**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





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





**For
      the quarterly period ended March 31, 2007**





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





**For
      the transition period from ____________to __________**  ****





**Commission
      File Number: 33-7106-A**


________________





**NATURADE,
      INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **23-2442709**(State
                or other jurisdiction of
            
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)**601
                Valencia Avenue, Suite 100, Brea, CA**
            
            **92823**(Address
                of principal executive offices)
            
            (Zip
                Code)





Registrant’s
      telephone number, including area code: **(714)
      573-4800**





________________





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 oNo 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 Exchange Act. (Check
      one):




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





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





As
      of May
      15, 2007 43,332,733 shares of the registrant’s Common Stock were issued and
      outstanding.













FORM
      10-Q





**QUARTERLY
      REPORT**


**Quarter
      Ended March 31, 2007**





**TABLE
      OF CONTENTS**




**PAGE**PART I. FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsCondensed
                Balance Sheets as of March 31, 2007 and December 31, 2006
            3Condensed
                Statements of Operations for the three months ended March 31, 2007
                and
                March 31, 2006
            4Condensed
                Statements of Cash Flows for the three months ended March 31, 2007
                and
                March 31, 2006
            5Notes
                to Condensed Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            20Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            37Item
                4.
            Controls
                and Procedures
            37PART II. OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            38Item
                1A.
            Risk
                Factors
            38Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            38Item
                3.
            Defaults
                Upon Senior Securities
            39Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            39Item
                5.
            Other
                Information
            39Item
                6.
            Exhibits
            39SIGNATURES







2


**Part
      I. Financial Information**







**NATURADE,
      INC.**


**Debtor
      in Possession**


**Condensed
      Balance Sheets**


**As
      of March 31, 2007 (Unaudited) and December 31, 2006**




ASSETSMarch
                31, 2007
            
            December
                31, 2006(Unaudited)Current
                assets:Cash
                and cash equivalents
            
            $
            27,592
            
            $
            80,713Accounts
                receivable, net
            
            
            489,920
            
            
            838,381Inventories,
                net
            
            
            252,644
            
            
            258,981Prepaid
                expenses and other current assets
            
            
            135,725
            
            
            56,101Total
                current assets
            
            
            905,881
            
            
            1,234,176Property
                and equipment, net
            
            
            46,836
            
            
            51,547Customer
                lists, trademarks and formulations, net
            
            
            337,277
            
            
            419,266Deferred
                financing fees, net
            
            
            628,934
            
            
            1,239,900Other
                assets
            
            
            13,382
            
            
            3,664Total
                assets
            
            $
            1,932,309
            
            $
            2,948,553LIABILITIES,
                REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
                DEFICITLiabilities
                not subject to compromise:Current
                liabilities:Accounts
                payable
            
            $
            1,518,392
            
            $
            777,307Accrued
                liabilities
            
            
            756,576
            
            
            499,428Revolving
                credit line
            
            
            966,868
            
            
            1,276,570Current
                portion of long-term debt
            
            
            454,550
            
            
            409,095Total
                current liabilities
            
            
            3,696,386
            
            
            2,962,400Long-term
                debt, less current maturities
            
            
            1,970,450
            
            
            2,015,905Total
                liabilities not subject to compromise
            
            
            5,666,836
            
            
            4,978,305Liabilities
                subject to compromise (Note 2)
            
            
            6,746,112
            
            
            9,344,422Total
                Liabilities
            
            
            12,412,947
            
            
            14,322,727COMMITMENTS
                AND CONTINGENCIESREDEEMABLE
                CONVERTIBLE PREFERRED STOCKRedeemable
                convertible preferred stock, Series C including accumulated
                preferredstock
                dividends of $4,600,000 at March 31, 2007 and $3,910,000 at December
                31,
                2006;par
                value $0.0001 per share: authorized 50,000,000 shares; issued and
                outstanding,21,000,000
                shares at March 31, 2007 and December 31, 2006 ($21,000,000
                redemptionvalue).
            
            
            6,280,000
            
            
            5,590,000STOCKHOLDERS'
                DEFICIT:Common
                stock, par value $0.0001 per share; authorized,
                100,000,000shares;
                issued and outstanding, 43,332,733 at March 31, 2007 andDecember
                31, 2006.
            
            
            4,334
            
            
            4,334Non-Voting
                Common stock, par value $0.0001 per share; authorized,2,000,000
                shares; issued and outstanding, 117,284 shares at March 31, 2007
                andDecember
                31, 2006.
            
            
            12
            
            
            12Additional
                paid-in capital
            
            
            22,990,945
            
            
            22,990,945Accumulated
                deficit
            
            
            (39,755,928
            )
            
            (39,959,465
            )Total
                stockholders' deficit
            
            
            (16,760,638
            )
            
            (16,964,174
            )Total
                liabilities, redeemable convertible preferred stock and stockholders'
                deficit
            
            $
            1,932,309
            
            $
            2,948,553





See
      accompanying notes to condensed financial statements.




3





**NATURADE,
                INC.****(DEBTOR-IN-POSSESSION)****Condensed
                Statements of Operations for the Three Months****Ended
                March 31, 2007 and March
                31,2006(unaudited)**




Three
                Months
            
            Three
                MonthsEnded
            
            EndedMarch
                31, 2007
            
            March
                31, 2006(Unaudited)
            
            (Unaudited)Net
                sales
            
            $
            1,397,890
            
            $
            3,795,512Cost
                of sales
            
            
            897,575
            
            
            1,926,035Gross
                profit
            
            
            500,315
            
            
            1,869,477Costs
                and expenses:Selling,
                general and administrative expenses
            
            
            1,414,403
            
            
            2,055,496Depreciation
            
            
            4,711
            
            
            27,111Amortization
            
            
            81,989
            
            
            233,333Total
                operating costs and expenses
            
            
            1,501,103
            
            
            2,315,941Operating
                loss
            
            
            (1,000,788
            )
            
            (446,464
            )Other
                income(expense):Other
                expense
            
            
            1,455
            
            
            1,132Reorganization
                income
            
            
            2,172,645
            
            
            -Interest
                expense
            
            
            (64,664
            )
            
            (201,652
            )Amortization
                of deferred financing fees
            
            
            (214,896
            )
            
            (653,188
            )Total
                other income (expense)
            
            
            1,894,540
            
            
            853,708Income
                (loss) before provision for income taxes
            
            
            893,752
            
            
            (1,300,172
            )Provision
                for income taxes
            
            
            -
            
            
            800Net
                income (loss)
            
            $
            893,752
            
            
            (1,300,972
            )Less:Deemed
                Dividend-Series C
            
            $
            (690,000
            )
            $
            (690,000
            )Net
                Income (Loss) Attributable to Common Shareholders
            
            $
            203,752
            
            $
            (1,990,972
            )Earnings
                (loss) per share- basic
            
            $
            0.00
            
            $
            (0.05
            )Earnings
                (loss) per share-diluted
            
            $
            0.00
            
            $
            (0.05
            )Weighted
                Average Number of Shares used in Computation ofEarnings
                ( loss) per share- basic
            
            
            43,332,733
            
            
            40,883,673Earnings
                ( loss) per share -diluted
            
            
            51,816,253
            
            
            40,883,673




See
      accompanying notes to condensed financial statements





4


**Naturade,
      Inc.**


**(DEBTOR-IN-POSSESSION)**


**Condensed
                Statements of Cash Flows for the Three
                Months****Ended
                March 31, 2007 and March 31, 2006
                (unaudited)**




Three
                months
            
            Three
                monthsEnded
            
            EndedMarch
                31, 2007
            
            March
                31, 2006(Unaudited)
            
            (Unaudited)Cash
                flows from operating activities:Net
                Income ( loss)
            
            $
            893,752
            
            $
            (1,300,972
            )Adjustments
                to reconcile  net income ( loss )tonet cash used in operating activities:Depreciation
                and amortization
            
            
            86,700
            
            
            260,444Amortization
                of loan discounts and deferred financing fees
            
            
            331,759
            
            
            653,188Issuance
                of common stock for consulting
            
            
            -
            
            
            73,077Stock
                Based Compensation
            
            
            -
            
            
            33,879Write-off
                of deferred financing fee
            
            
            279,207
            
            
            -Extinquishment
                of Symco note
            
            
            (1,414,972
            )
            
            -Provision
                for write-down of Balcombe and Ageless notes
            
            
            (998,234
            )
            
            -Write-off
                of accrued interest on Balcombe and Ageless notes
            
            
            (131,447
            )
            
            -Changes
                in operating assets and liabilities:Accounts receivable
            
            
            348,461
            
            
            (401,448
            )Inventories
            
            
            6,337
            
            
            (6,041
            )Prepaid expenses and other current assets
            
            
            (79,624
            )
            
            (191,889
            )Other assets
            
            
            (9,718
            )
            
            (582
            )Accounts payable and accrued liabilities
            
            
            944,576
            
            
            740,530Net
                cash provided by (used in) operating activities
            
            
            256,797
            
            
            (139,814
            )Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            -
            
            
            (6,640
            )Acquisitions
            
            
            -
            
            
            (71,463
            )Net
                cash used in investing activities
            
            
            -
            
            
            (78,103
            )Cash
                flows from financing activities:Repayments under the revolving credit line
            
            
            (1,478,707
            )
            
            (583,585
            )Payments of long-term debt
            
            
            -
            
            
            (10,501
            )Deferred financing fees
            
            
            -
            
            
            (22,750
            )Proceeds from term loan
            
            
            -
            
            
            740,909Proceeds from revolving credit line
            
            
            1,168,789
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            (309,918
            )
            
            124,073Net
                decrease in cash and cash equivalents
            
            
            (53,121
            )
            
            (93,844
            )Cash
                and cash equivalents, beginning of period
            
            
            80,713
            
            
            95,398Cash
                and cash equivalents, end of period
            
            $
            27,592
            
            $
            1,554**Supplemental
                Disclosures of Cash Flow Information****Cash
                paid during the period for:**Interest
            
            $
            64,664
            
            $
            55,347Income
                taxes
            
            $
            -
            
            $
            800**Non-cash
                financing transactions:**Deemed
                dividend-Series C
            
            $
            690,000
            
            $
            690,000




See
      accompanying notes to condensed financial statements.


5


**NATURADE,
      INC.**


(DEBTOR-IN-POSSESSION)


**Notes
      to Condensed Financial Statements**


**(Unaudited)**








1.
            *Basis
                of Presentation and Going Concern —*The accompanying unaudited condensed financial statements have been
                prepared in accordance with accounting principles generally accepted
                in
                the United States of America("GAAP") for interim financial information
                and
                with the instructions to Form 10-Q and Article 10 of Regulation S-X.
                Accordingly, they do not include all of the information and footnotes
                required by accounting principles generally accepted in the United
                States
                for complete financial statements. The preparation of financial statements
                in conformity with accounting principles generally accepted in the
                United
                States requires management to make estimates and assumptions that
                affect
                the amounts reported in the financial statements and accompanying
                notes.
                Actual results could differ from those
                estimates.





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





**Chapter
      11 Bankruptcy Proceedings**





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





The
      accompanying condensed financial statements have been prepared in accordance
      with GAAP applicable to a going concern, which assume that assets will be
      realized and liabilities are discharged in the normal course of business.
      As a result of the Chapter 11 Bankruptcy such realization of assets and
      liquidation of liabilities is subject to uncertainty. A substantial portion
      of
      the Company's liabilities as of the Petition Date are subject to compromise
      or
      other treatment in the Chapter 11 Bankruptcy. For financial reporting purposes,
      those unsecured liabilities and obligations whose disposition is dependent
      on
      the outcome of the Chapter 11 Bankruptcy have been segregated and classified
      as
      liabilities subject to compromise in the March 31, 2007 balance sheet.
      Generally, actions to enforce or otherwise effect repayment of all pre-Chapter
      11 liabilities and pending litigation against the Company are stayed while
      the
      Company continues as a debtor-in-possession during bankruptcy proceedings.
      Schedules have been filed by the Company with the Bankruptcy Court setting
      forth
      the assets and liabilities of the Company as of the Petition Date as reflected
      in the Company's accounting records. Differences between amounts reflected
      in
      such schedules and claims filed by creditors will be investigated and either
      amicably resolved or adjudicated by the Bankruptcy Court. The ultimate amount
      of
      and settlement terms for such liabilities are not presently
      determinable.





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





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





6


Since
      September 2006, the Company has sought consensual agreement with its secured
      lender, other secured parties and the committee of unsecured creditors. The
      parties reached consensual agreement on the Company’s Fifth Amended Plan of
      Reorganization (the “Plan”) which was heard in Bankruptcy Court on February 28,
      2007 and approved by the United States Bankruptcy Court, Central District
      of California, Santa Ana Division (Case No. SA 06-11493 RK). The Plan received
      virtually unanimous support from the Company’s creditors and shareholders, as
      well as strong support from the Company’s lenders and the Company’s Unsecured
      Creditors Committee. The Company expects its Plan to become effective and to
      emerge from Chapter 11 in May 2007 (the “Effective Date”), based upon
      representations the Company has received from Redux Holdings Inc. (“Redux”), the
      Company’s controlling shareholder, who has agreed to provide the funding
      required under its Plan. A copy of the Company’s Plan of Reorganization may be
      accessed at www.winthropcouchot.com/client_files.php under
      client documents - Naturade.





The
      Company expects to remain a fully reporting publicly traded company. At that
      time, the Company may qualify for fresh start reporting under SOP
      90-7.





The
      Company’s Plan provides for a recapitalization of the Company with the
      Company’s controlling shareholder, Redux Holdings, Inc. providing substantial
      cash infusion to meet the Company’s future working capital needs. In addition to
      a comprehensive debt restructuring, the Plan features an equity allocation
      and
      the plan allows for the retention of an equity interest by existing shareholders
      in the Company.





When
      the
      Plan becomes effective, all Company Series C Preferred shares, along with their
      voting and control rights, all options, all warrants, and all registration
      rights, will be cancelled as required under the Plan. The Company, as required
      by the Plan, will issue to Redux enough shares of restricted common stock to
      give Redux 95% equity and voting interest in the Company. All remaining
      shareholders will have a total of 5% equity interest in the
      Company.





**Going
      Concern**




The
      Company is currently operating under Chapter 11 of the U.S. Bankruptcy Code
      and
      continuation as a going concern is contingent upon, among other things, the
      Company’s ability to (i) get the plan effective(ii) return to profitability;
      (iii) generate sufficient cash flows from operations; and (v) obtain financing
      sources to meet the Company’s future obligations. These matters create
      substantial doubt about the Company’s ability to continue as a going concern.
      The financial statements do not reflect any adjustments relating to the
      recoverability and classification of recorded asset amounts or the amounts
      and
      classifications of liabilities that might result from the outcome of these
      uncertainties. Additionally, a plan of reorganization could materially change
      amounts reported in the financial statements, which do no give effect to all
      adjustments of the carrying value of assets and liabilities that are necessary
      as a consequence of reorganization under Chapter 11 bankruptcy. The Company’s
      continuation as a going concern will depend on refinancing from Redux pursuant
      to the approved Plan of Reorganization, continuing tight management of cash
      and
      profitable operations and continuing to obtain favorable credit terms from
      vendors. Management expects that vendors will begin to extend further credit
      after the Company emerges from bankruptcy with refinancing, and that the company
      will return to normal levels of customer order fill rates in the second quarter
      2007 and be profitable with a lower overhead structure. Additionally, Company
      management has taken cost containment measures to reduce operating costs
      including reduction of monthly facility lease expense from approximately
      $540,000 per year to approximately $120,000 per year, and reduction in staffing
      resulting in an annual cost reduction of more than $1,000,000. The Company’s
      court approved the Plan, which is expected to become effective in May 2007,
      provides for a recapitalization of the Company with the Company’s controlling
      shareholder, Redux Holdings, Inc. providing substantial cash infusion to meet
      the Company’s future working capital needs and allow the Company’s continuation
      as a going concern.




In
        July
        2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
        Income Taxes - An Interpretation of of
        FASB
        Statement No. 109 (“ FIN 48”). FIN 48 clarifies the accounting for uncertainty
        in income taxes recognized in financial statements in
        accordance with Statement of Financial Accounting Standards No. 109, Accounting
        for Income Taxes (“FAS 109”). The interpretation
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of
        a tax
        position taken or expected to be taken in a tax return. FIN 48 also provides
        guidance on dercognition of tax benefits, classification
        on the balance sheet, interest and penalties, accounting in interim periods,
        disclosure and transition. The company adopted
        FIN 48 effective January 1, 2007. As a result of the adoption, the Company
        determined that no cumlative effect adjustment was
        necessary to the opening balance of retained earnings as of January 1, 2007.
        The
        Company’s unrecognized tax benefits as of January
        1, 2007 were immaterial, and recognition of such tax benefits is not expected
        to
        have a material impact on the Company’s income
        tax provision in future periods. Changes in the Company’s unrecognized tax
        benefits during the three months ended March
        31,
        2007 were immaterial.




