,753	)

Earnings (loss) per share- basic	$	(0.03	)	$	(0.09	)	$	(0.06	)	$	(0.26	)
Earnings (loss) per share-diluted	$	(0.02	)	$	(0.09	)	$	(0.05	)	$	(0.26	)

Weighted Average Number of Shares used in Computation of
Earnings ( loss) per share- basic		43,332,733			43,332,733			43,332,733			43,332,733
Earnings ( loss) per share -diluted		51,816,253			43,332,733			51,787,182			43.332,733

See accompanying notes to condensed financial statements

Naturade, Inc.

(DEBTOR-IN-POSSESSION))

Condensed Statements of Cash Flows for the Nine Months

Ended September 30, 2007 and September 30, 2006 (Unaudited)

	Nine months			Nine months
	Ended			Ended
	September 30, 2007			September 30, 2006
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net Income ( loss)	$	(648,531	)	$	(9,067,753	)
Adjustments to reconcile net income ( loss) to
net cash used in operating activities:
Depreciation and amortization		241,307			752,021
Amortization of loan discounts and deferred financing fees		396,070			1,667,088
Issuance of common stock for consulting		-0-			440,578
Stock Based Compensation		-0-			65,732
Impairment of goodwill		-0-			3,319,612
Changes in operating assets and liabilities:
Accounts receivable		269,844			1,062,628
Inventories		(97,560	)		87,511
Prepaid expenses and other current assets		(25,275	)		99,627
Other assets		(38,407	)		(582	)
Liabilities subject to compromise		(2,598,310	)		-0-
Accounts payable and accrued liabilities		2,080,206			2,546,401
Net cash provided by (used in) operating activities before reorganization items		(420,656	)		972,863
Professional fees paid in connection with Chapter 11 proceeding		-0-			(104,298	)
Net cash provided by (used in) operating activities		(420,656	)		868,565
Cash flows from investing activities:					(104,298	)
Purchase of property and equipment		-0-			(22,632	)
Loss on Retirement		-0-			59,256
Net cash used in investing activities		-0-			36,624
Cash flows from financing activities:
Net borrowings (repayments) under line of credit		-0-			-0-
Net borrowings (repayments) under the revolving credit line		(44,760	)		(1,390,127	)
Payments of long-term debt		-0-			440,909
Proceeds from issuance of debt to related parties		-0-			350,000
Deferred financing fees		551,229			(260,249	)
Payments on term loan		-0-			(69,473	)
Net cash provided by (used in) financing activities		506,469			(928,940	)
Net increase (decrease) in cash and cash equivalents		85,813			(23,751	)
Cash and cash equivalents, beginning of period		80,713			95,398
Cash and cash equivalents, end of period	$	166,526		$	71,647
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	188,079		$	248,491
Income taxes	$	-0-			800
Non-cash financing transactions:
Deemed dividend-Series C	$	2,070,000			2,070,000

See accompanying notes to condensed financial statements.

NATURADE, INC.

(DEBTOR-IN-POSSESSION)

Notes to Condensed Financial Statements

(Unaudited)

Basis of Presentation and Going Concern — The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America(GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The accompanying condensed balance sheet at September 30, 2007 and the condensed statements of operations and cash flows for the periods ended September 30, 2007 and 2006 are unaudited. Such financial statements have been prepared on the same basis as the Company's audited financial statements and, in the opinion of management, reflect all adjustments, consisting only of a normal recurring adjustments (with the exception of the extinguishment of debt discussed in Note 2 which is recorded as reorganization income), necessary for a fair presentation of the financial position and results of operations for such periods. However, the accompanying financial statements do not include any adjustments that may be required in connection with restructuring the Company under Chapter 11 of the Bankruptcy Code. See, Note 10 - Subsequent Event. These unaudited condensed financial statements should be read in conjunction with the December 31, 2006 audited financial statements included in the Company's Form 10-K as previously filed with the Securities and Exchange Commission on April 17, 2007.

Contrary to the rules of the SEC and due to a lack of funding, the Company's unaudited condensed September 30, 2007 financial statements included in this filing have not been reviewed by an independent registered public accounting firm in accordance with professional standards for conducting such reviews. The Company intends to obtain a SAS 100 review of such financial statements if and when necessary funds become available.

The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2007.

Chapter 11 Bankruptcy Proceedings

On August 31, 2006 (the “ Petition Date”), the Company filed a voluntary petition for protection and reorganization (the “Chapter 11 Bankruptcy”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). Since the Petition Date, the Company has conducted activities as a debtor-in-possession under the Bankruptcy Code.

The accompanying condensed financial statements have been prepared in accordance with GAAP applicable to a going concern, which assume that assets will be realized and liabilities are discharged in the normal course of business. As a result of the Chapter 11 Bankruptcy such realization of assets and liquidation of liabilities is subject to uncertainty. A substantial portion of the Company's liabilities as of the Petition Date are subject to compromise or other treatment in the Chapter 11 Bankruptcy. For financial reporting purposes, those unsecured liabilities and obligations whose disposition is dependent on the outcome of the Chapter 11 Bankruptcy have been segregated and classified as liabilities subject to compromise in the September 30, 2007 balance sheet. Generally, actions to enforce or otherwise effect repayment of all pre-Chapter 11 liabilities and pending litigation against the Company are stayed while the Company continues as a debtor-in-possession during bankruptcy proceedings. Schedules have been filed by the Company with the Bankruptcy Court setting forth the assets and liabilities of the Company as of the Petition Date as reflected in the Company's accounting records. Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and either amicably resolved or adjudicated by the Bankruptcy Court. The ultimate amount of and settlement terms for such liabilities are not presently determinable.

Financial accounting and reporting during a Chapter 11 Bankruptcy for an entity with the expectation of reorganizing is prescribed in Statement of Position No. 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”). The Company has an expectation of reorganizing under the Bankruptcy Code. Pre-petition liabilities are reported on the basis of the expected amount of the allowed claims in accordance with Statement of Financial Accounting Standard(“SFAS”) No. 5, “Accounting for Contingencies”, as opposed to the amount for which the allowed claims may be settled. In addition, the Company has reported all transactions (other than interest expense) directly related to the Chapter 11 Bankruptcy as reorganization items in its statement of operations for the year ended December 31, 2006. SOP 90-7's definition of reorganization items excludes (1) interest expense and (2) transactions required to be reported as discontinued operations or extraordinary items in conformity with GAAP. However, the accompanying condensed financial statements do not include any adjustments that may be required in connection with restructuring the Company under Chapter 11 of the Bankruptcy Code.

On September 25, 2006, The Company's common stock was de-listed from the over-the-counter Bulletin Board and now trades on the "Pink Sheets." The Company filed a 15c 2-11 statement with NASD in June 2007, and is still in the comment stage to try to regain listing on the over-the-counter Bulletin Board.

Beginning in September 2006, the Company sought consensual agreement with its secured lender, other secured parties and the committee of unsecured creditors. The parties reached consensual agreement on the Company’s Fifth Amended Plan of Reorganization, as modified (the “Plan”) which was heard in Bankruptcy Court on October 30, 2007 and approved by the United States Bankruptcy Court, Central District of California, Santa Ana Division (Case No. SA 06-11493 RK). The Plan received support from the Company’s creditors and shareholders as well as support from the Company’s lenders and the Company’s Unsecured Creditors Committee. On November 8, 2007, Redux Holdings, Inc, (“Redux”), the Company’s controlling shareholder, invested $1.2 million in Naturade, as required by the Plan and on November 9, 2007, the Plan became effective (the “Effective Date”). A copy of the Plan is being posted at www.naturade.com . See Note 10 - Subsequent Event.

The Company will remain a fully reporting publicly traded company. Once the Company exits from Chapter 11, the Company may qualify for fresh start reporting under SOP 90-7.

In addition to the $1.2 million cash infusion by Redux, of which $700,000 was paid to the administrative creditors, and most of the balance was allocated to the Company’s future working capital need, the Plan included a comprehensive debt restructuring. The Plan also features an equity allocation and allows for the retention of an equity interest by existing shareholders in the Company. All Company Series C Preferred shares, along with its voting and control rights, all options, all warrants, and all registration rights, have been cancelled as required under the Plan. The Company will be issuing to Redux enough shares of common stock to give Redux 95% equity and voting interest in the Company, with all remaining shareholders will have a total of 5% equity interest in the Company. Pursuant to the U. S Bankruptcy Code, and the Plan, the new common shares being issued to Redux will be exempt from the registration requirements of the securities laws. The common shares currently issued, will retain their registered status.

Going Concern

As of September 30, 2007, the Company was operating under Chapter 11 of the U.S. Bankruptcy Code and continuation as a going concern was contingent upon, among other things, the Company’s ability to (i) get the plan effective (ii) return to profitability; (iii) generate sufficient cash flows from operations; and (v) obtain financing sources to meet the Company’s future obligations. These matters created substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that result from the outcome of these uncertainties. Additionally, the Plan materially change amounts reported in the financial statements, which do not give effect to all adjustments of the carrying value of assets and liabilities that are necessary as a consequence of reorganization under Chapter 11 bankruptcy. The Company’s continuation as a going concern depended on refinancing pursuant to the Plan, continuing tight management of cash and profitable operations and continuing to obtain favorable credit terms from vendors. Management expects that vendors will begin to extend further credit as the Company emerges from bankruptcy with refinancing and that the Company will return to normal levels of customer order fill rates once these terms are established and be profitable with a lower overhead structure. Additionally, Company management has taken cost containment measures to reduce operating costs including reduction of monthly facility lease expense from approximately $540,000 per year to approximately $120,000 per year, and reduction in staffing resulting in an annual cost reduction of more than $1,000,000. The Plan provides for a recapitalization of the Company with Redux providing a $1.2 million substantial cash infusion of which a portion will be allocated to meet the Company’s future working capital needs and allow the Company’s continuation as a going concern. See Note 10 -Subsequent Event.

The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Liabilities Subject To Compromise and Reorganization Items — Under Chapter 11 of the U.S. Bankruptcy Code, certain claims against the Company in existence prior to the filing of the petition for relief under the federal bankruptcy laws are stayed while the Company continues business operations as a debtor-in-possession. These estimated claims are reflected in the September 30, 2007 and December 31, 2006 Balance Sheets as Liabilities Subject to Compromise and are summarized in the table below. Such claims remain subject to future adjustments. Adjustments may result from actions of the bankruptcy court, negotiations, rejection or acceptance of executory contracts, determination of value of any collateral securing claims, proofs of claim or other events.

The Company has received approval from the bankruptcy court to pay or otherwise honor certain of its pre-petition obligations, including approval to pay payroll and other business related expenses of ongoing employees in the ordinary course of business. Accordingly, these pre-petition items have been excluded from Liabilities Subject to Compromise as of September 30, 2007 and December 31, 2006.

The liabilities subject to compromise consisted of the following items:

	September 30, 2007 (Unaudited)		December 31, 2006

Accounts payable	$	5,125,453	$	5,155,049
Notes payable for acquisitions		-0-		2,663,206
Accrued Interest		539,835		695,343
Notes payable to related parties		908,381		658,381
Accrued commissions		172,443		172,443
Total Liabilities Subject to Compromise	$	6,746,112	$	9,344,422

On February 28, 2007, Naomi Balcombe and Ageless entered into an Assignment of Claim Agreement (the Agreement) with Redux for the assignment of their rights, title and interest in, to and under the Claim. The aggregate amount of the claim as filed with the Bankruptcy Court was $1,248,234, of which $600,000 was claimed by Naomi Balcombe and $648,234 was claimed by Ageless.

In consideration for the assignment, Redux paid $250,000, of which $100,000 was deposited on February 9, 2007 in a trust account, with the deposit due to be released upon the entry of an order of the Bankruptcy Court, prior to June 1, 2007 confirming the Plan and such order being final and non-appealable (the Order); the remaining $150,000 was paid in the form of a Secured Promissory Note (the Note). The deposit was released on March 26, 2007.

As such, a provision of $998,234 to write-down the carrying value of the note from $1,248,234 to $250,000 (which represents the consideration paid by Redux and reimbursable by the Company) was recorded as of September 30, 2007, which is classified as reorganization income in the accompanying statement of operations for the nine months ended September 30, 2007. The related accrued interest of $131,447 at August 31, 2006 was also written off as of September 30, 2007.

Following acquisition of the Symbiotics business in 2005, a note payable was recorded by the Company for $1,414,972, payable to Doug Wyatt the previous owner.

The Company has sought and received expert advice from its bankruptcy attorneys regarding the status of creditor claims. Specifically, they have advised that where a debt was not listed on the schedules of liabilities lodged with the Court by the Debtor, and where the creditor has received notice from the Court of the bankruptcy but did not file a valid proof of claim, then such creditor has no valid claim on the bankrupt estate.

Management has specifically reviewed the Symco Note and potential claim status with its bankruptcy attorneys and, based on their professional advice, believes that Symco have forfeited their claim, and that the Company’s liability on the note is now NIL.

The claim was shown on the Schedules filed with the Court at $0.00 value for notice purposes only; and

The court properly noticed Doug Wyatt & Symco of the Company’s bankruptcy; and

Doug Wyatt was a member of the Creditors Committee and therefore was properly noticed and informed of the process and need to file a proof of claim to protect a creditor claim; and

Neither Doug Wyatt nor Symco filed any proof of claim by the bar date of approx December 12, 2006.

