Naturade (NRDCQ) 10-K/A 2007 FY Annual report (amended)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

þ	Annual Report Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
	For the fiscal year ended December 31, 2007

o	Transition Report Pursuant to Section 13 or 15(d) of the SecuritiesExchange 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

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12 (g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   þ Yes o No

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 þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 Act. (Check one):

Large accelerated filer o Non-accelerated filer þ Accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þNo

As of June 30, 2007, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of Common Stock held by non-affiliates was $237,654 based on the average of the bid and asked price on that date.

As of April 9, 2008, 194,908,121 shares of the registrant’s common stock were outstanding, including 3,372,345 shares subject to Stop Orders.

Explanatory Note

We are filing this Amendment to our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the U.S. Securities and Exchange Commission (SEC) on April 15, 2008, to amend the following typographical errors:

(i)     We revised the date of Haskell & White LLP’s Report of Independent Registered Accounting Firm from April 14, 2008, to April 15, 2008, as presented on page F-1 of our Annual Report on Form 10-K;

(ii)    We revised certain dates contained on pages 35 and 38 inItem 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations from November 9, 2009 to November 9, 2008;

(iii)   We revised certain numerical references in Part III, Item 11 Executive Compensation, and

(iv)   We revised the address of our principal executive offices, as presented above.

Other than the changes referred to above, all other information included in the above described Form 10-K remains unchanged.  This amendment does not reflect events occurring after the initial filing of such Form 10-K and does not modify or update the disclosures therein in any way other than as required to reflect the amendment as described above and set forth below.

Item 7. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with “Item 6. Selected Financial Data” and the financial statements and related notes attached to this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited, to those set forth under “Item 1A Risk Factors” and elsewhere in this report.

General

The Company is a branded natural products marketing company focused on growth through innovative products designed to nourish the health and well being of consumers. The Company competes in the overall market for natural, nutritional supplements primarily in the segment defined by Nutrition Business Journal (“NBJ”), a San Diego-based research publication that specializes in this industry, as Supplements.

Within the broad soy foods market, segments such as meal replacement drinks, soy milk and bars have outperformed other categories. 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, ReVivex™ healthy joint and arthritis pain relief products, Diet Lean® products focused on the low carb dieter, SportPharma® sports nutrition products and other niche dietary supplements. The Company’s products are sold in supermarkets, mass merchandisers, club stores, drug stores, natural food supermarkets and over 5,000 independent health food stores.

Chapter 11 Filing

On August 31, 2006, the Company filed a voluntary petition for protection and reorganization under Chapter 11 of the Bankruptcy Code in Bankruptcy Court. From the Petition Date until the Effective Date, the Company conducted its activities as a debtor-in-possession under the Bankruptcy Code. See Note 1, Chapter 11 Bankruptcy Proceedings for additional information.

The Company’s Plan of Reorganization, as modified (the “Plan”) was heard in Bankruptcy Court on October 30, 2007 and approved by the Bankruptcy Court, 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, 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. A copy of the Plan is posted at www.naturade.com , under Investor Relations.

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 needs, the Plan included a comprehensive debt restructuring. The Plan also features an equity allocation in Redux 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 issued to Redux enough shares of common stock to give Redux 95% equity and voting interest in the Company, with all remaining shareholders holding a total 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.

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 Bankruptcy (see Note 1 to the Financial Statements) such realization of assets and liquidation of liabilities was subject to uncertainty. For financial reporting purposes, those unsecured liabilities and obligations whose disposition is dependent on the outcome of the Chapter 11 Bankruptcy had been segregated and classified as liabilities subject to compromise in the December 31, 2006 balance sheet.

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”). Accordingly, unsecured pre-petition liabilities, which are subject to settlement, were classified as liabilities subject to compromise in the December 31, 2006 balance sheet. In addition, the Company had reported all transactions (other than interest expense) directly related to the Chapter 11 Bankruptcy as reorganization items in its statement of operations for the period ended November 7, 2007 and 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.

On September 25, 2006, the Company's common stock was de-listed from the over-the-counter Bulletin Board. The Company regained its listing on the over-the-counter Bulletin Board on January 15, 2008, under the symbol NRDCQ.OB.

Change in Control

On August 10, 2006, Quincy Investments Corp. (“Quincy”), the then 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, pursuant to which:

· Quincy transferred 28 million shares of the Company’s common stock,4.2 million shares of Series C and 14 million warrants to purchase the Company’s 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 the Company’s common stock in violation of the Quincy Transfer Agreement.

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

· Redux issued 574,787, shares of Redux common stock to Laurus, subject to certain provisions for anti-dilution.

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 prepayment penalties and charges associated with the Laurus obligations.

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

As a result of the transactions described above, Redux controlled voting rights of 29,550,000 shares of Company’s common stock and 4,200,000 shares of Series C, or 68.2% of the voting power of the Company’s common stock, 20.0% of the voting power of the Series C, and 52.5% of the combined voting power of the Company’s common stock and the Series C. The holders of the Series C were 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, prior to the Effective Date, Redux had the power to elect a majority of the Company’s 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 were included, these percentages increased.

On the Effective Date, all Company Series C Preferred shares, along with their voting and control rights, all options, all warrants, and all registration rights, were cancelled as required under the Plan. The Company, as required by the Plan, issued Redux 150,475,388 shares of common stock, giving Redux 180,025,388 shares of common stock or 95% equity and voting interest in the Company. The remaining shareholders retained a total 5% equity interest in the Company, with 8,510,388 shares of common stock. The computation did not include the 3,372,345 shares of common stock subject to Stop Orders.

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.

	Percent of Net Sales
	Successor Company			Predecessor Company
	Period from November 9, 2007 to December 31, 2007			Period from January 1, 2007 to November 8, 2007			Year ended  December 31,  2006
Net Sales		100.0	%		100.0	%		100.0	%
Gross profit		34.3	%		35.3	%		35.2	%
Selling, general and administrative expense.		34.7	%		55.0	%		80.0	%
Goodwill impairment		0.0	%		0.0	%		28.6	%
Impairment of customer lists		0.0	%		0.0	%		11.1	%
Reorganization professional fees		0.0	%		20.3	%		4.4	%
Operating loss		(10.0	)%		(44.9	)%		(98.3	)%
Interest expense		(35.2	)%		(15.4	)%		33.8	%
Loss on sale of assets		0.0	%		0.0	%		0.6	%
Other income (loss)		0.0	%		0.3	%		0.1	%
Income (loss) before provision for income taxes		(45.2	)%		68.4	%		(119.3	)%
Provision for income taxes		0.0	%		(0.3	)%		0.0	%
Net income (loss)		(45.2	)%		25.9	%		(119.3	)%

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

The major trends of our results of operations for the 12 months ended December 31, 2007 included the following:

• The filing for and eventual emergence from Chapter 11 Bankruptcy protection by the Company had a significant effect on revenues and earnings for the period. The filing resulted in product sourcing delays, customer order reductions, increased product costs and a significant increase in professional fees related to the reorganization.

• The general softness in the grocery segment related to competition from Wal-Mart and club stores continued to move consumers from historical purchasing patterns. We believe this trend is likely to continue.

2007 Compared to 2006

The following analysis compares the 12 months ended December 31, 2007 which is composed of the predecessor company for the period from January 1, 2007 to November 8, 2007 and the successor company from November 9, 2007 to December 31, 2007.

Net Sales

Net sales for 2007 decreased $2,728,429 or 28.9%, to $6,703,590 from $9,432,019 for 2006. The decrease in net sales is due principally to the effects of the Chapter 11 filing. As a result of the filing, Naturade had difficulty filling orders until product sourcing could be secured. Naturade’s ability to meet retailer demands was interrupted resulting in a subsequent significant decrease in customer orders and revenues. As of December 31, 2007, no significant customers notified Naturade that they were discontinuing purchasing from Naturade.

Net Sales are calculated based upon gross revenues less certain allowances.

For 2007, distributor and promotional allowances were a credit of $12,146, or 0.2% of gross sales, compared to an expense of $704,815, or 6.1% of gross sales, for the same period in 2006.   The decrease in distributor and promotional allowances is a result of the decrease in sales to mass merchants during the period. Mass merchants generally require more promotional allowances than do health food distributors. Damages and returns for 2007 were $295,234, or 4.2 % of gross sales, as compared to $755,458, or 6.5 % of gross sales, for 2006. Lower sales and the decreased sales to the mass market have accounted for the reduction in returns. Cash discounts for 2007 were $99,674, or 1.4% of gross sales, as compared to $120,784, or 1.0% of gross sales, in the same period of 2006. The decrease in cash discounts is directly related to the decrease in sales for the period. Slotting charges related to new distribution for 2007 were a credit of $4,159, or 0.06% of gross sales, as compared to an expense of $198,590, or 1.7% of gross sales, in 2006. Coupon and rebate redemption for 2007 was $-0-, as compared to $10,740, or 0.1%, in the same period of 2006.