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


Note
        2
        Earnings (Loss) Per Share
 
 The
        following table provides details of the calculation of basic and diluted
        earnings (loss) per common
        share
 
 March
                  31
              
              March
                  312007
              
              2006(Unaudited)
              
              (Unaudited)Earnings
                      (loss) per share–basic net income loss attributable to
                      common  shareholders
              
              $
              203,752
              
              $
              (1,990,972
              )Weighted
                    average shares outstanding for basic earnings (loss) per share
                    computation
              
              
              43,332,733
              
              
              40,883,673Earnings
                  (loss) per share–basic
              
              $
              0.00
              
              $
              (0.05
              )Earnings
                    (loss) per share diluted–net income (loss) attributable to
                    common shareholders
              
              $
              203,752
              
              $
              (1,990,972
              )Weighted
                    average shares outstanding for diluted EPS computation
              
              
              51,816,253
              
              
              40,883,673Earnings
                  (loss) per share–diluted
              
              $
              0.00
              
              $
              (0.05
              )


7




3.
                  *Liabilities
                      Subject To Compromise and Reorganization Items —*Under Chapter 11 of the U.S. Bankruptcy Code, certain claims
                      against the
                      Company in existence prior to the filing of the petition for
                      relief under
                      the federal bankruptcy laws are stayed while the Company continues
                      business operations as a debtor-in-possession. These estimated
                      claims are
                      reflected in the March 31, 2007 and December 31, 2006 Balance
                      Sheets as
                      Liabilities Subject to Compromise and are summarized in the
                      table below.
                      Such claims remain subject to future adjustments. Adjustments
                      may result
                      from actions of the bankruptcy court, negotiations, rejection
                      or
                      acceptance of executory contracts, determination of value of
                      any
                      collateral securing claims, proofs of claim or other
                      events.




The
      liabilities subject to compromise consisted of the following items:




March
                31, 2007
              (Unaudited)
            
            December
                31, 2006Accounts
                payable
            
            $
            5,125,453
            
            $
            5,155,049Notes
                payable for acquisitions
            
            
            -
            
            
            2,663,206Accrued
                Interest
            
            
            539,834
            
            
            695,343Notes
                payable to related parties
            
            
            908,381
            
            
            658,381Accrued
                commissions
            
            
            172,443
            
            
            172,443Total
                liabilities subject to compromise
            
            $
            6,746,112
            
            $
            9,344,422





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





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




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





If
      the
      Bankruptcy Court enters an order denying confirmation of the Plan, or as of
      June
      1, 2007 there is no Order, then the deposit shall be returned to Redux by the
      Escrow Agent and the Note and the Agreement will be null and void and the claim
      shall be transferred back to Balcombe and Ageless and Redux shall forfeit any
      and all rights in the Claim and any other rights set forth in the
      Agreement .





Management
      has reviewed the Agreement with Ageless referenced above and the potential
      effect of the contingency, and has concluded that probability of its Plan not
      being confirmed is remote. In fact, the Bankruptcy Court did enter a
      confirmation order for the Company’s Plan on or around March 13 2007. The only
      remaining condition to its Plan becoming fully effective is the cash infusion
      from Redux of $2,000,000. Redux Holdings has experienced some difficulties
      in
      fulfilling its full obligation in the original timeframe contemplated in the
      Plan. The Company, as Debtor, has recently reached a consensual agreement among
      the Creditor’s Committee, its lender Laurus, and Health Holdings, to amend the
      plan to allow the Plan to go effective with an initial $1,500,000 cash infusion
      and the balance of $500,000 within 90 days. This motion will be heard by the
      Court on May 16 and is expected to be entered by the Court with the support
      of
      all parties, hence we believe that the probability of the bankruptcy Court
      entering an order denying confirmation of the Plan, or as of June 1, 2007 there
      is no Order, is remote at March 31, 2007. As such, a provision of $998,234
      to
      write-down the carrying value of the note from $1,248,234 to $250,000 (which
      represents the consideration paid by Redux and reimbursable by the Company)
      was
      recorded as of March 31, 2007, which is classified as reorganization income
      in
      the accompanying statement of operations for the quarter ended March 31, 2007.
      The related accrued interest of $131,447 at August 31, 2006 was also written
      off
      on March 31, 2007.




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




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





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


·
              The
                  claim was shown on the Schedules filed with the Court at $0.00
                  value for
                  notice purposes only; and
 ·
              The
                  court properly noticed Doug Wyatt & Symco of the Company’s bankruptcy;
                  and
 ·
              Doug
                  Wyatt was a member of the Creditors Committee and therefore was
                  properly
                  noticed and informed of the process and need to file a proof of
                  claim to
                  protect a creditor claim; and
 ·
              Neither
                  Doug Wyatt nor Symco filed any proof of claim by the bar date of
                  approx
                  December 12, 2006.
  Therefore,
        based on the above and advice received, the note has been extinguished in
        bankruptcy and the management believes that the Company has no further liability
        on the note and as such, at March 31, 2007 the Company has written off to
        reorganization income the outstanding balance on the note of $1,414,972,
        the
        related deferred financing fees of $279,207 and has reversed the deferred
        interest expense of $116,864 that was recognized during the quarter ended
        March
        31, 2007.
  8
 **Reorganization
        Items**
 
 Reorganization
        items are presented separately in the Condensed Statement of Operations and
        represent items of expense that are realized or incurred by the Company because
        it is in reorganization under Chapter 11 of the U.S. Bankruptcy
        Code.
 
 *4.*
              *Impairment*-
 
 On
        March
        31, 2007, based upon the Company's assessment and in accordance with SFAS
        No.
        144, *Accounting
        for the Impairment or Disposal of Long-Lived Assets* ,
        the
        Company concluded that the carrying value of the intangible customer lists
        associated with the Ageless and Symco acquisitions (see Note 7), did not
        exceed
        the fair market values as determined by the Company’s assessment of the
        estimated future discounted cash flows. Consequently, no impairment charge
        was
        recognized during the three months ended March 31, 2007.
 
 *5.*
              *Inventories
                  —*Inventories are stated at the lower of weighted average cost or
                  market.
                  Weighted average cost is determined on a first-in, first-out basis.
                  Inventories at March 31, 2007 and December 31, 2006 consisted of
                  the
                  following:
 
 **March
                  31, 2007**
                **(Unaudited)**
              
              **December
                  31, 2006**Raw
                  Materials
              
              $
              49,879
              
              $
              49,879Finished
                  Goods
              
              
              281,946
              
              
              290,748Subtotal
              
              
              331,825
              
              
              340,627Less:
                  Reserve for Excess and Obsolete Inventories
              
              
              (79,181
              )
              
              (81,646
              )$
              252,644
              
              $
              258,981
 
 6.
              *Financing
                  —*In
                  July 2005, the Company obtained a $4,000,000 convertible financing
                  facility from Laurus, consisting of a $3,000,000 revolving credit
                  facility
                  and a $1,000,000 term loan. In consideration of such financing
                  facility,
                  The Company issued to Laurus an option to purchase up to 8,721,375
                  shares
                  of the Company’s common stock at $0.0001 per share and a warrant to
                  purchase up to 1,500,000 shares of the Company’s common stock at $0.80 per
                  share. The financing facility was amended on January 11, 2006,
                  by among
                  other things, increasing the term loan to $1,650,000 and eliminated
                  the
                  conversion features on the facility. The Company issued Laurus
                  1,050,000
                  shares of the Company’s common stock in consideration for this
                  amendment.
 
 Indebtedness
        under the revolving facility is based upon 35% of eligible inventory and
        90% of
        eligible accounts receivable. The financing facility has a term of three
        years
        ending on July 26, 2008. As part of the Chapter 11 restructuring, Laurus
        has
        agreed to extend the period for the repayment for the Term Loan to be
        repaid in equal monthly installments beginning the first day of the first
        full
        month following the Effective Date of the Plan through and including
        January 2010. The financing facility carries an interest rate of
        prime plus 2% per annum (10.25% at March 31, 2007), subject to certain
        reductions based upon growth of the Company’s stock price.
 
 The
        Company is subject to certain reporting covenants (such as the timely filing
        of
        financial reports with the Securities and Exchange Commission, monthly financial
        reporting deadlines and collateral reporting), is required to obtain Laurus’
approval of certain actions (such as incurring additional indebtedness, making
        any distribution on or repurchasing any common stock or merging with or
        purchasing any assets of stock of any person) and has granted Laurus a right
        of
        first refusal with respect to certain future financings. The Company is in
        compliance with all covenants at March 31, 2007.
 
 The
        loans
        are secured by all of the assets of the Company. The term loan is guaranteed
        by
        Peter H. Pocklington, a principal of Quincy, and a former director of the
        Company.
 
 In
        consideration for entering into this financing agreement (“Financing
        Agreement”), the Company issued to Laurus, the Laurus Option and the Laurus
        Warrant to purchase shares of the Company’s common stock. The Laurus Option
        entitles the holder to purchase up to 8,721,375 shares of common stock, subject
        to certain limitations on the amount of common stock held by Laurus, at a
        purchase price of $0.001 per share at any time on or after July 26, 2005.
        The
        Laurus Warrant entitles the holder to purchase up to 1,500,000 shares of
        common
        stock at a purchase price of $0.80 per share at any time on or after July
        26,
        2005 through July 26, 2010. The number of shares of common stock issuable
        upon
        exercise of the Laurus Option and the Laurus Warrant is subject to adjustment
        to
        prevent dilution upon stock splits, stock dividends, and other events. The
        exercise price of the Laurus Option and the Laurus Warrant may be paid, at
        the
        option of Laurus, by the cancellation of indebtedness under the financing
        facility.
 
 The
        Company paid to Laurus in cash a total of $193,500 in fees and expenses,
        existing of a “closing payment” of $156,000 and reimbursement of $37,500 of
        Laurus legal fees. Also in connection with the Laurus financing, the Company
        issued a warrant to Liberty for introducing the Company to Laurus (the “Liberty
        Warrant”). The Liberty Warrant entitles the holder to purchase up to 3,647,743
        shares of common stock at a purchase price of $0.08 at any time on or after
        July
        26, 2006 through July 26, 2011.
 
 9
 The
        value
        of the warrants and options issued to Laurus, using Black Scholes, equaling
        $786,036 and composed of the value of the Laurus Option $694,106 and the
        Laurus
        Warrant $91,930 was classified as a discount and is amortized as interest
        expense over 36 months using the interest method. Based on assessment of
        the
        terms of this exchange the Company determined that there is no beneficial
        conversion feature of this exchange.
 The
        value
        of the warrant issue to Liberty of $223,555 using the Black Scholes valuation
        model was capitalized as deferred finance fee and is amortized over 36 months
        using the interest method.
 
 On
        January 11, 2006 the Company and Laurus amended the Financing Agreement,
        pursuant to which the parties:
 
 ·
              Increased
                  the term loan from $1,000,000, of which $909,000 was outstanding
                  at
                  January 11, 2006, to $1,650,000. Over advances totaling $650,000
                  were
                  transferred from the Revolving Note to the Term Note with the remaining
                  $91,000 utilized as a reduction of the amount outstanding under
                  the
                  Revolving Note.
 
 ·
              Modified
                  the payments on the Term Note from $30,000 per month beginning
                  November 1,
                  2005 payable in shares of the Company’s common stock or $30,900 per month
                  if paid in cash, to $50,000 per month in cash beginning April 1,
                  2006.
 
 ·
              Eliminated
                  the First Minimum Borrowing Note outstanding of
                  $500,000.
 
 ·
              Eliminated
                  the ability of Laurus to convert the Term Note, the Revolving Note,
                  and
                  the Minimum Borrowing Notes into shares of the Company’s common
                  stock.
 
 ·
              Extended
                  the term of the Financing Agreement from three years ending on
                  July 26,
                  2008 to three years ending January 6,
                  2009.
 
 ·
              Modified
                  the prepayment provisions of the Revolving Note and the Term Note
                  from an
                  early payment fee of 35% of the loan amounts if paid prior to the
                  termination date, to 5% if retired before January 6, 2007, 4% if
                  retired
                  prior to January 6, 2008 and 3% if retired prior to January 6,
                  2009.
 
 ·
              In
                  consideration for entering into the amendment, the Company issued
                  to
                  Laurus 1,050,000 shares of common
                  stock.
 
 The
        value
        of the shares issued to Laurus in consideration for the debt modification
        plus
        the remaining unamortized deferred financing fees are being amortized over
        the
        renewed term of the Financing Agreement.
 
 On
        August
        31, 2006, pursuant to the Company’s filing under Chapter 11 of the US Bankruptcy
        Code, Laurus and Redux agreed to cause the Company to do the
        following:
 
 ·
              Laurus’
                  claim in the amount of $2,900,000 will be treated as fully secured
                  and the
                  liens granted Laurus pursuant to the Security and Purchase Agreement
                  dated
                  July 26, 2005 between Laurus and the Company (the “Financing Agreement”)
                  will remain without modification.
 
 ·
              Laurus
                  will provide debtor in possession financing (“DIP”) pursuant to the terms
                  and conditions of the financing
                  agreement.
 
 ·
              Interest
                  will continue to accrue on the Term Loan pursuant the terms of
                  the
                  Financing Agreement however, payments will be suspended until the
                  first
                  day of the first full month after the Effective Date of the Chapter
                  11
                  filing.
 
 ·
              The
                  maturity date of the Term loan will be extended to January 6, 2010
                  and
                  principal payments will commence on the first day of the first
                  full month
                  after the Effective Date of the Chapter 11 filing and be payable
                  in equal
                  monthly installments until the maturity date
                  .
 
 ·
              To
                  the extent that the Laurus DIP financing and/or Naturade’s use of Laurus
                  cash collateral is insufficient, Redux shall be responsible for
                  funding
                  all payments needed to confirm the plan and for working capital
                  of
                  Naturade before and after
                  confirmation.
 
 ·
              Laurus
                  will support the treatment of Laurus’ claims pursuant to Naturade’s Plan,
                  and will cast a vote in favor of the confirmation of such Plan,
                  provided
                  that the treatment of Laurus’ claims pursuant to the Plan is materially
                  the same as that set forth herein.
  10
  At
        March
        31, 2007, $553,909 was outstanding under the revolving facility as pre-petition
        debt, $412,959 was outstanding under the revolving facility as post petition
        debt, and $1,350,000 was outstanding under the term loan as pre-petition
        debt.
        These loans are fully secured and the pre-petition amounts are not included
        in
        the liabilities subject to compromise.
 
 ***Loan
        Agreements with Shareholder and Other Investors -*** On
        April
        14, 2003, the Company entered into a Loan Agreement (the “2003 Loan Agreement”)
        with Health Holdings and certain other lenders (the “2003 Lender Group”),
        pursuant to which the 2003 Lender Group agreed to lend the Company $450,000
        and,
        subject to the discretion of the 2003 Lender Group, up to an additional
        $300,000. All advances under the 2003 Loan Agreement bear interest at the
        rate
        of 15% per annum, are secured by substantially all of the assets of the Company,
        and are subordinated to the Company’s indebtedness to Laurus. In consideration
        of the extension of credit under the 2003 Loan Agreement, Wells Fargo waived
        all
        defaults of the Company as of December 31, 2003 under the Credit
        Agreement.
 
 On
        April
        14, 2004, the terms of the 2003 Loan Agreement were modified by the Joinder
        of
        Bill D. Stewart, the then Chief Executive Officer of the Company, as a member
        of
        the 2003 Lender Group, subject to all of the terms and conditions of the
        2003
        Loan Agreement, and the 2003 Lender Group advanced an additional $200,000,
        of
        which Bill D. Stewart advanced $100,000. Further, on May 3, 2004, the 2003
        Lender Group advanced the Company an additional $100,000. On August 16, 2004,
        advances allowed under the 2003 Loan Agreement were increased to a total
        of
        $950,000 and the 2003 Lender Group advanced an additional $200,000 to the
        Company. In July 2005, advances allowed under the 2003 Loan Agreement were
        increased to a total of $1,250,000 and the 2003 Lender Group advanced an
        additional $300,000 to the Company. There are no additional amounts available
        to
        advance under the 2003 Loan Agreement. Proceeds of the advances have been
        used
        for working capital. On January 26, 2005, the terms of the 2003 Loan Agreement
        were modified to extend the due date to December 31, 2005. On July 22, 2005,
        pursuant to the acquisitions of Ageless and Symco, the terms of the 2003
        Loan
        Agreement were again modified to extend the due date to December 31, 2006.
        On
        August 31, 2006 these loans became claims pursuant to the Company’s filing under
        Chapter 11 of the U.S. Bankruptcy Code. As of March 31, 2007, there is
        $1,250,000 outstanding under the 2003 Loan Agreement of which $1,075,000
        will be
        treated as fully secured and is included in Long Term Debt. Interest on the
        $1,075,000 of 10%  will
        accrue beginning the Effective Date of the Company’s Chapter 11 filing, to be
        paid monthly with monthly principal payments to begin two years from the
        Effective Date. The remaining $175,000 is included in Liabilities Subject
        to
        Compromise.
 
 In
        April
        2006, The Company’s then principal shareholder, Quincy, loaned the Company
        $350,000. This loan is payable on demand and does not carry a stated interest
        charge. At March 31, 2007, $350,000 was outstanding on this unsecured loan
        and
        is accordingly included in Liabilities Subject to Compromise. There is no
        written agreement for this loan between Quincy and the Company.
 
