<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-Q

(Mark One)

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

                  For the quarterly period ended March 31, 2000

                                       or

[ ]      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
  incorporation or organization)                    Identification No.)

                    14370 Myford Rd. Irvine, California 92606
                    -----------------------------------------
                    (Address of principal executive offices)

                                 (714) 573-4800
                                 --------------
              (Registrant's telephone number, including area code)

         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 /X/  No / /

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate by number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 7,347,389 shares
as of May 1, 2000.

                           Exhibit Index on Page 19

                                       1
<PAGE>

                                    FORM 10-Q
                                QUARTERLY REPORT
                          Quarter Ended March 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE NO.
                                                                                                       --------
<S>                                                                                                    <C>
PART I:           FINANCIAL INFORMATION

     Item 1.          Financial Statements

                      Balance Sheets  at March 31, 2000                                                   3
                      (unaudited) and December 31, 1999 (audited)

                      Statements of Operations for the three month period ended                           4
                      March 31, 2000 (unaudited) and March 31, 1999
                      (unaudited)

                      Statements of Cash Flows for three month periods ended                              5
                      March 31, 2000 (unaudited) and March 31,1999 (unaudited)

                      Notes to Financial Statements                                                       6

     Item 2.          Management's Discussion and Analysis of Financial Condition                        10
                      and Results of Operations

PART II:          OTHER INFORMATION

     Item 1.          Legal Proceedings                                                                  16

     Item 2.          Changes in Securities                                                              16

     Item 3.          Defaults upon Senior Securities                                                    16

     Item 4.          Submission of Matters to a Vote of Security Holders                                16

     Item 5.          Other Information                                                                  16

     Item 6.          Exhibits and Reports on Form 8-K                                                   17

SIGNATURES                                                                                               18
</TABLE>

                                       2
<PAGE>

NATURADE, INC.

BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999

                      ASSETS

<TABLE>
<CAPTION>
                                                                             March 31, 2000      December 31, 1999
<S>                                                                      <C>                    <C>
Current assets:

   Cash and cash equivalents                                                      $173,183             $1,056,240
   Accounts receivable, net                                                      1,343,185              1,217,323
   Inventories                                                                   1,983,751              2,225,289
   Prepaid expenses and other current assets                                       459,299                178,603
                                                                            ---------------       ----------------
                      Total current assets                                       3,959,418              4,677,455

Property and equipment, net                                                        316,476                326,317
Other assets                                                                        97,140                 99,178
                                                                            ---------------       ----------------
                      Total assets                                              $4,373,034             $5,102,950
                                                                           ================       ================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current  liabilities:
   Accounts payable                                                             $1,688,347             $2,035,862
   Accrued expenses                                                                652,856                547,573
   Current portion of long-term debt                                             1,367,138              2,743,949
                                                                            ---------------       ----------------
                      Total current liabilities                                  3,708,341              5,327,384

Long-term debt, less current maturities                                          3,770,434              3,778,528

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:

Common stock, par value $0.0001 per share; authorized, 50,000,000
  shares; issued and outstanding, 7,347,389 at March 31, 2000
  and 5,349,084 at December 31, 1999                                                   697                    535
Preferred stock, par value $0.0001 per share; authorized, 2,000,000
   shares; issued and outstanding, 1,250,024                                           125                    125

Additional paid-in capital                                                      11,311,743              9,688,025
Accumulated deficit                                                            (14,418,306)           (13,691,647)
                                                                            ---------------       ----------------
                      Total stockholders' deficit                               (3,105,741)            (4,002,962)
                                                                            ---------------       ----------------
                      Total liabilities and stockholders' deficit               $4,373,034             $5,102,950
                                                                           ================       ================
</TABLE>

                See accompanying notes to financial statements.