 Mass market net sales for 2007 increased $761,049, or 22.9%, to $4,090,551 from $3,329,502 for 2006. Typically, customers who depend on 100% fill rates to maintain sufficient quantity of product for sale to consumers such as mass market customers, will be the first to make a product switch when a supplier does not invest sufficiently in consumer marketing to “pull” product thru retail, and when a supplier files for Chapter 11 protection. Naturade sales suffered in 2007 from these factors however, its major mass market customer Sam’s Club, continues to carry Naturade Total Soy in a significant number of clubs increasing volume sales year over year.

For 2007, health food channel net sales decreased $3,489,478, or 57.2 %, to $2,613,039 from $6,102,517 for 2006. The sales decrease is due principally to sourcing problems related to the Company’s Chapter 11 Bankruptcy filing. In late 2007, the Company has secured reliable product sourcing and is increasing its fill rates in this channel with a goal to increase revenues in 2008 .

On a percent of net sales basis, the breakdown of sales between the mass market and health food channels was 39.0% for the health food channel and 61.0% for the mass market channel for 2007 as compared to 64.7% for the health food channel and 35.3%, respectively, for the same period in 2006. The increase in the mass market as a percent of total sales is due principally to the reduction in sales encountered in the health food channel in 2007 as a result of the Chapter 11. The majority of the loss in the mass market incurred early in the Chapter 11 proceedings during fiscal 2006.

For 2007 the top 40 customers accounted for $5,553,012, or 78.4%, of net sales, with 24 health food customers contributing $3,381,338 or 47.7%, of net sales, 2 mass market customers contributing $1,748,161 or 24.7%, of net sales, and 4 international customers contributing $423,513, or 6.0%, of net sales. This compares to the top 40 customers accounting for $8,290,520, or 87.9%, of net sales, with 23 health food customers contributing $4,231,801 or 44.8%, of net sales, 14 mass market customers contributing $3,780,188 or 40.1%, of net sales, and three international customers contributing $278,531, or 3.0%, of net sales for 2006.

For 2007, the top 40 products represented $ 5,929,822 or 88.5%, of net sales, with 16 Symbiotics products contributing $ 2,142,983 or 32.0% of net sales, 4 Naturade Total Soy® products contributing $ 1,945,115 or 29.0%, of net sales, 10 protein powders contributing $ 851,443 or 12.7 % of net sales, 3 Ageless products contributing $ 199,007 or 3.0 % of net sales and 7 other products contributing $ 791,275 or 11.8% of net sales. This compares the top 40 products represented $6,694,566 or 71.0%, of net sales, with 8 Naturade Total Soy® products contributing $2,529,576 or 26.8%, of net sales, 13 protein powders contributing $1,741,815 or 18.5% of net sales, 5 ReVivex™ products contributing $432,616 or 4.6% of net sales, and 14 other products contributing $1,990,559 or 21.1%  of net sales in 2006.

For both periods, the Company considers the 10 divisions of UNFI which represented 19.5% and 18.4% of net sales for 2007 and 2006 respectively and the six divisions of Tree of Life which represented 11.0% and 11.6% of net sales for 2007 and 2006 respectively as separate customers for purposes of this top 40 list, because of their ability to make independent purchasing decisions regarding the Company’s products. In “Item 1. Business—General”, the divisions of these two entities are combined under their corporate parent to reflect three major customers.

Gross Profit

Gross profit for 2007 decreased 29.1% to $2,352,251 or 35.1% of net sales, from $3,315,867 or 35.2% for 2006. The decrease is principally a result of lower sales for the period and the effects of Bankruptcy. Gross profit, as a percentage of sales was flat at 35.1% in 2007 as compared to 35.2% of net sales in 2006. The stability of gross profit margins as a percent of sales is due to the Company’s ability to obtain a stable supply source in early 2007.  

Operating Costs and Expenses

Operating costs and expenses for 2007 decreased 61% to $4,894,900, or 93% of net sales, from $12,589,110, or 133.5% of net sales for 2006. Operating expense for the period includes one-time charges totaling $1,089,260 for reorganization professional fees compared to $410,306 in 2006. Selling, general and administrative expenses decreased $4,126,906 from $7,542,707 during the year ended December 31, 2006, to $3,415,802 during the year ended December 31, 2007. This decrease was principally the result of reduced sales and marketing expenses, staff reductions and smaller facilities. Additionally, operating expense for the period includes a non-cash charge of $277,600 in amortization of intangible assets acquired in acquisitions as compared to a similar charge of $835,681 for the same period in 2006. In 2006, the Company incurred impairment charges of $2,694,357 in goodwill and $1,049,336 in Customer Lists as a result of devaluations due to the Company’s Chapter 11 proceedings. Prospectively, management expects future amortization expenses associated with the Company’s intangible assets to increase as a result of the Company’s use of Fresh-Start Accounting on November 9, 2007.

Interest Expense

Interest expense for 2007 decreased $1,894,484 to $1,296,668 from $3,191,155 compared to the same period in 2006 principally due to the decrease of $1,792,111 in amortization of deferred financing fees and debt discounts in 2007 related to the reduction of deferred financing fees capitalized as a result of the Company’s Chapter 11. In addition, a stay on interest on certain borrowings related to pre-petition debt resulted in a reduction of interest expense during the period. Prospectively, management expects future non-cash interest expenses to be significant as debt discounts associated with the Company’s debt instruments are amortized into interest expense over their expected terms.

Liquidity and Capital Resources

On August 31, 2006, the Company filed a voluntary petition for protection and reorganization under Chapter 11 of the Bankruptcy Code. Since the Petition Date through November 8, 2007, the Company has conducted activities as a debtor-in-possession under the Bankruptcy Code. See Note 1, Chapter 11 Bankruptcy Proceedings for additional information.

The Company’s credit facility consisted of a three year Credit and Security Agreement (the “Credit Agreement”) with Laurus Master Fund, LLP (“Laurus”) which was entered into on July 22, 2005. The Credit Agreement allowed for maximum borrowings of up to $4,000,000, of which $3,000,000 was a revolving note and $1,000,000 was a term note. On January 6, 2006, the Credit Agreement was amended whereby the term loan was increased to $1,650,000.

On August 31, 2006, prior 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 (the “Financing Changes”):

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

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

· Interest would continue to accrue on the Term Loan pursuant the terms of the Financing Agreement however, payments were to 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 was extended to January 2, 2010 and principal payments commenced on December 1, 2007 and are payable in equal monthly installments of $58, 271 until the maturity date.

On the Effective Date, the following amounts are outstanding with Laurus:

· Revolving Loan for $838,937 due in 36 months with interest of Prime plus 2%.

· Term Loan for $1,515,049 payable in 24 equal installments of $58,271 with interest equal to prime plus 2%, due January 2, 2010

· Revolver Over advance of $674,023 payable in monthly principal installments of $12,000 per month starting January 2008 until June 2008; $15,000 per month in July and August 2008; $25,000 per month starting September 2008 until December 2008; $40,000 per month starting January 2009 until May 2009 and $45,000 per month starting June 2009 until November 2009 with a final payment of $2,023 in December 2009. Interest is payable at prime plus 2%.

Borrowings on the revolving note are based on certain percentages of eligible accounts receivable and inventories and pays interest at prime plus 2% per annum. Available borrowings under the Credit Agreement were $-0- at December 31, 2007.

Pursuant to the Plan, the Company agreed to pay the administrative creditors an additional $300,000 in $100,000 installments prior to December 31 of 2009, 2010 and 2011. The Company also agreed to pay Health Holdings and Botanicals, LLC (“Health Holdings”) $1,361,000 at November 9, 2012, but Health Holdings has the right to convert the obligation into Redux Common Stock. The Company also agreed to pay the unsecured creditors 5% of their allowed claims on November 9, 2008, 5% on November 9, 2009, 10% on November 9, 2010 and 10% on November 9, 2011. Total allowed claims as of April 11, 2008 total approximately $1.3 million. Certain obligations of the Company under the Plan were guaranteed by Redux, and in some cases security was posted. See the Plan, posted at www.naturade.com , Investor Relations. A description of the obligations to the principal secured lender, Laurus, are described immediately above.