Therefore, based on the above and advice received, the note has been extinguished in bankruptcy and the Company believes it has no further liability on the note and as such, at September 30, 2007 the Company has written off to reorganization income the outstanding balance on the note of $1,414,972, the related deferred financing fees of $279,207 and has reversed the deferred interest expense of $116,864 that was recognized during the nine months ended September 30, 2007.

Reorganization Items

Reorganization items are presented separately in the Condensed Statement of Operations and represent items of expense that are realized or incurred by the Company because it is in reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Impairment - On September 30, 2007, based upon the Company's assessment and in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company concluded that the carrying value of the intangible customer lists associated with the Ageless and Symco acquisitions (see Note 7), did not exceed the fair market values as determined by the Company’s assessment of the estimated future discounted cash flows. Consequently, no impairment charge was recognized during the nine months ended September 30, 2007.

4.	Inventories — Inventories are stated at the lower of weighted average cost or market. Weighted average cost is determined on a first-in, first-out basis. Inventories at September 30, 2007 and December 31, 2006 consisted of the following:

	September 30, 2007 (Unaudited)			December 31, 2006

Raw Materials	$	55,261		$	49,879
Finished Goods		348,691			290,748
Subtotal		403,952			340,627
Less: Reserve for Excess and Obsolete Inventories		(47,411	)		(81,646	)
	$	356,541		$	258,981

Financing —In July 2005, the Company obtained a $4,000,000 convertible financing facility from Laurus, consisting of a $3,000,000 revolving credit facility and a $1,000,000 term loan. In consideration of such financing facility, The Company issued to Laurus an option to purchase up to 8,721,375 shares of the Company’s common stock at $0.0001 per share and a warrant to purchase up to 1,500,000 shares of the Company’s common stock at $0.80 per share. The financing facility was amended on January 11, 2006, by among other things, increasing the term loan to $1,650,000 and eliminated the conversion features on the facility. The Company issued Laurus 1,050,000 shares of the Company’s common stock in consideration for this amendment.

Indebtedness under the revolving facility is based upon 35% of eligible inventory and 90% of eligible accounts receivable. The financing facility has a term of three years ending on July 26, 2008. As part of the Chapter 11 restructuring, Laurus has agreed to extend the period for the repayment for the Term Loan to be repaid in equal monthly installments beginning the first day of the first full month following the Effective Date through and including January 2010. The financing facility carries an interest rate of prime plus 2% per annum (10.25% at September 30, 2007), subject to certain reductions based upon growth of the Company’s stock price.

The Company is subject to certain reporting covenants (such as the timely filing of financial reports with the Securities and Exchange Commission, monthly financial reporting deadlines and collateral reporting), is required to obtain Laurus’ approval of certain actions (such as incurring additional indebtedness, making any distribution on or repurchasing any common stock or merging with or purchasing any assets of stock of any person) and has granted Laurus a right of first refusal with respect to certain future financings. The Company is in compliance with all covenants at September 30, 2007 (but see note below on pre-petition accounts receivable)

The loans are secured by all of the assets of the Company. The term loan is guaranteed by Peter H. Pocklington, a principal of Quincy, and a former director of the Company.

In consideration for entering into this financing agreement (“Financing Agreement”), the Company issued to Laurus, the Laurus Option and the Laurus Warrant to purchase shares of the Company’s common stock. The Laurus Option entitles the holder to purchase up to 8,721,375 shares of common stock, subject to certain limitations on the amount of common stock held by Laurus, at a purchase price of $0.001 per share at any time on or after July 26, 2005. The Laurus Warrant entitles the holder to purchase up to 1,500,000 shares of common stock at a purchase price of $0.80 per share at any time on or after July 26, 2005 through July 26, 2010. The number of shares of common stock issuable upon exercise of the Laurus Option and the Laurus Warrant is subject to adjustment to prevent dilution upon stock splits, stock dividends, and other events. The exercise price of the Laurus Option and the Laurus Warrant may be paid, at the option of Laurus, by the cancellation of indebtedness under the financing facility.

The Company paid to Laurus in cash a total of $193,500 in fees and expenses, existing of a “closing payment” of $156,000 and reimbursement of $37,500 of Laurus legal fees. Also in connection with the Laurus financing, the Company issued a warrant to Liberty for introducing the Company to Laurus (the “Liberty Warrant”). The Liberty Warrant entitles the holder to purchase up to 3,647,743 shares of common stock at a purchase price of $0.08 at any time on or after July 26, 2006 through July 26, 2011.

The value of the warrants and options issued to Laurus, using Black Scholes, equaling $786,036 and composed of the value of the Laurus Option $694,106 and the Laurus Warrant $91,930 was classified as a discount and is amortized as interest expense over 36 months using the interest method. Based on assessment of the terms of this exchange the Company determined that there is no beneficial conversion feature of this exchange.

The value of the warrant issue to Liberty of $223,555 using the Black Scholes valuation model was capitalized as deferred finance fee and is amortized over 36 months using the interest method.

On January 11, 2006 the Company and Laurus amended the Financing Agreement, pursuant to which the parties:

Increased the term loan from $1,000,000, of which $909,000 was outstanding at January 11, 2006, to $1,650,000. Over advances totaling $650,000 were transferred from the Revolving Note to the Term Note with the remaining $91,000 utilized as a reduction of the amount outstanding under the Revolving Note.

Modified the payments on the Term Note from $30,000 per month beginning November 1, 2005 payable in shares of the Company’s common stock or $30,900 per month if paid in cash, to $50,000 per month in cash beginning April 1, 2006.

Eliminated the First Minimum Borrowing Note outstanding of $500,000.

Eliminated the ability of Laurus to convert the Term Note, the Revolving Note, and the Minimum Borrowing Notes into shares of the Company’s common stock.

Extended the term of the Financing Agreement from three years ending on July 26, 2008 to three years ending January 6, 2009.

Modified the prepayment provisions of the Revolving Note and the Term Note from an early payment fee of 35% of the loan amounts if paid prior to the termination date, to 5% if retired before January 6, 2007, 4% if retired prior to January 6, 2008 and 3% if retired prior to January 6, 2009.

In consideration for entering into the amendment, the Company issued to Laurus 1,050,000 shares of common stock.

The value of the shares issued to Laurus in consideration for the debt modification plus the remaining unamortized deferred financing fees are being amortized over the renewed term of the Financing Agreement.

On August 31, 2006, pursuant to the Company’s filing under Chapter 11 of the US Bankruptcy Code, Laurus and Redux agreed to cause the Company to do the following:

Laurus’ claim in the amount of $2,900,000 will be treated as fully secured and the liens granted Laurus pursuant to the Security and Purchase Agreement dated July 26, 2005 between Laurus and the Company (the “Financing Agreement”) will remain without modification.

Laurus will provide debtor in possession financing (“DIP”) pursuant to the terms and conditions of the financing agreement.

Interest will continue to accrue on the Term Loan pursuant the terms of the Financing Agreement however, payments will be suspended until the first day of the first full month after the Effective Date of the Chapter 11 filing.

The maturity date of the Term loan will be extended to January 6, 2010 and principal payments will commence on the first day of the first full month after the Effective Date of the Chapter 11 filing and be payable in equal monthly installments until the maturity date .

To the extent that the Laurus DIP financing and/or Naturade’s use of Laurus cash collateral is insufficient, Redux shall be responsible for funding all payments needed to confirm the plan and for working capital of Naturade before and after confirmation.

Laurus will support the treatment of Laurus’ claims pursuant to Naturade’s Plan, and will cast a vote in favor of the confirmation of such Plan, provided that the treatment of Laurus’ claims pursuant to the Plan is materially the same as that set forth herein.

At September 30, 2007, $520,303 was outstanding under the revolving facility as pre-petition debt, $711,507 was outstanding under the revolving facility as post petition debt, and $1,350,000 was outstanding under the term loan as pre-petition debt. These loans are fully secured and the pre-petition amounts are not included in the liabilities subject to compromise. The majority of pre-petition accounts receivable under the revolving facility are deemed potentially uncollectible; and, consequently, the total revolver balance outstanding is under secured against available accounts receivable and inventory as per formula. Laurus is fully aware of this, has not called a default, and has indicated it is prepared to negotiate a repayment program with the Company after it emerges from Bankruptcy.

Loan Agreements with Shareholder and Other Investors -On April 14, 2003, the Company entered into a Loan Agreement (the “2003 Loan Agreement”) with Health Holdings and certain other lenders (the “2003 Lender Group”), pursuant to which the 2003 Lender Group agreed to lend the Company $450,000 and, subject to the discretion of the 2003 Lender Group, up to an additional $300,000. All advances under the 2003 Loan Agreement bear interest at the rate of 15% per annum, are secured by substantially all of the assets of the Company, and are subordinated to the Company’s indebtedness to Laurus. In consideration of the extension of credit under the 2003 Loan Agreement, Wells Fargo waived all defaults of the Company as of December 31, 2003 under the Credit Agreement.

On April 14, 2004, the terms of the 2003 Loan Agreement were modified by the Joinder of Bill D. Stewart, the then Chief Executive Officer of the Company, as a member of the 2003 Lender Group, subject to all of the terms and conditions of the 2003 Loan Agreement, and the 2003 Lender Group advanced an additional $200,000, of which Bill D. Stewart advanced $100,000. Further, on May 3, 2004, the 2003 Lender Group advanced the Company an additional $100,000. On August 16, 2004, advances allowed under the 2003 Loan Agreement were increased to a total of $950,000 and the 2003 Lender Group advanced an additional $200,000 to the Company. In July 2005, advances allowed under the 2003 Loan Agreement were increased to a total of $1,250,000 and the 2003 Lender Group advanced an additional $300,000 to the Company. There are no additional amounts available to advance under the 2003 Loan Agreement. Proceeds of the advances have been used for working capital. On January 26, 2005, the terms of the 2003 Loan Agreement were modified to extend the due date to December 31, 2005. On July 22, 2005, pursuant to the acquisitions of Ageless and Symco, the terms of the 2003 Loan Agreement were again modified to extend the due date to December 31, 2006. On August 31, 2006 these loans became claims pursuant to the Company’s filing under Chapter 11 of the U.S. Bankruptcy Code. As of September 30, 2007, there is $1,250,000 outstanding under the 2003 Loan Agreement of which $1,075,000 will be treated as fully secured and is included in Long Term Debt. Interest on the $1,075,000 of 10% will accrue beginning the Effective Date, to be paid monthly with monthly principal payments to begin two years from the Effective Date. The remaining $175,000 is included in Liabilities Subject to Compromise.

In April 2006, The Company’s then principal shareholder, Quincy, loaned the Company $350,000. This loan is payable on demand and does not carry a stated interest charge. At September 30, 2007, $350,000 was outstanding on this unsecured loan and is accordingly included in Liabilities Subject to Compromise. There is no written agreement for this loan between Quincy and the Company.

Stock-Based Compensation — Effective January 1, 2006, the Company began recording compensation expense associated with stock options for employees in accordance with SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”). Prior to January 1, 2006, the Company accounted for stock-based compensation related to stock options using the intrinsic value method of accounting for stock-based awards granted to employees and directors in accordance with the Accounting Principals Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plan. The Company has adopted the modified prospective transition method provided under SFAS 123R, and as a result, has not retroactively adjusted results from prior periods. Under this transition method, compensation expense associated with stock options recognized in the three and nine month periods ended September 30, 2007, includes expense related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant date fair value

Employee Stock Option Plan In February 1998, the Company adopted an Incentive Stock Option Plan (the “ISO Plan”) to enable participating employees to acquire shares of the Company’s common stock. The ISO Plan provided for the granting of incentive stock options up to an aggregate of 850,000 shares, as amended. In October 2001, the Company amended the ISO Plan by increasing to 2,000,000 the number of shares of the Company’s common stock that may be subject to awards granted pursuant to the ISO Plan. The actual number of incentive stock options that may be granted to employees is determined by the Compensation Committee based on the parameters set forth in the ISO Plan. Under the terms of the ISO Plan, incentive stock options may be granted at not less than 100% of the fair market value at the date of the grant (110% in the case of 10% shareholders). Incentive options granted under the ISO Plan, vest over a four-year period from the date of grant. As of September 30, 2007, 48,000 incentive stock options under the ISO Plan were outstanding at the weighted average exercise price per share of $0.14. All stock options outstanding at September 30, 2007 will be cancelled as the Effective Date. See Note 10 - Subsequent Event.

Director Stock Options - In October 1999, options to purchase 87,500 shares of common stock were granted to each of two then new board members at an exercise price of $1.03. These options expired on October 14, 2006.

Senior Management Options - On December 16, 2005, the Board of Directors (the “Board”) awarded Bill D. Stewart, the then Chief Executive Officer of the Company, an option to purchase 1,620,000 shares of common stock and Stephen M. Kasprisin, the then Chief Operating/Chief Financial Officer of the Company, an option to purchase 1,616,500 shares of common stock. The options have a seven year term, vest in equal quarterly increments over two years and were granted at an exercise price equal to the closing price of the Company’s common stock on December 16, 2005. The options were granted pursuant to the 1998 Incentive Stock Option Plan of the Company. Mr. Stewart and Mr. Kasprisin terminated their employment with the Company on August 30, 2006 pursuant with the change in control by Redux. All unexercised options under these senior management option grants expired upon their termination of employment.