                                       3
<PAGE>

NATURADE, INC

STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS
   ENDED MARCH 31, 2000 AND MARCH 31, 1999

<TABLE>
<CAPTION>
                                                                               Three Months Ended        Three Months Ended
                                                                                  March 31, 2000           March 31, 1999
                                                                                  (Unaudited)              (Unaudited)
<S>                                                                           <C>                       <C>
Net sales                                                                          $3,386,534               $2,352,808

Cost of sales                                                                       1,841,593                1,384,629
                                                                                 -------------            -------------

Gross profit                                                                        1,544,941                  968,179
                                                                                 -------------            -------------

Costs and expenses:
     Selling, general and  administrative expenses                                  1,953,116                1,894,285
     Depreciation and amortization                                                     42,084                   46,780
     Other operating expense                                                                -                2,774,000
                                                                                 -------------            -------------

       Total operating costs and expenses                                           1,995,200                4,715,065
                                                                                 -------------            -------------

Operating loss                                                                       (450,259)              (3,746,886)

Other expense:
    Interest expense                                                                  270,407                   89,251
    Other expense (income)                                                              5,193                  (56,265)
                                                                                 -------------            -------------

Loss before provision for income taxes                                               (725,859)              (3,779,872)

Provision for income taxes                                                                800                    2,400
                                                                                 -------------            -------------

Net loss                                                                            ($726,659)             ($3,782,272)
                                                                                 =============            =============

Basic and Diluted Loss per share                                                       ($0.12)                  ($0.71)
                                                                                 =============            =============

Weighted Average Number of Shares used in Computation of
     Basic and Diluted Loss per Share                                               5,898,405                5,336,733
                                                                                 =============            =============
</TABLE>
                 See accompanying notes to financial statements

                                       4
<PAGE>

NATURADE, INC

STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
  ENDED MARCH 31, 2000 AND MARCH 31, 1999

<TABLE>
<CAPTION>
                                                                    Three Months Ended        Three Months Ended
                                                                      March 31, 2000            March 31, 1999
<S>                                                                <C>                       <C>
Cash flows from operating activities:
Net  (loss) income                                                     ($726,658)               ($3,782,272)
Adjustments to reconcile net (loss) to
   net cash used in operating activities:
Depreciation and amortization                                             42,084                     46,780
Provision for bad debt expense                                                 -                     61,445
Provision for excess and obsolete inventories                                  -                    (83,465)
Loss on disposition of property and equipment                              6,973                          -
Writeoff of Intangible Assets                                                  -                    (49,580)
Changes in assets and liabilities:
   Accounts receivable                                                  (125,862)                   203,872
   Inventories                                                           241,538                    105,631
   Prepaid expenses and other current assets                            (300,607)                  (119,104)
   Other assets                                                            2,038                     26,279
   Lawsuit judgement payable                                                                      2,774,000
   Accounts payable and accrued expenses                                (242,232)                   240,799
                                                                    ------------               -------------
          Net cash used in operating activities:                      (1,102,726)                  (575,615)

Cash flows from investing activities:
Related Party Receivable                                                       -                          -
Purchase of property and equipment                                       (21,155)                   (53,822)
Proceeds from sale of property and equipment                               1,849                     55,000
                                                                    ------------               -------------
          Net cash (used in) provided by investing activities:           (19,306)                     1,178

Cash flows from financing activities:
Net borrowings under line of credit                                      178,138                    285,719
Payments of long-term debt, including capital lease                     (113,644)                   (48,831)
    majority shareholder into equity
Amortization of debt discount                                            174,481
Proceeds from sale of stock                                                                          38,794
Proceeds from exercise of stock options/warrants                               -                      1,065
                                                                    ------------               -------------
          Net cash provided by financing activities:                     238,975                    276,747

Net decrease in cash and cash equivalents                               (883,057)                  (297,690)
Cash and cash equivalents, beginning of period                         1,056,240                    842,029
                                                                    ------------               -------------
Cash and cash equivalents, end of period                                $173,183                   $544,339
                                                                    ============               =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR:
Interest                                                                $133,647                    $87,880
Taxes                                                                         $0                         $0
</TABLE>

                 See accompanying notes to financial statements

                                       5
<PAGE>

                                 NATURADE, INC.