 *7.*
              *Stock-Based
                  Compensation —*Effective January 1, 2006, the Company began recording compensation
                  expense associated with stock options for employees in accordance
                  with
                  SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”) Prior to January 1,
                  2006, the Company accounted for stock-based compensation related
                  to stock
                  options using the intrinsic value method of accounting for stock-based
                  awards granted to employees and directors in accordance with the
                  Accounting Principals Board (“APB”) Opinion No. 25, “Accounting for Stock
                  Issued to Employees,” and related interpretations in accounting for its
                  stock option plan. The Company has adopted the modified prospective
                  transition method provided under SFAS 123R, and as a result, has
                  not
                  retroactively adjusted results from prior periods. Under this transition
                  method, compensation expense associated with stock options recognized
                  in
                  the three month periods ended March 31, 2006, includes expense
                  related to
                  the remaining unvested portion of all stock option awards granted
                  prior to
                  January 1, 2006, based on the grant date fair value
 
 ***Employee
        Stock Option Plan*** In
        February 1998, the Company adopted an Incentive Stock Option Plan (the “Plan”)
        to enable participating employees to acquire shares of the Company’s common
        stock. The Plan provided for the granting of incentive stock options up to
        an
        aggregate of 850,000 shares, as amended. In October 2001, the Company amended
        the Plan by increasing to 2,000,000 the number of shares of the Company’s common
        stock that may be subject to awards granted pursuant to the Plan. The actual
        number of incentive stock options that may be granted to employees is determined
        by the Compensation Committee based on the parameters set forth in the Plan.
        Under the terms of the Plan, incentive stock options may be granted at not
        less
        than 100% of the fair market value at the date of the grant (110% in the
        case of
        10% shareholders). Incentive options granted under the Plan vest over a
        four-year period from the date of grant. As of March 31, 2007, 81,000 incentive
        stock options under the Plan were outstanding at the weighted average exercise
        price per share of $0.11.
 
 ***Director
        Stock Options -*** In
        October 1999, options to purchase 87,500 shares of common stock were granted
        to
        each of two then new board members at an exercise price of $1.03. These options
        expired on October 14, 2006.
 
 ***Senior
        Management Options*** **-** On
        December 16, 2005, the Board of Directors (the “Board”) awarded Bill D. Stewart,
        the then Chief Executive Officer of the Company, an option to purchase 1,620,000
        shares of common stock and Stephen M. Kasprisin, the then Chief Operating/Chief
        Financial Officer of the Company, an option to purchase 1,616,500 shares
        of
        common stock. The options have a seven year term, vest in equal quarterly
        increments over two years and were granted at an exercise price equal to
        the
        closing price of the Company’s common stock on December 16, 2005. The options
        were granted pursuant to the 1998 Incentive Stock Option Plan of the Company.
        Mr. Stewart and Mr. Kasprisin terminated their employment with the Company
        on
        August 30, 2006 pursuant with the change in control by Redux. All unexercised
        options under these senior management option grants expired upon their
        termination of employment.
  11
 The
        computation of the expected term is based on a weighted average calculation
        of
        the estimated average life of unexercised options. The expected volatility
        is
        based on the historical volatility of the S&P small capital 600 fund for the
        12 months prior to the end of the quarter options were granted. The Company
        elected to use this index as a result of the relative small number of shares
        held by non-affiliate shareholders (2,586,102) as compared to total outstanding
        shares (43,332,733). The Company believes this index is a more accurate
        indicator of the volatility of similar companies of similar size versus the
        movement of the Company’s stock with limited trading volume. The risk free
        interest is based upon the implied yield on U.S. Treasury constant maturities
        with a remaining term equal to the expected term of the option. The dividend
        yield rate is projected to be zero. The estimated forfeiture rate on stock
        options was zero and was based upon past history of the Company.
 
 A
        summary
        of the Company’s outstanding stock options is as follows:
 
 **Number
                  of**
                **Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**
              
              **Number**
                **Exercisable**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**Outstanding
                  at December 31, 2006
              
              
              8,802,375
              
              $
              0.002
              
              
              8,770,375
              
              $
              0.002GrantedExercisedExpiredOutstanding
                  at March 31, 2007
              
              
              8,802,375
              
              $
              0.002
              
              
              8,779,500
              
              $
              0.002
 ____________
 **Includes
        8,721,375 fully vested options issued to Laurus.
 
 The
        following table summarizes information about stock options outstanding at
        March
        31, 2007:
 
 **Range
                  of Exercise Prices**
              
              **Options**
                **Outstanding**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contract
                  Life**
                **In
                  Years**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Options**
                **Exercisable**
              
              **Weighted**
                **Average**
                **Exercise
                  Price**
                **for
                  Exercisable**
                **Options**$0.001
                  - $0.01
              
              
              8,721,375
              
              
              Indefinite
              
              $
              0.001
              
              
              8,721,375
              
              $
              0.001$0.10
                  - $0.25
              
              
              81,000
              
              
              5
              
              $
              0.110
              
              
              58,125
              
              $
              0.0908,802,375
              
              
              
              
              $
              0.002
              
              
              8,779,500
              
              $
              0.002
 
 
 At
        March
        31, 2007, there was no unamortized compensation costs related to non-vested
        stock options which is expected to be recognized in the future.
 
 The
        aggregate intrinsic value of options outstanding and exercisable at March
        31,
        2007 was $165,700.
 
 The
        following table summarizes non-vested options at March 31, 2007:
 
 **Number
                  of**
              
              **Grant
                  Date****Shares**
              
              **Fair
                  Value***Non-vested
                  at December 31, 2006
              
              
              32,000GrantedVested
              
              
              (9,125
              )ExercisedExpiredNon-vested
                  at March 31, 2007
              
              
              22,875
 *
        There
        were no options granted during the period.
 
 ***Warrants
        -*** In 1999,
        the Company granted warrants t purchase 600,000 shares of common stock at
        $1.00
        per share in conjunction with certain financing agreements. These warrants
        expire ten years from the date of grant.
 
 The
        Laurus Option entitles the holder to purchase up to 8,721,375 shares of common
        stock, subject to certain limitations on the amount of common stock held
        by
        Laurus, at a purchase price of $0.001 per share at any time on or after July
        26,
        2005. The Laurus Warrant entitles the holder to purchase up to 1,500,000
        shares
        of common stock at a purchase price of $0.80 per share at any time on or
        after
        July 26, 2005 through July 26, 2010.
 
 In
        consideration for entering into the Master Investment Agreement described
        in
        Note 5, the Company issued to Quincy, warrants to purchase shares of common
        stock. The warrants entitle the holder to purchase up to 7,000,000 shares
        of
        common stock at a purchase price of $0.80 per share at any time on or after
        July
        22, 2006 until July 22, 2015 and to purchase up to 7,000,000 shares of common
        stock at a purchase price of $1.02 per share at any time on or after July
        22,
        2006 until July 22, 2015. In addition, the Company issued to Health Holdings,
        warrants to purchase shares of the Company’s common stock. The warrants entitle
        the holder to purchase up to 10,000,000 shares of common stock at a purchase
        price of $1.00 per share during the period from July 22, 2006 until July
        22,
        2015.
 
 12
 On
        July
        26, 2005, the Company issued to Liberty a warrant to purchase up to 3,647,743
        shares of the Company’s common stock at a purchase price of $0.08 per share for
        introducing the Company to Laurus. Redux acquired Liberty’s warrant and all
        rights thereto on November 16, 2006.
 
 A
        summary
        of the Company’s outstanding warrants is as follows:
 
 **Number
                  of**
                **Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**
              
              **Number**
                **Exercisable**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**December
                  31, 2006
              
              
              28,247,743
              
              $
              0.83
              
              
              28,247,743
              
              $
              0.83GrantedExercisedExpiredOutstanding
                  at March 31, 2007
              
              
              28,247,743
              
              $
              0.83
              
              
              28,247,743
              
              $
              0.83
 
 The
        following table summarizes information about warrants outstanding at March
        31,
        2007:
 
 **Range
                  of Exercise Prices**
              
              **Warrants**
                **Outstanding**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contract
                  Life**
                **In
                  Years**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Warrants**
                **Exercisable**
              
              **Weighted**
                **Average**
                **Exercise
                  Price**
                **for
                  Exercisable**
                **Warrants**$0.01-$0.10
              
              
              3,647,743
              
              
              4
              
              $
              0.08
              
              
              3,647,743
              
              $
              0.08$0.80-$1.10
              
              
              24,600,000
              
              
              4
              
              $
              0.94
              
              
              24,600,000
              
              $
              0.9428,247,743
              
              
              
              
              $
              0.83
              
              
              28,247,743
              
              $
              0.83
 
 
 *8.*
              *Segment
                  Reporting —*Operating segments are defined as components of an enterprise about
                  which
                  separate financial information is available that is evaluated regularly
                  by
                  the Company’s chief decision-maker, or decision-making group, in deciding
                  how to allocate resources and in assessing performance. The Company’s
                  chief decision maker is the Chief Executive
                  Officer.
 
 The
        Company has two reportable operating segments: health food specialty stores
        and
        mass market stores. The Company does not allocate operating expenses to these
        segments, nor does it allocate specific assets to these segments. Therefore,
        segment information reported includes only sales, cost of sales and gross
        profit.
 
 Operating
        segment data for the three month periods ended March 31, 2007 and 2006 was
        as
        follows:
  **Distribution
                  Channels****Health
                  Food**
              
              **Mass
                  Market**
              
              **Total**Three
                  months ended March 31, 2007Sales
              
              $
              886,344
              
              
              511,546
              
              
              1,397,890Cost
                  of sales
              
              
              569,115
              
              
              328,460
              
              
              897,575Gross
                  profit
              
              $
              317,229
              
              
              183,086
              
              
              500,315Three
                  months ended March 31, 2006Sales
              
              $
              2,354,350
              
              
              1,441,162
              
              
              3,795,512Cost
                  of sales
              
              
              1,108,482
              
              
              817,553
              
              
              1,926,035Gross
                  profit
              
              $
              1,245,868
              
              
              623,609
              
              
              1,869,477
  13
 Sales
        are
        attributed to geographic areas based on the location of the entity to which
        the
        products were sold. Geographic segment data for the three month periods ended
        March 31, 2007 and 2006 was as follows:
 **United
                    States**
                
                **International**
                
                **Total**Three
                    months ended March 31, 2007Sales
                
                $
                1,243,493
                
                
                154,397
                
                
                1,397,890Cost
                    of sales
                
                
                798,438
                
                
                99,137
                
                
                897,575Gross
                    profit
                
                $
                445,055
                
                
                55,260
                
                
                500,315Three
                    months ended March 31, 2006Sales
                
                $
                3,724,901
                
                
                70,611
                
                
                3,795,512Cost
                    of sales
                
                
                1,887,199
                
                
                38,836
                
                
                1,926,035Gross
                    profit
                
                $
                1,837,702
                
                
                31,775
                
                
                1,869,477
 During
        the three months ended March 31, 2007 and 2006, the Company had sales to
        three
        customers whose purchases exceed 10% of the Company’s total net sales as shown
        in the table below.
  **Major
                  Customer Table****Customer
                  One**
              
              **Customer
                  Two**
              
              **Customer
                  Three****Sales**
              
              **Accounts**
                **Receivable**
                **Balance**
                **Quarter-end**
              
              **Sales**
              
              **Accounts**
                **Receivable**
                **Balance**
                **Quarter-end**
              
              **Sales**
              
              **Accounts**
                **Receivable**
                **Balance**
                **Quarter-end**Three
                  Months ended March 31, 2007
              
              $
              248,972
              
              
              145,787
              
              
              217,754
              
              
              150,2300
              
              
              90,250
              
              
              36,200Three
                  Months ended March 31, 2006
              
              $
              718,567
              
              
              494,359
              
              
              468,521
              
              
              213424,
              
              
              509,699
              
              
              405,712
  
 9.
              *Guarantees
                  —*In
                  November 2002, the Financial Accounting Standards Board (“FASB”) issued
                  FASB Interpretation Number (“FIN”) 45, “Guarantor’s Accounting and
                  Disclosure Requirements for Guarantees, including Indirect Guarantees
                  of
                  Indebtedness of Others-an interpretation of FASB Statements No.
                  5, 57 and
                  107 and rescission of FIN 34.” The following is a summary of the Company’s
                  agreements that the Company has determined are within the scope
                  of FIN
                  45.
 
 Pursuant
        to its bylaws, the Company has agreed to indemnify the current officers and
        directors of the Company for certain events or occurrences arising as a
        result of an officer’s or director’s serving in such capacity. The term of the
        indemnification period is the officer’s or director’s lifetime. The maximum
        potential amount of future payments the Company could make under these
        indemnification agreements is unlimited. However, the Company has a directors’
and officers’ liability insurance policy that limits its exposure and enables it
        to recover a portion of any future amounts paid. As a result of its insurance
        policy coverage, the Company believes the estimated fair value of these
        indemnification agreements is minimal and has no liability recorded for these
        agreements as of December 31, 2006 and March 31, 2007.
 
 The
        Company enters into indemnification provisions under (i) its agreements with
        other companies in its ordinary course of business, typically business partners,
        contractors, customers and landlords and (ii) its agreements with investors.
        Under these provisions the Company generally agrees to indemnify and hold
        harmless the indemnified party for losses suffered or incurred by the
        indemnified party as a result of the Company’s activities or, in some cases, as
        a result of the indemnified party’s activities under the agreement. These
        indemnification provisions often include indemnifications relating to
        representations made by the Company with regard to intellectual property
        rights.
        These indemnification provisions generally survive the termination of the
        underlying agreement. In addition, in some cases, the Company has agreed
        to
        reimburse employees for certain expenses and to provide salary continuation
        during short-term disability. The maximum potential amount of future payments
        the Company could be required to make under these indemnification provisions
        is
        unlimited. The Company has not incurred material costs to defend lawsuits
        or
        settle claims related to these indemnification provisions. As a result, the
        Company believes the estimated fair value of these provisions is minimal.
        Accordingly, the Company has no liabilities recorded for these agreements
        as of
        December 31, 2006 and March 31, 2007.
 
 *10.*
              *Litigation
                  —*From time to time, the Company is party to various other claims
                  and
                  litigation that arise in the normal course of business. While any
                  litigation contains an element of uncertainty, management believes
                  that
                  the ultimate outcome of these claims and litigation will not have
                  a
                  material adverse effect on the Company’s results of operations or
                  financial condition. Prior to August 31, 2006, the Bankruptcy filing
                  date,
                  The Company was involved in the following
                  litigation:
 
 14
 **Ageless
        Foundation, Inc. v. Quincy Investment Corp., Naturade, Inc. and
        Peter**  **H.
        Pocklington** **(Case No. 05-25540 Circuit Court of the 11th Judicial District
        in**  **and
        for Miami-Dade County, Florida).** On
        December 30, 2005, Ageless filed a complaint in Circuit Court of the 11th
        Judicial District in and for Miami-Dade County, Florida against Quincy, the
        Company and Peter H. Pocklington, the former Chairman of the Board of the
        Company, for the alleged failure to pay certain consideration for the purchase
        of corporate assets sold by Ageless to Quincy, which obligation allegedly
        was
        guaranteed by the Company and Peter H. Pocklington. Ageless is seeking damages
        in the amount of $648,234. This case was settled through the Chapter 11
        Bankruptcy proceedings and the Company is no longer a party to this litigation.
 
 On
        September 30, 2006, a judgment in the amount of $271,000 was entered against
        the
        Company related to a vendor. Such amount has been accrued as of March 31,
        2007
        and is included in Liabilities Subject to Compromise.
 
 The
        claims against Naturade were settled in the BK. Neither Redux nor any other
        of
        its Affiliates, except Naturade, were a party to
 the
        Ageless litigation. Redux did not make the contracts allegedly breached,
        was not
        involved with Naturade at the time the Ageless
 acquisition
        happened, and is only a shareholder of Naturade.
 
 The
        Company is the subject of various litigation matters, including an eviction
        matter with the Irvine Company related to the Company’s office facilities lease.
        The lease was set to expire in 2013; however, the Company vacated the premises
        in August 2006. The Company discontinued the accrual for the remaining rent
        as
        of August 31, 2006 as the lease was rejected by order of the bankruptcy on
        August 31, 2006. Accrued rents remaining unpaid as of August 31, 2006 are
        included in Liabilities Subject to Compromise as of March 31, 2007.
 
 The
        Company has fully accrued the amounts claimed in these suits as of March
        31,
        2007 and has included such amounts in Liabilities Subject to Compromise.
        In
        addition, the Company has received a stay as to each of these lawsuits under
        its
        Chapter 11 Bankruptcy proceeding. As of this filing no plaintiff or other
        party
        has made a motion for or been granted a Relief from Stay.
 
 The
        following litigation matters are currently pending:
 
 a) **** **Fortress
        Systems, LLC dba FSI Nutrition v. Naturade, Inc.** **(Case No. ADV**  **.06-08004
        U.S. Bankruptcy Court, District of Nebraska).** On
        January 11, 2006, Fortress Systems, LLC (dba FSI Nutrition) filed a claim
        against the Company in U.S. Bankruptcy Court, District of Nevada alleging
        failure to pay for a special order product. The plaintiff is seeking $47,255
        in
        damages. This claim was filed in the Company’s Chapter 11 bankruptcy case and is
        now treated as an unsecured creditor claim under the Plan.
  b) **Naturade, Inc. v. Doyle & Boissiere, LLC; Health Holdings and Botanicals,
        LLC; Quincy Investments Corp.: Peter H. Pocklington: William B. Doyle, Jr.;
        Lionel P. Boissiere; and Does 1-70 (** **Orange
        County Superior Court, State of California, Case No.:
        07CC02752)** .
        Filed
        on February 9, 2007. This lawsuit was initiated by the Company to seek
        compensation and damages relating to Breach of Fiduciary Duty, Breach of
        Contract, Fraud, Conversion, Breach of the Implied Covenant, Negligence,
        Accounting, and Declaratory Relief from several former directors and entities
        with which the Company had contractual relationships. The Company seeks
        compensatory and punitive damages against each defendant. A trial for this
        matter has not yet been set. Related to this litigation, on December 8, 2006,
        Quincy Investments, Inc. filed a proof of claim against the Company’s bankruptcy
        estate alleging a general unsecured claim in the approximate amount of
        $350,000.00 (“Quincy Claim”). The Company disputes the Quincy Claim, and has
        filed a formal objection to the Quincy Claim. This matter is pending in
        Bankruptcy Court.
  c) **Naturade,
        Inc. v. NBTY, Inc. d/b/a Omni-Pak Industries**  **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1057RK)** Filed on
        February 15, 2007. On December 11, 2006, NBTY, Inc. (“NBTY”) filed proof of
        claim against the Company’s bankruptcy estate alleging a general unsecured claim
        in the amount of $660,774.10 (“NBTY Claim”). The Company disputes the NBTY
        Claim, but has yet to file a formal objection to the NBTY Claim. On February
        15,
        2007, the Company filed a complaint against NBTY d/b/a/ Omni-Pak Industries
        to
        avoid and recover approximately $191,480.81 of preferential transfers of
        property under Bankruptcy Code Sections 547 and 550. A trial for this matter
        has
        not yet been set.
 