At December 31, 2007, the Company had an accumulated deficit of $601,697, a net working capital deficit of $575,255, and has incurred recurring net losses. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm has issued an opinion that substantial doubt exists as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from a negative outcome of this uncertainty. The Company believes that cash proceeds from the Plan, its current Financing Agreement and growth in its core operations will sustain the Company for the next year.

The Company used cash of $1,336,761 from operating and reorganization activities in the year ended December 31, 2007, compared to a source of cash of $648,148 from operating activities for the year ended December 31, 2006. This decrease in cash provided by operating activities is primarily due to operating losses before reorganization items of $3,206,247and an increase in inventories of $795,420, partially offset by a decrease in receivables of $132,676 and an increase in accounts payable and accrued expenses of $1,331,128 .

Net cash used in inventories was $795,420 for the year ended December 31, 2007 compared to net cash provided by inventories of $160,454 for the year ended December 31, 2006. The increase in inventory was a direct result of the Company obtaining stable sourcing with credit terms allowing the Company to rebuild inventory to meet required customer fill ratios.  

Net cash provided by accounts receivable was $132,676 for the year ended December 31, 2007 compared to net cash provided by accounts receivable of $1,323,849 for the same period of 2006, principally due to lower sales volume in 2007 as compared to sales volume in 2006 as a result of the Company’s Chapter 11. Customer terms have remained constant; however there is a slight increase in day’s sales outstanding due to customers paying slower than historical averages after the Company filed for protection under Chapter 11.

Net cash provided by accounts payable and accrued expenses was $1,331,128 for the year ended December 31, 2007 compared to net cash provided of $3,682,318 for the same period of 2006. The increase in accounts payable and accrued expenses is a direct result of the Company’s ability to obtain certain credit terms to purchase inventory during the period.

The Company’s working capital deficit decreased from $1,728,224 at December 31, 2006 to $575,255 at December 31, 2007. This decrease was largely due to an increase in accounts payable post emergence from Chapter 11.

The Company’s cash provided financing activities was $1,590,800 for the year ended December 31, 2007, compared to cash used in financing activities of $605,000 for the same period of 2006. The increased source of cash in 2007 was primarily the result of the $1,200,000 cash infusion by the majority shareholder at the Effective Date plus net borrowings on the revolver of $419,874.

Laurus Financing

On July 26, 2005, Naturade entered the Financing Agreement with Laurus, providing for a $3,000,000 revolving credit facility and a $1,000,000 term loan. The indebtedness under the revolving facility is evidenced by a convertible “Revolving Note” and one or more convertible “Minimum Borrowing Notes,” and the indebtedness under the term facility is evidenced by a convertible “Term Note.” The Revolving Note, the Term Note and the Minimum Borrowing Notes are herein referred to as the “Laurus Notes.” Gross funds of $2,655,250 were advanced to us on July 26, 2005 under the Laurus Notes comprising $1,000,000 under the Term Note, $500,000 under the first minimum borrowing note (the “First Minimum Borrowing Note”), and $1,155,250 under the Revolving Note. The Company paid fees and expenses in cash to Laurus of $193,500 on the closing date, consisting of “closing payment” of $156,000 and reimbursement of Laurus’ legal fees of $37,500. Also in connection with the Laurus financing, the Liberty Warrant to Liberty Company Financial LLC (“Liberty”) for introducing us to Laurus. The Liberty Warrant entitles the holder to purchase up to 3,647,743 shares of its common stock at a purchase price of $0.08 at any time on or after July 26, 2006 through July 26, 2011. On December 31, 2007, $1,276,570 was outstanding under the Revolving Note, and $1,350,000 was outstanding under the Term Note. 

The Company also issued Laurus a five-year warrant to purchase an aggregate of 1,500,000 shares of its common stock at an exercise price of $0.80 per share and an option to purchase 8,721,375 shares of its common stock at an exercise price of $0.0001 per share, as described below.

In conjunction with the Financing Agreement, Health Holdings, Stewart and Weil extended the term of the Secured Promissory Notes issued to them pursuant to that certain Loan Agreement dated April 23, 2003, from December 31, 2005 to December 31, 2007.

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

• Increased the Term Note 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.

• Converted the First Minimum Borrowing Note outstanding of $500,000 to the Revolving Note.

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

• Extended the term of the Agreement from three years ending on July 26, 2008 to three years ended 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, Naturade issued to Laurus 1,050,000 shares of the Company’s 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 was 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 provided debtor in possession financing (“DIP”) pursuant to the terms and conditions of the financing agreement.

· Interest continued 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 was extended to January 2, 2010 and principal payments commenced on December 1, 2007 and are payable in equal monthly installments of $58,271 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.

On the Effective Date, the following amounts are outstanding with Laurus:

· Revolving Loan for $838,937 due in 36 months with interest of Prime plus 2%.

· Term Loan for $1,515,049 payable in 24 equal installments of $58,271 with interest equal to prime plus 2%

· Revolver Over Advance of $674,023 payable in monthly principal installments of $12,000 per month starting January 2008 until June 2008; $15,000 per month in July and August 2008; $25,000 per month starting September 2008 until December 2008; $40,000 per month starting January 2009 until May 2009 and $45,000 per month starting June 2009 until November 2009 with a final payment of $2,023 in December 2009. Interest is payable at prime plus 2%.

At December 31, 2007, $1,149,447 was outstanding under the revolving facility; $1,456,778 was outstanding under the term loan and $674,023 was outstanding under the Revolver Over Advance.

Laurus Notes. The amount of funds available for borrowings under the Revolving Note are advanced pursuant to a formula consisting of (i) 90% of eligible accounts receivable (as defined in the Financing Agreement) (primarily receivables that are less than 90 days old), and (ii) 30% of eligible inventory (as defined in the Financing Agreement), up to a maximum inventory advance of $500,000; provided, however, that the amount available for borrowing may be limited by such reserves as Laurus deems proper based upon significant business developments relating to the Company or its account debtors. Laurus’ discretionary rights could reduce the amount of funds available for borrowing under the Revolving Note.

Principal on the Term Note is payable in 25 consecutive monthly installments of $58,271 commencing on December 1, 2007 and on the first day of each month thereafter, subject to acceleration upon the occurrence of an Event of Default or termination of the Financing Agreement.

Amounts outstanding under the Laurus Notes will mature on January 2, 2010. If the Company terminates the Financing Agreement and the loans there under prior to the maturity date, it will incur an early payment fee equal to 5%, 4% and 3% of the total investment amount of $4,650,000 if terminated in the first, second or third year, respectively, of the term of the Financing Agreement. Interest on the amounts outstanding under the Laurus Notes accrues at the annual rate of 2% above the prime rate, but not less than 6%. The interest rate charged, however, will be decreased by 2% (or 200 basis points) for every 25% increase in the market price of our common stock above the fixed conversion price of $0.80. The interest rate may not be reduced beyond 0%.

Security and Events of Default. The Laurus Notes are secured by a lien on substantially all of the Company’s assets. The Financing Agreement requires the Company ues to maintain a lock box account to receive payments of our accounts receivable, and all funds transmitted to the lock box account will be applied to amounts outstanding under the Laurus Notes. Laurus may verify, inspect or appraise assets constituting the collateral. The lien granted to Laurus will continue in full force and effect, notwithstanding the termination of the Financing Agreement. The Financing Agreement sets forth certain circumstances under which the Financing Agreement can be declared in default and subject to termination, including among others if (i) there is a material adverse change in the Company’s condition and affairs (financial or otherwise); (ii) an insolvency proceeding is commenced; (iii) it default on any of its material agreements with third parties or there are material liens or attachments levied against its assets; (iv) its common stock ceases to be publicly traded; and (v) it fails to comply with the terms, representations and conditions of the Financing Agreement.

Upon the occurrence of an Event of Default and for so long as it is continuing, the interest rate charged will be increased by 2% per month until the default is cured; should the default continue beyond any applicable grace period, then Laurus could require the Company to repay 125% of any principal and interest outstanding under the Laurus Notes. Following the occurrence of an Event of Default, Laurus also has the right to demand repayment in full of all obligations owing to Laurus under the Financing Agreement, whether or not otherwise due and will retain its lien in the collateral provided by the Company until all the obligations have been satisfied. 

Affirmative and Negative Covenants. Under the Financing Agreement, the Company may take certain actions only with the approval of Laurus, including the following material actions: incurring additional indebtedness (other than trade debt); making any distribution with respect to or repurchasing any shares of its capital stock; or entering into any merger, consolidation or reorganization with or purchasing any assets or stock of any other person.

