**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q/A**





**Amendment
      No. 1**





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





**For
      the quarterly period ended June 30, 2007**





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





**For
      the transition period from ____________to __________**





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


________________





**NATURADE,
      INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **23-2442709**(State
                or other jurisdiction of
            
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)**2099
                S. State College Blvd., Suite 210, Anaheim, CA**
            
            **92806**(Address
                of principal executive offices)
            
            (Zip
                Code)





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





________________





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes o
      No
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
      August 15, 2007 43,332,733 shares of the registrant’s Common Stock were issued
      and outstanding.












FORM
      10-Q





**QUARTERLY
      REPORT**


**Quarter
      Ended June 30, 2007**





**TABLE
      OF CONTENTS**




**PAGE**PART I. FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsCondensed
                Balance Sheets as of June 30, 2007 and December 31, 2006
            3Condensed
                Statements of Operations for the three and six months ended June
                30, 2007
                and June 30, 2006
            4Condensed
                Statements of Cash Flows for the six months ended June 30, 2007 and
                June
                30, 2006
            5Notes
                to Condensed Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            19Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            33Item
                4.
            Controls
                and Procedures
            34PART II. OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            35Item
                1A.
            Risk
                Factors
            36Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            36Item
                3.
            Defaults
                Upon Senior Securities
            36Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            36Item
                5.
            Other
                Information
            36Item
                6.
            Exhibits
            37SIGNATURES





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


2




**Part
      I. Financial Information**







**NATURADE,
      INC.**


**Debtor
      in Possession**


**Condensed
      Balance Sheets**


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




ASSETSJune
                30, 2007
            
            December
                31, 2006(Unaudited)Current
                assets:Cash
                and cash equivalents
            
            $
            41,391
            
            $
            80,713Accounts
                receivable, net
            
            
            440,520
            
            
            838,381Inventories,
                net
            
            
            250,084
            
            
            258,981Prepaid
                expenses and other current assets
            
            
            66,843
            
            
            56,101Total
                current assets
            
            
            798,838
            
            
            1,234,176Property
                and equipment, net
            
            
            43,189
            
            
            51,547Customer
                lists, trademarks and formulations, net
            
            
            255,287
            
            
            419,266Deferred
                financing fees, net
            
            
            445,380
            
            
            1,239,900Other
                assets
            
            
            24,821
            
            
            3,664Total
                assets
            
            $
            1,567,515
            
            $
            2,948,553LIABILITIES,
                REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
                DEFICITLiabilities
                not subject to compromise:Current
                liabilities:Accounts
                payable
            
            $
            2,266,466
            
            $
            777,307Accrued
                liabilities
            
            
            645,973
            
            
            499,428Revolving
                credit line
            
            
            494,506
            
            
            1,276,570Current
                portion of long-term debt
            
            
            522,581
            
            
            409,095Total
                current liabilities
            
            
            3,929,526
            
            
            2,962,400Long-term
                debt, less current maturities
            
            
            2,426,296
            
            
            2,015,905Total
                liabilities not subject to compromise
            
            
            6,355,822
            
            
            4,978,305Liabilities
                subject to compromise (Note 2)
            
            
            6,746,112
            
            
            9,344,422Total
                Liabilities
            
            
            13,101,934
            
            
            14,322,727COMMITMENTS
                AND CONTINGENCIESREDEEMABLE
                CONVERTIBLE PREFERRED STOCKRedeemable
                convertible preferred stock, Series C including accumulated
                preferredstock
                dividends of $5,290,000 at June 30, 2007 and $3,910,000 at December
                31,
                2006;par
                value $0.0001 per share: authorized 50,000,000 shares; issued and
                outstanding,21,000,000
                shares at June 30, 2007 and December 31, 2006 ($21,000,000
                redemptionvalue).
            
            
            6,970,000
            
            
            5,590,000STOCKHOLDERS'
                DEFICIT:Common
                stock, par value $0.0001 per share; authorized,
                100,000,000shares;
                issued and outstanding, 43,332,733 at June 30, 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 June 30, 2007
                andDecember
                31, 2006.
            