 15
 d) **Naturade,
        Inc. v. Yellow Transportation** **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1055RK).** Filed
        on
        February 14, 2007. On November 6, 2006, Yellow Transportation (“YT”) filed proof
        of claim against the Company’s bankruptcy estate alleging a general unsecured
        claim in the amount of $60,336.88 (“YT Claim”). The Company disputes the YT
        Claim, but has yet to file a formal objection to the YT Claim. On February
        14,
        2007, The Company filed a complaint against YT seeking to avoid and recover
        approximately $191,761.02 of preferential transfers of property under Bankruptcy
        Code Sections 547 and 550. A trial for this matter has not yet been set.
 
 e) **Naturade,
        Inc. v. United Parcel Service, Inc.**  **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1056RK)** Filed on
        February 14, 2007. On November 6, 2006, UPS filed a proof of claim asserting
        an
        unsecured claim in the amount of $11,997.96 (“UPS Claim”). On February 14, 2007,
        the Company filed a complaint against UPS to avoid and recover approximately
        $22,784.68 of preferential transfers of property under Bankruptcy Code Sections
        547 and 550 (“UPS Complaint”). On April 9, 2007, the Company filed and served a
        motion seeking court approval of a settlement agreement with UPS that provides
        for UPS to pay the Company $3,500.00 and waive any and all other claims against
        the Company as consideration for the Company’s dismissal of the UPS Complaint
        with prejudice. This motion was approved by the Court and the Company received
        settlement of $3,500 from UPS in May 2007 bringing finality to this
        matter.
 
 f) **** **Claims
        and Other Bankruptcy Related Litigation:** The
        Company anticipates that objections to numerous claims filed against the
        Company’s bankruptcy estate will be prepared and prosecuted by the Company in or
        about April 2007 based on several factual and legal grounds, which should
        result
        in the reduction or elimination of certain claims filed in the bankruptcy
        case. **** In
        addition thereto, the Company may commence additional adversary actions,
        including actions for avoidance and recovery of preferential transfers against
        certain of the Company’s pre-petition date creditors.
 
 g) **Invensys
        Systems, Inc. v. Pinnacle Marketing Concepts, Inc., et al (Orange County
        Superior Court, Case No. 07CC00470):**
 On
        or
        about March 23, 2007, Invensys Systems, Inc., a sublandlord, in the chain
        of
        possession of the premises located at 601 Valencia Avenue, Brea, California
        92823, serviced a three day notice to pay rent or quite. . The Company’s
        bankruptcy attorney promptly sent a response that a bankruptcy stay was in
        place
        and the sublandlord was prevented as a matter of law with proceeding to evict
        the Company. Subsequently, the sublandlord filed an Unlawful Detainer against
        a
        number of subtenants, including the Company. The Company has not been served
        with the Complaint and therefore dose not have to file an Answer. The Company
        has signed a lease for new premises and believes it will be out of the Valencia
        location before the end of May. Further, the Company’s sublease agreement is
        with One World Science Inc. and not with the Plaintiff and there is no privity
        of contract. The Company is in good standing with its sublandlord, One World
        Science Inc.
 
 The
        Company has fully accrued the amounts claimed in these suits (except for
        the
        Invensys suit) as of March 31, 2007. In addition, the Company has received
        a
        stay as to each of these lawsuits under its Chapter 11 Bankruptcy proceeding.
        As
        of this filing no plaintiff or other party has made a motion for or been
        granted
        a Relief from Stay. ****
 
 *11.*
              *Subsequent
                  Events*-
                  On May 2, 2007, the Company entered into a Sublease with First
                  American
                  Default Management Solutions LLC for new office space located at
                  2099 S.
                  State College Boulevard, Suite 210, Anaheim, California 92806.
                  The lease
                  expires on April 30, 2009. The monthly rent is $9,637 and the Company
                  pays
                  $104 per month for use of the furniture systems that were in place
                  at time
                  it executed Sublease. Starwood O.C. Portfolio VII, L.L.C. (Newport
                  Federal) is the Master Lessor and First American Default Solutions
                  LLC is
                  the Sub Lessor by virtue of a Master Lease. The Sub Lease has been
                  executed by the Sub Lessor and the Company expects it to be approved
                  by
                  the Master Lessor, and to take possession of the premises prior
                  to June 1
                  2007.
 
 On
        April
        13, 2007, Redux issued Laurus a cashless warrant to purchase up to 700,000
        shares of Redux common stock, in consideration of Laurus waving all default
        interest of the Company’s accrued default interest and fees.
 
 **ITEM
        2. Management’s Discussion and Analysis of Financial Condition and
        Results****of
        Operations**
 
 *This
        discussion contains “forward-looking statements.” Although the
        Company*  *believes
        that the expectations reflected in such forward-looking statements
        are*  *reasonable,
        such statements are inherently subject to risk and the Company
        can*  *give
        no assurances that such expectations will prove to be correct.
        Such*  *forward-looking
        statements involve risks and uncertainties, and actual results*  *could
        differ from those described herein. Future results may be subject
        to*  *numerous
        factors, many of which are beyond the Company’s control. Such
        risk*  *factors
        include, without limitation, the risks set forth below under
“Risk*  *Factors.”
        The Company undertakes no obligation to publicly release the
        result*  *of
        any revisions to these forward-looking statements that may be made
        to*  *reflect
        events or circumstances after the date hereof or to reflect the*  *occurrence
        of unexpected events.*
 
 All
        comparisons below are for the three month period ended March 31, 2007 compared
        to the three month period ended March 31, 2006.
 
 16
 **The
        Company**
 
 Naturade,
        Inc. (the “Company”) develops and markets branded natural products. The Company
        is focused on innovative products designed to nourish the health and well-being
        of consumers.
 
 The
        Company competes primarily in the market for natural, nutritional supplements.
        The Company’s products include:
 
 ·
              Naturade
                  Total Soy®, a full line of nutritionally complete meal replacements for
                  weight loss and cholesterol reduction available in several flavors
                  of
                  powders;
 
 ·
              Naturade®
                  protein powders;
 
 ·
              Diet
                  Lean® products focused on the low carb
                  dieter;
 
 ·
              Ageless
                  Foundation Laboratories the Anti-Aging Company® anti-aging
                  products;
 
 ·
              Symbiotics®
                  Colostrum products; and
 
 ·
              Other
                  niche dietary supplements.
 
 The
        Company’s products are sold to the mass market, the health food market and the
        military in the United States, Canada and selected international markets.
        The
        mass market consists of supermarkets, mass merchandisers, club stores and
        drug
        stores. The health food market consists of natural food supermarkets and
        over
        5,000 independent health food stores.
 
 The
        Company’s independent registered public accounting firm issued a going concern
        opinion on the Company’s December 31, 2006 financial statements by including an
        explanatory paragraph in which they expressed substantial doubt about its
        ability to continue as a going concern.
 
 The
        Company was incorporated in 1986 under the laws of the state of Delaware.
        The
        Company’s principal executive offices are located at 601 Valencia Avenue, Suite
        100., Brea, California 92823, and its telephone number is (714) 573-4800.
        The
        Company’s website is located at *www.naturade.com* .
 
 **Recent
        Developments**
 
 ***Chapter
        11 Filing***
 
 On
        August
        31, 2006 (the “ Petition Date”), the Company filed a voluntary petition for
        protection and reorganization (the “Chapter 11 Matter”) under Chapter 11 of the
        United States Bankruptcy Code (the “Bankruptcy Code”) in the United States
        Bankruptcy Court for the Central District of California (the “Bankruptcy
        Court”). Since the Petition Date, the Company has conducted activities as a
        debtor-in-possession under the Bankruptcy Code. See Note 1 for additional
        information.
 
 The
        accompanying financial statements have been prepared in accordance with
        accounting principles generally accepted in the United States (“GAAP”)
        applicable to a going concern, which assume that assets will be realized
        and
        liabilities are discharged in the normal course of business. As a result of
        the Chapter 11 Matter (see Note 1), such realization of assets and liquidation
        of liabilities is subject to uncertainty. A substantial portion of the Company's
        liabilities as of the Petition Date are subject to compromise or other treatment
        in the Chapter 11 Matter. For financial reporting purposes, those unsecured
        liabilities and obligations whose disposition is dependent on the outcome
        of the
        Chapter 11 Matter will be segregated and classified as liabilities subject
        to
        compromise in the March 31, 2007 balance sheet. Generally, actions to enforce
        or
        otherwise effect repayment of all pre-Chapter 11 liabilities and pending
        litigation against the Company are stayed while the Company continues as
        a
        debtor-in-possession during bankruptcy proceedings. Schedules have been filed
        by
        the Company with the Bankruptcy Court setting forth the assets and liabilities
        of the Company as of the Petition Date as reflected in the Company's accounting
        records. Differences between amounts reflected in such schedules and claims
        filed by creditors will be investigated and either amicably resolved or
        adjudicated by the Bankruptcy Court. The ultimate amount of and settlement
        terms
        for such liabilities are not presently determinable.
 
 Financial
        accounting and reporting during a Chapter 11 Matter for an entity with the
        expectation of reorganizing is prescribed in Statement of Position No. 90-7,
        “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code”
(“SOP 90-7”). The Company has an expectation of reorganizing under the
        Bankruptcy Code. Accordingly, unsecured pre-petition liabilities, which may
        be
        subject to settlement, are classified as liabilities subject to compromise
        in the March 31, 2007 balance sheet. In addition, the Company has reported
        all
        transactions (other than interest expense) directly related to the Chapter
        11
        Matter as reorganization items in its statement of operations for the three
        months ended March 31, 2007. SOP 90-7's definition of reorganization items
        excludes (1) interest expense and (2) transactions required to be reported
        as
        discontinued operations or extraordinary items in conformity with GAAP.
 
 17
  ***Basis
        of Presentation*** The
        accompanying condensed balance sheet at March 31, 2007 and the condensed
        statements of operations and cash flows for the three months ended March
        31,
        2007 and 2006 are unaudited. Such financial statements have been prepared
        on the
        same basis as the Company's audited consolidated financial statements and,
        in
        the opinion of management, reflect all adjustments, which  (except for the
        extinguishment of debt discussed in Note 3, which recorded as reorganization
        income) consist only of a normal recurring nature, necessary for a fair
        presentation of the financial position and results of operations for such
        periods. However, the accompanying financial statements do not include any
        adjustments that may be required in connection with restructuring the Company
        under Chapter 11 of the Bankruptcy Code. These unaudited condensed financial
        statements should be read in conjunction with the December 31, 2006 audited
        financial statements included in the Company's Form 10-K as previously filed
        with the Securities and Exchange Commission on April 18, 2007.
  On
        September 25, 2006, The Company's Common Stock was de-listed from the
        over-the-counter Bulletin Board and now trades on the "Pink
        Sheets."
  ***Change
        in Control***
 
 *Recapitalization/Change
        in Control —* On
        August 10, 2006, Quincy Investments Corp. (“Quincy”), the principal shareholder
        of the Company, subsequent to executing a Letter of Intent of July 26, 2006
        with
        Redux to transfer to Redux, Quincy’s controlling interest in Naturade, as
        reported on the Company’s Form 8-K filed with the Securities and Exchange
        Commission on August 2, 2006, entered into the Quincy Transfer Agreement
        (“the
        Quincy Transfer Agreement”) pursuant to which:
 
 ·
              Quincy
                  transferred 28 million shares of the Company’s common stock ,4.2 million
                  shares of Series C Convertible Preferred Stock (“Series C”) and 14 million
                  warrants to purchase common stock to
                  Redux;
 ·
              Redux
                  agreed to make cash contributions up to $500,000, at its sole discretion,
                  to the Company;
 ·
              Redux
                  and Quincy agreed to attempt to complete a Definitive Agreement
                  by August
                  31, 2006.
 ·
              Quincy
                  withheld 3,372,345 shares of Common in violation of the Quincy
                  Transfer
                  Agreement.
 
 Before
        the transactions described above, Quincy owned 31,372,345 shares of the
        Company’s common stock, or 72.4% of the voting power of the Company’s common
        stock. Quincy also owned 4.2 million shares of Series C. which when added
        to
        Quincy’s common stock holdings, represented 55.3% of the combined voting power
        of the Company’s common stock and the Series C. The holders of the Series C are
        entitled to vote along with the holders of the Company’s common stock (on an
        as-converted basis) on all matters, including the election of directors,
        presented to the stockholders. As a result, Quincy had the power to elect
        a
        majority of the Board of Directors and to determine the outcome of any matter
        submitted to the stockholders, subject to the rights of Health Holdings and
        Botanicals, LLC holders of 12,600,000 shares of Series C who have the right
        to
        elect one director and to approve certain transactions.
 
 The
        Definitive Agreement contemplated under the Letter of Intent was not been
        entered into and the Letter of Intent by its terms has expired. Although
        Quincy
        has threatened litigation against Redux related to the absence of a Definitive
        Agreement no lawsuit has been commenced. In contrast, the Company has initiated
        a lawsuit against Quincy and Peter Pocklington. See Note 12, Legal Proceedings.
  On
        August
        31, 2006 Laurus entered into an agreement with Redux, the principal shareholder
        of the Company, (the “Redux Agreement”) pursuant to which:
 
 ·
              Laurus
                  Master Fund, Ltd. (“Laurus”) transferred 1,050,000 shares of the Company’s
                  common stock to Redux;
 ·
              Laurus
                  transferred warrants to purchase 1,500,000 shares of the Company’s common
                  stock at $0.80 per share to Redux which were cancelled upon transfer;
                  (“Laurus Warrant”)
 ·
              Laurus
                  transferred an option to purchase 8,721,375 shares of the Company’s common
                  stock at $0.001 per share to Redux (“Laurus Options”);
                  and
 ·
              Redux
                  issued 574,787 shares of Redux common stock to Laurus, subject
                  to certain
                  provisions for anti-dilution and piggy back registration
                  rights.
 
 On
        November 16, 2006, Redux acquired 500,000 shares of the Company’s common stock
        and warrants to purchase 3,647,743 shares of common stock from Liberty Company
        Financial, LLC (“Liberty”) and in exchange issued to Liberty 28,116 shares of
        Redux common stock.
 
 On
        January 3, 2007, Redux and Howard Shao entered into an agreement to exchange
        23,
        413 shares of Redux Holding, Inc’s restricted common stock for any and all of
        Mr. Shao’s “equity and/or debt instruments issued him and/or amounts owed him by
        Naturade, Inc. This exchange included 1,000,000 shares of Company’s restricted
        common stock, unissued, but owed Mr. Shao under prior agreements. The 1,000,000
        shares of Company restricted common stock have since been issued to Redux.
        See
        Exhibit 10.82
 
 18
 
 On
        April
        13, 2007, Redux issued Laurus a cashless warrant to purchase up to 700,000
        shares of Redux common stock, in consideration of Laurus waving all default
        interest of the Company’s accrued default interest and fees.
 
 As
        a
        result of the transactions described above, Redux controls voting rights
        of
        30,550,000 shares of the Company’s common stock and 4,200,000 shares of Series
        C, or 70.5% of the voting power of the Company’s common stock, 20.0% of the
        voting power of the Series C, and 54% of the combined voting power of the
        Company’s common stock and the Series C. The holders of the Series C are
        entitled to vote along with the Company’s common stock (on an as-converted
        basis) on all matters, including the election of directors, presented to
        the
        stockholders. As a result, Redux has the power to elect a majority of the
        Board
        of Directors and to determine the outcome of any matter submitted to the
        stockholders, subject to the rights of the holders of the Series C described
        above. If the Laurus Options are included, these percentages increase.
 
 The
        Company’s reorganization plan as approved by the court is expected to become
        effective in May 2007. Once the plan becomes effective (the “Effective
        Date”), all Company Series C Preferred shares, along with their voting and
        control rights, all options, all warrants, and all registration rights, will
        be
        cancelled as required under the Plan. The Company, as required by the Plan,
        will
        issue Redux enough shares of restricted common stock to give Redux a 95%
        equity
        and voting interest in the Company. All remaining shareholders will have
        a total
        of 5% equity interest in the Company.
 
 ***Financing***
 
 In
        July
        2005, the Company obtained a $4,000,000 convertible financing facility from
        Laurus, consisting of a $3,000,000 revolving credit facility and a $1,000,000
        term loan. In consideration of such financing facility, The Company issued
        to
        Laurus an option to purchase up to 8,721,375 shares of common stock at $0.0001
        per share and a warrant to purchase up to 1,500,000 shares of common stock
        at
        $0.80 per share. The financing facility was amended on January 11, 2006,
        by
        among other things, increasing the term loan to $1,650,000 and eliminated
        the
        conversion features on the facility. The Company issued Laurus 1,050,000
        shares
        of common stock in consideration for this amendment. See Note 6 to Financial
        Statements, “Financing.”
 