The computation of the expected term is based on a weighted average calculation of the estimated average life of unexercised options. The expected volatility is based on the historical volatility of the S&P small capital 600 fund for the 12 months prior to the end of the quarter options were granted. The Company elected to use this index as a result of the relative small number of shares held by non-affiliate shareholders (2,586,102) as compared to total outstanding shares (43,332,733). The Company believes this index is a more accurate indicator of the volatility of similar companies of similar size versus the movement of the Company’s stock with limited trading volume. The risk free interest is based upon the implied yield on U.S. Treasury constant maturities with a remaining term equal to the expected term of the option. The dividend yield rate is projected to be zero. The estimated forfeiture rate on stock options was zero and was based upon past history of the Company.

A summary of the Company’s outstanding stock options at September 30, 2007 are as follows:

	Number of Shares			Weighted Average Exercise Price per Share		Number Exercisable		Weighted Average Exercise Price per Share
Outstanding at December 31, 2006		8,802,375		$	0.002		8,770,375	$	0.002
Granted		-0-
Exercised		-0-
Expired		(33,000	)
Outstanding at September 30, 2007		8,769,375		$	0.001		8,764,375	$	0.001

____________

**Includes 8,721,375 fully vested options issued to Laurus.

The following table summarizes information about stock options outstanding at September 30, 2007:

Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Contract Life In Years		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price for Exercisable Options
$0.001 - $0.01		8,721,375		Indefinite	$	0.001		8,721,375	$	0.001
$0.10 - $0.25		48,,000		4	$	0.138		43,000	$	0.142
		8,769,375			$	0.001		8,764,375	$	0.001

At September 30, 2007, there was no unamortized compensation costs related to non-vested stock options which is expected to be recognized in the future.

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2007 was $7,482.

The following table summarizes non-vested options at September 30, 2007:

	Number of			Grant Date
	Shares			Fair Value*
Non-vested at December 31, 2006		32,000
Granted
Vested		(19,625	)
Exercised
Expired		(7,375	)
Non-vested at September 30, 2007		5,000

* There were no options granted during the period.

Warrants - In 1999, the Company granted warrants t purchase 600,000 shares of common stock at $1.00 per share in conjunction with certain financing agreements. These warrants expire ten years from the date of grant.

The Laurus Option entitles the holder to purchase up to 8,721,375 shares of common stock, subject to certain limitations on the amount of common stock held by Laurus, at a purchase price of $0.001 per share at any time on or after July 26, 2005. The Laurus Warrant entitles the holder to purchase up to 1,500,000 shares of common stock at a purchase price of $0.80 per share at any time on or after July 26, 2005 through July 26, 2010.

In consideration for entering into the Master Investment Agreement described in Note 5, the Company issued to Quincy, warrants to purchase shares of common stock. The warrants entitle the holder to purchase up to 7,000,000 shares of common stock at a purchase price of $0.80 per share at any time on or after July 22, 2006 until July 22, 2015 and to purchase up to 7,000,000 shares of common stock at a purchase price of $1.02 per share at any time on or after July 22, 2006 until July 22, 2015. In addition, the Company issued to Health Holdings, warrants to purchase shares of the Company’s common stock. The warrants entitle the holder to purchase up to 10,000,000 shares of common stock at a purchase price of $1.00 per share during the period from July 22, 2006 until July 22, 2015.

On July 26, 2005, the Company issued to Liberty a warrant to purchase up to 3,647,743 shares of the Company’s common stock at a purchase price of $0.08 per share for introducing the Company to Laurus. Redux acquired Liberty’s warrant and all rights thereto on November 16, 2006.

All warrants outstanding as September 30, 2007 will be cancelled as of the Effective Date. See Note 10 - Subsequent Event

A summary of the Company’s outstanding warrants as of September 30, 2007 are as follows:

	Number of Shares		Weighted Average Exercise Price per Share		Number Exercisable		Weighted Average Exercise Price per Share
December 31, 2006		28,247,743	$	0.83		28,247,743	$	0.83
Granted
Exercised
Expired
Outstanding at September 30, 2007		28,247,743	$	0.83		28,247,743	$	0.83

The following table summarizes information about warrants outstanding at September 30, 2007:

Range of Exercise Prices	Warrants Outstanding		Weighted Average Remaining Contract Life In Years		Weighted Average Exercise Price		Warrants Exercisable		Weighted Average Exercise Price for Exercisable Warrants
$0.01-$0.10		3,647,743		4	$	0.08		3,647,743	$	0.08
$0.80-$1.10		24,600,000		4	$	0.94		24,600,000	$	0.94
		28,247,743			$	0.83		28,247,743	$	0.83

Segment Reporting — Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company’s chief decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief decision maker is the Chief Executive Officer.

The Company has two reportable operating segments: health food specialty stores and mass market stores. The Company does not allocate operating expenses to these segments, nor does it allocate specific assets to these segments. Therefore, segment information reported includes only sales, cost of sales and gross profit.

Operating segment data for the three month periods ended September 30, 2007 and 2006 was as follows:

	Distribution Channels
	Health Food		Mass Market		Total
Three months ended September 30, 2007
Sales	$	1,001,295	$	771,576	$	1,772,871
Cost of sales		598,159		529,059		1,118,218
Gross profit	$	412,136	$	242,517	$	654,653
Three months ended September 30, 2006
Sales	$	1,018,246	$	751,218	$	1,769,464
Cost of sales		590,828		465,605		1,056,433
Gross profit	$	427,418	$	285,613	$	713,031

Nine months ended September 30, 2007
Sales	$	2,983,136	$	1,518,019	$	4,501,155
Cost of sales		1,781,758		1,202,806		2,984,564
Gross profit	$	1,201,378	$	315,213	$	1,516,591
Nine months ended September 30, 2006
Sales	$	5,056,363	$	3,295,235	$	8,351,598
Cost of sales		2,546,664		1,880,040		4,426,704
Gross profit	$	2,509,669	$	1,415,195	$	3,924,894

Sales are attributed to geographic areas based on the location of the entity to which the products were sold. Geographic segment data for the three month periods ended September 30, 2007 and 2006 was as follows:

	United States		International		Total
Three months ended September 30, 2007
Sales	$	1,695,408	$	77,463	$	1,772,871
Cost of sales		1,086,320		31,898		1,118,218
Gross profit	$	609,088	$	45,565	$	654,653
		1,
Three months ended September 30, 2006
Sales	$	1,740,460	$	29,004	$	1,769,464
Cost of sales		1,040,481		15,952		1,056,433
Gross profit	$	699,979		13,052		713,031

Nine months ended September 30, 2007
Sales	$	4,158,857	$	342,298	$	4,501,155
Cost of sales		2,796,839		187,725		2,984,564
Gross profit	$	1,362,018	$	154,573	$	1,516,591

Nine months ended September 30, 2006
Sales	$	8,130,124	$	221,474	$	8,351,598
Cost of sales		4,304,893		121,811		4,429,704
Gross profit	$	3,825,231	$	99,663	$	3,924,894

During the three and nine months ended September 30, 2007 and 2006, the Company had sales to three customers whose purchases exceed 10% of the Company’s total net sales as shown in the table below.

	Major Customer Table
	Customer One				Customer Two				Customer Three
	Sales		Accounts Receivable Balance Quarter-end		Sales		Accounts Receivable Balance Quarter-end		Sales		Accounts Receivable Balance Quarter-end
Three Months ended September 30, 2007	$	478,395	$	202,963	$	223,823	$	91,972	$	230,734	$	74,460
Three Months ended September 30, 2006	$	548,828	$	412,134	$	262,770	$	197,291	$	141,091	$	80,784
Nine Months ended September 30, 2007	$	1,007,814	$	202,963	$	749,664	$	91,972	$	456,220	$	74,460
Nine Months ended September 30, 2006	$	1,855,614	$	412,134	$	1,144,211	$	197,291	$	872,364	$	80,784

Guarantees — In November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation Number (“FIN”) 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others-an interpretation of FASB Statements No. 5, 57 and 107 and rescission of FIN 34.” The following is a summary of the Company’s agreements that the Company has determined are within the scope of FIN 45.

Pursuant to its bylaws, the Company has agreed to indemnify the current officers and directors of the Company for certain events or occurrences arising as a result of an officer’s or director’s serving in such capacity. The term of the indemnification period is the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could make under these indemnification agreements is unlimited. However, the Company has a directors’ and officers’ liability insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal and has no liability recorded for these agreements as of December 31, 2006 and September 30, 2007.

The Company enters into indemnification provisions under (i) its agreements with other companies in its ordinary course of business, typically business partners, contractors, customers and landlords and (ii) its agreements with investors. Under these provisions the Company generally agrees to indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights. These indemnification provisions generally survive the termination of the underlying agreement. In addition, in some cases, the Company has agreed to reimburse employees for certain expenses and to provide salary continuation during short-term disability. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the Company believes the estimated fair value of these provisions is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2006 and September 30, 2007.

Litigation — From time to time, the Company is party to various other claims and litigation that arise in the normal course of business. While any litigation contains an element of uncertainty, management believes that the ultimate outcome of these claims and litigation will not have a material adverse effect on the Company’s results of operations or financial condition. Prior to August 31, 2006, the Bankruptcy filing date, the Company was involved in the following litigation:

On September 30, 2006, a judgment in the amount of $271,000 was entered against the Company related to a vendor. Such amount has been accrued as of September 30, 2007 and is included in Liabilities Subject to Compromise.

The Company is the subject of various litigation matters, including an eviction matter with the Irvine Company related to the Company’s office facilities lease. The lease was set to expire in 2013; however, the Company vacated the premises in August 2006. The Company discontinued the accrual for the remaining rent as of August 31, 2006 as the lease was rejected by order of the bankruptcy on August 31, 2006. Accrued rents remaining unpaid as of August 31, 2006 are included in Liabilities Subject to Compromise as of September 30, 2007.

The Company has fully accrued the amounts claimed in these suits as of September 30, 2007 and has included such amounts in Liabilities Subject to Compromise. In addition, the Company has received a stay as to each of these lawsuits under its Chapter 11 Bankruptcy proceeding. As of this filing no plaintiff or other party has made a motion for or been granted a Relief from Stay.

The following litigation matters are currently pending:

a) Fortress Systems, LLC dba FSI Nutrition v. Naturade, Inc. (Case No. ADV .06-08004 U.S. Bankruptcy Court, District of Nebraska). On January 11, 2006, Fortress Systems, LLC (dba FSI Nutrition) filed a claim against the Company in U.S. Bankruptcy Court, District of Nevada alleging failure to pay for a special order product. The plaintiff is seeking $47,255 in damages. This claim was filed in the Company’s Chapter 11 bankruptcy case and is now treated as an unsecured creditor claim under the Plan.

b) Naturade, Inc. v. Doyle & Boissiere, LLC; Health Holdings and Botanicals, LLC; Quincy Investments Corp. : Peter H. Pocklington: William B. Doyle, Jr.; Lionel P. Boissiere; and Does 1-70 (Orange County Superior Court, State of California, Case No.: 07CC02752). Filed on February 9, 2007. This lawsuit was initiated by the Company to seek compensation and damages relating to Breach of Fiduciary Duty, Breach of Contract, Fraud, Conversion, Breach of the Implied Covenant, Negligence, Accounting, and Declaratory Relief from several former directors and entities with which the Company had contractual relationships (“State Court Actions”). The Company seeks compensatory and punitive damages against each defendant. A trial for this matter has not yet been set. Related to this litigation, on December 8, 2006, Quincy Investments, Inc. filed a proof of claim against the Company’s bankruptcy estate alleging a general unsecured claim in the approximate amount of $350,000.00 (“Quincy Claim”). The Company disputes the Quincy Claim and filed a formal objection to the Quincy Claim. On July 9, 2007, the Bankruptcy Court entered an order, which provided that it would abstain from ruling on the objection to the Quincy Claim pending resolution of the State Court Action and disallow the Quincy Claim for purposes of Plan distribution only, subject to reconsideration and payment in accordance with the terms of the Plan on account of any allowed claim that it may have upon resolution of the State Court Action. As of the Effective Date, the Company has settled this litigation with all defendants, except for Pocklington and Quincy, against whom the Company and Redux will continue to prosecute this action. Pocklington and Quincy have evaded personal service of the complaint. Service by publication will be effected by the plaintiffs instead.

c) Naturade, Inc. v. NBTY, Inc. d/b/a Omni-Pak Industries (United States Bankruptcy Court, Adversarial Case No.: SA07-1057RK) Filed on February 15, 2007. On December 11, 2006, NBTY, Inc. d/b/a Omni-Pak Industries (“NBTY”) filed a proof of claim against the Company’s bankruptcy estate alleging a general unsecured claim in the amount of $660,774.10 and an alleged administrative claim in the amount of $3,916.00. (“NBTY Claim”). On February 15, 2007, the Company filed a complaint against NBTY to avoid and recover approximately $191,480.81 of preferential transfers of property under Bankruptcy Code Sections 547 and 550. The Company and NBTY have exchanged information and support for their respective positions regarding the NBTY Claim, the complaint and NBTY’s affirmative defenses thereto. As a result thereof, the Company and NBTY have reached a compromise and settlement that will provide, among other things, for NBTY’s payment of $7,658.00, allowance of the unsecured portion only of the NBTY Claim and dismissal of the complaint. The settlement is subject to final documentation and Bankruptcy Court approval thereof.