The Financing Agreement also provides Laurus with a right of first refusal to provide additional financing on terms no less favorable than those offered by a third party with respect to any additional convertible indebtedness or the sale or issuance of any equity interests, other than straight equity issuances.

Pursuant to the Plan, the Company agreed to pay the administrative creditors an additional $300,000 in $100,000 installments prior to December 31 of 2009, 2010 and 2011. The Company also agreed to pay Health Holdings and Botanicals, LLC (“Health Holdings”) $1,361,000 at November 9, 2012, but HHB has the right to convert the obligation into Redux Common Stock. The Company also agreed to pay the unsecured creditors 5% of their allowed claims on November 9, 2008, 5% on November 9, 2009, 10% on November 9, 2010 and 10% on November 9, 2011. Total allowed claims as of April 11, 2008 total approximately $1.3 million Certain obligations of the Company under the Plan were guaranteed by Redux, and in some cases security was posted. See the Plan, posted at www.naturade.com , Investor Relations.

Critical Accounting Policies and Use of Estimates

The Company’s significant accounting policies are described in Note 1 of the Company’s Financial Statements for the year ended December 31, 2007, which have been prepared in accordance with accounting principles generally accepted in the United States. In preparing the financial statements, the Company is required to make estimates and judgments which 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 critical accounting policies which require significant judgments and estimates in the preparation of its financial statements.

Revenue Recognition . Naturade recognizes revenue in accordance with SEC Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition in Financial Statements,” 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) collectibility 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 collectibility of those fees. To satisfy the criteria, Naturade: (1) inputs orders based upon receipt of a customer purchase order; (2) records revenue upon shipment of goods when risk of loss and title transfer under the Company’s arrangements with customers or otherwise complying with the terms of the purchase order; (3) confirms pricing through the customer purchase order and; (4) validates 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 management 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 12 months ended December 31, 2007 and 2006, distributor and promotional allowances were a credit of $12,146, or 0.2% of gross sales and an expense of $704,815, or 6.1% of gross sales, respectively.

• Damages and Returns

In the 12 months ended December 31, 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 12 months ended December 31, 2007 and 2006, damages and returns charged against revenues were $421,925, or 6.0% of gross sales and $755,458, or 6.5% of gross sales, respectively.

The following is a summary of the damages and returns reserve for the fiscal years ended December 31:

	2007		2006
Beginning balance	$	389,128	$	42,910
Provision for damages and returns		421,925		755,458
Actual damages and returns during the period		790,535		409,240
Ending balance	$	20,518	$	389,128

Damages and returns in past years have typically been immaterial to our overall results. In 2006 the returns have increased primarily as a result of increased Ageless and ReVivex™ product returns. As the returns as a percent of gross sales has increased , the reserve has accordingly been increased at December 31, 2007, based upon historical run rates in order to properly match revenues and deductions.

• 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 12 months ended December 31, 2007 and 2006, cash discounts were $99,674 or 1.4% of gross sales and $120,784 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 12 months ended December 31, 2007 and 2006 slotting costs was a credit of $4,159, or 0.06% of gross sales and an expense of $198,590, or 1.7% of gross sales, 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, we evaluate the Company’s ending inventories for excess quantities and obsolescence. This evaluation includes analyses of forecast sales levels by product and historical demand. We write off inventories that are considered obsolete. Remaining inventory balances are adjusted to approximate the lower of the Company’s 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 we are at risk to the extent such amounts become uncollectible. Accounts receivable is stated net of applicable reserves for returns and allowances, promotional allowances and doubtful accounts. The Company 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.

Intangible Assets, Including Goodwill. The Company conducts periodic impairment reviews of intangible assets including goodwill. Such reviews require the Company to make estimates of future cash flows and fair values. These cash flow projections include significant assumptions about economic conditions, demand and pricing for the Company’s products, and costs. In addition, the determination of whether or not impairment exists requires the Company to make certain assumptions and estimates in determining fair value of the reporting unit. While significant judgment is required, the Company believes that the assumptions and estimates used in its impairment reviews are reasonable. However, should these assumptions change in the future, the fair value models could result in lower fair values for intangible assets and goodwill, which could materially affect the value of the Company’s intangible assets and goodwill and results of operations.

Impairment of Long-Lived Assets – In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “ Accounting for the Impairment orDisposal of Long-Lived Assets ,” the Company assesses the recoverability of its long-lived assets upon the occurrence of a triggering event by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment, if any, is measured based on fair value and is charged to operations in the period in which long-lived asset impairment is determined by management. If long-lived assets become impaired, the Company recognizes an impairment loss measured as the amount by which the carrying value of the assets exceeds the estimated fair value of the assets.

Impact of Contractual Obligations and Commercial Commitments

The following summarizes the Company’s contractual obligations at December 31, 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)	$	1,525,142	$	790,925	$	734,217	$	-0-	$	-0-
Health Holdings Loan (a)		2,156,275		-0-		331,740		1,824,535		-0-
Revolving Credit (a)		1,920,993		1,399,830		521,163		-0-		-0-
Redux Note (a)		250,000		250,000		-0-		-0-		-0-
Notes Payable to Professionals (a)		378,147		100,000		278,147		-0-		-0-
Notes Payable, Taxes (a)		9,449		1,811		5,036		2,602		-0-
Wald Holdings Note (a)		151,687		-0-		23,337		128,350		-0-
Stewart Loan Agreement (a)		224,158		-0-		34,486		189,672		-0-
Operating Leases		157,529		118,147		39,382		-0-		-0-
Unsecured Creditors		1,658,785		276,464		1,382,321		-0-		-0-
Total Contractual Cash Obligations	$	8,432,165	$	2,,937,177	$	3,349,829	$	2,145,159	$	-0-

(a)   Includes interest.

Impact of Inflation

From time to time, the Company experiences price increases from third-party manufacturers and these increases cannot always be passed on to the Company’s customers. While these price increases have not had a material impact on the Company’s historical operations or profitability in the past, they could affect sales in the future.

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, and was effective for The Company on the Effective Date.

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 did not have a material effect on the Company’s financial statements.

On July 13, 2006, FASB issued Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 also 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. The new FASB standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The adoption of this pronouncement did not have a material effect on the Company’s financial statements.  

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.. 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, and was effective for The Company on the Effective Date.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) replaces SFAS No. 141, “Business Combinations”, and is effective for the Company for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS 141(R) requires the new acquiring entity to recognize all assets acquired and liabilities assumed in the transactions, expense all direct transaction costs and account for the estimated fair value of contingent consideration.  This standard establishes an acquisition-date fair value for acquired assets and liabilities and fully discloses to investors the financial effect the acquisition will have.  This standard will not impact the Company’s present financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 requires all entities to report minority interests in subsidiaries as equity in the financial statements, and requires that transactions between entities and noncontrolling interests be treated as equity.  SFAS 160 is effective for the Company as of the beginning of fiscal year 2009.  The Company is evaluating the impact of this pronouncement on the Company’s financial position, results of operations and cash flows.

PART III

Item 11. Executive Compensation

Compensation Discussion and Analysis

The Compensation and Governance Committee, consisting of two members of the Board of Directors, administers the executive compensation program. The role of the Compensation Governance Committee is to oversee the Company’s compensation and benefit plans and policies, administer stock and option plans and review and approve annually all compensation decisions relating to the executive officers of the Company. In addition, the Compensation and Governance Committee oversees the corporate governance policies of the Board and the Company.

The compensation programs are designed to remunerate the Company’s executives and are intended to provide incentive to the senior executives and other employees to maximize stakeholder value, which in turn effects the overall compensation earned by the Company’s management. The Company has adopted compensation programs designed to achieve the following:

· Attract, motivate and retain superior talent;

· Encourage high performance and promote accountability

· Ensure that compensation is commensurate with the company’s annual performance

· Provide performance awards for the achievement of financial and operational targets and strategic objectives, essential to the Company’s long-term growth.

From the Petition Date until the Effective Date, the components of employee compensation have included base salaries only. There are currently no employment contracts in place. Additionally, since August 14, 2006, the Company has leased its personnel from One World Science. Under this employee leasing arrangement, the Company maintains control over the compensation decisions of the leased employees.