 On
        August
        31, 2006, pursuant to the Company’s filing under Chapter 11 of the US Bankruptcy
        Code, the Company agreed to the following:
 
 ·
              Laurus
                  claim in the amount of $2,900,000 will be treated as fully secured
                  and the
                  liens granted Laurus pursuant to the Financing Agreement will remain
                  without modification.·
              Laurus
                  will provide debtor in possession financing (“DIP”) pursuant to the terms
                  and conditions of the financing agreement.·
              Interest
                  will continue to accrue on the Term Loan pursuant the terms of
                  the
                  Financing Agreement however, payments will be suspended until the
                  first
                  day of the first full month after the Effective Date of the Chapter
                  11
                  filing.·
              The
                  maturity date of the Term loan will be extended to January 6, 2010
                  and
                  principal payments will commence on the first day of the first
                  full month
                  after the Effective Date of the Chapter 11 filing and be payable
                  in equal
                  monthly installments until the maturity
                  date.
  **Critical
        Accounting Policies and Use of Estimates**
 
 In
        preparing the financial statements, the Company is required to make estimates
        and judgments that affect the results of its operations and the reported
        value
        of assets and liabilities. Actual results may differ from these estimates.
        The
        Company believes that the following summarizes the critical accounting policies
        that require significant judgments and estimates in the preparation of the
        Company’s financial statements.
 
 *Revenue
        Recognition* . The
        Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
        (“SAB”) No. 101, *Revenue
        Recognition in Financial*  *Statements* , as
        amended by SAB No. 101A, No. 101B and No. 104. SAB No. 101 requires that
        four
        basic criteria must be met before revenue can be recognized: (1) persuasive
        evidence of an arrangement exists; (2) delivery has occurred or services
        rendered; (3) the fee is fixed and determinable; and (4) 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, the Company: (1) inputs orders based upon receipt of a customer
        purchase order; (2) record revenue upon shipment of goods when risk of loss
        and
        title transfer under the Company’s arrangements with customers or otherwise
        comply with the terms of the purchase order; (3) confirm pricing through
        the
        customer purchase order and; (4) validate creditworthiness through past payment
        history, credit agency reports and other financial data. Other than through
        warranty rights, the Company’s customers do not have explicit or implicit rights
        of return. Should changes in conditions cause us to determine the revenue
        recognition criteria are not met for certain future transactions, such as
        a
        determination that an outstanding account receivable has become uncollectible,
        revenue recognized for any reporting period could be adversely
        affected.
  19
 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
        three months ended March 31, 2007 and 2006, distributor and promotional
        allowances were $0, or.0 % of gross sales, and $297,706 or 7.0% of gross
        sales,
        respectively.
 
 
 ·
              Damages
                  and Returns
 
 In
        the
        three months ended March 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 three months ended March 31, 2007 and 2006, damages
        and returns charged against revenues were $60,775, or 4.1% of gross sales,
        and
        $167,600, or 3.9% of gross sales, respectively. The increase as a percentage
        of
        sales is related principally to lower sales levels coupled with increased
        retailer returns related to the Company’s Chapter 11 filing.
 
 The
        following is a summary of the unaudited damages and returns
        reserve:
 
 Three
                  Months Ended
                March
                  31, 2007
              
              Three
                  Months Ended
                March
                  31, 2006Beginning
                  balance
              
              $
              736,985
              
              $
              55,067Provision
                  for damages and returns
              
              
              (57,892
              )
              
              167,600Actual
                  damages and returns during the period
              
              
              60,775
              
              
              172507Ending
                  balance
              
              $
              618,318
              
              $
              50,160
 
 Damages
        and returns are typically immaterial to the Company’s overall results. As the
        majority of returns represent consumer returns, which trail sales by about
        a
        month, the reserve has been set based upon specific review of potential returns
        which are higher than normal as a result of the Company’s Chapter 11
        filing.
 
 ·
              Cash
                  Discounts
 
 Cash
        discounts are recorded as deducted by customers from remittances, as the
        customer does not earn them until the customer pays according to
        terms.
 
 For
        the
        three months ended March 31, 2007 and 2006, cash discounts were $24,907 or
        1.5%
        of gross sales, and $34,889 or 0.8% 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.
 
 20
 For
        the
        three months ended March 31, 2007 and 2006, slotting costs were $9,771, or
        .6 %
        of gross sales, and $43,388, or 1.0% of gross sales, respectively.
 
 ·
              Coupon
                  and Rebate Redemption
 
 Coupon
        and rebate costs are charged against revenues as redeemed. Historically,
        Naturade has incurred insignificant redemption of its consumer coupons or
        rebates.
 
 For
        the
        three months ended March 31, 2007 and 2006, coupon and rebate costs were
        $-0-
        and $141, respectively.
 
 *Inventory
        Valuation* .
        Merchandise inventories are stated at the lower of cost (first-in, first-out
        basis) or market. The Company considers cost to include the direct cost of
        finished goods provided by co-packers as well as the cost of those components
        supplied to the co-packers. At each balance sheet date, the Company evaluates
        its ending inventories for excess quantities and obsolescence. This evaluation
        includes analyses of forecast sales levels by product and historical demand.
        The
        Company writes off inventories that are considered obsolete. Remaining inventory
        balances are adjusted to approximate the lower of cost or market value and
        result in a new cost basis in such inventory until sold. If future demand
        or
        market conditions are less favorable than the Company’s projections, additional
        inventory write-down may be required, and would be reflected in cost of sales
        in
        the period the revision is made.
 
 *Accounts
        Receivable and Allowances for Uncollectible Accounts* .
        Accounts receivable are unsecured, and the Company is at risk to the extent
        such
        amounts become uncollectible. Accounts receivable are stated net of applicable
        reserves for returns and allowances, bill backs and doubtful accounts.
        Management regularly reviews and monitors individual account receivable balances
        to determine if the reserve amounts are appropriate and provides for an
        allowance for uncollectible accounts by considering historical customer buying
        patterns, invoice aging, specific promotions and seasonal
        factors.
  **Results
        of Operations**
  **Major
          trends that affected the Company’s results of operations in
          2007**
 
 The
          major
          trends affecting the Company’s results of operations in the first three months
          ended March 31, 2007 included the following:
 
 ·
                The
                    Company’s filing for protection under Chapter 11 Bankruptcy has had a
                    negative effect on the Company’s ability to purchase inventory for the
                    three months ended March 31, 2007. The Company believes this
                    trend is
                    likely to continue until the Chapter 11 Matter is
                    resolved..
 
 ·
                The
                    Company’s lack of sufficient cash to maintain proper inventory levels
                    has
                    had a negative effect on the Company’s revenues for the three months
                    ended March 31, 2007. The Company believes this trend is likely
                    to
                    continue unless the Company obtains sufficient capital to bring
                    inventory
                    levels back to historical levels.
 The
        following table sets forth, for the periods indicated, the percentage which
        certain items in the statement of operations data bear to net sales and the
        percentage dollar increase (decrease) of such items from period to
        period.
 
 **Percent
                  of Net Sales**
                **Three
                  Months Ended March 31,**
              
              **Percentage
                  Dollar Increase (Decrease)**
                **Three
                  Months Ended March 31,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Net
                  sales
              
              
              100%
              
              
              100%
              
              
              (63%)
              
              
              30%Gross
                  profit
              
              
              35%
              
              
              49%
              
              
              (73%)
              
              
              36%Selling,
                  general and administrative expenses
              
              
              101%
              
              
              54%
              
              
              (31%)
              
              
              29%Depreciation
                  & amortization.
              
              
              6%
              
              
              7%
              
              
              (147%)
              
              
              77%Operating
                  loss
              
              
              (72%)
              
              
              (12%)
              
              
              124%
              
              
              (93)%Interest
                  expense
              
              
              5%
              
              
              5%
              
              
              (67%)
              
              
              896%Net
                  Income (loss) before provision for income taxes
              
              
              64%
              
              
              (34%)
              
              
              (169)%
              
              
              (312)%Provision
                  for income taxes
              
              
              0%
              
              
              0%
              
              
              100%
              
              
              0%Net
                  Income (loss)
              
              
              64%
              
              
              (34%)
              
              
              (169)%
              
              
              (311)%
  21
 *Net
        Sales*
 
 Net
        sales
        for the three months ended March 31, 2007 of $,1,397,890 decreased $2,397,622
        or
        63.2% as compared to net sales of $3,795,512 for the three months ended March
        31, 2006. The decrease in net sales for this period is due principally to
        the
        Company’s filing for protection under the US Bankruptcy Code. The filing
        resulted in a disruption in shipping due to lack of capital to purchase
        sufficient inventory levels and an inability to maintain traditional order
        fill
        ratios.
 
 Net
        sales
        are calculated based upon gross revenues less certain allowances.
 
 For
        the
        three months ended March 31, 2007, distributor and promotional allowances
        were
        $0, or .0% of gross sales, compared to $297,706, or 7.0% of gross sales,
        for the
        same period in 2006. The change in distributor and promotional allowances
        as a
        percent of gross sales was a result of the Company’s inability to provide
        discounts as a result of the constraints imposed by the Company’s Chapter 11
        filing. Damages and returns for three months ended March 31, 2007 were $60,775
        or 4.1% of gross sales, as compared to $167,600, or 3.9% of gross sales,
        for the
        three months ended March 31, 2006. Lower sales in the mass market have resulted
        in lower returns. Cash discounts for the three months ended March 31, 2007
        were
        $24,907 or 1.7% of gross sales, as compared to $34,889, or 0.8 % of gross
        sales,
        in the same period of 2006. Cash discounts for the three months ended March
        31,
        2007 decreased due to lower collections during the period. Slotting charges
        related to new distribution for the three months ended March 31, 2007 were
        $9,971, or .6% of gross sales, as compared to $43,888, or 1.0% of gross sales,
        in the same period of 2005 There were no significant new slotting charges
        in the
        three months ended March 31, 2007 because the Company did not introduce new
        products during the period. Coupon and rebate redemption for the three months
        ended March 31, 2007 was $-0-, as compared to $141 in the same period of
        2006.
 
 *Mass
        Market Net Sales* .
        For the
        three months ended March 31, 2007, mass market revenues decreased $929,616
        or
        64.5% to $511,546 from $1,441,162 for the three months ended March 31,
        2006. The decrease in net sales during the period is related to the decreased
        sales of the ReVivex® brand during the period due to the lack of promotional
        funds available for consumer advertising coupled with decreased inventory
        availability due to the Company’s Chapter 11 filing. The ReVivex® brand is being
        discontinued. In addition, reduced inventory availability as a consequence
        of
        bankruptcy reduced sales in the period to mass market customers.
 
 *Health
        Food Net Sales.* For the
        three months ended March 31, 2007, health food channel net sales decreased
        $1,488,006, or 63.2%, to $866,344 from $2,354,350 for the three months
        ended March 31, 2006.The sales decrease is principally related to sales of
        Ageless and Symco brands partially offset by reductions in sales of core
        protein
        powders related to lower fill rates on customer orders as a result of cash
        restrictions on inventory purchases.
  *Channels
        of Distribution.* On a
        percent of net sales basis, the breakdown of sales between the mass market
        and
        health food channels was 63.4% for the health food channel and 36.6 % for
        mass
        market channel for the three months periods ended March 31, 2007 as compared
        to
        62.0% for the health food channel and 38.0% for the mass market channel,
        respectively, for the same period in 2006. The change in sales by channel
        is
        principally related to the sales of Ageless and Symco brands which are
        principally sold through the health food channel coupled by the decline in
        ReVivex® brands in the mass market channel. For
        the
        three months ended March 31, 2007, domestic net sales decreased $2,481,408
        or
        66.6%, to $1,243,493 from $3,724,901 for the three months ended March 31,
        2006.
        The decrease in domestic net sales is principally due to Sales shortfalls
        in the
        mass and health channels.. For the three months ended March 31, 2007,
        international sales increased $83,786 or 118.7% to $154,397 from $70,611.
        International sales for the both periods increased principally due to the
        expansion of the Ageless and Symco products to international customers in
        the
        fourth quarter of 2006 which continued to grow during the three months ended
        March 31, 2007.
  *Gross
        Profit*
 
 Gross
        profit for the three months ended March 31, 2007 decreased $ 1,369,161 or
        73.2 %
        to $500,316 for the same period in 2006. The decrease for the period is
        principally a result of decreased revenues for the period along with decreased
        margins from sales of Symbiotics and Ageless products versus the Company’s core
        products. Gross profit, as a percentage of sales decreased from 49.3% to
        33.4%
        of net sales in the three month period ended March 31, 2007compared to the
        three
        month period ended March 31, 2006, due to lower margins related to increased
        costs to purchase product due to vendor changes related to the Chapter 11
        filing.
 
 *Operating
        Costs and Expenses*
 
 Operating
        costs and expenses for the three months ended March 31, 2007 decreased by
        $814,837 to $1,501,103, 35.2% of net sales, from $2,315,941, or 61.0% of
        net
        sales, for the same period in 2006. Operating expenses decreased as a result
        of
        the Company’s continuing efforts to reduce costs to be in line with current
        revenue levels. New Company management took immediate action from August
        2006 to
        cut operating costs including;
  22
  ·
              Reduction
                  of monthly facility lease expense from approximately $540,000 per
                  year to
                  approximately $120,000 per year.
 ·
              A
                  reduction in staffing resulting in an annual cost reduction of
                  more than
                  $1,000,000.
  *Interest
        Expense*
  Interest
        expense for the three months ended March 31, 2007 decreased $575,281 to $279,559
        from $854,480 compared to the same period in 2006 principally due to a reduction
        in the amortization of deferred financing fees and debt discounts of $438,293
        in
        2007 as compared to the same period in 2006. The amortization is related
        to the
        recapitalization of the Registrant coupled with the acquisitions of Symbiotics
        and Ageless. The remainder of the decrease is related principally to the
        cessation of interest charges on certain debt subject to compromise in
        accordance with the Company’s Chapter 11 filing.
 
 **Liquidity
        and Capital Resources**
 
 On
        August
        31, 2006 (the “Petition Date”), the Company filed a voluntary petition for
        protection and reorganization (the “Chapter 11 Matter”) under Chapter 11 of the
        United States Bankruptcy Code (the “Bankruptcy Code”) in the United States
        Bankruptcy Court for the Central District of California (the “Bankruptcy
        Court”). Since the Petition Date, the Company has conducted activities as a
        debtor-in-possession under the Bankruptcy Code. See Note 2 for additional
        information.
 
 The
        Company’s operating activities used cash of $139,490 in the three ended March
        31, 2007, compared to cash used of $139,814 from operating activities in
        the
        three months ended March 31, 2006. This decrease in cash used from operating
        activities is primarily due to the increase in cash provided by accounts
        payable of $751,085 and cash provided of $348,461 by accounts receivable
        and a
        decrease in liabilities subject to compromise of $2,598,310 during the period,
        partially offset of cash net loss of $1,000,788 before non-cash charges for
        depreciation and amortization .
 
 Net
        cash
        provided by inventories was $6,337 for the three months ended March 31, 2007,
        compared with net cash used by inventories of $6,041 for the three months
        ended
        March 31, 2006. The ongoing shortage of cash required management to reduce
        inventories during the first nine months of 2006.
 
 Net
        cash
        provided by accounts receivable was $348,461 for the three month period ended
        March 31, 2007 compared to net cash used by accounts receivable of $401,448
        for
        the same period of 2006, principally due a lower sales three months ended
        March
        31, 2007 versus the same period in 2006. General customer terms, receivable
        days
        outstanding and the Company’s collection policies have remained
        constant.  Net
        cash
        provided by accounts payable and accrued expenses was $998,233 for the three
        month period ended March 31, 2007 compared to net cash provided of $740,530
        for
        the same period of 2006, principally due to an increase in accounts
        payable vendor days outstanding as a result of the Company’s cash position
        during the period.
  The
        Company’s working capital deficit increased $1,062,281 from $1,728,224 at
        December 31, 2006 to $2,790,505 at March 31, 2007. This increase was largely
        due to a decrease in accounts receivable of $348,461 related to
        decreased sales during the period coupled with an increase in accounts payable
        of $751,085 and an increase in accrued expenses of $247,148 due to the
        difficulties in purchasing inventories due to the cash constraints on the
        Company partially offset by repayments of $309,702 on the revolving debt
        during
        the period.
  For
        the
        three months ending March 31,2007 the provision for excess and obsolete
        inventory increased by $59,182 to $79,182 from, $20,000 compared to the same
        period in 2006..
  The
        Company’s cash provided by financing activities was $ 86,369 for the three
        months ended March 31, 2007, compared to cash provided by financing
        activities of $124,073 for the same period of 2006.
 
 As
        of
        March 31, 2007, the Company was in compliance with all of the covenants of
        the
        Credit Agreement with Laurus.
 
 The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates the realization of assets and the satisfaction of liabilities
        in the normal course of business. At March 31, 2007, the Company had an
        accumulated deficit of $39,755,928, and a stockholders’ capital deficiency of
        $16,760,638. These factors, among others, raise substantial doubt about the
        Company’s ability to continue as a going concern. The financial statements do
        not include any adjustments that might result from the outcome of this
        uncertainty. The Company’s independent registered public accounting firm
        qualified their opinion on the Company’s December 31, 2006 financial statements
        by including an explanatory paragraph in which they expressed substantial
        doubt
        about the Company’s ability to continue as a going concern.
 