            
            12
            
            
            12Additional
                paid-in capital
            
            
            22,990,945
            
            
            22,990,945Accumulated
                deficit
            
            
            (41,499,710
            )
            
            (39,959,465
            )Total
                stockholders' deficit
            
            
            (18,504,419
            )
            
            (16,964,174
            )Total
                liabilities, redeemable convertible preferred stock and stockholders'
                deficit
            
            $
            1,567,515
            
            $
            2,948,553





See
        accompanying notes to condensed financial statements


3




**NATURADE,
                INC.****(DEBTOR-IN-POSSESSION)****Condensed
                Statements of Operations for the Three and Six
                Months****Ended
                June 30, 2007 and June 30,
                2006(Unaudited)**




Three
                Months
            
            Three
                Months
            
            Six
                Months
            
            Six
                MonthsEnded
            
            Ended
            
            Ended
            
            EndedJune
                30, 2007
            
            June
                30, 2006
            
            June
                30, 2007
            
            June
                30, 2006(Unaudited)
            
            (Unaudited)
            
            (Unaudited)
            
            (Unaudited)Net
                sales
            
            $
            1,330,394
            
            $
            2,786,622
            
            $
            2,728,284
            
            $
            6,582,134Cost
                of sales
            
            
            968,764
            
            
            1,444,236
            
            
            1,866,347
            
            
            3,370,271Gross
                profit
            
            
            361,630
            
            
            1,342,386
            
            
            861,937
            
            
            3,211,863Costs
                and expenses:Selling,
                general and administrative expenses
            
            
            1,097,939
            
            
            2,316,067
            
            
            2,512,340
            
            
            4,370,763Depreciation
            
            
            3,647
            
            
            15,470
            
            
            8,358
            
            
            42,581Amortization
            
            
            81,989
            
            
            233,333
            
            
            163,979
            
            
            466,667Total
                operating costs and expenses
            
            
            1,183,575
            
            
            2,564,870
            
            
            2,684,677
            
            
            4,880,011Operating
                loss
            
            
            (821,945
            )
            
            (1,222,484
            )
            
            (1,822,740
            )
            
            (1,668,148
            )Other
                income(expense):Impairment
                of Goodwill
            
            
            -
            
            
            (2,694,357
            )
            
            -
            
            
            (2,694,357
            )Reorganization
                income
            
            
            -
            
            
            -
            
            
            2,172,644Other
                income (expense)
            
            
            15,080
            
            
            (8,950
            )
            
            16,534
            
            
            (7,818
            )Total other income(expense)
            
            
            15,080
            
            
            (2,703,307
            )
            
            2,189,178
            
            
            (2,702,175
            )Interest
                expense:Interest
            
            
            63,569
            
            
            172,373
            
            
            128,233
            
            
            374,025Amortization
                of deferred financing fees
            
            
            183,555
            
            
            533,303
            
            
            398,450
            
            
            1,186,491Total
                Interest Expense
            
            
            247,124
            
            
            705,676
            
            
            526,683
            
            
            1,560,516Loss
                before provision for income taxes
            
            
            (1,053,989
            )
            
            (4,631,467
            )
            
            (160,245
            )
            
            (5,930,839
            )Provision
                for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            800Net
                loss
            
            $
            (1,053,989
            )
            $
            (4,631,467
            )
            $
            (160,245
            )
            $
            (5,931,639
            )Less:Deemed
                Dividend-Series C
            
            $
            (690,000
            )
            $
            (690,000
            )
            $
            (1,380,000
            )
            $
            (1,380,000
            )Net
                Loss Attributable to Common Shareholders
            
            $
            (1,743,989
            )
            $
            (5,321,467
            )
            $
            (1,540,245
            )
            $
            (7,311,639
            )Earnings
                (loss) per share- basic
            
            $
            (0.04
            )
            $
            (0.12
            )
            $
            (0.04
            )
            $
            (0.17
            )Earnings
                (loss) per share-diluted
            
            $
            (0.03
            )
            $
            (0.12
            )
            $
            (0.03
            )
            $
            (0.17
            )Weighted
                Average Number of Shares used in Computation ofEarnings
                ( loss) per share- basic
            
            
            43,443,733
            
            
            43,332,733
            
            
            43,443,733
            
            
            43,332,733Earnings
                ( loss) per share -diluted
            
            
            51,729,039
            
            
            43,332,733
            
            
            51,722,646
            
            
            43,332,733





See
      accompanying notes to condensed financial statements





4


**Naturade,
      Inc.**


**(DEBTOR-IN-POSSESSION)**


**Condensed
                Statements of Cash Flows for the Six
                Months****Ended
                June 30, 2007 and June 30, 2006
                (Unaudited)**




Six
                months
            
            Six
                monthsEnded
            
            EndedJune
                30, 2007
            
            June
                30, 2006(Unaudited)
            
            (Unaudited)Cash
                flows from operating activities:Net
                Income ( loss)
            
            $
            (160,245
            )
            $
            (5,931,639
            )Adjustments
                to reconcile  net income ( loss )tonet cash used in operating activities:Depreciation
                and amortization
            
            
            172,337
            
            
            509,248Amortization
                of loan discounts and deferred financing fees
            