d) Naturade, Inc. v. Yellow Transportation (United States Bankruptcy Court, Adversarial Case No.: SA07-1055RK). Filed on February 14, 2007. On November 6, 2006, Yellow Transportation (“YT”) filed a proof of claim against the Company’s bankruptcy estate alleging a general unsecured claim in the amount of $60,336.88 (“YT Claim”). On February 14, 2007, the Company filed a complaint against YT seeking to avoid and recover approximately $191,761.02 of preferential transfers of property under Bankruptcy Code Sections 547 and 550. The Company and YT have exchanged information and support for their respective positions regarding the YT Claim, the complaint and YT’s affirmative defenses thereto. As a result thereof, the Company and YT have reached a compromise and settlement that will provide, among other things, for YT’s payment of $45,000.00, allowance of the YT Claim and dismissal of the complaint. The settlement is subject to final documentation and Bankruptcy Court approval thereof.

e) Naturade, Inc. v. Gevity HR, IX, L.P. (United States Bankruptcy Court, Adversarial Case No.: SA07- 07-01101RK). Filed on April 16, 2007. On November 20, 2006, Gevity HR, IX, L.P. (“Gevity”) filed a proof of claim against the Company’s bankruptcy estate alleging a priority claim in the amount of $84,848.44 (“Gevity Claim”). By order entered on July 11, 2007, the Bankruptcy Court sustained the Company’s objection to the Gevity Claim, thereby reclassifying the Gevity Claim from an alleged priority claim to a general unsecured claim in the amount of $84,848.44. On April 16, 2007, the Company filed a complaint against Gevity seeking to avoid and recover approximately $555,975.55 of preferential transfers of property under Bankruptcy Code Sections 547 and 550. The Company and Gevity have exchanged information and support for their respective positions regarding the Gevity Claim, the complaint and Gevity’s affirmative defenses thereto. As a result thereof, the Company and Gevity have reached a compromise and settlement that will provide, among other things, for Gevity’s payment of $ $3,068.00, allowance of the Gevity Claim and dismissal of the complaint. The settlement is subject to final documentation and Bankruptcy Court approval thereof.

f) Other Bankruptcy Related Litigation: The Company filed a motion to reject an Asset Purchase Agreement dated November 2, 2004, between the Debtor and L.O.D.C., Ltd. (the “Agreement”) on the grounds that the Agreement was executory, burdensome and of no value to the Company’s reorganization efforts. On July 9, 2007, the Bankruptcy Court entered an order denying the Company’s motion to reject the Agreement on the basis that the Agreement was not executory. The Company timely filed an appeal of the Bankruptcy Court order with the Ninth Circuit Bankruptcy Appellate Panel (“BAP”). The Company subsequently requested that the BAP dismiss its appeal without prejudice which request was granted on October 5, 2007.

g) Invensys Systems, Inc. v. Pinnacle Marketing Concepts, Inc., et al (Orange County Superior Court, Case No. 07CC00470):

On or about March 23, 2007, Invensys Systems, Inc., a sub landlord, in the chain of possession of the premises located at 601 Valencia Avenue, Brea, California 92823, serviced a three day notice to pay rent or quite. . The Company’s bankruptcy attorney promptly sent a response that a bankruptcy stay was in place and the sub landlord was prevented as a matter of law with proceeding to evict the Company. Subsequently, the sub landlord filed an Unlawful Detainer against a number of subtenants, including the Company. The Company has not been served with the Complaint and therefore does not have to file an Answer. The Company has signed a lease for new premises and moved out of the premises on May 19, 2007. Further, the Company’s sublease agreement is with One World Science Inc. and not with the Plaintiff and there is no privity of contract. The Company is in good standing with its sub landlord, One World Science, Inc. One World Science, Inc., settled its portion of the Unlawful Detainer with Invenys Systems, Inc., on October 18, 2007. The Company has no further exposure to liability in this case.

The Company has fully accrued the amounts claimed in these suits (except for the Invensys suit) as of September 30, 2007. In addition, the Company has received a stay as to each of these lawsuits under its Chapter 11 Bankruptcy proceeding. As of this filing no plaintiff or other party has made a motion for or been granted a Relief from Stay.

10.

Subsequent Event - Plan Effectiveness — On October 30, 2007, the Company reached consensual agreement on the Fifth Amended Plan of Reorganization, as modified (the “Plan”) which was heard and approved by the United States Bankruptcy Court, Central District of California, Santa Ana Division (Case No. SA 06-11493 RK). The Plan received support from the Company’s creditors and shareholders as well as support from the Company’s lenders and the Company’s Unsecured Creditors Committee.

On November 8, 2007, Redux Holdings, Inc, (“Redux”), the Company’s controlling shareholder, invested $1.2 million in Natured, as required by the Plan and on November 9, 2007, the Plan became effective (the” Effective Date”). A copy of the Plan is being posted at www.naturade.com.

ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion contains “forward-looking statements.” Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements are inherently subject to risk and the Company can give no assurances that such expectations will prove to be correct. Such forward-looking statements involve risks and uncertainties, and actual results could differ from those described herein. Future results may be subject to numerous factors, many of which are beyond the Company’s control. Such risk factors include, without limitation, the risks set forth below under “Risk Factors.” The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events.

All comparisons below are for the three and nine month periods ended September 30, 2007 compared to the three and nine month periods ended September 30, 2006.

The Company

Naturade, Inc. (the “Company”) develops and markets branded natural products. The Company is focused on innovative products designed to nourish the health and well-being of consumers.

The Company competes primarily in the market for natural, nutritional supplements. The Company’s products include:

Naturade Total Soy®, a full line of nutritionally complete meal replacements for weight loss and cholesterol reduction available in several flavors of powders;

Naturade® protein powders;

Ageless Foundation Laboratories the Anti-Aging Company® anti-aging products;

Symbiotics® Colostrum products; and

Other niche natural products.

The Company’s products are sold to the mass market, the health food market and the military in the United States, Canada and selected international markets. The mass market consists of supermarkets, mass merchandisers, club stores and drug stores. The health food market consists of natural food supermarkets and over 5,000 independent health food stores.

The Company’s independent registered public accounting firm issued a going concern opinion on the Company’s December 31, 2006 financial statements by including an explanatory paragraph in which they expressed substantial doubt about its ability to continue as a going concern.

The Company was incorporated in 1986 under the laws of the state of Delaware. The Company’s principal executive offices are located at 2099 S. State College Blvd., Suite 210, Anaheim, CA 92806. The Company’s website is located at www.naturade.com.

Recent Developments

Chapter 11 Filing

On August 31, 2006 (the “ Petition Date”), the Company filed a voluntary petition for protection and reorganization (the “Chapter 11 Matter”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). Since the Petition Date, the Company has conducted activities as a debtor-in-possession under the Bankruptcy Code. See Note 1 for additional information. See also, Note 10 - Subsequent Event.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to a going concern, which assume that assets will be realized and liabilities are discharged in the normal course of business. As a result of the Chapter 11 Matter (see Note 1), such realization of assets and liquidation of liabilities is subject to uncertainty. A substantial portion of the Company's liabilities as of the Petition Date are subject to compromise or other treatment in the Chapter 11 Matter. For financial reporting purposes, those unsecured liabilities and obligations whose disposition is dependent on the outcome of the Chapter 11 Matter will be segregated and classified as liabilities subject to compromise in the September 30, 2007 balance sheet. Generally, actions to enforce or otherwise effect repayment of all pre-Chapter 11 liabilities and pending litigation against the Company are stayed while the Company continues as a debtor-in-possession during bankruptcy proceedings. Schedules have been filed by the Company with the Bankruptcy Court setting forth the assets and liabilities of the Company as of the Petition Date as reflected in the Company's accounting records. Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and either amicably resolved or adjudicated by the Bankruptcy Court. The ultimate amount of and settlement terms for such liabilities are not presently determinable.

Financial accounting and reporting during a Chapter 11 Matter for an entity with the expectation of reorganizing is prescribed in Statement of Position No. 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”). The Company has an expectation of reorganizing under the Bankruptcy Code. Accordingly, unsecured pre-petition liabilities, which may be subject to settlement, are classified as liabilities subject to compromise in the September 30, 2007 balance sheet. In addition, the Company has reported all transactions (other than interest expense) directly related to the Chapter 11 Matter as reorganization items in its statement of operations for the three and nine months ended September 30, 2007. SOP 90-7's definition of reorganization items excludes (1) interest expense and (2) transactions required to be reported as discontinued operations or extraordinary items in conformity with GAAP.

Basis of Presentation

The accompanying condensed balance sheet at September 30, 2007, the condensed statements of operations for the three and nine months ended September 30, 2007 and cash flows for the nine months ended September 30, 2007 and 2006 are unaudited. Such financial statements have been prepared on the same basis as the Company's audited consolidated financial statements and, in the opinion of management, reflect all adjustments, (except for the extinguishment of debt discussed in Note 2 which is recorded as reorganization income), consist only of a normal recurring nature, necessary for a fair presentation of the financial position and results of operations for such periods. However, the accompanying financial statements do not include any adjustments that may be required in connection with restructuring the Company under Chapter 11 of the Bankruptcy Code. These unaudited condensed financial statements should be read in conjunction with the December 31, 2006 audited financial statements included in the Company's Form 10-K as previously filed with the Securities and Exchange Commission on April 18, 2007.

On September 25, 2006, The Company's Common Stock was de-listed from the over-the-counter Bulletin Board and now trades on the "Pink Sheets."

Change in Control

Recapitalization/Change in Control — On August 10, 2006, Quincy Investments Corp. (“Quincy”), the principal shareholder of the Company, subsequent to executing a Letter of Intent of July 26, 2006 with Redux to transfer to Redux, Quincy’s controlling interest in Naturade, as reported on the Company’s Form 8-K filed with the Securities and Exchange Commission on August 2, 2006, entered into the Quincy Transfer Agreement (“the Quincy Transfer Agreement”) pursuant to which:

Quincy transferred 28 million shares of the Company’s common stock, 4.2 million shares of Series C Convertible Preferred Stock (“Series C”) and 14 million warrants to purchase common stock to Redux;

Redux agreed to make cash contributions up to $500,000 at its sole discretion to the Company;

Redux and Quincy agreed to attempt to complete a Definitive Agreement by August 31, 2006.

Quincy withheld 3,372,345 shares of Common in violation of the Quincy Transfer Agreement.

Before the transactions described above, Quincy owned 31,372,345 shares of the Company’s common stock, or 72.4% of the voting power of the Company’s common stock. Quincy also owned 4.2 million shares of Series C which when added to Quincy’s common stock holdings represented 55.3% of the combined voting power of the Company’s common stock and the Series C. The holders of the Series C are entitled to vote along with the holders of the Company’s common stock (on an as-converted basis) on all matters, including the election of directors, presented to the stockholders. As a result, Quincy had the power to elect a majority of the Board of Directors and to determine the outcome of any matter submitted to the stockholders, subject to the rights of Health Holdings and Botanicals, LLC holders of 12,600,000 shares of Series C who have the right to elect one director and to approve certain transactions.

The Definitive Agreement contemplated under the Letter of Intent was not been entered into and the Letter of Intent by its terms has expired. Although Quincy has threatened litigation against Redux related to the absence of a Definitive Agreement, no lawsuit has been commenced. In contrast, the Company has initiated a lawsuit against Quincy and Peter Pocklington. See Note 12 - Legal Proceedings.

On August 31, 2006 Laurus entered into an agreement with Redux, the principal shareholder of the Company, (the “Redux Agreement”) pursuant to which:

Laurus Master Fund, Ltd. (“Laurus”) transferred 1,050,000 shares of the Company’s common stock to Redux;

Laurus transferred warrants to purchase 1,500,000 shares of the Company’s common stock at $0.80 per share to Redux which were cancelled upon transfer; (“Laurus Warrant”)

Laurus transferred an option to purchase 8,721,375 shares of the Company’s common stock at $0.001 per share to Redux (“Laurus Options”); and

Redux issued 574,787 shares of Redux common stock to Laurus subject to certain provisions for anti-dilution and piggy back registration rights.

On November 16, 2006, Redux acquired 500,000 shares of the Company’s common stock and warrants to purchase 3,647,743 shares of common stock from Liberty Company Financial, LLC (“Liberty”) and in exchange issued to Liberty 28,116 shares of Redux common stock.

On January 3, 2007, Redux and Howard Shao entered into an agreement to exchange 23,413 shares of Redux Holding, Inc’s restricted common stock for any and all of Mr. Shao’s equity and/or debt instruments issued him and/or amounts owed him by Naturade, Inc. This exchange included 1,000,000 shares of Company’s restricted common stock, unissued, but owed Mr. Shao under prior agreements. The 1,000,000 shares of Company restricted common stock have since been issued to Redux. See Exhibit 10.82.

On April 13, 2007, Redux issued Laurus a cashless warrant to purchase up to 700,000 shares of Redux common stock in consideration of Laurus waving all default interest of the Company’s accrued default interest and fees.