                          Notes to Financial Statements

1.    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. In the opinion of management, the information contained herein
      includes all adjustments necessary for fair presentation of the financial
      statements. All such adjustments are of a normal recurring nature. These
      financial statements do not include all disclosures associated with the
      Company's annual financial statements and accordingly, should be read in
      conjunction with such statements.

2.    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, 2000 and December 31, 1999 consisted of the
      following:

<TABLE>
<CAPTION>
                                                          March 31, 2000     December 31, 1999
                                                            (Unaudited)          (Audited)
                                                           ------------        -------------
<S>                                                      <C>               <C>
      Raw Materials                                         $  188,597          $  180,174
      Finished Goods                                         2,389,621           2,639,582
                                                           ------------        -------------

      Subtotal                                               2,578,218           2,819,756
      Less: Reserve for Excess and Obsolete Inventories       (594,467)           (594,467)
                                                           ------------        -------------
                                                            $1,983,751          $2,225,289
</TABLE>

3.    As previously reported, on March 11, 1999, a civil judgment (the "PNI
      Judgment") was entered against the Company and a co-defendant for a total
      of $2,774,000 by the United States Bankruptcy Court for the Northern
      District of Texas following trial in a proceeding initiated by the
      Trustee (the "PNI Trustee") in the Chapter 7 bankruptcy case of
      Performance Nutrition, Inc. ("PNI"). On August 5, 1999, the Bankruptcy
      Court approved a settlement agreement between the Company and the PNI
      Trustee (the "Settlement Agreement"). The Settlement Agreement provided
      the Company with a full release of the Judgment and required the Company
      to deliver to the PNI Trustee (1) a cash payment of $1,350,000 which was
      made in 1999, (2) a promissory note in the amount of $424,000, of which
      $176,667 is outstanding at March 31, 2000, payable over 12 months at 5%
      interest, and (3) a contingent promissory note (the obligations under
      which have lapsed without payment by the Company). Consequently, the
      adjusted total cost to the Company of the settlement is $1,774,000,
      exclusive of interest on the promissory note.

                                       6
<PAGE>

4.    The Company rents property and equipment under certain noncancellable
      operating leases expiring in various years through 2006. Future minimum
      commitments under operating leases as of March 31, 2000 are as follows:

<TABLE>
<CAPTION>
                YEAR                                AMOUNT
                -----                               ------
<S>                                           <C>
                2000 (April 1 - December 31)       304,606
                2001                               435,420
                2002                               417,113
                2003                               412,828
                2004                               399,584
                Thereafter                         734,052
                                               ------------
                  Total                        $ 2,703,603
</TABLE>

5.    In March 1999, the Company entered into a Finance Agreement (the "Finance
      Agreement") with Health Holdings and Botanicals, Inc., a majority
      stockholder of the Company ("Health Holdings"). The Finance Agreement
      provided that the Company was entitled to borrow up to $1 million at an
      interest rate of 8% per annum. The Finance Agreement further provided that
      for each dollar borrowed, the Company would issue a warrant to Health
      Holdings to purchase three-tenths (0.3) of a share of common stock of the
      Company at an exercise price of $2.125 per share. As of June 30, 1999, the
      Company had issued 300,000 warrants under the Finance Agreement prior to
      the Amendment referred to below. The warrants are exercisable for a period
      of ten years commencing on the date of grant.