The Compensation and Governance Committee has not adopted any formal or informal policies or guidelines for compensation due to the constraints of operating under Chapter 11 of the Bankruptcy Code. The Company emerged from Bankruptcy proceedings on November 9, 2007. During 2008, the Compensation and Governance Committee hopes to evaluate the compensation plans for executive officers taking into account strategic goals and performance metrics. In addition the Compensation and Governance Committee will attempt to perform reviews of all Company compensation policies, including policies and strategy relating to executive compensation, as well as the appropriate mix of base salary, and incentive compensation. These efforts will be balanced with the need for the Company to channel its efforts into surviving as a going concern under the Plan.

Elements of Compensation

Executive compensation consists of the following elements:

Base Salary- Base salaries for the Company’s executives are generally established based on the scope of their responsibilities, level of experience and individual performance, taking into account both external competitiveness and internal equity considerations. The goal for the base salary component is to compensate employees at a level that approximates the median salaries of individuals in comparable positions at similarly situated companies. Base Salaries are reviewed by the Compensation Committee and may be adjusted from time to time at the Compensation and Governance Committee’s discretion.

Stock Options - In 1998, the Company adopted the 1998 Incentive Stock Option Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The purpose of the Incentive Plan is to enable the Company to attract, retain and motivate its employees by providing for performance-based benefits. At the 2000 annual stockholders’ meeting, the number of shares of the Company’s Common Stock that may be subject to awards granted under the Incentive Plan was increased to 850,000. At the 2001 annual stockholders’ meeting, the number was further increased to 2,000,000.

The Incentive Plan was administered by the Compensation Committee consisting of two members of the Board of Directors or administered by the full Board of Directors. The administrator had the power to construe and interpret the Incentive Plan and, subject to provisions of the Incentive Plan, to determine the persons to whom and the dates on which awards will be granted, the number of shares to be subject to each award, the times during the term of each award within which all or a portion of the award may be exercised, the exercise price, the type of consideration and other terms and conditions of the award. The exercise price of stock options under the Incentive Plan could not be less than the fair market value of the Common Stock subject to the option on the date of the option grant and in some cases could not be less that 110% of fair market value. The maximum term of the Incentive Plan was ten years, except that the Board could terminate the Incentive Plan earlier. The term of each individual award will depend upon the written agreement between the Company and the grantee setting forth the terms of the awards.

The Incentive Plan and the awards were cancelled when the Company’s Plan became effective. The Compensation and Governance Committee plans to adopt a new equity based award plan for employees in the future.

General Benefits - The Company’s executives are eligible to participate in all employee benefit plans, such as medical and dental. Prior to the Company’s filing for Chapter 11 Bankruptcy protection, the Company offered additional benefits to its executive officers such as life insurance and vehicle allowances.

401(k) Plan- The Company maintains a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of all employees who meet certain age and length of service requirements. The 401(k) Plan provides for Company matching contributions equal to 25% of each employee participant’s contribution not to exceed 6% of the employee participant’s compensation.

On September 1, 2006, management voluntary suspended the 401(k) Plan as the Company began leasing its personnel from One World Science and no longer had any direct employees.

2007 Executive Base Salary and Incentive Compensation Determinations

Richard Munro

Mr. Munro served as the Company’s Chief Executive Officer from August, 2006 until November 9, 2007. Mr. Munro had an annual base salary of $200,000. No additional incentive compensation was granted to Mr. Munro, except in his role as a member of the Special Committee of the Board of Directors (see above and below). Mr. Munro did not have an employment agreement with the Company.

Adam Michelin

Mr. Michelin began serving as the Company Chief Executive Office on November 14, 2007. Mr. Michelin has an annual base salary of $150,000. No additional incentive compensation has been granted to Mr. Michelin. Mr. Michelin does not have an employment contract with the Company.

Richard Robinette

Mr. Robinette began serving as the Company’s Chief Operating Officer on November 14, 2007. Mr. Robinette has an annual base salary of $150,000. No additional incentive compensation has been granted to Mr. Robinette. Mr. Robinette has does not have an employment contract with the Company.

Milos Sarcev

Mr. began serving as the Company’s Chief Science Officer on November 12, 2007. Mr. Sarcev has an annual base salary of $150,000. No additional incentive compensation has been granted to Mr. Sarcev. Mr. Sarcev has does not have an employment contract with the Company.

See “Security Ownership of Certain Beneficial Owners and Managementand Related Stockholder Matters” for additional information on the control person status of each of Messrs. Michelin, Robinette and Sarcev.

Dee Kelly

Dee Kelly served as the Company’s Chief Financial Officer from January 3, 2007 to April 15, 2007. Ms. Kelly was an independent contractor and was paid a fee of $4,000 per month. No additional incentive compensation was granted to Ms. Kelly. Ms. Kelly did not have an employment agreement with the Company.

2007 SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by the Company’s Chief Executive Officer, and three other most highly compensated executive officers for the year ended December 31, 2007.

Name and  Principal Position	Year		Salary $		Bonus $		Stock Awards $		Option Awards $ (6)		Non-Equity Incentive Plan Compensation $		Change in Pension Value and Nonqualified Deferred Compensation Earnings $		All Other Compensation $		Total $
Richard L. Munro, Chief Executive Officer (1)		2007	$	182,336	$	0	$	0	$	0	$	0	$	0	$	15,385	$	197,721
Adam Michelin , Chief Executive (2)		2007	$	23,077	$	0	$	0	$	0	$	0	$	0	$	0	$	23,077
Richard Robinette, Chief Operating Officer (3)		2007	$	19,320	$	0	$	0	$	0	$	0	$	0	$	0	$	19,320
Milos Sarcev, Chief Science Officer (4)		2007	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Dee S. Kelly, Former Chief Financial Officer (5)		2007	$	19,000	$	0	$	0	$	0	$	0	$	0	$	0	$	19,000

(1)	Mr. Munro resigned as Chief Executive Officer November 9, 2007.
(2)	Mr. Michelin became Chief Executive Officer on November 14, 2007.
(3)	Mr. Robinette became Chief Operating Officer on November 14, 2007.
(4)	Mr. Sarcev became Chief Science Officer on November 14, 2007.
(5)	Ms. Kelly served as Chief Financial Officer from January 3, 2007 to April 15, 2007.

2007 Grants of Plan-Based Awards

The Company made no grants of plan-based awards to any of the named executive officers during 2007.

Outstanding Equity Awards at December 31, 2007

The Company had no outstanding equity awards at December 31, 2007, other than the payment of three million shares of restricted stock to three directors for their services on a Special Committee.

Option Exercises and Stock Vested

None of the Company’s named executive officers or former executive officers exercised any stock options or similar awards during the fiscal year 2007. All formerly outstanding stock options to named executive officers or former executive officers expired upon termination of employment and all other option awards were cancelled on the Effective Date. In addition, the Company had no unvested stock awards outstanding to any named executive officers or former executive officers.

Pension Benefits

None of the Company’s named executive officers or former executive officers are covered by a pension plan or other similar benefit plan that provides for payments or other benefits.

Nonqualified Deferred Compensation

The Company does not have any non-qualified deferred compensation plans.

Potential Payments upon Termination or Change in Control

The Company currently has no employment agreements which would cause potential payments upon termination or change in control.

Compensation of Directors

On December 16, 2005 the Board approved a compensation plan for non-management directors whereby, all non-management directors, except Mr. Pocklington, received directors fees of a quarterly cash retainer of $3,125 plus an option to purchase Common Stock of the Company with the number of shares calculated by dividing $9,375 by the average of the closing price of the Company’s Common Stock for each of the last five trading days preceding the first Board meeting during the quarter. The exercise price of the option will be the average of the closing price of the Company’s Common Stock for each of the last five trading days preceding the first Board meeting during the quarter. Such options shall (i) have a seven year term and (ii) be immediately exercisable in whole or part. This plan was in effective until March 23, 2007. During 2007, t he option award was not granted and the Board will reconsider whether it will grant a catch up award when a new equity incentive plan is in place in the future.  

Effective March 23, 2007, each member of the Board of Directors receives $800 per calendar quarter for their service, except that Board members who receive cash compensation for their services as an officer of employee of Naturade or any of its affiliates are not paid. Also effective March 23, 2007, each member of the Audit Committee and the Compensation and Governance Committee receive $800 per calendar quarter for their service, except that the Chairman of each committee receives $1,200 and members who receive cash compensation for their services as an officer or employee of Naturade or any of its affiliates are not paid.