As a result of the transactions described above, Redux controls voting rights of 30,550,000 shares of the Company’s common stock and 4,200,000 shares of Series C, or 70.5% of the voting power of the Company’s common stock, 20.0% of the voting power of the Series C, and 54% of the combined voting power of the Company’s common stock and the Series C. The holders of the Series C are entitled to vote along with the Company’s common stock (on an as-converted basis) on all matters, including the election of directors, presented to the stockholders. As a result, Redux has the power to elect a majority of the Board of Directors and to determine the outcome of any matter submitted to the stockholders, subject to the rights of the holders of the Series C described above. If the Laurus Options are included, these percentages increase.

The Company’s reorganization plan as approved by the bankruptcy court became effective on November 9, 2007, (the “Plan”). On November 9, 2007 (the ”Effective Date”) all Company Series C Preferred shares, along with their voting and control rights, all options, all warrants, and all registration rights, are cancelled as required under the Plan. The Company, as required by the Plan, will issue Redux enough shares of restricted common stock to give Redux 95% equity and voting interest in the Company. All remaining shareholders will have a total of 5% equity interest in the Company. See Note 10 -Subsequent Event.

Financing

In July 2005, the Company obtained a $4,000,000 convertible financing facility from Laurus, consisting of a $3,000,000 revolving credit facility and a $1,000,000 term loan. In consideration of such financing facility, The Company issued to Laurus an option to purchase up to 8,721,375 shares of common stock at $0.0001 per share and a warrant to purchase up to 1,500,000 shares of common stock at $0.80 per share. The financing facility was amended on January 11, 2006, by among other things, increasing the term loan to $1,650,000 and eliminated the conversion features on the facility. The Company issued Laurus 1,050,000 shares of common stock in consideration for this amendment. See Note 5 - Financing.

On August 31, 2006, pursuant to the Company’s filing under Chapter 11 of the US Bankruptcy Code, the Company agreed to the following:

Laurus claim in the amount of $2,900,000 will be treated as fully secured and the liens granted Laurus pursuant to the Financing Agreement will remain without modification.

Laurus will provide debtor in possession financing (“DIP”) pursuant to the terms and conditions of the financing agreement.

Critical Accounting Policies and Use of Estimates

In preparing the financial statements, the Company is required to make estimates and judgments that affect the results of its operations and the reported value of assets and liabilities. Actual results may differ from these estimates. The Company believes that the following summarizes the critical accounting policies that require significant judgments and estimates in the preparation of the Company’s financial statements.

Revenue Recognition. The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 101A, No. 101B and No. 104. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) require management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. To satisfy the criteria, the Company: (1) inputs orders based upon receipt of a customer purchase order; (2) record revenue upon shipment of goods when risk of loss and title transfer under the Company’s arrangements with customers or otherwise comply with the terms of the purchase order; (3) confirm pricing through the customer purchase order and; (4) validate creditworthiness through past payment history, credit agency reports and other financial data. Other than through warranty rights, the Company’s customers do not have explicit or implicit rights of return. Should changes in conditions cause us to determine the revenue recognition criteria are not met for certain future transactions, such as a determination that an outstanding account receivable has become uncollectible, revenue recognized for any reporting period could be adversely affected.

The Company records revenues net of returns and allowances. Gross sales, which are defined as list price times units sold, include the following reductions for returns and allowances:

Distributor Allowances. Distributor allowances are provided to all distributors as a reduction from list price and are recorded as a reduction off the invoice at time of billing. Revenues and accounts receivable are recorded net of these allowances.

Promotional Allowances. Promotional allowances are related to specific promotions offered by Naturade related to in-store promotions being offered by a retailer and distributor promotions being offered to retailers. In most cases, the promotion is designed to correspond with a similar consumer promotion being offered by the retailer, the cost of which is borne by the retailer. Promotional allowances are based upon purchases by the retailer or distributor during the promotional period and are deducted from the customer invoice at the time of billing. Revenues and accounts receivable are recorded net of these allowances. Shipments during the promotional period are not subject to return after the end of the promotional period.

For the nine months ended September 30, 2007 and 2006, distributor and promotional allowances were $(16,934) or 0% of gross sales, and $949,654, or 9.7% of gross sales, respectively.

Damages & Returns. In the nine months ended September 30, 2007 and 2006, damages and returns were charged against revenues based upon historical return rates. Actual damages and returns are charged against the reserve when the product is returned, charges deducted or a consumer deduction is received. On a periodic basis, actual charges are compared to the reserve and, if required, the reserve rate is adjusted to reflect new trends. For the nine months ended September 30, 2007 and 2006, damages and returns charged against revenues were $331,586, or 7.4 % of gross sales, and $423,178, or 4.3 % of gross sales, respectively.

The following is a summary of the damages and returns reserve:

	Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006
Beginning balance	$	736,985		$	42,910
Provision for damages and returns		331,586			423,178
Actual damages and returns during the period		(1,002,765	)		(208,790)	)
Ending balance	$	65,806		$	257,298

Damages and returns are typically immaterial to the Company’s overall results. As the majority of returns represent consumer returns, which trail sales by about a month, the reserve has been set based upon specific review of potential returns which are higher than normal as a result of the Company’s Chapter 11 filing.

Cash Discounts. Cash discounts are recorded as deducted by customers from remittances, as the customer does not earn them until the customer pays according to terms. For the nine months ended September 30, 2007 and 2006, cash discounts were $71,847, or 15% of gross sales, and $100,265 or 1.0% of gross sales, respectively.

Slotting. Slotting charges related to new distribution (either a new customer or a new product introduced to an existing customer) are recorded as a prepaid expense as incurred and amortized over 12 months as a reduction of revenues. Should a customer cease purchasing from Naturade or discontinue the respective product line, the unamortized slotting costs are charged against revenues at that time. There have been no significant unamortized slotting charges charged against revenues in the periods reported.

For the nine months ended September 30, 2006 and 2005, slotting costs were $(4,035), or 0.0% of gross sales, and $119,254, or 1.2% of gross sales, respectively. Slotting expense was a credit during the period due to the fact that the Company no longer allows slotting charges; and, as a result, reserves were reversed resulting in a credit for the six month period.

Coupon & Rebate Redemption. Coupon and rebate costs are charged against revenues as redeemed. Historically, Naturade has incurred insignificant redemption of its consumer coupons or rebates. For the nine months ended September 30, 2007 and 2006, coupon and rebate costs were $0 and $1,544, respectively.

Inventory Valuation. Merchandise inventories are stated at the lower of cost (first-in, first-out basis) or market. The Company considers cost to include the direct cost of finished goods provided by co-packers as well as the cost of those components supplied to the co-packers. At each balance sheet date, the Company evaluates its ending inventories for excess quantities and obsolescence. This evaluation includes analyses of forecast sales levels by product and historical demand. The Company writes off inventories that are considered obsolete. Remaining inventory balances are adjusted to approximate the lower of cost or market value and result in a new cost basis in such inventory until sold. If future demand or market conditions are less favorable than the Company’s projections, additional inventory write-down may be required, and would be reflected in cost of sales in the period the revision is made.

Accounts Receivable and Allowances for Uncollectible Accounts. Accounts receivable are unsecured, and the Company is at risk to the extent such amounts become uncollectible. Accounts receivable are stated net of applicable reserves for returns and allowances, bill backs and doubtful accounts. Management regularly reviews and monitors individual account receivable balances to determine if the reserve amounts are appropriate and provides for an allowance for uncollectible accounts by considering historical customer buying patterns, invoice aging, specific promotions and seasonal factors.

Results of Operations

The following table sets forth, for the periods indicated, the percentage which certain items in the statement of operations data bear to net sales and the percentage dollar increase (decrease) of such items from period to period.

	Percent of Net Sales Nine Months Ended June 30,				Percentage Dollar Increase (Decrease) Nine Months Ended March 30,
	2007		2006		2007		2006
Net sales		100%		100%		(46%)		(10%)
Gross profit		34%		47%		(61%)		(12%)
Selling, general and administrative expenses		75%		86%		(47%)		19%
Depreciation & amortization.		5%		9%		(144%)		336%
Operating loss		(46%)		(39%)		(34%)		(173%)
Interest expense		17%		26%		(66%)		203%
Net Income (loss) before provision for income taxes		(14%)		(109%)		(93%)		(337)%
Provision for income taxes		0%		0%		(100%)		0%
Net Income (loss)		(14%)		(109%)		(93%)		(337)%

Major trends that affected the Company’s results of operations in 2007

The major trends affecting the Company’s results of operations in the nine months ended September 30, 2007 included the following:

The Company’s filing for protection under Chapter 11 Bankruptcy has had a negative effect on the Company’s ability to purchase inventory for the nine months ended September 30, 2007. The Company believes this trend is likely to continue until the Company emerges from bankruptcy. See Note 10 - Subsequent Event.

The Company’s lack of sufficient cash to maintain proper inventory levels has had a negative effect on the Company’s revenues for the three and nine months ended September 30, 2007. The Company believes this trend is likely to continue unless the Company obtains sufficient capital to bring inventory levels back to historical levels.

Net Sales

Net sales for the three months ended September 30, 2007 of $1,772,871, decreased $3,407 or 0.2% as compared to net sales of $1,769,464 for the three months ended September 30, 2006. Net sales for the nine months ended September 30, 2007 of $4,501,156, decreased 46.1% as compared to net sales of $8,351,598 for the nine months ended September 30, 2006. The decrease in net sales for the nine month period is due principally to the Company’s filing for protection under the US Bankruptcy Code. The filing resulted in a disruption in shipping due to lack of capital to purchase sufficient inventory levels and an inability to maintain traditional order fill ratios.

Critical Accounting Policies and Use of Estimates - Revenue Recognition.

Mass Market Net Sales- For the three months ended September 30, 2007, mass market revenues increased $20,358 or 2.6% to $771,576 from $751,218 for the three months ended September 30, 2006. For the nine months ended September 30, 2007, mass market revenues decreased $1,777,216 or 53.9% to $1,518,019 from $3,295,235 for the nine months ended September 30, 2006. The decrease in net sales during the period is related to the to the lack of promotional funds available for consumer advertising coupled with decreased inventory availability due to the Company’s Chapter 11 filing.

Health Food Net Sales- For the three months ended September 30, 2007, health food channel net sales decreased $16,951, or 1.7%, to $1,001,295 from $1,018,246 for the three months ended September 30, 2006. For the nine months ended September 30, 2007, health food channel net sales decreased $2,073,227, or 41.0%, to $2,983,136 from $5,056,363 for the nine months ended September 30, 2006.The sales decrease is principally related to sales of Ageless and Symco brands partially offset by reductions in sales of core protein powders related to lower fill rates on customer orders as a result of cash restrictions on inventory purchases. The health food decrease was lower than that seen in the mass channel as a result of the buying habits of health channels customers. Typically, the health food channel purchases through distributors who do not have a just in time need for product resulting in higher tolerance to out of stock situations caused by the Company’s cash constraints.

Channels of Distribution- On a percent of net sales basis, the breakdown of sales between the mass market and health food channels was 56.5% for the health food channel and 43.5 % for mass market channel for the three months periods ended September 30, 2007 as compared to 57.5% for the health food channel and 42.5% for the mass market channel, respectively, for the same period in 2006. On a percent of net sales basis, the breakdown of sales between the mass market and health food channels was 66.3% for the health food channel and 33.7 % for mass market channel for the nine months periods ended September 30, 2007 as compared to 60.5% for the health food channel and 39.5% for the mass market channel, respectively, for the same period in 2006. The change in sales by channel is principally related to the higher tolerance to stock outs created by the Company’s cash constraints in the health food channel.

For the three months ended September 30, 2007, domestic net sales decreased $45,052 or 2.6%, to $1,695,408 from $1,740,460 for the three months ended September 30, 2006. For the nine months ended September 30, 2007, domestic net sales decreased $3,971,267 or 48.8%, to $4,158,857 from $8,130,124 for the nine months ended September 30, 2006. The decrease in domestic net sales is principally due to sales shortfalls in the mass and health channels. For the three months ended September 30, 2007, international sales increased $48,459 or 167.1% to $77,463 from $29,004. For the nine months ended September 30, 2007, international sales increased $120,824 or 54.6% to $342,298 from $221,474. International sales for the nine months ended September 30, 2007 increased principally due to the expansion of the Ageless and Symco products to international customers in the fourth quarter of 2006 which continued to grow during the period.

Gross Profit

Gross profit for the three months ended September 30, 2007 decreased $58,378 or 8.2 % to $654,653 as compared to $713,031 for the same period in 2006. Gross profit for the nine months ended September 30, 2007 decreased $ 2,408,303 or 61.4% to $1,516,591 as compared to $3,924,894 for the same period in 2006. The decrease for the period is principally a result of decreased revenues for the period along with decreased margins from sales of Symbiotics and Ageless products versus the Company’s core products. Gross profit, as a percentage of sales for the three month period ended September 30, 2007 compared to the same period in 2006, decreased 3.4% from 40.3% of net sales and from 40.3% to 36.9%. Gross profit for the nine month period ended September 30, 2007 as compared to the same period in 2006, decreased 13.3% from 47.0% to 33.7%. Gross profit decreased due to lower margins related to increased costs to purchase product due to vendor changes related to the Chapter 11 filing.