6.    In June 1999, the Finance Agreement was amended (the "Amendment") to
      increase the amount of available borrowings to $1.6 million (also at an
      interest rate of 8% per annum). The Amendment further provided that for
      each dollar borrowed over $1 million, the Company would issue a warrant
      to Health Holdings to purchase one-half (1/2) of a share of common stock
      of the Company at an exercise price of $1.00 per share. Further, the
      exercise price of the 300,000 warrants previously issued under the
      Finance Agreement prior to the Amendment was reset to $1.00 per share.
      All borrowings under the Finance Agreement were secured by the assets of
      the Company. All borrowings made prior to June 1, 1999 were due on March
      7, 2000; those made after May 31, 1999 were scheduled to be due May 31,
      2000. As of December 31,1999, the Company borrowed $1,600,000 under the
      Finance Agreement and the Amendment and issued a total of 600,000
      warrants to Health Holdings. The Company recorded the fair value of the
      warrants issued as a debt discount and amortized this discount over the
      life of the debt. The Finance Agreement further provided that at any time
      upon written notice, Health Holdings may convert any portion of the
      advances into shares of the Company's common stock at a conversion price
      equal to the lower of $1.00 per share or the then fair market value of
      the Company's common stock.

                                       7
<PAGE>

7.    In August 1999, the Company entered into a Credit Agreement (the "Credit
      Agreement") with Health Holdings. The Credit Agreement allows for advances
      (the "Advances") of $4 million at an interest rate of 8% per annum with a
      due date of July 31, 2004. Interest only payments are required on a
      quarterly basis. As of March 31, 2000, the Company has borrowed $3,650,000
      under this facility. The Credit Agreement further provides that any time
      upon written notice, Health Holdings may convert any portion of the
      Advances into shares of the Company's common stock at a conversion price
      equal to the lower of $.75 per share or the then fair market value of the
      Company's common stock.

8.    In March 2000, Health Holdings converted the entire outstanding balance
      under the Finance Agreement of $1,600,000 plus accrued interest of
      $23,145 into 1,997,717 shares of restricted common stock of the Company
      based on the then fair market value of the Company's common stock of
      $.812. Effective with this conversion, the Finance Agreement terminated
      and is no longer in effect.

9.    On January 27, 2000, the Company entered into a three year Credit and
      Security Agreement with Wells Fargo Business Credit that allows for
      maximum borrowings of up to $3,000,000, based on certain percentages of
      eligible accounts receivable and inventories as defined. Amounts due under
      the Credit and Security Agreement bear interest at the prime rate plus
      1.5%. Borrowings under the Credit and Security Agreement are
      collateralized by substantially all assets of the Company. The Credit and
      Security Agreement contains covenants which, among other things, require
      that certain financial ratios are met. As of March 31, 2000, the Company
      borrowed $1,158,446 under the Credit and Security Agreement and based on
      eligible accounts receivables and inventory the additional availability
      as of March 31, 2000 is approximately $1,100,000.

10.   As part of a restructuring of the Company in 1991, equity holders
      exchanged their shares for new common stock and Class A and Class B
      Warrants. The Class A Warrants expired at December 31, 1996. The Class B
      Warrants allowed for the purchase of one share of common stock for $1.25
      per share. Subsequent to December 31, 1999, 588 warrants were exercised.
      On January 15, 2000, the remaining 324,520 unexercised Class B warrants
      expired.

11.   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 operating decision-maker, or decision-making
      group, in deciding how to allocate resources and in assessing
      performance.

      The Company's reportable operating segments include health food specialty
      stores and mass market categories. 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.

                                       8
<PAGE>

      Operating segment data for the three months ended March 31, 2000 and
      March 31, 1999 was as follows:

<TABLE>
<CAPTION>
                                                                    Distribution Channels
                                                                    Health Food   Mass Market        Total
                                                                   -------------  -----------     ------------
<S>                                                                <C>             <C>            <C>
        Three months ended March 31, 2000
             Sales                                                  $ 2,451,827    $ 934,707      $ 3,386,534
             Cost of Sales                                            1,328,719      512,874        1,841,593
                                                                   -------------   ----------     ------------
                 Gross Profit                                         1,123,108      421,833        1,544,941


        Three months ended March 31, 1999
             Sales                                                  $ 2,291,638    $ 61,170      $ 2.352,808
             Cost of Sales                                            1,350,883      33,746        1,384,629
                                                                   -------------   ----------     ------------
                 Gross Profit                                           940,755      27,424          968,179
</TABLE>