 The
        Company’s liquidity would be adversely affected if the Company commits a default
        under the Financing Agreement and Laurus exercises its right to terminate,
        or
        demand immediate payment of all amounts outstanding under, the Financing
        Agreement as a result of a default. In addition, if the Company continues
        to
        incur declines in revenues, the Company could encounter a shortage in cash
        reserves required to meet current commitments. This could result in the Company
        being unable to obtain products necessary to fulfill customer orders. The
        Company has raised additional capital through the financing with Laurus as
        described in Note 6. The Company and/or its principal shareholder are
        seeking to raise additional capital. No assurance can be given that additional
        financing will be available in the future or that, if available, such financing
        will be obtainable on terms acceptable to the Company or its stockholders.
        Impact of Contractual Obligations and Commercial Commitments
 23
 
 The
        following summarizes the Company’s contractual obligations at March 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**
              
              **3-5
                  Years**
              
              **After
                  5 Years**Laurus
                  Term Loan (a)
              
              $
              1,864,466
              
              $
              539,614
              
              $
              1,324,852Health
                  Holdings Loan (a)
              
              $
              2,,079,508
              
              
              
              
              
              778,909
              
              
              454,364
              
              
              846,235Revolving
                  Credit (a)
              
              
              1,345,718
              
              
              1,345,718
              
              
              -
              
              
              -
              
              
              -Unsecured
                  Creditors
              
              
              6,746,112
              
              
              185,675
              
              
              557,025
              
              
              6,003,412
              
              
              -Total
                  Contractual Cash Obligations
              
              $
              12,035,804
              
              $
              2,071,007
              
              $
              2,660,786
              
              $
              6,457,776
              
              $
              846,235
 
 
 ____________
 
 (a)  Includes
        interest.
 
 **New
        Accounting Pronouncements**
 
 FASB
        Statement No. 157, *Fair
        Value Measurements,* has been
        issued by the Financial Accounting Standards Board (“FASB”). This new standard
        provides guidance for using fair value to measure assets and liabilities.
        Under
        Statement 157, fair value refers to the price that would be received to sell
        an
        asset or paid to transfer a liability in an orderly transaction between market
        participants in the market in which the reporting entity transacts. In this
        standard, the FASB clarifies the principle that fair value should be based
        on
        the assumptions market participants would use when pricing the asset or
        liability. In support of this principle, Statement 157 establishes a fair
        value
        hierarchy that prioritizes the information used to develop those assumptions.
        The fair value hierarchy gives the highest priority to quoted prices in active
        markets and the lowest priority to unobservable data, for example, the reporting
        entity’s own data. Under the standard, fair value measurements would be
        separately disclosed by level within the fair value hierarchy. The provisions
        of
        Statement 157 are effective for financial statements issued for fiscal years
        beginning after November 15, 2007, and interim periods within those fiscal
        years. Earlier application is encouraged, provided that the reporting entity
        has
        not yet issued financial statements for that fiscal year, including any
        financial statements for an interim period within that fiscal year. The
        adoption of this pronouncement is not expected to have material effect on
        the
        Company’s financial statements.
 
 The
        FASB
        has issued FASB Staff Position (FSP) EITF 00-19-2, "Accounting for Registration
        Payment Arrangements." This FSP specifies that the contingent obligation
        to make
        future payments or otherwise transfer consideration under a registration
        payment
        arrangement, whether issued as a separate agreement or included as a provision
        of a financial instrument or other agreement, should be separately recognized
        and measured in accordance with FASB Statement No. 5, *Accounting
        for Contingencies.* The
        FSP
        further clarifies that a financial instrument subject to a registration payment
        arrangement should be accounted for in accordance with other applicable GAAP
        without regard to the contingent obligation to transfer consideration pursuant
        to the registration payment arrangement. This FSP amends various authoritative
        literature notably FASB Statement No. 133, *Accounting
        for Derivative Instruments and Hedging Activities,* FASB
        Statement No. 150, *Accounting
        for Certain Financial Instruments with Characteristics of both Liabilities
        and
        Equity,* and
        FASB
        Interpretation No. 45, *Guarantor’s
        Accounting and Disclosure Requirements for Guarantees, Including Indirect
        Guarantees of Indebtedness of Others.* This
        FSP
        is effective immediately for registration payment arrangements and the financial
        instruments subject to those arrangements that are entered into or modified
        subsequent to December 21, 2006. For registration payment arrangements and
        financial instruments subject to those arrangements that were entered into
        prior
        to December 21, 2006, the guidance in the FSP is effective for financial
        statements issued for fiscal years beginning after December 15, 2006, and
        interim periods within those fiscal years. The
        adoption of this pronouncement is not expected to have material effect on
        the
        Company’s financial statements.
 
 In
        July
        2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
        Income Taxes - An Interpretation of of
        FASB
        Statement No. 109 (“ FIN 48”). FIN 48 clarifies the accounting for uncertainty
        in income taxes recognized in financial statements in
        accordance with Statement of Financial Accounting Standards No. 109, Accounting
        for Income Taxes (“FAS 109”). The interpretation
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of
        a tax
        position taken or expected to be taken in a tax return. FIN 48 also provides
        guidance on dercognition of tax benefits, classification
        on the balance sheet, interest and penalties, accounting in interim periods,
        disclosure and transition. The company adopted
        FIN 48 effective January 1, 2007. As a result of the adoption, the Company
        determined that no cumlative effect adjustment was
        necessary to the opening balance of retained earnings as of January 1, 2007.
        The
        Company’s unrecognized tax benefits as of January
        1, 2007 were immaterial, and recognition of such tax benefits is not expected
        to
        have a material impact on the Company’s income
        tax provision in future periods. Changes in the Company’s unrecognized tax
        benefits during the three months ended March
        31,
        2007 were immaterial.
 
 24
 
 On
        February 15, 2007, the FASB issued FASB Statement No. 159, *The
        Fair Value Option for Financial Assets and Financial Liabilities - Including
        an
        Amendment of FASB Statement No. 115.* SFAS 159
        permits an entity to choose to measure many financial instruments and certain
        other items at fair value. This option is available to all entities, including
        not-for-profit organizations. Most of the provisions in Statement 159 are
        elective; however, the amendment to FASB Statement No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities,* applies
        to all entities with available-for-sale and trading securities. Some
        requirements apply differently to entities that do not report net income.
        The
        fair value option established by Statement 159 permits all entities to choose
        to
        measure eligible items at fair value at specified election dates. A business
        entity will report unrealized gains and losses on items for which the fair
        value
        option has been elected in earnings (or another performance indicator if
        the
        business entity does not report earnings) at each subsequent reporting date.
        A
        not-for-profit organization will report unrealized gains and losses in its
        statement of activities or similar statement. The fair value option:
        ( *a* )
        may be
        applied instrument by instrument, with a few exceptions, such as investments
        otherwise accounted for by the equity method; ( *b* )
        is
        irrevocable (unless a new election date occurs); and ( *c* )
        is
        applied only to entire instruments and not to portions of instruments. Statement
        159 is effective as of the beginning of an entity’s first fiscal year that
        begins after November 15, 2007.  Early adoption is permitted as of the
        beginning of the previous fiscal year provided that the entity makes that
        choice
        in the first 120 days of that fiscal year and also elects to apply the
        provisions of FASB Statement No. 157, *Fair
        Value Measurements.* The
        adoption of this pronouncement is not expected to have material effect on
        the
        Company’s financial statements *.*
 
 **Forward
        Looking Statements**
 
 Except
        for the historical information contained herein, the matters addressed in
        this
        Quarterly Report on Form 10-Q constitute “forward-looking statements.”
Forward-looking statements may be identified by the use of the words
“anticipates,” “expects,” “intends,” “plans,” and variations or similar
        expressions. These forward-looking statements are subject to a variety of
        risks
        and uncertainties, many of which are beyond the control of the Company,
        including those discussed below under “Risk Factors” and elsewhere in this
        Quarterly Report on Form 10-Q, which could cause actual results to differ
        materially from those anticipated by the Company’s management. In addition, the
        information set forth in the reports the Company files with the SEC from
        time to
        time, describe certain additional risks and uncertainties that could cause
        actual results to vary materially from the future results covered in such
        forward-looking statements. Readers are cautioned not to place undue reliance
        on
        any of these forward-looking statements, which speak only as of the date
        of this
        report. The Company undertakes no obligation to update any of these
        forward-looking statements to reflect events or circumstances after the date
        of
        this report or to reflect the occurrence of unexpected events.
  **RISK
        FACTORS**
 
 *An
        investment in the Company’s common stock involves a high degree
        of*  *risk.
        In addition to the other information contained in this report, you
        should*  *carefully
        consider the following risks and uncertainties before purchasing
        the*  *Company’s
        common stock. If any of these risks or uncertainties were to
        occur,*  *the
        Company’s business, financial condition and operating results could
        suffer*  *serious
        harm. In that case, the trading price of the Company’s common
        stock*  *could
        decline and you could lose all or part of your investment.*
 
 The
        short
        and long-term success of the Company is subject to certain risks, many of
        which
        are substantial in nature. Shareholders and prospective shareholders in the
        Company should consider carefully the following risk factors, in addition
        to
        other information contained herein. This Annual Report on Form 10-K contains
        forward-looking statements, which are subject to a variety of risks and
        uncertainties. The Company’s actual results could differ materially from those
        anticipated in these forward-looking statements as a result of various factors,
        including those set forth below.
 
 An
        investment in the Company’s common stock involves a high degree of risk. In
        addition to the other information contained in this report, you should  
carefully consider the following risks and uncertainties before purchasing
        the
  Company’s common stock. If any of these risks or uncertainties were to
        occur, the Company’s business, financial condition and operating results could
        suffer   serious harm. In that case, the trading price of the Company’s
        common stock   could decline and you could lose all or part of your
        investment.
 
 ***On
        August 31, 2006 (the “Petition Date”), the Company filed for protection under
        Chapter 11 of the U.S. Bankruptcy Code.***
 
 As
        a
        result of the Chapter 11 Bankruptcy (see Note 1, *Chapter
        11 Bankruptcy Proceedings* ),
        the
        realization of assets and liquidation of liabilities is subject to uncertainty.
        A substantial portion of the Company's liabilities as of the Petition Date
        are
        subject to compromise or other treatment in the Chapter 11 Bankruptcy. For
        financial reporting purposes, those unsecured liabilities and obligations
        whose
        disposition is dependent on the outcome of the Chapter 11 Bankruptcy have
        been
        segregated and classified as liabilities subject to compromise in the December
        31, 2006 balance sheet. Generally, actions to enforce or otherwise effect
        repayment of all pre-Chapter 11 liabilities and pending litigation against
        the
        Company are stayed while the Company continues as a debtor-in-possession
        during
        bankruptcy proceedings. Schedules have been filed by the Company with the
        Bankruptcy Court setting forth the assets and liabilities of the Company
        as of
        the Petition Date as reflected in the Company's accounting records. Differences
        between amounts reflected in such schedules and claims filed by creditors
        will
        be investigated and either amicably resolved or adjudicated by the Bankruptcy
        Court. The ultimate amount of and settlement terms for such liabilities are
        not
        presently determinable.
 
 25
 ***The
        Company’s reorganization plan under Chapter11 of the U.S. Bankruptcy Code may
        not go effective if new funding does not come in as
        planned.***
 
 The
        Company, as Debtor, has recently reached a consensual agreement among the
        Creditor’s Committee, its lender Laurus, and Health Holdings, to amend the plan
        to allow the Plan to go effective with an initial $1,500,000 cash infusion
        and
        the balance of $500,000 within 90 days. This motion will be heard by the
        Court
        on May 16 and is expected to be entered by the Court with the support of
        all
        parties. If for any reason
 this
        funding is not made to make the Plan effective, this could have an adverse
        impact on the company, its share price and whether the
 Company
        can continue as an on going concern.
 
 ***The
        Company may incur future losses which may affect its ability to continue
        as***  ***a
        going concern.***
 
 The
        Company had a net loss of approximately $1.9 million, $ 402,000, $3.7 million,
        and $11.3 million for the fiscal years ended December 31, 2003, 2004,
        2005, and 2006, respectively, and net income of approximately $368,000 for
        the
        fiscal year ended 2004. At March 31, 2007, the Company had an accumulated
        deficit of $39,755,928, and a stockholders’ capital deficiency of $16,760,638.
        The Company anticipates that it will incur net losses for the foreseeable
        future
        and will need access to additional financing for working capital and to expand
        its business. If unsuccessful in those efforts, the Company could be forced
        to
        cease operations and investors in its common stock could lose their entire
        investment. The Company’s independent registered public accounting firm issued a
        going concern opinion on the Company’s December 31, 2006 financial statements by
        including an explanatory paragraph in which they expressed substantial doubt
        about its ability to continue as a going concern.
  ***The
        Company’s success depends on current and ongoing financing which may not
        be***  ***available
        or, if available, could result in substantial dilution to
        its***  ***stockholders,
        depress the market price of its common stock and impair
        its***  ***ability
        to raise capital by selling its common stock***
 
 The
        Company’s success is dependent on its current financing as well as new financing
        to support its working capital requirements, acquire additional brands or
        businesses and fund its current operating losses. Additional financing is
        made
        more difficult by the Chapter 11 Bankruptcy since such matter may lower creditor
        confidence in the Company and lending entities may refuse to grant the Company
        a
        loan or line of credit, or if such loan or line of credit is granted, it
        may be
        granted only on terms materially less favorable to the Company than are
        available to its competitors, including, but not limited to, a higher than
        average rate of interest or the issuance of options, warrants or other rights
        to
        acquire its common stock at prices that are, or in the future may be, less
        than
        the market price of its common stock, which could result in substantial dilution
        to its stockholders, depress the market price of its common stock and impair
        its
        ability to raise capital by selling its common stock.
 
 ***In
        our recent acquisitions, we have assumed substantial additional
        obligations.***
  In
        its
        acquisition of Ageless, the Company assumed accounts payable of $173,593
        and an
        obligation to an employee in the amount of $600,000. In addition, the Company
        agreed to pay a purchase price consisting of a promissory note in the principal
        amount of $648,234, and entered into certain consulting agreements. In February
        2007, Redux purchased the claims filed in the Naturade bankruptcy for the
        Ageless acquisition from Ageless and its principal. See Item 13, Certain
        Relationships and Related Transactions. In its acquisition of Symco and
        Symbiotics, the Company assumed accounts payable of $408,965, indebtedness
        under
        credit facilities of $224,313 and obligations under certain contracts, totaling
        $274,382. In addition, the Company agreed to pay a purchase price consisting
        of
        a promissory note in the principal amount $1,476,305, and an earn-out, and
        entered into certain consulting agreements. For a description of these
        acquisitions, including the purchase prices, assets acquired and obligations
        assumed, see Note 8, Acquisitions. The Company has only limited resources
        available to us. If these resources are insufficient to allow the Company
        to pay
        these obligations as they come due and to maintain its business as it is
        currently operated, the Company could be forced to cease operations, and
        investors in the Company could lose their entire investment.
  ***The
        Company’s current financial condition could cause third party suppliers
        and***  ***manufacturers
        to refuse to do business with us, or to do so only on
        less***  ***favorable
        terms.***
 
 The
        Company depends upon third-party suppliers and manufacturers, such as Advanced
        Protein Systems and Best Formulations, for its products. The Company does
        not
        have long-term supply agreements and the Chapter 11 Bankruptcy may lower
        vendor
        confidence in it and they may refuse to provide products or do business with
        it,
        or may do so only on less favorable terms, which could cause the Company’s net
        sales to decline. In addition, the Company’s current cash position could result
        in a higher degree of credit risk than normal for its suppliers. As a result,
        supplier pricing may include factors related to this credit risk such as
        the
        absence of cash discounts and the costs of extended terms that increase the
        Company’s cost for product and ultimately decrease our profitability. Any
        unfavorable change in the Company’s cash position could result in additional
        costs for product affecting its profitability. From time to time, the Company
        has experienced difficulties with various vendors requiring it to purchase
        product on cash upon delivery (“COD”) basis. As a result of purchasing on a COD
        basis, The Company could experience significant delays in shipments to its
        customers, which could have a material affect on its operating results. Although
        the Company believes that alternative sources of materials and contract
        manufacturing services are available, the loss of one or more suppliers or
        manufacturers as a result of the Chapter 11 Bankruptcy Matter could have
        a
        material adverse effect on results of operations until an alternative source
        is
        located and has commenced producing the Company’s products. ******
 
 26
 ***The
        Company’s revenues depend on continued business from the Company’s
        key***  ***customers.***
 
 The
        Company’s three largest customer’s together account for 39.8% of net sales for
        the three months ended March 31, 2007. One mass market customer, Wal-Mart/Sam’s
        Club, represented approximately 18% of the Company’s net sales, and two health
        food distributors, United Natural Foods, Inc. (“UNFI”) and Tree of Life, Inc.,
        accounted for 16% and 6%, respectively, of the Company’s net sales, during the
        three months ended March 31, 2007. The loss of any of these customers could
        have
        a material adverse effect on the Company’s results of operations. From time to
        time, major customers have experienced financial difficulties. Additionally,
        the
        issuance of a going concern opinion by the Company’s independent registered
        public accounting firm may create concern among existing and potential customers
        that the Company may be unable to fulfill product needs. As a result, due
        to the
        Chapter 11 Bankruptcy, existing and potential customers may determine not
        to do
        business with the Company, or only do so on less favorable terms, which may
        cause net sales to decline. The Company does not have long-term contracts
        with
        any of its customers and, accordingly, there can be no assurance that any
        customer will continue to place orders with the Company to the same extent
        it
        has in the past, or at all.
  ***If
        the Company’s third-party suppliers or manufacturers fail to timely
        deliver***  ***products
        of acceptable quality or comply with FDA manufacturing guidelines,
        or***  ***raise
        prices, profits may be affected.***
 
 The
        use
        of third-party suppliers and manufacturers and the resulting loss of direct
        control over production could result in the Company’s failure to receive timely
        delivery of products of acceptable quality. Any failure by third party suppliers
        or manufacturers to deliver products, or the delivery of defective products,
        may
        adversely affect the Company’s ability to deliver products to its customers in a
        timely manner and of an acceptable quality. If the Company fails to deliver
        products of acceptable quality in a timely manner, its customers may seek
        alternative sources for its products. The Company’s use of third-party suppliers
        and manufacturers could also reduce its gross profits if the suppliers or
        manufacturers raise prices and the Company cannot find alternative, less
        costly
        sources or pass price increases on to customers.
 