Operating Costs and Expenses

Operating costs and expenses for the three months ended September 30, 2007 decreased by $1,286,792 to $923,551, or 52.1% of net sales, from $2,210,343, or 124.9% of net sales, for the same period in 2006. Operating costs and expenses for the nine months ended September 30, 2007 decreased by $3,482,125 to $3,608,228, or 80.2% of net sales, from $7,090,353, or 84.9% of net sales, for the same period in 2006. Operating expenses decreased as a result of the Company’s continuing efforts to reduce costs to be in line with current revenue levels. New Company management took immediate action from August 2006 to cut operating costs.

Interest Expense

Interest expense for the three months ended September 30, 2007 decreased $395,046 to $220,129 from $615,175 in the same period in 2006. Interest expense for the nine months ended September 30, 2007 decreased $1,428,880 to $746,812 from $2,175,692 in the same period in 2006. Interest expense decreased principally due to a reduction in the amortization of deferred financing fees and debt discounts of $1,115,859, in 2007 as compared to the same periods in 2006. The amortization is related to the recapitalization of the Registrant coupled with the acquisitions of Symbiotics and Ageless. The remainder of the decrease, $313,021, is related principally to the cessation of interest charges on certain debt subject to compromise in accordance with the Company’s Chapter 11 filing.

Liquidity and Capital Resources

On August 31, 2006 (the “Petition Date”), the Company filed a voluntary petition for protection and reorganization (the “Chapter 11 Matter”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). Since the Petition Date through November 8, 2007, the Company has conducted activities as a debtor-in-possession under the Bankruptcy Code. See Note 2 for additional information and Note 10-“Subsequent Event.”

The Company’s operating activities used cash of $420,656 in the nine months ended September 30, 2007, compared to cash provided of $868,565 from operating activities in the nine months ended September 30, 2006. This increase in cash used from operating activities is primarily due to Company’s limited cash availability and continuing losses form operations related to the Chapter 11 filing.

Net cash provided by amortization of loan discounts and deferred financing fees was $398,450 for the nine month period ended September 30, 2007 compared to net cash used by amortization of loan discounts and deferred financing fees of $260,249 for the same period of 2006 principally due a modification in financing terms in late 2006 resulting in a write-off of deferred financing fees and loan discounts.

Net cash provided by accounts receivable was $269,844 for the nine months ended September 30, 2007 compared to cash provided of $1,062,628 for the same period in 2006 principally due to lower sales during the nine months ended September 30, 2007. General customer terms, receivable days outstanding and the Company’s collection policies have remained constant.

Net cash used by inventories was $97,560 for the nine months ended September 30, 2007, compared with net cash provided by inventories of $87,511 for the nine months ended September 30, 2006. The ongoing shortage of cash required management to closely monitor inventory levels and only purchase inventory as needed for shipments.

Net cash used by liabilities subject to compromise was $2,598,310 for the nine months ended September 30, 2007 as compared to $0 cash used for the same period in 2006. The Company was able to eliminate certain liabilities under Court decree that did not meet Court imposed requirements. The Company had not filed for Chapter 11 protection until late in the nine months ended September 30, 2006.

Net cash provided by accounts payable and accrued expenses was $2,080,206 for the nine month period ended September 30, 2007 compared to net cash provided of $2,546,401 for the same period of 2006, principally due to constraints on the Company’s ability to purchase on credit as a result of the Company’s cash position during the period.

The Company’s working capital deficit increased $2,408,584 from $1,728,224 at December 31, 2006 to $4,136, 808 at September 30, 2007. This increase was largely due to a decrease in accounts receivable of $397,861 related to decreased sales during the period coupled with an increase in accounts payable of $1,489,159 due to the cash constraints on the Company partially offset by repayments of $782,064 on the revolving debt during the period.

For the nine months ending September 30, 2007, the provision for excess and obsolete inventory decreased by $34,235, to $47,411. There was no change in the provision for the nine month period ended September 30, 2006.

The Company’s cash provided by financing activities was $506,469 for the nine months ended September 30, 2007, compared to cash used by financing activities of $928,940 for the same period of 2006 principally due to a reduction in borrowings from the revolving line of $1,345,367 and an increase in cash provided by deferred financing fees of $811,478 Partially offset by reductions in cash provided by borrowings on the term loan and related party loans in 2006.

As of September 30, 2007, the Company was in compliance with all of the covenants of the Credit Agreement with Laurus. At September 30, 2007, $520,303 was outstanding under the revolving facility as pre-petition debt, $711,507 was outstanding under the revolving facility as post petition debt, and $1,350,000 was outstanding under the term loan as pre-petition debt. These loans are fully secured and the pre-petition amounts are not included in the liabilities subject to compromise. The majority of pre-petition accounts receivable under the revolving facility are deemed potentially uncollectible and consequently, the total revolver balance outstanding is under secured against available accounts receivable and inventory as per formula. Laurus is fully aware of this, has not called a default, and has indicated it is prepared to negotiate a repayment program with the Company after it emerges from Bankruptcy.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2007, the Company had an accumulated deficit of $42,677,996, and a stockholders’ capital deficiency of $19,682,705. These factors, among others, raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s independent registered public accounting firm qualified their opinion on the Company’s December 31, 2006 financial statements by including an explanatory paragraph in which they expressed substantial doubt about the Company’s ability to continue as a going concern.

The Company’s liquidity would be adversely affected if the Company commits a default under the Financing Agreement and Laurus exercises its right to terminate or demand immediate payment of all amounts outstanding under, the Financing Agreement as a result of a default. In addition, if the Company continues to incur declines in revenues, the Company could encounter a shortage in cash reserves required to meet current commitments. This could result in the Company being unable to obtain products necessary to fulfill customer orders. The Company has raised additional capital through the financing with Laurus as described in Note 6. The Company and/or its principal shareholder are seeking to raise additional capital. No assurance can be given that additional financing will be available in the future or that, if available, such financing will be obtainable on terms acceptable to the Company or its stockholders.

Impact of Contractual Obligations and Commercial Commitments

The following summarizes the Company’s contractual obligations at September 30, 2007 and the effects such obligations are expected to have on liquidity and cash flow in future periods.

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
Laurus Term Loan (a)	$	1,762,041	$	721,037	$	1,041,004	$	- 0-	$	- 0-
Health Holdings Loan (a)	$	2,155,720		-0-		124,368		331,649		1,699,703
Revolving Credit (a)	$	1,303,537		1,303,537		-0-		-0-		-0-
Unsecured Creditors (b)	$	6,746,111		168,653		505,958		6,071,500		-0-
Operating Leases	$	187,066		118,147		6 8,919		-0-		-0-
Total Contractual Cash Obligations	$	12,154,475	$	2,311,374	$	1 ,740,249	$	6,403,149	$	1,699,703

(a) Includes interest.

New Accounting Pronouncements

FASB Statement No. 157, Fair Value Measurements, has been issued by the Financial Accounting Standards Board (“FASB”). This new standard provides guidance for using fair value to measure assets and liabilities. Under Statement 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, Statement 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity’s own data. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. The provisions of Statement 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The adoption of this pronouncement is not expected to have material effect on the Company’s financial statements.

The FASB has issued FASB Staff Position (FSP) EITF 00-19-2, "Accounting for Registration Payment Arrangements." This FSP specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The FSP further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable GAAP without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. This FSP amends various authoritative literature notably FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This FSP is effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to December 21, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to December 21, 2006, the guidance in the FSP is effective for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years. The adoption of this pronouncement is not expected to have material effect on the Company’s financial statements.

Recently Issued Accounting Principles

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“FAS 109”). The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. The company adopted FIN 48 effective January 1, 2007. As a result of the adoption, the Company determined that no cumulative effect adjustment was necessary to the opening balance of retained earnings as of January 1, 2007. The Company’s unrecognized tax benefits as of January 1, 2007 were immaterial, and recognition of such tax benefits is not expected to have a material impact on the Company’s income tax provision in future periods. Changes in the Company’s unrecognized tax benefits during the three months ended September 30, 2007 was immaterial.

On February 15, 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115. SFAS 159 permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities, including not-for-profit organizations. Most of the provisions in Statement 159 are elective; however, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. The fair value option established by Statement 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. A not-for-profit organization will report unrealized gains and losses in its statement of activities or similar statement. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. The adoption of this pronouncement is not expected to have material effect on the Company’s financial statements.

Forward Looking Statements

Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements.” Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” and variations or similar expressions. These forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond the control of the Company, including those discussed below under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, which could cause actual results to differ materially from those anticipated by the Company’s management. In addition, the information set forth in the reports the Company files with the SEC from time to time, describe certain additional risks and uncertainties that could cause actual results to vary materially from the future results covered in such forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unexpected events.

RISK FACTORS

An investment in the Company’s common stock involves a high degree of risk. In addition to the other information contained in this report, you should carefully consider the following risks and uncertainties before purchasing the Company’s common stock. If any of these risks or uncertainties were to occur, the Company’s business, financial condition and operating results could suffer serious harm. In that case, the trading price of the Company’s common stock could decline and you could lose all or part of your investment.

The short and long-term success of the Company is subject to certain risks, many of which are substantial in nature. Shareholders and prospective shareholders in the Company should consider carefully the following risk factors, in addition to other information contained herein. This Annual Report on Form 10-K contains forward-looking statements, which are subject to a variety of risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below.

On August 31, 2006 (the “Petition Date”), the Company filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

As a result of the Chapter 11 Bankruptcy (see Note 1, Chapter 11 Bankruptcy Proceedings), the realization of assets and liquidation of liabilities is subject to uncertainty. A substantial portion of the Company's liabilities as of the Petition Date are subject to compromise or other treatment in the Chapter 11 Bankruptcy. For financial reporting purposes, those unsecured liabilities and obligations whose disposition is dependent on the outcome of the Chapter 11 Bankruptcy have been segregated and classified as liabilities subject to compromise in the December 31, 2006 balance sheet. Generally, actions to enforce or otherwise effect repayment of all pre-Chapter 11 liabilities and pending litigation against the Company are stayed while the Company continues as a debtor-in-possession during bankruptcy proceedings. Schedules have been filed by the Company with the Bankruptcy Court setting forth the assets and liabilities of the Company as of the Petition Date as reflected in the Company's accounting records. Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and either amicably resolved or adjudicated by the Bankruptcy Court. The ultimate amount of and settlement terms for such liabilities are not presently determinable

The Company may incur future losses which may affect its ability to continue as a going concern.

The Company had a net loss of approximately $1.9 million, $ 402,000, $3.7 million, and $11.3 million for the fiscal years ended December 31, 2002, 2003, 2005, and 2006, respectively, and net income of approximately $368,000 for the fiscal year ended 2004. At September 30, 2007, the Company had an accumulated deficit of $42,727,996, and a stockholders’ capital deficiency of $19,682,705. The Company anticipates that it will incur net losses for the foreseeable future and will need access to additional financing for working capital and to expand its business. If unsuccessful in those efforts, the Company could be forced to cease operations and investors in its common stock could lose their entire investment. The Company’s independent registered public accounting firm issued a going concern opinion on the Company’s December 31, 2006 financial statements by including an explanatory paragraph in which they expressed substantial doubt about its ability to continue as a going concern.

The Company’s success depends on current and ongoing financing which may not be available or, if available, could result in substantial dilution to its stockholders, depress the market price of its common stock and impair its ability to raise capital by selling its common stock

The Company’s success is dependent on its current financing as well as new financing to support its working capital requirements, acquire additional brands or businesses and fund its current operating losses. Additional financing is made more difficult by the Chapter 11 Bankruptcy since such a matter may lower creditor confidence in the Company and lending entities may refuse to grant the Company a loan or line of credit, or if such loan or line of credit is granted, it may be granted only on terms materially less favorable to the Company than are available to its competitors, including, but not limited to, a higher than average rate of interest or the issuance of options, warrants or other rights to acquire its common stock at prices that are, or in the future may be, less than the market price of its common stock, which could result in substantial dilution to its stockholders, depress the market price of its common stock and impair its ability to raise capital by selling its common stock.

In our acquisitions, we have assumed substantial additional obligations.

In its acquisition of Ageless, the Company assumed accounts payable of $173,593 and an obligation to an employee in the amount of $600,000. In addition, the Company agreed to pay a purchase price consisting of a promissory note in the principal amount of $648,234, and entered into certain consulting agreements. In February 2007, Redux purchased the claims filed in the Naturade bankruptcy for the Ageless acquisition from Ageless and its principal. See Item 13, Certain Relationships and Related Transactions. In its acquisition of Symco and Symbiotics, the Company assumed accounts payable of $408,965, indebtedness under credit facilities of $224,313 and obligations under certain contracts, totaling $274,382. In addition, the Company agreed to pay a purchase price consisting of a promissory note in the principal amount $1,476,305, and an earn-out, and entered into certain consulting agreements. For a description of these acquisitions, including the purchase prices, assets acquired and obligations assumed, see Note 8, Acquisitions. The Company has only limited resources available to us. If these resources are insufficient to allow the Company to pay these obligations as they come due and to maintain its business as it is currently operated, the Company could be forced to cease operations, and investors in the Company could lose their entire investment.

The Company’s current financial condition could cause third party suppliers and manufacturers to refuse to do business with us or to do so only on less favorable terms.