      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 months ended March 31, 2000 and March 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                                                   United States       International       Total
                                                                   -------------       -------------   ------------
<S>                                                                <C>                <C>             <C>
          Three months ended March 31, 2000
               Sales                                                $ 3,247,724          $ 138,810     $ 3,386,534
               Cost of Sales                                          1,757,689             83,904       1,841,593
                                                                   -------------       -------------   ------------
                    Gross Profit                                      1,490,035             54,906       1,544,941

<CAPTION>
                                                                   United States       International       Total
                                                                   -------------       -------------   ------------
<S>                                                                <C>                <C>             <C>
        Three months ended March 31, 1999
               Sales                                                $ 2,331,925           $ 20,883     $ 2,352,808
               Cost of Sales                                          1,358,005             26,624       1,384,629
                                                                   -------------       -------------   ------------
                    Gross Profit                                        973,920             (5,741)        968,179
</TABLE>

      During the three months ended March 31, 2000 and 1999 one customer
      which includes six distribution centers accounted for 23.6% and 26.2%,
      respectively, of total net sales.

12.   In 1998, the FASB issued SFAS no. 133: " Accounting for Derivatives and
Hedging Activities", which the Company will adopt in fiscal 2001. SFAS No.
133 requires that all derivatives be reported at fair value. Management has
not yet determined the impact of the adoption of SFAS No. 133 on the
financial statements of the Company.

                                       9
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

       This discussion contains "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Although Naturade,
Inc. (the "Company" or the "Registrant") 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 and future results may be subject to numerous factors, many
of which are beyond the control of the Company. Such risk factors include,
without limitation, the risk of changes or developments in the regulatory
framework or product liability principles applicable to the Company and its
products, and the risk of consolidation in the distribution channels expected
to be used by the Company to distribute its products. 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, 2000
compared to the three months ended March 31, 1999.

RESULTS OF OPERATIONS

       Total net sales for the three months ended March 31, 2000 increased
$1,033,726 or 43.9%% to $3,386,534 from $2,352,808 for the three months ended
March 31 ,1999. Of this amount, domestic sales increased $1,187,160 or 58.6%
to $3,211,915 from $2,024,755 for the three months ended March 31, 1999. Kids
Plex-tm sales decreased $69,364 or 92.4% to $5,698 from $75,062 for the three
months ended March 31, 1999. International sales increased $117,928 or 564%
to $138,811 from $20,883 for the three months ended March 31, 1999. Partially
offsetting this sales increase in the three months ended March 31, 2000 was
the sale in the March 1999 quarter of $148,164 of raw materials to copackers
(the "Raw Material Sale") for which there were no comparable sales in the
three months ended March 31, 2000. Finally, private label sales for the three
months ended March 31, 2000 declined $57,032 to $15,466 from $72,498 for the
three months ended March 31, 1999 as the Company continued to deemphasize
private label business due to its low profit margins and small volume.

       For the three months ended March 31, 2000, the top 40 customers
accounted for $3.1 million or 91% of sales, with 22 health food customers
contributing $2.1 million or 60.7% of sales, 16 mass market customers
contributing $927,000 or 27.5% of sales, and 2 international customers
contributing $99,000 or 2.9% of sales. For the three months ended March 31,
2000, the Company continued its rollout of Naturade Total Soy products, with
twelve products comprising the product family contributing $1,249,000 or 37%
of sales. Overall, the top 25 products represented $2,207,000 or 65.2% of
sales of which twelve protein powder products contributed $898,000 or 26.5%
or sales, seven Naturade Total Soy products contributed $1,055,000 or 31.2%
of sales,

                                       10
<PAGE>

four Aloe Vera products represented $182,000 or 5.4% of sales and two
expectorant products represented $72,000 or 2.1% of sales.