Director Compensation Table (1)

Director Name	Fees Earned or Paid in Cash		Stock Awards (2)		Option Awards		Total
Adam M. Michelin (3)	$	12,722		—		—	$	12,722
Stephen L. Scott (4)	$	4,178	$	20,000		—	$	24,178
Gary C. Cannon   (5)	$	11,051		—		—	$	11,051
Karen Muller (6)	$	10,775	$	20,000		—	$	30,775
Richard Munro (7)			$	20,000			$	20,000

(1) Director Compensation was paid in 2007 for services rendered from August 10, 2006 through September 30, 2007. No fees for the period September 30, 2007 to December 31, 2007 have yet been paid.

(2) On November 7, 2007, the Board made a special award of restricted stock to Messrs. Munro and Scott and Ms. Muller. A special committee of the Board of Directors was formed on August 15, 2007, consisting of Mr. Scott and former directors, Richard Munro and Karen Muller, who served as Chairman. This Committee evaluated the offers to purchase the Company and/or provide financing, so that the Company could emerge from bankruptcy. The Committee met nine times and presented its findings to the full Board on October 8, 2007. The Special Committee then disbanded . The Special Committee was not paid any cash compensation for its many meetings and extremely long hours which typically extended beyond normal business hours on a sustained basis. Instead, each member was awarded 1 million shares of restricted stock (or at their option, 1 million warrants exercisable at 2 cents) by the Board of Directors for their services. Each of the three Directors thereafter opted for restricted stock, which on the date of the award was trading at a market price of 2 cents.

(3) Mr. Michelin was paid for the period August 10, 2006 to March 23, 2007, on a prorated basis, at the old rate of $3,125 per calendar quarter. No options were granted (see above). He was also paid for the period from March 23, 2007 to September 30, 2007, on a prorated basis, at the rate of $800 per quarter for services as a director and as a member of both the Audit and Compensation and Governance Committees, he was paid for the period March 23, 2007 to September 30, 2007, on a prorated basis, at the rate of $1,600 per calendar quarter.

.

(4) Mr. Scott joined the Board and was named Chairman of the Audit Committee on March 23, 2007. Mr. Scott was paid for the period from March 23, 2007 to September 30, 2007, on a prorated basis, at the rate of $800 per calendar quarter for services as a director and as Chairman of the Audit Committee, he was paid for the period March 23, 2007 to September 30, 2007, on a prorated basis, at the rate of $1,200 per calendar quarter. See also the equity award in footnote (4) below.

(5)

Mr. Cannon was paid for the period August 10, 2006, to March 23, 2007, on a prorated basis, at the old rate of $3,125 per calendar quarter. No options were granted (see above). He was also paid for the period from March 23, 2007, to September 30, 2007, on a prorated basis, at the rate of $800 per calendar quarter for services as a director and as a member of Compensation and Governance Committee. He was paid for the period March 23, 2007, to September 30, 2007, on a prorated basis, at the rate of $800 per calendar quarter. Mr. Cannon serves as General Counsel for the Company and its controlling shareholder, Redux, pursuant to a retainer arrangement. For the period of August 10, 2006, to December 31, 2007, the retainer payments were $68,000. A significant portion of the retainer payment is allocated to the Company by Redux.

(6)

Ms. Muller served on the Board of Directors and as Chairman of the Compensation and Governance Committee from August 10, 2006 to April 12, 2007 and rejoined the Board on June 1, 2007. Ms. Muller was paid for the period August 10, 2006 to March 23, 2007, on a prorated basis, at the old rate of $3,125 per calendar quarter. No options were granted (see above). She was also paid for the periods from March 23, 2007 to April 10, 2007 and from June 1, 2007 to September 30, 2007, on a prorated basis, at the rate of $800 per calendar quarter for services as a director and as Chairman of the Compensation and Governance Committee, she was paid for the periods from March 23, 2007 to April 10, 2007 and from June 1, 2007 September 30, 2007, on a prorated basis, at the rate of $1,200 per calendar quarter. Ms. Muller voluntarily resigned her Board seat on January 18, 2008. See also the equity award in footnote (4) above.

(7) Mr. Munro served on the Board of Directors and as a member of the Audit Committee from August 10, 2006 to January, 2008, at which time he voluntarily resigned his position as a director of the Company. As a salaried employee, he was not eligible for regular director fees until his resignation as Chief Executive Officer of the Company on November 9, 2007. No fees for the period of November 9, 2007 to January 18, 2008 have yet been paid. See also the equity award in footnote (4) above.

Employment Contracts, Termination of Employment and Change-In-ControlArrangements

There are no employment contracts, and there are no terminations of employment and change-in-control arrangements.

Incentive Stock Option Plan

In 1998, the Company adopted the 1998 Incentive Stock Option Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The purpose of the Incentive Plan is to enable the Company to attract, retain and motivate its employees by providing for performance-based benefits. At the 2000 annual stockholders’ meeting, the number of shares of the Company’s Common Stock that may be subject to awards granted under the Incentive Plan was increased to 850,000. At the 2001 annual stockholders’ meeting, the number was further increased to 2,000,000. Immediately prior to the Effective Date, 81,000 options to purchase shares of the Company’s Common Stock were outstanding under the Incentive Plan, of which 49,000 options to purchase shares (subject to adjustment to prevent dilution) had vested, and 1,919,000 shares were available for future awards under the Incentive Plan.

The Incentive Plan was administered by a committee consisting of three members of the Board of Directors or administered by the full Board of Directors. The administrator had the power to construe and interpret the Incentive Plan and, subject to provisions of the Incentive Plan, to determine the persons to whom and the dates on which awards would be granted, the number of shares which would be subject to each award, the times during the term of each award within which all or a portion of the award could be exercised, the exercise price, the type of consideration and other terms and conditions of the award. The exercise price of stock options under the Incentive Plan could not be less than the fair market value of the Common Stock subject to the option on the date of the option grant and in some cases could not be less that 110% of fair market value. The maximum term of the Incentive Plan is ten years, except that the Board could terminate the Incentive Plan earlier. The term of each individual award depended upon the written agreement between the Company and the grantee setting forth the terms of the awards.

The Incentive Plan and the awards were cancelled on the Effective Date.

401(k) Plan

Prior to the Petition Date, the Company maintained a 401(k) profit sharing plan (“401(k) Plan”) for the benefit of all employees who meet certain age and length of service requirements. The 401(k) Plan provided for Company matching contributions equal to 25% of each employee participant’s contribution not to exceed 6% of the employee participant’s compensation.

On September 1, 2006, the Company voluntarily suspended the 401(k) Plan as the Company began leasing its personnel from One World Science and no longer had any direct employees.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation and Governance Committee was established on March 23, 2007. Given the cash constraints on the Company, which operated under Chapter 11 for most of 2007, the Committee left all salary arrangements for employees leased from One World Science in place. Other than the most basic medical and dental plan, the employees had no other benefits and were not granted any equity incentives approved by the Committee. No cash bonuses were paid and none of the salaries was above market. During 2008, the Compensation and Governance Committee will review all existing compensation arrangements at the Company and make any changes it deems appropriate.

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation and Governance Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included into Naturade’s Annual Report on Form 10-K for the year ended December 31, 2007.

THE COMPENSATION COMMITTEE

Gary Cannon, Chairman

Adam Michelin

Compensation and Governance Committee Interlocks and Insider Participation

Mr. Michelin is the Chief Executive Officer of the Company and Mr. Cannon is Secretary and serves as outside General Counsel to the Company pursuant to a retainer agreement with Redux. Mr. Michelin is one of the principal owners of Redux, the controlling shareholder of the Company. Under the NASD Rules for Bulletin Board Companies, where there is a majority controlling shareholder, the Compensation Committee need not consist of independent directors.

PART IV

Item 15.Exhibits and Financial Statements

(a) See the Index to Financial Statements on page F-1 for a list of financial statements filed as part of this report.

Financial statement schedules have been omitted because they either are not applicable or the required information is shown in the Company’s financial statements or the related notes thereto.

(b)   Exhibits: The following is a list of exhibits filed as a part of this report:

Exhibit Number	Document
3.1	Certificate of Incorporation of Naturade, Inc., together with amendments and Certificates of Designation relating thereto, incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 1997.
3.2	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on December 20, 2001, and incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.3	Certificate of Designation of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on December 20, 2001, and incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.4	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on December 28, 2001, and incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.5	Certificate of Elimination of Series A Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on January 3, 2002 incorporated by reference to Exhibit 3.5 to Form SB-2 (File No. 333-127397).
3.6	Certificate of Amendment of Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on May 15, 2003 incorporated by reference to Exhibit 3.6 to Form SB-2 (File No. 333-127397).
3.7	Certificate of Amendment of Certificate of Designation of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on May 15, 2003 incorporated by reference to Exhibit 3.7 to Form SB-2 (File No. 333-127397).
3.8	Certificate of Decrease of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005 incorporated by reference to Exhibit 3.8 to Form SB-2 (File No. 333-127397).
3.9	Certificate of Designation of Series C Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005, and incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
3.10	Certificate of Elimination of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005, and incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
3.11	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on November 26, 2007 and incorporated by reference to Exhibit 9.1.1 to the Company’s Current Report on Form 8-K filed on December 12, 2007.