The Company depends upon third-party suppliers and manufacturers, such as Advanced Protein Systems and Best Formulations, for its products. The Company does not have long-term supply agreements and the Chapter 11 Bankruptcy may lower vendor confidence in it and they may refuse to provide products or do business with it, or may do so only on less favorable terms, which could cause the Company’s net sales to decline. In addition, the Company’s current cash position could result in a higher degree of credit risk than normal for its suppliers. As a result, supplier pricing may include factors related to this credit risk such as the absence of cash discounts and the costs of extended terms that increase the Company’s cost for product and ultimately decrease its profitability. Any unfavorable change in the Company’s cash position could result in additional costs for product affecting its profitability. From time to time, the Company has experienced difficulties with various vendors requiring it to purchase product on cash upon delivery (“COD”) basis. As a result of purchasing on a COD basis, The Company could experience significant delays in shipments to its customers, which could have a material affect on its operating results. Although the Company believes that alternative sources of materials and contract manufacturing services are available, the loss of one or more suppliers or manufacturers as a result of the Chapter 11 Bankruptcy Matter could have a material adverse effect on results of operations until an alternative source is located and has commenced producing the Company’s products.

The Company’s revenues depend on continued business from the Company’s key customers.

The Company’s three largest customer’s together account for 61.2% of net sales for the nine months ended September 30, 2007. One mass market customer, Sam’s Club, represented approximately 27.8% of the Company’s net sales, and two health food distributors, United Natural Foods, Inc. (“UNFI”) and Tree of Life, Inc., accounted for 20.7% and 12.6%, respectively, of the Company’s net sales, during the nine months ended September 30, 2007. The loss of any of these customers could have a material adverse effect on the Company’s results of operations. From time to time, major customers have experienced financial difficulties. Additionally, the issuance of a going concern opinion by the Company’s independent registered public accounting firm may create concern among existing and potential customers that the Company may be unable to fulfill product needs. As a result, due to the Chapter 11 Bankruptcy, existing and potential customers may determine not to do business with the Company, or only do so on less favorable terms, which may cause net sales to decline. The Company does not have long-term contracts with any of its customers and, accordingly, there can be no assurance that any customer will continue to place orders with the Company to the same extent it has in the past, or at all.

If the Company’s third-party suppliers or manufacturers fail to timely deliver products of acceptable quality or comply with FDA manufacturing guidelines, or raise prices, profits may be affected.

The use of third-party suppliers and manufacturers and the resulting loss of direct control over production could result in the Company’s failure to receive timely delivery of products of acceptable quality. Any failure by third-party suppliers or manufacturers to deliver products, or the delivery of defective products, may adversely affect the Company’s ability to deliver products to its customers in a timely manner and of an acceptable quality. If the Company fails to deliver products of acceptable quality in a timely manner, its customers may seek alternative sources for its products. The Company’s use of third-party suppliers and manufacturers could also reduce its gross profits if the suppliers or manufacturers raise prices and the Company cannot find alternative, less costly sources or pass price increases on to customers.

Although the Company requires that the Company’s third-party suppliers and manufacturers comply with the FDA manufacturing guidelines, Naturade cannot assure that these third parties will always act in accordance to these regulations. If the manufacturing facilities used by the Company’s third- party suppliers or manufacturers did not meet those standards, the production of its products could be delayed until the necessary modifications are made to comply with those standards or alternate suppliers or manufacturers are located. Furthermore, the potential exists for circumstances to arise which would require the Company to seek out alternate suppliers or manufacturers who operate in compliance with the FDA’s requirements.

Restrictions or requirements imposed by government regulation could result in material harm to the Company’s results of operations and financial condition.

The Company’s operations, properties and products are subject to regulation by various foreign, federal, state and local government entities and agencies, including the FDA and the FTC. Among other matters, such regulation is concerned with statements and claims made in connection with the packaging, labeling, marketing and advertising of the Company’s products. The governmental agencies have a variety of processes and remedies available to them, including initiating investigations, issuing warning letters and cease and desist orders, requiring corrective labeling or advertising, requiring consumer redress, seeking injunctive relief or product seizure, imposing civil penalties and commencing criminal prosecution.

Weight loss products are subject to increased regulatory scrutiny due to intensified campaigns by both FTC and FDA. FTC has specifically launched a nation-wide law enforcement sweep against companies making false weight-loss claims. This initiative was created to stop deceptive advertising, provide refunds to consumers harmed by unscrupulous weight-loss advertisers, encourage media outlets not to carry advertisements containing bogus weight-loss claims and to educate consumers to be on their guard against companies promising miraculous weight loss without diet or exercise. The FTC campaign identifies seven specific claims that they consider suspect, including: “Lose weight without diet or exercise”; “Eat what you want and lose weight”; “Weight loss will be permanent” (even when the user stops using the product); “Block the absorption of fat or calories, and lose substantial weight”; “Safely lose more than three pounds per week for a period of more than four weeks”; “Substantial weight loss for all users”; and “Diet patches, creams, wraps, earrings and other products worn on the body or rubbed into the skin that cause substantial weight loss.” If the FDA and FTC move beyond their current focus and more closely scrutinize weight loss products in the retail marketplace, there can be no assurance that this change in focus would not have an adverse effect on the sale of the Company’s products.

As a result of the Company’s efforts to comply with changes in applicable statutes and regulations, the Company has from time to time reformulated, eliminated or relabeled certain of its products and revised certain aspects of its sales, marketing and advertising programs. The Company may be subject in the future to additional laws or regulations administered by federal, state, local or foreign regulatory authorities, the repeal or amendment of laws or regulations which the Company considers favorable, such as the DSHEA, or more stringent interpretations of current laws or regulations. The Company cannot predict the nature of future laws, regulations, interpretations or applications, nor can the Company predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on its business in the future. Such future laws and regulations could, however, require the reformulation of products to meet new standards, the recall or discontinuance of products that cannot be reformulated, the imposition of additional record keeping requirements, expanded documentation of product efficacy, expanded or modified labeling and scientific substantiation, including health warnings or restrictions on benefits described for its products. Any of or all of such requirements could hurt sales of the Company’s products or increase its costs, resulting in material harm to its results of operations and financial condition.

The Company’s competitors may develop products that are more effective or less costly.

The market for nutraceutical products is highly competitive. Many of the Company’s competitors, such as GeniSoy and Health Source by Abbott Labs, have substantially greater capital resources, research and development capabilities, and manufacturing and marketing resources, capabilities and experience than the Company. Naturade’s competitors may succeed in developing products that are more effective or less costly than any products developed by the Company. Additionally, bovine colostrum, the key ingredient in the Symbiotics Brand, is a very popular health product. Many of the Company’s competitors offer a full line of colostrum products in stores and online with claims of high quality at low, wholesale prices. Success will depend among other things on the Company’s ability to out perform the other companies in its marketing and advertising efforts.

The Company’s success depends on its ability to attract and retain qualified personnel.

The Company’s success depends upon its ability to attract and retain qualified sales, marketing, scientific, accounting and executive management personnel. To commercialize its products and product candidates, Naturade must maintain and expand its personnel particularly in the areas of product sales and marketing. Naturade faces intense competition, and the effects of bankruptcy, for such personnel from other companies, academic institutions, government entities and other research organizations. There can be no assurance that the Company will be successful in hiring, leasing or retaining qualified personnel. Moreover, managing the integration of new personnel could pose significant risks to the Company’s development and progress and increase its operating expenses.

Expanding the Company’s sales in the mass market resulted in less stable demand for the Company’s products and higher costs of distribution.

Although traditionally Naturade has been a marketer for the health food market, the Company recently built a presence in the mass market. While yielding increased revenue, selling to the mass market has also resulted in significant risks and losses for the Company. Compared to sales in the health food market, the aggregate volume of mass market orders can vary significantly from period to period and tends to be more sensitive to short-term or local variations in market conditions. The instability can make planning difficult and can cause unexpected reductions in sales, or in orders that exceed the Company’s short-term capacity, in either case resulting in lost revenue. Failure to manage the costs and risks associated with the mass market could cause material adverse harm to the Company’s business.

Certain stockholders has the ability to control the Company

Redux, the owner of 95% of the outstanding equity of the Company, will control the Company. As a result, Redux will have the ability to elect all of the Company’s directors, control the outcome of all matters requiring stockholder approval and control the Company’s management and affairs.

Future sales of equity securities could cause substantial dilution to the Company’s stockholders depress the market price of its common stock and impair its ability to raise capital by selling its common stock.

The Company may seek to obtain new financing from various sources, including the sale of its securities. Future sales of common stock or securities convertible into common stock at or below recent market prices could result in dilution of the common stock, depress the market price of the Company’s common stock and impair its ability to raise capital by selling its common stock.

The Company’s future success depends on the Company’s ability to develop and commercialize products.

The Company currently is engaged in developing nutraceuticals, which are characterized by extensive and costly research and rapid technological progress and change. New process developments are expected to continue at a rapid pace in both industry and academia. The Company’s future success will depend on its ability to develop and commercialize its existing product candidates and to develop new products. There can be no assurance that Naturade will successfully complete the development of any of its existing product candidates or that any of its future products will be commercially viable or achieve market acceptance. In addition, research and development and discoveries by others could render some or all of our programs or potential product candidates uncompetitive or obsolete.

The Company is subject to variability of quarterly results and, therefore, its results of operations for any period may not be indicative of future periods.

The Company has experienced, and expects to continue to experience, variations in its net sales and operating results from quarter to quarter. The Company believes that the factors that influence this variability of quarterly results include the timing of its introduction of new product lines, the level of consumer acceptance of each product line, general economic and industry conditions that affect consumer spending and retailer purchasing, the availability of manufacturing capacity, the timing of trade shows, the product mix of customer orders, the timing of placement or cancellation of customer orders, the weather, transportation delays, the occurrence of chargebacks in excess of reserves and the timing of expenditures in anticipation of increased sales and actions of competitors. Accordingly, a comparison of the Company’s results of operations from period to period is not necessarily meaningful, and its results of operations for any period are not necessarily indicative of future performance.

The change in control affected by the Company’s recent recapitalization may restrict future use of its tax loss carry forwards.

As of December 31, 2006, the Company had federal net operating loss carry forwards of $29,756,012 that begin expiring in December 2017 and state net operating loss carry forwards of $18,817,934 that began expiring in December 2005. A valuation allowance for the full amount of net deferred taxes has been provided because it is more likely than not that the deferred taxes will not be realized. Under Section 382 of the Internal Revenue Code, certain significant changes in ownership, such as the Company’s recent recapitalization, may restrict the future utilization of these tax loss carry forwards. Based upon preliminary calculations, it is estimated that the utilization of tax losses for federal or state tax purposes would be limited to approximately $150,000 per year. As a result, federal net operating losses may expire before the Company is able to fully utilize them. As the Company is currently in a loss position this limit is not applicable. A more detailed calculation will be prepared once the Company has taxable income for federal purposes.

The Company may not have sufficient resources to address product liability exposure.

Product liability risk is inherent in the testing, manufacture, marketing and sale of the Company’s products and product candidates, and there can be no assurance that the Company will be able to avoid significant product liability exposure. The Company may be subject to various product liability claims, including, among others, that its products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. Naturade currently maintains general liability insurance and product liability insurance at levels consistent with industry norms and as required by the Company’s principal customers. The Company believes such insurance to be adequate. There can be no assurance that the Company will be able to maintain insurance in sufficient amounts to protect it against such liabilities at a reasonable cost. Any future product liability claim against the Company could result in it paying substantial damages, which may not be covered by insurance and may have a material adverse effect on the Company’s business and financial condition.

The Soy protein based foods category is experiencing a decline in sales.

The Company’s business consists primarily of selling natural products and functional foods, including soy protein-based products. The soy foods category, which is a significant portion of the Company’s revenues, as a whole has recently experienced decreased sales. Other categories of dietary supplements have experienced reduced sales in recent periods after several years of dramatic growth. In particular, revenues in both the herbal and health food store categories have had periods of significant decline. There can be no assurance that this general consumer trend will not be experienced by the Company’s product categories as well. Even if the Company is successful in increasing sales within its market category, a decline in the overall market for natural products or functional foods could have a material adverse affect on its business.

Adverse publicity may affect the Company’s ability to attract and retain distributors.

The Company’s products are formulated with vitamins, minerals, herbs and other ingredients that it regards as safe when taken as recommended by the Company and that scientific studies have suggested may involve health benefits. While the Company conducts extensive quality control testing on its products, the Company generally does not conduct or sponsor clinical studies relating to the benefits of its products. The Company is highly dependent upon consumers’ perception of the overall integrity of its business, as well as the safety and quality of its products and similar products distributed by other companies that may not adhere to the same quality standards as the Company does. The Company could be adversely affected if any of its products, or any similar products distributed by other companies, should prove harmful or be asserted to be harmful to consumers, or should scientific studies provide unfavorable findings regarding the effectiveness of such products. The Company’s ability to attract and retain distributors could be adversely affected by negative publicity relating to it or to other direct sales organizations or by the announcement by any governmental agency of investigatory proceedings regarding the business practices of the Company or other direct sales organizations.

The Company may not be able to protect its intellectual property which could enable other companies to replicate its products.