 Although
        the Company requires that the Company’s third-party suppliers and manufacturers
        comply with the FDA manufacturing guidelines, Naturade cannot assure that
        these
        third parties will always act in accordance to these regulations. If the
        manufacturing facilities used by the Company’s third- party suppliers or
        manufacturers did not meet those standards, the production of its products
        could
        be delayed until the necessary modifications are made to comply with those
        standards or alternate suppliers or manufacturers are located. Furthermore,
        the
        potential exists for circumstances to arise which would require the Company
        to
        seek out alternate suppliers or manufacturers who operate in compliance with
        the
        FDA’s requirements.
 
 ***Restrictions
        or requirements imposed by government regulation could result
        in***  ***material
        harm to the Company’s results of operations and financial
        condition.***
 
 The
        Company’s operations, properties and products are subject to regulation by
        various foreign, federal, state and local government entities and agencies,
        including the FDA and the FTC. Among other matters, such regulation is concerned
        with statements and claims made in connection with the packaging, labeling,
        marketing and advertising of the Company’s products. The governmental agencies
        have a variety of processes and remedies available to them, including initiating
        investigations, issuing warning letters and cease and desist orders, requiring
        corrective labeling or advertising, requiring consumer redress, seeking
        injunctive relief or product seizure, imposing civil penalties and commencing
        criminal prosecution.
 
 Weight
        loss products are subject to increased regulatory scrutiny due to intensified
        campaigns by both FTC and FDA. FTC has specifically launched a nation-wide
        law
        enforcement sweep against companies making false weight-loss claims. This
        initiative was created to stop deceptive advertising, provide refunds to
        consumers harmed by unscrupulous weight-loss advertisers, encourage media
        outlets not to carry advertisements containing bogus weight-loss claims and
        to
        educate consumers to be on their guard against companies promising miraculous
        weight loss without diet or exercise. The FTC campaign identifies seven specific
        claims that they consider suspect, including: “Lose weight without diet or
        exercise”; “Eat what you want and lose weight”; “Weight loss will be permanent”
(even when the user stops using the product); “Block the absorption of fat or
        calories, and lose substantial weight”; “Safely lose more than three pounds per
        week for a period of more than four weeks”; “Substantial weight loss for all
        users”; and “Diet patches, creams, wraps, earrings and other products worn on
        the body or rubbed into the skin that cause substantial weight loss.” If the FDA
        and FTC move beyond their current focus and more closely scrutinize weight
        loss
        products in the retail marketplace, there can be no assurance that this change
        in focus would not have an adverse effect on the sale of the Company’s
        products.
 
 As
        a
        result of the Company’s efforts to comply with changes in applicable statutes
        and regulations, the Company has from time to time reformulated, eliminated
        or
        relabeled certain of its products and revised certain aspects of its sales,
        marketing and advertising programs. The Company may be subject in the future
        to
        additional laws or regulations administered by federal, state, local or foreign
        regulatory authorities, the repeal or amendment of laws or regulations which
        the
        Company considers favorable, such as the DSHEA, or more stringent
        interpretations of current laws or regulations. The Company cannot predict
        the
        nature of future laws, regulations, interpretations or applications, nor
        can the
        Company predict what effect additional governmental regulations or
        administrative orders, when and if promulgated, would have on its business
        in
        the future. Such future laws and regulations could, however, require the
        reformulation of products to meet new standards, the recall or discontinuance
        of
        products that cannot be reformulated, the imposition of additional record
        keeping requirements, expanded documentation of product efficacy, expanded
        or
        modified labeling and scientific substantiation, including health warnings
        or
        restrictions on benefits described for its products. Any of or all of such
        requirements could hurt sales of the Company’s products or increase its costs,
        resulting in material harm to its results of operations and financial
        condition.
 
 27
 ***The
        Company’s competitors may develop products that are more effective or
        less***  ***costly.***
 
 The
        market for nutraceutical products is highly competitive. Many of the Company’s
        competitors, such as GeniSoy and Health Source by Abbott Labs, have
        substantially greater capital resources, research and development capabilities,
        and manufacturing and marketing resources, capabilities and experience than
        the
        Company. Naturade’s competitors may succeed in developing products that are more
        effective or less costly than any products developed by the Company.
        Additionally, bovine colostrum, the key ingredient in the Symbiotics Brand,
        is a
        very popular health product. Many of the Company’s competitors offer a full line
        of colostrum products in stores and online with claims of high quality at
        low,
        wholesale prices. Success will depend among other things on the Company’s
        ability to out perform the other companies in its marketing and advertising
        efforts.
 
 ***The
        Company’s success depends on its ability to attract and retain
        qualified***  ***personnel.***
 
 The
        Company’s success depends upon its ability to attract and retain qualified
        sales, marketing, scientific and executive management personnel. To
        commercialize its products and product candidates, Naturade must maintain
        and
        expand its personnel, particularly in the areas of product sales and marketing.
        Naturade faces intense competition, and the effects of bankruptcy, for such
        personnel from other companies, academic institutions, government entities
        and
        other research organizations. There can be no assurance that the Company
        will be
        successful in hiring, leasing or retaining qualified personnel. Moreover,
        managing the integration of new personnel could pose significant risks to
        the
        Company’s development and progress and increase its operating
        expenses.
 
 ***Expanding
        the Company’s sales in the mass market resulted in less stable
        demand***  ***for
        the Company’s products and higher costs of
        distribution.***
 
 Although
        traditionally Naturade has been a marketer for the health food market, the
        Company recently built a presence in the mass market. While yielding increased
        revenue, selling to the mass market has also resulted in significant risks
        and
        losses for the Company. Compared to sales in the health food market, the
        aggregate volume of mass market orders can vary significantly from period
        to
        period and tends to be more sensitive to short-term or local variations in
        market conditions. The instability can make planning difficult and can cause
        unexpected reductions in sales, or in orders that exceed the Company’s
        short-term capacity, in either case resulting in lost revenue. Failure to
        manage
        the costs and risks associated with the mass market could cause material
        adverse
        harm to the Company’s business.
 
 ***Certain
        stockholders have the ability to control the Company and have
        other***  ***substantial
        rights, preferences and privileges.***
 
 Assuming
        the Redux cash infusions are received by the Company, Redux, as the owner
        of 95%
        of the outstanding equity of the Company will control the Company. As a result,
        Redux will have the ability to elect all of the Company’s directors, control the
        outcome of all matters requiring stockholder approval and control the Company’s
        management and affairs.
 
 ***Future
        sales of equity securities could cause substantial dilution to
        the***  ***Company’s
        stockholders, depress the market price of its common stock and
        impair***  ***its
        ability to raise capital by selling its common stock.***
 
 The
        Company may seek to obtain new financing from various sources, including
        the
        sale of its securities. Future sales of common stock or securities convertible
        into common stock at or below recent market prices could result in dilution
        of
        the common stock, depress the market price of the Company’s common stock and
        impair its ability to raise capital by selling its common stock.
 
 ***The
        Company’s future success depends on the Company’s ability to develop
        and***  ***commercialize
        products.***
 
 The
        Company currently is engaged in developing nutraceuticals, which are
        characterized by extensive and costly research and rapid technological progress
        and change. New process developments are expected to continue at a rapid
        pace in
        both industry and academia. The Company’s future success will depend on its
        ability to develop and commercialize its existing product candidates and
        to
        develop new products. There can be no assurance that Naturade will successfully
        complete the development of any of its existing product candidates or that
        any
        of its future products will be commercially viable or achieve market acceptance.
        In addition, research and development and discoveries by others could render
        some or all of our programs or potential product candidates uncompetitive
        or
        obsolete.
 
 ***The
        Company is subject to variability of quarterly results and, therefore,
        its***  ***results
        of operations for any period may not be indicative of future
        periods.***
 
 The
        Company has experienced, and expects to continue to experience, variations
        in
        its net sales and operating results from quarter to quarter. The Company
        believes that the factors that influence this variability of quarterly results
        include the timing of its introduction of new product lines, the level of
        consumer acceptance of each product line, general economic and industry
        conditions that affect consumer spending and retailer purchasing, the
        availability of manufacturing capacity, the timing of trade shows, the product
        mix of customer orders, the timing of placement or cancellation of customer
        orders, the weather, transportation delays, the occurrence of chargebacks
        in
        excess of reserves and the timing of expenditures in anticipation of increased
        sales and actions of competitors. Accordingly, a comparison of the Company’s
        results of operations from period to period is not necessarily meaningful,
        and
        its results of operations for any period are not necessarily indicative of
        future performance.
  28
 ***The
        change in control affected by the Company’s recent recapitalization
        may***  ***restrict***  ***future
        use of its tax loss carry forwards.***
 
 As
        of
        December 31, 2006, the Company had federal net operating loss carry forwards
        of
        $29,756,012 that begin expiring in December 2017 and state net operating
        loss
        carry forwards of $18,817,934 that began expiring in December 2005. A valuation
        allowance for the full amount of net deferred taxes has been provided because
        it
        is more likely than not that the deferred taxes will not be realized. Under
        Section 382 of the Internal Revenue Code, certain significant changes in
        ownership, such as the Company’s recent recapitalization, may restrict the
        future utilization of these tax loss carry forwards. Based upon preliminary
        calculations, it is estimated that the utilization of tax losses for federal
        or
        state tax purposes would be limited to approximately $150,000 per year. As
        a
        result, federal net operating losses may expire before the Company is able
        to
        fully utilize them. As the Company is currently in a loss position this limit
        is
        not applicable. A more detailed calculation will be prepared once the Company
        has taxable income for federal purposes.
 
 ***The
        Company may not have sufficient resources to address product
        liability***  ***exposure.***
 
 Product
        liability risk is inherent in the testing, manufacture, marketing and sale
        of
        the Company’s products and product candidates, and there can be no assurance
        that the Company will be able to avoid significant product liability exposure.
        The Company may be subject to various product liability claims, including,
        among
        others, that its products include inadequate instructions for use or inadequate
        warnings concerning possible side effects and interactions with other
        substances. Naturade currently maintains general liability insurance and
        product
        liability insurance at levels consistent with industry norms and as required
        by
        the Company’s principal customers. The Company believes such insurance to be
        adequate. There can be no assurance that the Company will be able to maintain
        insurance in sufficient amounts to protect it against such liabilities at
        a
        reasonable cost. Any future product liability claim against the Company could
        result in it paying substantial damages, which may not be covered by insurance
        and may have a material adverse effect on the Company’s business and financial
        condition.
 
 ***The
        Soy protein based foods category is experiencing a decline in
        sales.***
 
 The
        Company’s business consists primarily of selling natural products and functional
        foods, including soy protein-based products. The soy foods category, which
        is a
        significant portion of the Company’s revenues, as a whole has recently
        experienced decreased sales. Other categories of dietary supplements have
        experienced reduced sales in recent periods after several years of dramatic
        growth. In particular, revenues in both the herbal and health food store
        categories have had periods of significant decline. There can be no assurance
        that this general consumer trend will not be experienced by the Company’s
        product categories as well. Even if the Company is successful in increasing
        sales within its market category, a decline in the overall market for natural
        products or functional foods could have a material adverse affect on its
        business.
 
 ***Adverse
        publicity may affect the Company’s ability to attract and
        retain***  ***distributors.***
 
 The
        Company’s products are formulated with vitamins, minerals, herbs and other
        ingredients that it regards as safe when taken as recommended by the Company
        and
        that scientific studies have suggested may involve health benefits. While
        the
        Company conducts extensive quality control testing on its products, the Company
        generally does not conduct or sponsor clinical studies relating to the benefits
        of its products. The Company is highly dependent upon consumers’ perception of
        the overall integrity of its business, as well as the safety and quality
        of its
        products and similar products distributed by other companies that may not
        adhere
        to the same quality standards as the Company does. The Company could be
        adversely affected if any of its products, or any similar products distributed
        by other companies, should prove harmful or be asserted to be harmful to
        consumers, or should scientific studies provide unfavorable findings regarding
        the effectiveness of such products. The Company’s ability to attract and retain
        distributors could be adversely affected by negative publicity relating to
        it or
        to other direct sales organizations or by the announcement by any governmental
        agency of investigatory proceedings regarding the business practices of the
        Company or other direct sales organizations.
 
 ***The
        Company may not be able to protect its intellectual property which
        could***  ***enable
        other companies to replicate its products.***
 
 The
        Company’s success depends in part on its ability to preserve its trade secrets
        and know-how, and operate without infringing on the property rights of third
        parties. The Company does not have any patents, and as a result another company
        could replicate one or more of its products. The Company’s policy is to pursue
        registrations for all of the trademarks associated with its key products.
        The
        Company relies on common law trademark rights to protect its unregistered
        trademarks as well as its trade dress rights. Common law trademark rights
        generally are limited to the geographic area in which the trademark is actually
        used, while a U.S. federal registration of a trademark enables the registrant
        to
        stop the unauthorized use of the trademark by any third party anywhere in
        the
        United States. The Company intends to register its trademarks in certain
        foreign
        jurisdictions where its products are sold. However, the protection available,
        if
        any, in such jurisdictions may not be as extensive as the protection available
        to the Company in the United States.
  29
 Currently,
        the Company has 53 U.S. trademarks. The Company also maintains trademark
        registrations in approximately 12 foreign countries. Because of its limited
        financial resources, the Company cannot in all cases exhaustively monitor
        the
        marketplace for trademark violations. The Company will evaluate and pursue
        potential infringement on a case-by-case basis in accordance with its business
        needs and financial resources. If the Company is not aware of some infringing
        uses or elect not to pursue them, the value of its trademarks could be
        substantially weakened. If the Company takes action to enforce its intellectual
        property rights, litigation may be necessary. Any such litigation could be
        very
        costly and could distract the Company’s personnel. Due to limited financial
        resources, the Company may be unable to pursue some litigation matters. In
        matters the Company does pursue, it can provide no assurance of a favorable
        outcome. An unfavorable outcome in any proceeding could have a material adverse
        effect on its business, financial condition and results of operations.
  ***New
        products are expensive to introduce and may not be
        successful.***
 
 Each
        year, the Company introduces new products to meet consumer demands and counter
        competitive threats. These new products include product line extensions,
        such as
        new flavors of currently existing products, as well as new formulations or
        configurations such as Diet Lean®. The Company experiences significant costs in
        formulating new products, designing packaging and merchandising. There can
        be no
        assurance that consumers and retailers will accept its new products. In
        addition, there can be no assurance that once new products are initially
        distributed to mass market and health food retailers, there will be repeat
        orders for these new products. Furthermore, expensive introductory retailer
        charges for additional shelf space may negate any initial increase in
        sales.
 
 ***The
        Company’s stock price may be subject to significant
        fluctuations.***
 
 Trading
        in the Company’s common stock is low in volume. The market price of the
        Company’s common stock is likely to be volatile and could be subject to
        significant fluctuations in response to factors such as quarterly variations
        in
        operating results, operating results which vary from the expectations of
        securities analysts and investors, changes in financial estimates, changes
        in
        market valuations of competitors, announcements by the Company or its
        competitors of a material nature, loss of one or more customers, additions
        or
        departures of key personnel, future sales of common stock and stock market
        price
        and volume fluctuations. For the five trading days ended March 31, 2007,
        the
        average daily trading volume of its common stock was 0 shares, compared to
        the
        up to 64,490,618 additional shares for which the Company has granted
        registration rights. Additionally, investor confidence may be adversely affected
        by issuance of a going concern opinion by the Company’s independent registered
        public accounting firm, which may cause the Company’s stock price to fall. Also,
        general political and economic conditions such as recession, or interest
        rate or
        currency rate fluctuations, may adversely affect the market price of the
        Company’s common stock.
 
 On
        August
        25, 2006, the NASD delisted the Company from the Over the Counter Bulletin
        Board, due to the Company’s inability to timely file its second quarter 2006
        10Q. The Company is now listed and trading on the “Pink Sheets” with the symbol
        NRDC.PK. Listing on the Pink Sheets could adversely affect the Company’s ability
        to increase the share price and move the Company’s common stock listing to a
        national security exchange.
 
 ***The
        Company’s common stock is currently deemed to be a “penny stock.” As
        a***  ***result,
        trading of its shares may be subject to special requirements
        which***  ***could
        impede the Company’s stockholders’ ability to resell their
        shares.***
 
 The
        Company’s common stock is a “penny stock” as that term is defined in Rule 3a51-1
        adopted under the Exchange Act because it is selling at a price below $5.00
        per
        share. In the future, if the Company was unable to list its common stock
        on a
        national securities exchange, or the per share sale price is not at least
        $5.00,
        its common stock may continue to be deemed to be a “penny stock.”
 