       Gross profit as a percentage of sales increased 4.5% to 45.6% of sales
for the three months ended March 31, 2000 from 41.1% for the three months
ended March 31, 1999. The increase in gross profit for the March 31, 2000
period is due to lower production expenses incurred because of the complete
outsourcing of all production by the end of March 2000 and the Raw Material
Sale at cost to copackers. Since this sale was at cost, it produced no gross
margin and thus distorted the March 1999 quarter gross margin by
approximately 2.7%.

       Selling, general and administrative expenses increased $58,831 to
$1,953,116 or 57.7% of sales for the three months ended March 31, 2000, from
$1,894,285 or 80.5% for the three months ended March 31, 1999. Variable
marketing, commissions and freight out costs were $428,638, $142,528 and
$214,512 for the three months ended March 31, 2000 compared to $403,935,
$99,144 and $160,927 for the three months ended March 31,1999. The increase
of $24,703 in variable marketing costs is attributable to costs associated
with increased trade promotions. Commissions and freight out costs as a
percent of sales were 4.2% and 6.3%, respectively, for the three months ended
March 31, 2000 compared to 4.2% and 6.8%, respectively, for the three months
ended March 31, 1999. For the three months ended March 31, 2000, these higher
variable marketing, commissions and freight-out costs were partially offset
by lower general and administrative expenses resulting in a net increase of
$59,000 compared to the three months ended March 31, 1999.

       Other operating expense for the three months ended March 31, 1999
consisted of $2,774,000 relating to the PNI Judgment. See Note 3 to the
Financial Statements. There was no comparable amount for the three months
ended March 31, 2000.

       Interest expense for the three months ended March 31, 2000 increased
$181,156 compared to the three months ended March 31, 1999. This increase was
due to additional cash interest costs of $30,555 attributable to borrowings
under the Credit Agreement and Finance Agreement and non-cash interest costs
of $150,601 related to the amortization of the debt discount. See Note 8 to
the Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

       The Company used cash of $1,102,726 in operating activities in the
three months ended March 31, 2000 compared to $575,615 for operating
activities for the three months ended March 31, 1999.

       The Company's working capital increased from ($649,929) at December
31, 1999 to $251,077 at March 31, 2000. This increase was largely due to the
conversion of $1.6 million due to Health Holdings into the Company's common
stock in March 2000. See Note 8 to the Financial Statements. This increase
was offset by the Company's operating losses for the three months ended March
31, 2000.

                                       11
<PAGE>

       Cash used in investment activities during the three month period ended
March 31, 2000 was ($19,306) compared to cash provided by investing
activities during the three months ended March 31, 1999 of $1,178.

       The Company's cash provided by financing activities was $238,975 for
the three month period ended March 31, 2000 compared to cash provided by
financing activities of $276,747 for the three month period ended March 31,
1999. The March 31, 2000 amount was the result of an increase in borrowings
under the Credit and Security Agreement, the net impact of the conversion of
$1.6 million due to Health Holdings into equity and the quarterly repayment
under the Settlement Agreement. See Note 3 to the Financial Statements.

RISK FACTORS

       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.

       Impact of Government Regulation

       The Company's operations, properties and products are subject to
regulation by various foreign, federal, state and local government entities
and agencies, particularly the U.S. Food and Drug Administration (FDA) and
Federall Trade Commission (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.

       As a result of the Company's efforts to comply with 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 or foreign regulatory authorities, the repeal or amendment of laws or
regulations which the Company considers favorable, such as the Dietary
Supplement Health and Education Act (DSHEA), or more stringent
interpretations of current laws or regulations. The Company is unable to
predict the nature of such 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
the Company's business in the future. Such future laws and regulations could,
however, require the reformulation of certain products to meet new standards,
the recall or discontinuance of certain products that cannot be reformulated,
the imposition of additional recordkeeping requirements, expanded
documentation of product efficacy, and expanded or modified labeling and
scientific substantiation. Any or all of such requirements could have a
material adverse effect on the Company's results of operations and financial
condition.