The Company’s success depends in part on its ability to preserve its trade secrets and know-how, and operate without infringing on the property rights of third parties. The Company does not have any patents, and as a result another company could replicate one or more of its products. The Company’s policy is to pursue registrations for all of the trademarks associated with its key products. The Company relies on common law trademark rights to protect its unregistered trademarks as well as its trade dress rights. Common law trademark rights generally are limited to the geographic area in which the trademark is actually used, while a U.S. federal registration of a trademark enables the registrant to stop the unauthorized use of the trademark by any third party anywhere in the United States. The Company intends to register its trademarks in certain foreign jurisdictions where its products are sold. However, the protection available, if any, in such jurisdictions may not be as extensive as the protection available to the Company in the United States.

Currently, the Company has 53 U.S. trademarks. The Company also maintains trademark registrations in approximately 12 foreign countries. Because of its limited financial resources, the Company cannot in all cases exhaustively monitor the marketplace for trademark violations. The Company will evaluate and pursue potential infringement on a case-by-case basis in accordance with its business needs and financial resources. If the Company is not aware of some infringing uses or elect not to pursue them, the value of its trademarks could be substantially weakened. If the Company takes action to enforce its intellectual property rights, litigation may be necessary. Any such litigation could be very costly and could distract the Company’s personnel. Due to limited financial resources, the Company may be unable to pursue some litigation matters. In matters the Company does pursue, it can provide no assurance of a favorable outcome. An unfavorable outcome in any proceeding could have a material adverse effect on its business, financial condition and results of operations.

New products are expensive to introduce and may not be successful.

Each year, the Company introduces new products to meet consumer demands and counter competitive threats. These new products include product line extensions, such as new flavors of currently existing products, as well as new formulations or configurations such as Naturade Total Soy® Strawberry. The Company experiences significant costs in formulating new products, designing packaging and merchandising. There can be no assurance that consumers and retailers will accept its new products. In addition, there can be no assurance that once new products are initially distributed to mass market and health food retailers, there will be repeat orders for these new products. Furthermore, expensive introductory retailer charges for additional shelf space may negate any initial increase in sales.

The Company’s stock price may be subject to significant fluctuations.

Trading in the Company’s common stock is low in volume. The market price of the Company’s common stock is likely to be volatile and could be subject to significant fluctuations in response to factors such as quarterly variations in operating results, operating results which vary from the expectations of securities analysts and investors, changes in financial estimates, changes in market valuations of competitors, announcements by the Company or its competitors of a material nature, loss of one or more customers, additions or departures of key personnel, future sales of common stock and stock market price and volume fluctuations. For the five trading days ended September 30, 2007, the average daily trading volume of its common stock was -0- shares, compared to the up to 64,490,618 additional shares for which the Company has granted registration rights. Additionally, investor confidence may be adversely affected by issuance of a going concern opinion by the Company’s independent registered public accounting firm, which may cause the Company’s stock price to fall. Also, general political and economic conditions such as recession, or interest rate or currency rate fluctuations, may adversely affect the market price of the Company’s common stock.

On August 25, 2006, the NASD delisted the Company from the Over the Counter Bulletin Board, due to the Company’s inability to timely file its second quarter 2006 10Q. The Company is now listed and trading on the “Pink Sheets” with the symbol NRDC.PK. Listing on the Pink Sheets could adversely affect the Company’s ability to increase the share price and move the Company’s common stock listing to a national security exchange.

The Company’s common stock is currently deemed to be a “penny stock.” As a result, trading of its shares may be subject to special requirements which could impede the Company’s stockholders’ ability to resell their shares.

The Company’s common stock is a “penny stock” as that term is defined in Rule 3a51-1 adopted under the Exchange Act because it is selling at a price below $5.00 per share. In the future if the Company was unable to list its common stock on a national securities exchange, or the per share sale price is not at least $5.00, its common stock may continue to be deemed to be a “penny stock.”

Section 15(g) of the Exchange Act and Rule 15g-2, require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; to determine reasonably, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; to provide the investor with a written statement setting forth the basis on which the broker-dealer made such determination; and to receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.

Compliance with these requirements may make it more difficult for holders of the Company’s common stock to resell their shares to third parties or to otherwise dispose of them.

The Company may not be able to comply in a timely manner with Section 404 of the Sarbanes-Oxley Act of 2002, which could harm its operating results.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, the Company will be required, beginning in the Company’s fiscal year 2007, to perform an evaluation of the design and operating effectiveness of its internal controls and publicly attest to such evaluation. The Company has prepared an internal plan of action for compliance with the requirements of Section 404, although as of the date of this filing, it has not yet completed its effectiveness evaluation. Although the Company believes its internal controls are operating effectively, the Company cannot guarantee that it will not have a material weakness as reported by its independent registered public accounting firm. If the Company fails to complete this evaluation in a timely manner, it could be subject to regulatory scrutiny and a loss of public confidence in the Company’s internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause us to fail to meet its reporting obligations.

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk.

The Company’s earnings are not affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result a current lack of international purchases. As a result, the Company bears no risk of exchange rate gains or losses that may result in the future as a result of this financing structure. The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt.

In the normal course of business, the Company is exposed to a variety of risks including market risk associated with interest rate movements. The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt.

The Company’s long-term debt primarily consists of a (i) a line of credit facility of $4,350,000 consisting of a $1,350,000 term loan combined with $3,000,000 revolving debt with Laurus entered into on July 27, 2005, and amended on January 11, 2006 and $1,050,000 borrowed under a Loan Agreement with investors entered into on April 14, 2003. The line of credit bears interest at prime rate plus 2% and the Investor Notes bear interest at 15% per annum.

For the nine months ended September 30, 2007, the interest expense on the line of credit was $188,079 if the interest rate were to increase by one percent; this would result in an interest expense of $207,369 for the nine months ended September 30, 2007.

ITEM 4 - Controls and Procedures.

The Company’s management, with the participation of the Company’s former Chief Executive Officer Richard Munro, and the current Chief Executive Officer and current and former Principal Accounting Officer, Adam Michelin, carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)). Based upon that evaluation, the Chief Executive Officer and the Principal Accounting Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are not effective at the reasonable assurance level in making known to them material information relating to the Company (including its consolidated subsidiaries) required to be included in this report.

Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such a simple errors or mistakes or intentional circumvention of the established process. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving the Company’s disclosure objectives.

There were no changes in the Company’s internal control over financial reporting that occurred during the Quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. Other Information

ITEM 1 . Legal Proceedings.

From time to time, the Company is party to various other claims and litigation that arise in the normal course of business. While any litigation contains an element of uncertainty, management believes that the ultimate outcome of these claims and litigation will not have a material adverse effect on the Company’s results of operations or financial condition. Prior to August 31, 2006, the Bankruptcy filing date, The Company was involved in the following litigation:

On September 30, 2006, a judgment in the amount of $271,000 was entered against the Company related to a vendor. Such amount has been accrued as of December 31, 2006 and is included in Liabilities Subject to Compromise.

The following litigation matters are currently pending:

b) Naturade, Inc. v. Doyle & Boissiere, LLC; Health Holdings and Botanicals, LLC; Quincy Investments Corp.: Peter H. Pocklington: William B. Doyle, Jr.; Lionel P. Boissiere; and Does 1-70 (Orange County Superior Court, State of California, Case No.: 07CC02752). Filed on February 9, 2007. This lawsuit was initiated by the Company to seek compensation and damages relating to Breach of Fiduciary Duty, Breach of Contract, Fraud, Conversion, Breach of the Implied Covenant, Negligence, Accounting, and Declaratory Relief from several former directors and entities with which the Company had contractual relationships (“State Court Action”). The Company seeks compensatory and punitive damages against each defendant. A trial for this matter has not yet been set. Related to this litigation, on December 8, 2006, Quincy Investments, Inc. filed a proof of claim against the Company’s bankruptcy estate alleging a general unsecured claim in the approximate amount of $350,000.00 (“Quincy Claim”). The Company disputes the Quincy Claim, and has filed a formal objection to the Quincy Claim. This matter is pending in Bankruptcy Court. On July 9, 2007, the Bankruptcy Court entered an order, which provided that it would abstain from ruling on the objection to the Quincy Claim pending resolution of the State Court Action and disallow the Quincy Claim for purposes of Plan distribution only, subject to reconsideration and payment in accordance with the terms of the Plan on account of any allowed claim that it may have upon resolution of the State Court Action. . As of the Effective Date, the Company has settled this litigation with all defendants, except for Pocklington and Quincy, against whom the Company and Redux will continue to prosecute this action. Pocklington and Quincy have evaded personal service of the complaint. Service by publication will be effected by the plaintiffs instead.

c) Naturade, Inc. v. NBTY, Inc. d/b/a Omni-Pak Industries (United States Bankruptcy Court, Adversarial Case No.: SA07-1057RK) Filed on February 15, 2007. On December 11, 2006, NBTY, Inc. d/b/a Omni-Pak Industries (“NBTY”) filed a proof of claim against the Company’s bankruptcy estate alleging a general unsecured claim in the amount of $660,774.10 and an alleged administrative claim in the amount of $3,916.00 (“NBTY Claim”). The Company disputes the NBTY Claim, but has yet to file a formal objection to the NBTY Claim. On February 15, 2007, the Company filed a complaint against NBTY to avoid and recover approximately $191,480.81 of preferential transfers of property under Bankruptcy Code Sections 547 and 550. The Company and NBTY have exchanged information and support for their respective positions regarding the NBTY Claim, the complaint and NBTY’s affirmative defenses thereto. As a result thereof, the Company and NBTY have reached a compromise and settlement that will provide, among other things, for NBTY’s payment of $7,658.00, allowance of the unsecured portion only of the NBTY Claim and dismissal of the complaint. The settlement is subject to final documentation and Bankruptcy Court approval thereof.

f) Other Bankruptcy Related Litigation: The Company filed a motion to reject an Asset Purchase Agreement dated November 2, 2004, between the Debtor and LODC (the “Agreement”) on the grounds that the Agreement was executory, burdensome and of no value to the Company’s reorganization efforts. On July 9, 2007, the Bankruptcy Court entered an order denying the Company’s motion to reject the Agreement on the basis that the Agreement was not executory. The Company timely filed an appeal of the Bankruptcy Court order with the Ninth Circuit Bankruptcy Appellate Panel (“BAP”). The Company subsequently requested that the BAP dismiss its appeal without prejudice which request was granted on October 5, 2007.

g) Invensys Systems, Inc. v. Pinnacle Marketing Concepts, Inc., et al (Orange County Superior Court, Case No. 07CC00470):On or about March 23, 2007, Invensys Systems, Inc., a sub landlord, in the chain of possession of the premises located at 601 Valencia Avenue, Brea, California 92823, serviced a three day notice to pay rent or quite. . The Company’s bankruptcy attorney promptly sent a response that a bankruptcy stay was in place and the sub landlord was prevented as a matter of law with proceeding to evict the Company. Subsequently, the sub landlord filed an Unlawful Detainer against a number of subtenants, including the Company. The Company has not been served with the Complaint and therefore dose not have to file an Answer. The Company has signed a lease for new premises and moved out of the premises on May 19, 2007. Further, the Company’s sublease agreement is with One World Science Inc. and not with the Plaintiff and there is no privity of contract. The Company is in good standing with its sub landlord, One World Science, Inc. One World Science, Inc., settled its portion of the Unlawful Detainer with Invenys Systems, Inc., on October 18, 2007. The Company has no further exposure to liability in this case.

ITEM 1A. Risk Factors.

See “Risk Factors” in Part I, Item 2 of this Quarterly Report on Form 10-Q for a description of the Company’s risk factors.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

NONE

ITEM 3. Defaults Upon Senior Equity Securities .

NONE.

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

NONE

ITEM 5. Other Information.

NONE

ITEM 6. Exhibits

(a) Exhibits

Exhibit Number	Document
10.83**	Security Agreement between Laurus Master Fund, LTD. and Naturade, Inc. dated November 6, 2007
10.84**	Secured Revolving Note Agreement dated November 6, 2007 by and between Laurus Master Fund, LTD. And Naturade, Inc.
10.85**	Secured Term Note dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc.
10.86**	Grant of Security Interest in Patents and Trademarks by Naturade, Inc. to Laurus Master Fund, Inc. dated November 6, 2007.
10.87**	Lockbox Agreement by and between Naturade, Inc. and Laurus Master Fund, LTD. dated November 6, 2007.

31.1**	Certification Pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2**	Certification Pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Management contracts or compensatory plan or arrangement.
**	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATURADE, INC.
	(Registrant)

DATE: November 14, 2007	By	/s/ Adam Michelin

		Chief Executive Officer

DATE: November 14, 2007	By	/s/ Adam Michelin
		Adam Michelin
		Chief Executive Officer and Principal Accounting Officer

EXHIBIT INDEX

Exhibit Number	Document
10.83**	Security Agreement between Laurus Master Fund, LTD. and Naturade, Inc. dated November 6, 2007
10.84**	Secured Revolving Note Agreement dated November 6, 2007 by and between Laurus Master Fund, LTD. And Naturade, Inc.
10.85**	Secured Term Note dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc.
10.86**	Grant of Security Interest in Patents and Trademarks by Naturade, Inc. to Laurus Master Fund, Inc. dated November 6, 2007.
10.87**	Lockbox Agreement by and between Naturade, Inc. and Laurus Master Fund, LTD. dated November 6, 2007.

31.1**	Certification Pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2**	Certification Pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Management contracts or compensatory plan or arrangement.
**	Filed herewith.

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	H.S. freshman Avg

Naturade (NRDCQ) Inactive 10-Q2007 Q3 Quarterly report

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