 Section
        15(g) of the Exchange Act and Rule 15g-2, require broker-dealers dealing
        in
        penny stocks to provide potential investors with a document disclosing the
        risks
        of penny stocks and to obtain a manually signed and dated written receipt
        of the
        document before effecting any transaction in a penny stock for the investor’s
        account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
        approve
        the account of any investor for transactions in such stocks before selling
        any
        penny stock to that investor. This procedure requires the broker-dealer to
        obtain from the investor information concerning his or her financial situation,
        investment experience and investment objectives; to determine reasonably,
        based
        on that information, that transactions in penny stocks are suitable for the
        investor and that the investor has sufficient knowledge and experience as
        to be
        reasonably capable of evaluating the risks of penny stock transactions; to
        provide the investor with a written statement setting forth the basis on
        which
        the broker-dealer made such determination; and to receive a signed and dated
        copy of such statement from the investor, confirming that it accurately reflects
        the investor’s financial situation, investment experience and investment
        objectives.
 
 Compliance
        with these requirements may make it more difficult for holders of the Company’s
        common stock to resell their shares to third parties or to otherwise dispose
        of
        them.
 
 ***The
        Company may not be able to comply in a timely manner with Section 404
        of***  ***the
        Sarbanes-Oxley Act of 2002, which could harm its operating
        results.***
 
 Pursuant
        to Section 404 of the Sarbanes-Oxley Act of 2002, the Company will be required,
        beginning in the Company’s fiscal year 2007, to perform an evaluation of the
        design and operating effectiveness of its internal controls and publicly
        attest
        to such evaluation. The Company has prepared an internal plan of action for
        compliance with the requirements of Section 404, although as of the date
        of this
        filing, it has not yet completed its effectiveness evaluation. Although the
        Company believes its internal controls are operating effectively, the Company
        cannot guarantee that it will not have a material weakness as reported by
        its
        independent registered public accounting firm. If the Company fails to complete
        this evaluation in a timely manner, it could be subject to regulatory scrutiny
        and a loss of public confidence in the Company’s internal controls. In addition,
        any failure to implement required new or improved controls, or difficulties
        encountered in their implementation, could harm the Company’s operating results
        or cause us to fail to meet our reporting obligations . ******
 
 30
 ***ITEM
        3***.**Quantitative
        and Qualitative Disclosures About Market Risk.**
 
 The
        Company’s earnings are not affected by fluctuations in the value of the U.S.
        dollar as compared to foreign currencies as a result a current lack of
        international purchases. As a result, the Company bears no risk of exchange
        rate
        gains or losses that may result in the future as a result of this financing
        structure. The Company’s exposure to market risk for changes in interest rates
        relates primarily to the Company’s long-term debt.
 
 In
        the
        normal course of business, the Company is exposed to a variety of risks
        including market risk associated with interest rate movements. The Company’s
        exposure to market risk for changes in interest rates relates primarily to
        the
        Company’s long-term debt.
 
 The
        Company’s long-term debt primarily consists of a (i) a line of credit facility
        of $4,350,000 consisting of a $1,350,000 term loan combined with $3,000,000
        revolving debt with Laurus entered into on July 27, 2005, and amended on
        January
        11, 2006 and $1,050,000 borrowed under a Loan Agreement with investors entered
        into on April 14, 2003. The line of credit bears interest at prime rate plus
        2%
        and the Investor Notes bear interest at 15% per annum.
 
 For
        the
        three months ended March 31, 2007, the interest expense on the line of credit
        was $64,080; if the interest rate were to increase by one percent, this would
        result in an interest expense of $40,571 for the three months ended March
        31,
        2007.
  ***ITEM
        4*** . **Controls
        and Procedures** .
 
 The
        Company’s management, with the participation of the Company’s Chief Executive
        Officer, Richard Munro, and Principal Accounting Officer, Adam Michelin,
        carried
        out an evaluation of the effectiveness of the Company’s disclosure controls and
        procedures (as defined in Exchange Act Rule 15d-15(e)). Based upon that
        evaluation, the Chief Executive Officer and the Principal Accounting
        Officer concluded that, as of the end of the period covered by this report,
        the Company’s disclosure controls and procedures are not effective at the
        reasonable assurance level in making known to them material information relating
        to the Company (including its consolidated subsidiaries) required to be included
        in this report.
 
 Disclosure
        controls and procedures, no matter how well designed and implemented, can
        provide only reasonable assurance of achieving an entity’s disclosure
        objectives. The likelihood of achieving such objectives is affected by
        limitations inherent in disclosure controls and procedures. These include
        the
        fact that human judgment in decision-making can be faulty and that breakdowns
        in
        internal control can occur because of human failures such a simple errors
        or
        mistakes or intentional circumvention of the established process. The Company’s
        disclosure controls and procedures are designed to provide reasonable assurance
        of achieving the Company’s disclosure objectives.
 
 There were
        changes in the Company’s internal control over financial reporting, that
        occurred during the Quarter covered by this report that has materially affected,
        or is reasonably likely to materially affect, the Company’s internal control
        over financial reporting. During August 2006, the Company reduced
        personnel, moved its primary offices, and filed for protection under
        Chapter 11. These and other significant events resulted in material internal
        control changes.
  **PART
        II. Other Information**
 
 ***ITEM
        1***  **.
        Legal Proceedings.** ****
 
 From
        time
        to time, the Company is party to various other claims and litigation that
        arise
        in the normal course of business. While any litigation contains an element
        of
        uncertainty, management believes that the ultimate outcome of these claims
        and
        litigation will not have a material adverse effect on the Company’s results of
        operations or financial condition. Prior to August 31, 2006, the Bankruptcy
        filing date, The Company was involved in the following litigation:
 
 The
        Company has fully accrued the amounts claimed in these suits as of March
        31,
        2007. In addition, the Company has received a stay as to each of these lawsuits
        under its Chapter 11 Bankruptcy proceeding. As of this filing no plaintiff
        or
        other party has made a motion for or been granted a Relief from
        Stay.
 
 **Ageless
        Foundation, Inc. v. Quincy Investment Corp., Naturade, Inc. and
        Peter**  **H.
        Pocklington** **(Case No. 05-25540 Circuit Court of the 11th Judicial District
        in**  **and
        for Miami-Dade County, Florida).** On
        December 30, 2005, Ageless filed a complaint in Circuit Court of the 11th
        Judicial District in and for Miami-Dade County, Florida against Quincy, the
        Company and Peter H. Pocklington, the former Chairman of the Board of the
        Company, for the alleged failure to pay certain consideration for the purchase
        of corporate assets sold by Ageless to Quincy, which obligation allegedly
        was
        guaranteed by the Company and Peter H. Pocklington. Ageless is seeking damages
        in the amount of $648,234. This case was settled through the Chapter 11
        Bankruptcy proceedings and the Company is no longer a party to this
        litigation.
 
 31
 On
        September 30, 2006, a judgment in the amount of $271,000 was entered against
        the
        Company related to a vendor. Such amount has been accrued as of December
        31,
        2006 and is included in Liabilities Subject to Compromise.
 
 The
        claims against Naturade were settled in the BK. Neither Redux nor any other
        of
        its Affiliates, except Naturade, were a party to
 the
        Ageless litigation. Redux did not make the contracts allegedly breached,
        was not
        involved with Naturade at the time the Ageless
 acquisition
        happened, and is only a shareholder of Naturade.
 
 The
        Company is the subject of various litigation matters, including an eviction
        matter with the Irvine Company related to the Company’s office facilities lease.
        The lease was set to expire in 2013; however, the Company vacated the premises
        in August 2006. The Company discontinued the accrual for the remaining rent
        as
        of August 31, 2006 as the lease was rejected by order of the bankruptcy on
        August 31, 2006. Accrued rents remaining unpaid as of August 31, 2006 are
        included in Liabilities Subject to Compromise as of March 31, 2007.
 
 
 The
        Company has fully accrued the amounts claimed in these suits as of March
        31,
        2007 and has included such amounts in Liabilities Subject to Compromise.
        In
        addition, the Company has received a stay as to each of these lawsuits under
        its
        Chapter 11 Bankruptcy proceeding. As of this filing no plaintiff or other
        party
        has made a motion for or been granted a Relief from Stay.
 
 The
        following litigation matters are currently pending:
 
 a) **** **Fortress
        Systems, LLC dba FSI Nutrition v. Naturade, Inc.** **(Case No. ADV**  **.06-08004
        U.S. Bankruptcy Court, District of Nebraska).** On
        January 11, 2006, Fortress Systems, LLC (dba FSI Nutrition) filed a claim
        against the Company in U.S. Bankruptcy Court, District of Nevada alleging
        failure to pay for a special order product. The plaintiff is seeking $47,255
        in
        damages. This claim was filed in the Company’s Chapter 11 bankruptcy case and is
        now treated as an unsecured creditor claim under the Plan.
 
 b) **Naturade, Inc. v. Doyle & Boissiere, LLC; Health Holdings and Botanicals,
        LLC; Quincy Investments Corp.: Peter H. Pocklington: William B. Doyle, Jr.;
        Lionel P. Boissiere; and Does 1-70 (** **Orange
        County Superior Court, State of California, Case No.:
        07CC02752)** .
        Filed
        on February 9, 2007. This lawsuit was initiated by the Company to seek
        compensation and damages relating to Breach of Fiduciary Duty, Breach of
        Contract, Fraud, Conversion, Breach of the Implied Covenant, Negligence,
        Accounting, and Declaratory Relief from several former directors and entities
        with which the Company had contractual relationships. The Company seeks
        compensatory and punitive damages against each defendant. A trial for this
        matter has not yet been set. Related to this litigation, on December 8, 2006,
        Quincy Investments, Inc. filed a proof of claim against the Company’s bankruptcy
        estate alleging a general unsecured claim in the approximate amount of
        $350,000.00 (“Quincy Claim”). The Company disputes the Quincy Claim, and has
        filed a formal objection to the Quincy Claim. This matter is pending in
        Bankruptcy Court.
 
 c) **Naturade,
        Inc. v. NBTY, Inc. d/b/a Omni-Pak Industries**  **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1057RK)** Filed on
        February 15, 2007. On December 11, 2006, NBTY, Inc. (“NBTY”) filed proof of
        claim against the Company’s bankruptcy estate alleging a general unsecured claim
        in the amount of $660,774.10 (“NBTY Claim”). The Company disputes the NBTY
        Claim, but has yet to file a formal objection to the NBTY Claim. On February
        15,
        2007, the Company filed a complaint against NBTY d/b/a/ Omni-Pak Industries
        to
        avoid and recover approximately $191,480.81 of preferential transfers of
        property under Bankruptcy Code Sections 547 and 550. A trial for this matter
        has
        not yet been set.
 
 d) **Naturade,
        Inc. v. Yellow Transportation** **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1055RK).** Filed
        on
        February 14, 2007. On November 6, 2006, Yellow Transportation (“YT”) filed proof
        of claim against the Company’s bankruptcy estate alleging a general unsecured
        claim in the amount of $60,336.88 (“YT Claim”). The Company disputes the YT
        Claim, but has yet to file a formal objection to the YT Claim. On February
        14,
        2007, The Company filed a complaint against YT seeking to avoid and recover
        approximately $191,761.02 of preferential transfers of property under Bankruptcy
        Code Sections 547 and 550. A trial for this matter has not yet been set.
 
 e) **Naturade,
        Inc. v. United Parcel Service, Inc.**  **(United
        States Bankruptcy Court, Adversarial Case No.: SA07-1056RK)** Filed on
        February 14, 2007. On November 6, 2006, UPS filed a proof of claim asserting
        an
        unsecured claim in the amount of $11,997.96 (“UPS Claim”). On February 14, 2007,
        the Company filed a complaint against UPS to avoid and recover approximately
        $22,784.68 of preferential transfers of property under Bankruptcy Code Sections
        547 and 550 (“UPS Complaint”). On April 9, 2007, the Company filed and served a
        motion seeking court approval of a settlement agreement with UPS that provides
        for UPS to pay the Company $3,500.00 and waive any and all other claims against
        the Company as consideration for the Company’s dismissal of the UPS Complaint
        with prejudice. This motion was approved by the Court and the Company received
        settlement of $3,500 from UPS in May 2007 bringing finality to this
        matter
 
 32
 f) **** **Claims
        and Other Bankruptcy Related Litigation:** The
        Company anticipates that objections to numerous claims filed against the
        Company’s bankruptcy estate will be prepared and prosecuted by the Company in or
        about April 2007 based on several factual and legal grounds, which should
        result
        in the reduction or elimination of certain claims filed in the bankruptcy
        case. **** In
        addition thereto, the Company may commence additional adversary actions,
        including actions for avoidance and recovery of preferential transfers against
        certain of the Company’s pre-petition date creditors.
  g) **Invensys
        Systems, Inc. v. Pinnacle Marketing Concepts, Inc., et al (Orange County
        Superior Court, Case No. 07CC00470):**
 On
        or
        about March 23, 2007, Invensys Systems, Inc., a sublandlord, in the chain
        of
        possession of the premises located at 601 Valencia Avenue, Brea, California
        92823, serviced a three day notice to pay rent or quite. . The Company’s
        bankruptcy attorney promptly sent a response that a bankruptcy stay was in
        place
        and the sublandlord was prevented as a matter of law with proceeding to evict
        the Company. Subsequently, the sublandlord filed an Unlawful Detainer against
        a
        number of subtenants, including the Company. The Company has not been served
        with the Complaint and therefore dose not have to file an Answer. The Company
        has signed a lease for new premises and believes it will be out of the Valencia
        location before the end of May. Further, the Company’s sublease agreement is
        with One World Science Inc. and not with the Plaintiff and there is no privity
        of contract. The Company is in good standing with its sublandlord, One World
        Science Inc.
 
 The
        Company has fully accrued the amounts claimed in these suits (except for
        the
        Invensys suit) as of March 31, 2007. In addition, the Company has received
        a
        stay as to each of these lawsuits under its Chapter 11 Bankruptcy proceeding.
        As
        of this filing no plaintiff or other party has made a motion for or been
        granted
        a Relief from Stay. ****
 
  ***ITEM
        1A***  **.
        Risk Factors.**
 
 See
“Risk
        Factors” in Part I, Item 2 of this Quarterly Report on Form 10-Q for a
        description of the Company’s risk factors.
 
 ***ITEM
        2***  **.
        Unregistered Sales of Equity Securities and Use of
        Proceeds.**
  NONE
 
 ***ITEM
        3*****.
        Defaults Upon Senior Equity Securities**.
 
 NONE.
 
 ***ITEM
        4***  **.
        Submission of Matters to a Vote of Security Holders** .
 
 NONE
 
 ***ITEM
        5***  **.
        Other Information** .
 
 NONE
  ***Item
        5.02*** **** **Departure
        of Directors or Certain Officers; Election of Directors; Appointment of Certain
        Officers; Compensatory** **Arrangements
        of Certain Officers.**
 
 On
        May
        14, 2007, Karen M. Muller was elected to the Naturade Board of Directors
        and
        appointed as Chair of the Compensation and Governance Committee.
 
 ***Karen
        M. Muller Bio*** **.** Ms.
        Muller graduated from Fordham Law School, as a member of the Fordham Law
        Review,
        and holds a B.A. in Economics, summa cum laude, from Hunter College of the
        City
        University of New York. Ms. Muller has over 20 years experience in the
        investment banking and financial services industry. Ms. Muller has been a
        consultant to Redux, the controlling shareholder of Naturade, since July
        2006.  Since November 2004, Ms. Muller also has been a principal and part
        owner of Cerius Consulting Group, Inc., based in Orange County. From May
        2003
        until November 2004, Ms. Muller worked with the Newport Beach based investment
        banking firm Capital Asset Advisors. From October 1999 until February 2003,
        Ms,
        Muller was Chief Administrative Office and General Counsel of Epoch Networks,
        Inc. where she helped complete the restructuring and sale of Epoch’s Internet
        Service Provider business. Prior to joining Epoch, for ten years, Ms. Muller
        was
        Managing Director with Lehman Brothers. Prior to Lehman Brothers, Ms, Muller
        was
        an associate at the Wall Street law firm Cahill, Gordon & Reindel, where she
        worked on corporate finance and M&A transactions. She holds the title
        Director Emeritus of the Forum for Corporate Directors, for which she
        established an ISS approved board governance training program.  Ms. Muller
        previously served on the Naturade Board from August 11, 2006 until April
        12,
        2006.
 
 33
 ***ITEM
        6*****.
        Exhibits**
 
 (a)
        Exhibits
 
 
 **Exhibit**
                **Number**
              **Document****10.82
              Letter
                  Agreement dated January 3, 2007 between Redux Holdings, Inc and
                  Howard
                  Shao**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**31.1
              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**32.1
              Certification
                  Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of
                  the
                  Sarbanes-Oxley Act of 2002
  
 
 *
              Management
                  contracts or compensatory plan or arrangement.**
              Filed
                  herewith.
 
 
 **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the Registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
   NATURADE,
                  INC.(Registrant)DATE:
                  May 15, 2007
              By
              */s/*Richard MunroRichard
                  MunroChief
                  Executive OfficerDATE:
                  May 15, 2007
              By
              */s/*Adam
                  MichelinPrincipal
                  Accounting Officer
  
 34
 **EXHIBIT
        INDEX**
  **Exhibit**
                **Number**
              **Document****10.82
              Letter
                  Agreement dated January 3, 2007 between Redux Holdings, Inc and
                  Howard
                  Shao**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**31.1
              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**32.1
              Certification
                  Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of
                  the
                  Sarbanes-Oxley Act of 2002
   
 
 *
              Management
                  contracts or compensatory plan or arrangement.**
              Filed
                  herewith.
 
 35