                                       12
<PAGE>

       Technological Changes

       The Company currently is engaged in developing nutraceuticals, which
are characterized by extensive research efforts 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 the
Company 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, there can be no assurance
that research and development and discoveries by others will not render some
or all of the Company's programs or potential product candidates
uncompetitive or obsolete.

       Dependence on Third-Party Manufacturers

       Although the FDA does not currently regulate manufacturing facilities
for nutraceutical products, there can be no assurance that the FDA at some
time in the future will not begin regulating these manufacturing facilities.
If the FDA were to begin regulating the manufacturing facilities for
nutraceuticals and if the manufacturing facilities used by our third-party
manufacturers did not meet those standards, the production of the Company's
products will be delayed until the necessary modifications are made to comply
with those standards. If the manufacturer were unable or unwilling to make
the necessary modifications, the Company would be required to find an
alternate source to manufacture its products.

       Competition

       The market for nutraceutical products is highly competitive. Many, if
not all, of the Company's competitors have substantially greater capital
resources, research and development capabilities, and manufacturing and
marketing resources, capabilities and experience than the Company. The
Company's competitors may succeed in developing products that are more
effective or less costly than any products that may be developed by the
Company.

       Dependence on Qualified Personnel

       The Company's success is dependent upon its ability to attract and
retain qualified scientific and executive management personnel. To
commercialize its products and product candidates, the Company must maintain
and expand its personnel, particularly in the areas of product sales and
marketing. The Company faces intense competition 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 or retaining qualified personnel. Moreover, managing the
integration of such new personnel could pose significant risks to the
Company's development and progress and increase its operating expenses.

                                       13
<PAGE>

       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. The Company currently
maintains a general liability insurance policy and a product liability
insurance policy. There can be no assurance that the Company will be able to
maintain such insurance in sufficient amounts to protect the Company against
such liabilities at a reasonable cost. Any future product liability claim
against the Company could result in the Company paying substantial damages,
which may not be covered by insurance and may have a material adverse effect
on the business and financial condition of the Company.

       Effect of Adverse Publicity

       The Company's products consist of vitamins, minerals, herbs and other
ingredients that the Company regards as safe when taken as suggested by the
Company and that various 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 which may not adhere to the same quality standards as the
Company. The Company could be adversely affected if any of the Company's
products or any similar products distributed by other companies should prove
or be asserted to be harmful to consumers or should scientific studies
provide unfavorable findings regarding the effectiveness of the Company's
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 organization or by the announcement by any governmental agency of
investigatory proceedings regarding the business practices of the Company or
other direct sales organizations.

       Intellectual Property Protection

       Our success depends in part on our ability to obtain and maintain
patent protection for our technologies and products, preserve our trade
secrets, and operate without infringing on the property rights of third
parties. 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 rights generally are limited to the
geographic area in which the trademark is actually used, while a United
States 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 the Company's 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.

                                       14
<PAGE>

       Currently, the Company has received over twenty United States
trademarks as well as California registrations on seven trademarks. The
Company also maintains trademark registrations in over twenty-five foreign
countries. To the extent the Company does not have patents on its products,
another Company may replicate one or more of the Company's products.
Litigation may be necessary to enforce our patent and proprietary rights. Any
such litigation could be very costly and could distract our personnel. We can
provide no assurance of a favorable outcome of any litigation proceeding. An
unfavorable outcome in any proceeding could have a material adverse effect on
our business, financial condition and results of operations.

YEAR 2000 ISSUE UPDATE

       Many computer systems and other equipment with embedded chips or
processors in use today were designed and developed using two digits, rather
than four, to specify the year. As a result, such systems will recognize the
Year 2000 as "00" and may assume that the year is 1900 rather than 2000. This
is commonly known as the Year 2000 issue, which could potentially result in a
system failure or in miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices or engage in other similar normal business activities.