3.12	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on February 20, 2008, and incorporated by reference to Exhibit 99.1 to the Company’s Current Report on From 8-K filed on March 13, 2008.
3.13	Amended and Restated Bylaws of Naturade, Inc., as amended December 7, 2001, incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K filed on January 3, 2002.

Exhibit Number	Document
4.1	Form of certificate of common stock, par value $0.0001 per share incorporated by reference to Exhibit 4.1 to Form SB-2 (File No. 333-127397).
10.1	Asset Purchase Agreement, dated November 2, 2004, between the Company and L.O.D.C. Group, LTD, incorporated by reference to Exhibit 10.54 to the Company’s Current Report on Form 8-K filed on November 9, 2004.
10.2	Asset Purchase Agreement, dated as of July 22, 2005, by and among Quincy Investments Corp., Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.3	Assignment and Assumption Agreement dated, as of July 22, 2005, by and among the Company, Quincy Investments Corp., Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.4	Asset Purchase Agreement, dated as of July 27, 2005, by and between Quincy Investments Corp. and The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.5	Assignment and Assumption Agreement, dated as of July 28, 2005, by and among the Company, Quincy Investments Corp. and The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.6	Promissory Note in the amount of $1,775, 687.46, dated August 3, 2005, by Quincy Investments Corp. and the Company payable to Symbiotics, Inc., incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.7	Promissory Note in the amount of $648,234.00, dated August 5, 2005, by Quincy Investments Corp. and the Company payable to The Ageless Foundation, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.8	Guaranty of Promissory Note, dated as of August 3, 2005, by Peter H. Pocklington for the benefit of each of Symco Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.9	Guaranty of Promissory Note, dated as of August 5, 2005, by Peter H. Pocklington for the benefit of The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.10	Trademark License Agreement, dated August 3, 2005, by and among the Company, Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.11	Independent Contractor Proprietary Information and Inventions Agreement dated August 5, 2005, by and between Naturade, Inc. and Naomi Balcombe, incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.12	Transition Agreement, entered into as of August 3, 2005, by and between Naturade, Inc., Symco, Inc. and Symbiotics, Inc. incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.13	Independent Contractor Proprietary Information and Inventions Agreement, dated August 3, 2005, by and between Naturade, Inc. and Douglas Wyatt incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 9, 2005,

10.14	Independent Contractor Proprietary Information and Inventions Agreement, dated August 3, 2005, by and between Naturade, Inc. and David Brown and Symbiotics, Inc. incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.15	Agreement, dated May 31, 2006, by and among Quincy Investments Corp., Naturade, Inc., Symbiotics, Inc. and Symco, Incorporated, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 31, 2006
10.16	Amended and Restated Promissory Note, dated May 31, 2006, by and among Quincy Investments Corp., Naturade, Inc., Symbiotics, Inc. and Symco, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 31, 2006

Exhibit Number	Document
10.17	Agreement dated August 10, 2006, by and among Redux Holdings, Inc. and Quincy Investments Corp., incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 10, 2006
10.18	Services Agreement between One World Science, Inc. , a wholly owned subsidiary of Redux Holdings, Inc. and the Company dated August 16, 2006, requiring One World Science, Inc. to provide services to the Company, including, but not limited to, Manufacturing and Packing Coordination Services; Warehouse, Inventory Management and Distribution Services; Advertising Services; Customer Support Services; Sales Services; and Management, Financial and Legal Services, incorporated by reference to Exhibit 10.74 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.19	Letter Agreement Dated November 16, 2006 between Laurus Master Fund, LLC and Redux Holdings, Inc. to waive Default and Fees owed by the Company and for Redux Holding, Inc to acquire all of Laurus Master Fund, LLC’s Company Common Stock and Warrants for shares of Redux Holdings, Inc. Common Stock, , incorporated by reference to Exhibit 10.75 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.20	Security Agreement between Laurus Master Fund, LTD. and Naturade, Inc. dated November 6, 2007, incorporated by reference to Exhibit 10.83 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.21	Secured Revolving Note Agreement dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc. incorporated by reference to Exhibit 10.84 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.22	Secured Term Note dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc., incorporated by reference to Exhibit 10.85 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.23	Grant of Security Interest in Patents and Trademarks by Naturade, Inc. to Laurus Master Fund, Inc. dated November 6, 2007, incorporated by reference to Exhibit 10.86 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.24	Lockbox Agreement by and between Naturade, Inc. and Laurus Master Fund, LTD. dated November 6, 2007, incorporated by reference to Exhibit 10.87 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.25	Global Settlement Agreement Dated February 14, 2007 between the Company, Redux Holdings, Inc., the Official Committee of Unsecured Creditors appointed in the Creditors Chapter 11 Case, Health Holdings & Botanicals, LLC and Doyle & Boissiere LLC settling claims of secured and unsecured creditors in the Company’s Chapter 11 Bankruptcy, incorporated by reference to Exhibit 10.78 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.26	Stipulation between Debtor and Window Rock Enterprises, Inc. Re Resolution of Objections to Confirmation of Debtors Fourth Amended Chapter 11 Plan of Reorganization and Order thereon Dated February 28, 2007 resolving all disputed claims between the Company and Window Rock Enterprises, Inc., incorporated by reference to Exhibit 10.79 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.27	Signature page for Stipulation of Debtor and Window Rock Enterprises set forth in Exhibit 10.80, incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.28	Assignment of Claim Agreement, Dated February 28, 2006 by Ageless Foundation, Inc. and Naomi Balcombe, to Redux Holdings, Inc., incorporated by reference to Exhibit 10.81 to the Company’s Annual Report on Form 10-K filed on April 17, 2007
10.29	Memorandum of Understanding signed by Naturade, Inc. and Redux Holdings, Inc. on March 19, 2008, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on March 20, 2008. Sublease between the Company and First American Default Management Solutions, LLC dated March 21, 2007.
**10.30	Sublease between the Company and First American Default Management Solutions, LLC dated March 21, 2007.

Exhibit Number	Document
14.1	Code of Financial Ethics incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003
14.2	Charter of Audit Committee adopted by the Company Board of Directors on March 23, 2007, incorporated by reference to Exhibit 14.2 to the Company’s Annual Report on Form 10-K filed on April 17, 2007.
14.3	Charter of Compensation and Governance Committee adopted by the Company Board of Directors on March 23, 2007, , incorporated by reference to Exhibit 14.3 to the Company’s Annual Report on Form 10-K filed on April 17, 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
**32.2	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**   Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NATURADE, INC.
Date: April 30, 2008	/s/ Adam M. Michelin
	Adam M. Michelin,
	Chief Executive Officer

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

Signature	Title	Date
/s/ Adam M. Michelin	Director ,Chief Executive Officer and Chairman of the Board	April 30, 2008
Adam Michelin	(Principal Executive Officer)
/s/ Adam M. Michelin	Chief Financial Officer	April 30, 2008
Adam Michelin	(Principal Accounting Officer)
/s/ Stephen L. Scott	Director	April 30, 2008
Stephen L. Scott	(Chairman of the Audit Committee)
/s/ Gary C. Cannon	Director and Secretary	April 30, 2008
Gary C. Cannon

63

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Naturade, Inc.

We have audited the accompanying balance sheet of Naturade, Inc. (the “Company”) as of December 31, 2007 and the related statements of operations, stockholders’ equity, and cash flows for the period from January 1, 2007 to November 8, 2007 (Predecessor Company) and the period from November 9, 2007 to December 31, 2007 (Successor Company). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As described in Note 1 to the accompanying financial statements, the Bankruptcy Court entered an order confirming the plan of reorganization, which became effective on November 9, 2007. Accordingly, the accompanying financial financial statements have been prepared in conformity with AICPA Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,” for the Successor Company as a new entity with assets, liabilities and capital structure having carrying values not comparable with prior periods, as described in Note 1.