       The Company has implemented a comprehensive program to address Year
2000 issues. The program considers the effect of the Year 2000 on the
Company's internal systems, customers, products and services, and suppliers
and other critical business partners. Implementation of the Company's plan is
complete and the Company believes that all identified potential Year 2000
issues have been effectively resolved. The cost to identify and resolve Year
2000 issues was not material to the Company's financial results and has been
expensed as incurred or capitalized where appropriate. There can be no
assurance that the Company's Year 2000 program or the programs of critical
business partners will be completely successful, and failure could have a
material adverse effect on the Company's business and results of operations.

       At this time we have not experienced any material Year 2000 related
problems with our information systems and computer software, and we have not
experienced any material problems with our key suppliers or customers related
to Year 2000. There has been no material impact on our business, financial
condition or results of operations related to the Year 2000.

RECENTLY ISSUED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS

       In 1998, the FASB issued SFAS no. 133: " Accounting for Derivatives
and Hedging Activities", which the Company will adopt in fiscal 2001. SFAS
No. 133 requires that all derivatives be reported at fair value. Management
has not yet determined the impact of the adoption of SFAS No. 133 on the
financial statements of the Company.

                                       15
<PAGE>

PART II. Other Information

       ITEM 1. Legal Proceedings

       As previously reported, on March 11, 1999, a civil judgment (the "PNI
Judgment") was entered against the Company and a co-defendant for a total of
$2,774,000 by the United States Bankruptcy Court for the Northern District of
Texas following trial in a proceeding initiated by the Trustee (the "PNI
Trustee") in the Chapter 7 bankruptcy case of Performance Nutrition, Inc.
("PNI"). On August 5, 1999, the Bankruptcy Court approved a settlement
agreement between the Company and the PNI Trustee (the "Settlement
Agreement"). The Settlement Agreement provided the Company with a full
release of the Judgment and required the Company to deliver to the PNI
Trustee (1) a cash payment of $1,350,000 which was made in 1999, (2) a
promissory note in the amount of $424,000, of which $176,667 is outstanding
at March 31, 2000, payable over 12 months at 5% interest, and (3) a
contingent promissory note (the obligations under which have lapsed resulting
in the termination of this note without payment by the Company).
Consequently, the adjusted total cost to the Company of the settlement is
$1,774,000, exclusive of interest on the promissory note.

       ITEM 2. Changes in Securities

       In March 2000, the Company issued 1,997,717 shares of its common stock
to its majority stockholder, Health Holdings, upon conversion of indebtedness
owed by the Company to Health Holdings. See Note 8 to Financial Statements.
The Company relied on Regulation D and/or Section 4(2) of the Securities Act
of 1933 with respect to the securities issuance described in this Item 2.

ITEM 3. Defaults upon Senior Securities

             NONE

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

             NONE

ITEM 5. Other Information

              NONE





                                       16
<PAGE>

ITEM 6. Exhibits & Reports on Form 8-K

<TABLE>
<CAPTION>
     Exhibits
      Number                Description                              Page
     --------               -----------                              ----
<S>                   <C>                                           <C>
       10.1           Amendment No. 2 to Finance Agreement             20

       27             Financial Data Schedule                          21
</TABLE>

       Reports on Form 8-K

       On March 3, 2000, the Company filed Form 8-K dated March 1, 2000
relating to the execution by the Company of a Credit and Security Agreement
with Wells Fargo Business Credit.







                                       17
<PAGE>

                               S I G N A T U R E S

         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 hereunto duly authorized.

                                                  NATURADE, INC.
                                                    (Registrant)

       DATE:                                      By /s/ Bill D. Stewart
              --------------------                ----------------------------
              May 15, 2000                        Bill D. Stewart
                                                  Chief Executive Officer

       DATE:                                      By /s/Lawrence J. Batina
              --------------------                ----------------------------
              May 15, 2000                        Lawrence J. Batina
                                                  Chief Financial Officer





                                       18
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
      Number                Description                                  Page
<S>             <C>                                                   <C>
      10.1       Amendment No. 2 to Finance Agreement                     20

      27         Financial Data Schedule                                  21
</TABLE>





                                       19