In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and the results of its operations and its cash flows for the period from January 1, 2007 to November 8, 2007 (Predecessor Company) and the period from November 9, 2007 to December 31, 2007 (Successor Company), in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s recurring losses from operations, net working capital deficit and recent Chapter 11 bankruptcy filing raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/Haskell & White LLP

Irvine, California

April 15, 2008

F-1

EXHIBIT INDEX –

Exhibit Number	Document
3.1	Certificate of Incorporation of Naturade, Inc., together with amendments and Certificates of Designation relating thereto, incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 1997.
3.2	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on December 20, 2001, and incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.3	Certificate of Designation of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on December 20, 2001, and incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.4	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on December 28, 2001, and incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
3.5	Certificate of Elimination of Series A Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on January 3, 2002 incorporated by reference to Exhibit 3.5 to Form SB-2 (File No. 333-127397).
3.6	Certificate of Amendment of Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on May 15, 2003 incorporated by reference to Exhibit 3.6 to Form SB-2 (File No. 333-127397).
3.7	Certificate of Amendment of Certificate of Designation of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on May 15, 2003 incorporated by reference to Exhibit 3.7 to Form SB-2 (File No. 333-127397).
3.8	Certificate of Decrease of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005 incorporated by reference to Exhibit 3.8 to Form SB-2 (File No. 333-127397).
3.9	Certificate of Designation of Series C Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005, and incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
3.10	Certificate of Elimination of Series B Convertible Preferred Stock of Naturade, Inc., filed with the Delaware Secretary of State on July 28, 2005, and incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
3.11	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on November 26, 2007 and incorporated by reference to Exhibit 9.1.1 to the Company’s Current Report on Form 8-K filed on December 12, 2007.
3.12	Certificate of Amendment to Certificate of Incorporation of Naturade, Inc., filed with the Delaware Secretary of State on February 20, 2008, and incorporated by reference to Exhibit 99.1 to the Company’s Current Report on From 8-K filed on March 13, 2008.
3.13	Amended and Restated Bylaws of Naturade, Inc., as amended December 7, 2001, incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K filed on January 3, 2002.
4.1	Form of certificate of common stock, par value $0.0001 per share incorporated by reference to Exhibit 4.1 to Form SB-2 (File No. 333-127397).
10.1	Asset Purchase Agreement, dated November 2, 2004, between the Company and L.O.D.C. Group, LTD, incorporated by reference to Exhibit 10.54 to the Company’s Current Report on Form 8-K filed on November 9, 2004.
10.2	Asset Purchase Agreement, dated as of July 22, 2005, by and among Quincy Investments Corp., Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 28, 2005.

10.3 Assignment and Assumption Agreement dated, as of July 22, 2005, by and among the Company, Quincy Investments Corp., Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on July 28, 2005.

Exhibit Number	Document
10.4	Asset Purchase Agreement, dated as of July 27, 2005, by and between Quincy Investments Corp. and The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.5	Assignment and Assumption Agreement, dated as of July 28, 2005, by and among the Company, Quincy Investments Corp. and The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on July 28, 2005.
10.6	Promissory Note in the amount of $1,775, 687.46, dated August 3, 2005, by Quincy Investments Corp. and the Company payable to Symbiotics, Inc., incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.7	Promissory Note in the amount of $648,234.00, dated August 5, 2005, by Quincy Investments Corp. and the Company payable to The Ageless Foundation, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.8	Guaranty of Promissory Note, dated as of August 3, 2005, by Peter H. Pocklington for the benefit of each of Symco Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.9	Guaranty of Promissory Note, dated as of August 5, 2005, by Peter H. Pocklington for the benefit of The Ageless Foundation, Inc., incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.10	Trademark License Agreement, dated August 3, 2005, by and among the Company, Symco, Inc. and Symbiotics, Inc., incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.11	Independent Contractor Proprietary Information and Inventions Agreement, dated August 5, 2005, by and between Naturade, Inc. and Naomi Balcombe incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.12	Transition Agreement, entered into as of August 3, 2005, by and between Naturade, Inc., Symco, Inc. and Symbiotics, Inc. incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 9, 2005.
10.13	Independent Contractor Proprietary Information and Inventions Agreement, dated August 3, 2005, by and between Naturade, Inc. and Douglas Wyatt incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 9, 2005,
10.14	Independent Contractor Proprietary Information and Inventions Agreement, dated August 3, 2005, by and between Naturade, Inc. and David Brown and Symbiotics, Inc. incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on August 9, 2005,
10.15	Agreement, dated May 31, 2006, by and among Quincy Investments Corp., Naturade, Inc., Symbiotics, Inc. and Symco, Incorporated, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 31, 2006
10.16	Amended and Restated Promissory Note, dated May 31, 2006, by and among Quincy Investments Corp., Naturade, Inc., Symbiotics, Inc. and Symco, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 31, 2006
10.17	Agreement dated August 10, 2006, by and among Redux Holdings, Inc. and Quincy Investments Corp. incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 10, 2006
10.18	Services Agreement between One World Science, Inc. , a wholly owned subsidiary of Redux Holdings, Inc. and the Company dated August 16, 2006, requiring One World Science, Inc. to provide services to the Company, including, but not limited to, Manufacturing and Packing Coordination Services; Warehouse, Inventory Management and Distribution Services; Advertising Services; Customer Support Services; Sales Services; and Management, Financial and Legal Services, incorporated by reference to Exhibit 10.74 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.

Exhibit Number	Document
10.19	Letter Agreement Dated November 16, 2006 between Laurus Master Fund, LLC and Redux Holdings, Inc. to waive Default and Fees owed by the Company and for Redux Holding, Inc to acquire all of Laurus Master Fund, LLC’s Company Common Stock and Warrants for shares of Redux Holdings, Inc. Common Stock, incorporated by reference to Exhibit 10.75 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
10.20	Security Agreement between Laurus Master Fund, LTD. and Naturade, Inc. dated November 6, 2007, incorporated by reference to Exhibit 10.83 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007.
10.21	Secured Revolving Note Agreement dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc. incorporated by reference to Exhibit 10.84 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.22	Secured Term Note dated November 6, 2007 by and between Laurus Master Fund, LTD. and Naturade, Inc., incorporated by reference to Exhibit 10.85 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.23	Grant of Security Interest in Patents and Trademarks by Naturade, Inc. to Laurus Master Fund, Inc. dated November 6, 2007, incorporated by reference to Exhibit 10.86 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.24	Lockbox Agreement by and between Naturade, Inc. and Laurus Master Fund, LTD. dated November 6, 2007, incorporated by reference to Exhibit 10.87 to the Company’s Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2007
10.25	Global Settlement Agreement Dated February 14, 2007 between the Company, Redux Holdings, Inc., the Official Committee of Unsecured Creditors appointed in the Creditors Chapter 11 Case, Health Holdings & Botanicals, LLC and Doyle & Boissiere LLC settling claims of secured and unsecured creditors in the Company’s Chapter 11 Bankruptcy, incorporated by reference to Exhibit 10.78 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
10.26	Stipulation between Debtor and Window Rock Enterprises, Inc. Re Resolution of Objections to Confirmation of Debtors Fourth Amended Chapter 11 Plan of Reorganization and Order thereon Dated February 28, 2007 resolving all disputed claims between the Company and Window Rock Enterprises, Inc. , incorporated by reference to Exhibit 10.79 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
10.27	Signature page for Stipulation of Debtor and Window Rock Enterprises set forth in Exhibit 10.26,incorporated by reference to Exhibit 10.74 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
10.28	Assignment of Claim Agreement, Dated February 28, 2006 by Ageless Foundation, Inc. and Naomi Balcombe, to Redux Holdings, Inc.incorporated by reference to Exhibit 10.81 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
10.29	Memorandum of Understanding signed by Naturade, Inc. and Redux Holdings, Inc. on March 19, 2008, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on March 20, 2008.
**10.30	Sublease between the Company and First American Default Management Solutions, LLC dated March 21, 2007.
14.1	Code of Financial Ethics incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003

Exhibit Number	Document
14.2	Charter of Audit Committee adopted by the Company Board of Directors on March 23, 2007, Incorporated by reference to Exhibit 14.2 to the Company’s Annual Report on Form 10-K filed on April 11, 2008..
14.3	Charter of Compensation and Governance Committee adopted by the Company Board of Directors on March 23, 2007,incorporated by reference to Exhibit 14.3 to the Company’s Annual Report on Form 10-K filed on April 11, 2008.
**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
**32.2	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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*   Management contracts or compensatory plan or arrangement.

**  Filed herewith.