            
            398,450
            
            
            1,186,491Issuance
                of common stock for consulting
            
            
            -
            
            
            440,578Stock
                Based Compensation
            
            
            -
            
            
            65,733Impairment
                of goodwill
            
            
            -
            
            
            2,694,357Changes
                in operating assets and liabilities:Accounts receivable
            
            
            397,861
            
            
            187,784Inventories
            
            
            8,897
            
            
            163,208Prepaid expenses and other current assets
            
            
            (10,742
            )
            
            (43,413
            )Other assets
            
            
            (21,157
            )
            
            (582
            )Liabilities
                subject to compromise
            
            
            (2,598,310
            )
            
            -Accounts payable and accrued liabilities
            
            
            1,635,704
            
            
            1,157,120Net
                cash provided by (used in) operating activities
            
            
            (177,205
            )
            
            428,885Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            -
            
            
            (18,289
            )Acquisitions
            
            
            -
            
            
            (40,785
            )Net
                cash used in investing activities
            
            
            
            
            
            (59,074
            )Cash
                flows from financing activities:Net
                borrowings (repayments) under line of credit
            
            
            (782,064
            )
            
            (961,003
            )Payments
                of long-term debt
            
            
            -
            
            
            (139,679
            )Proceeds from issuance of debt to related parties
            
            
            -
            
            
            350,000Deferred financing fees
            
            
            396,070
            
            
            (260,249
            )Proceeds from term loan
            
            
            523,877
            
            
            590,909Net
                cash provided by (used in) financing activities
            
            
            137,883
            
            
            (420,022
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            (39,322
            )
            
            (50,211
            )Cash
                and cash equivalents, beginning of period
            
            
            80,713
            
            
            95,398Cash
                and cash equivalents, end of period
            
            $
            41,391
            
            $
            45,187**Supplemental
                Disclosures of Cash Flow Information****Cash
                paid during the period for:**Interest
            
            $
            124,591
            
            $
            169,380Income
                taxes
            
            $
            -
            
            $
            800**Non-cash
                financing transactions:**Deemed
                dividend-Series C
            
            $
            1,380,000
            
            $
            1,380,000




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





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




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





**Chapter
      11 Bankruptcy Proceedings**





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





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





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





6


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





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
      support from the Company’s creditors and shareholders, as well as support from
      the Company’s lenders and the Company’s Unsecured Creditors Committee. While no
      assurances can be made, the Company hopes its Plan will become effective and
      to
      emerge from Chapter 11 in the latter part of 2007 (the “Effective Date”). It is
      currently in negotiations with several potential investors, who would provide
      the funding required under the Plan, but no definitive agreements have been
      reached.. A copy of the Plan may be accessed at www.winthropcouchot.com/client_files.php under
      client documents - Naturade. The Company management is continuing to inform
      all
      of its creditors including Laurus Master Fund (“Laurus”), the senior secured
      creditor, of the efforts being made by the Company to secure funding and they
      have all indicated their continued support. Based on its communications with
      Laurus, the Company expects Laurus’ continued financial support pending
      potential funding of the Plan.





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, as currently approved, 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 reorganization
      plan features an equity allocation and the Plan allows for the retention of
      an
      equity interest by existing shareholders in the Company. The Plan also provides
      that upon effectiveness,, All Company Series C Preferred shares, along with
      its
      voting and control rights, all options, all warrants, and all registration
      rights, will be cancelled as required under the Plan. The Company would then
      issue to Redux enough shares of restricted common stock to give Redux 95% equity
      and voting interest in the Company, with all remaining shareholders will have
      a
      total of 5% equity interest in the Company. Although it is possible that that
      Redux will be providing the cash infusion for working capital needs, it is
      also
      possible that an investment will come from another investor. The Plan would
      need
      to be amended to reflect any changes.





**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, the Plan could materially change amounts reported
      in the financial statements, which do not give effect to all adjustments of
      the
      carrying value of assets and liabilities that are necessary as a consequence
      of
      reorganization under Chapter 11 bankruptcy. The Company’s continuation as a
      going concern will depend on refinancing pursuant to the Plan, continuing tight
      management of cash and profitable operations and continuing to obtain favorable
      credit terms from vendors. Management expects that vendors will begin to extend
      further credit after the Company emerges from bankruptcy with refinancing,
      and
      that the company will return to normal levels of customer order fill rates
      once
      these terms are established and be profitable with a lower overhead structure.
      Additionally, Company management has taken cost containment measures to reduce
      operating costs including reduction of monthly facility lease expense from
      approximately $540,000 per year to approximately $120,000 per year, and
      reduction in staffing resulting in an annual cost reduction of more than
      $1,000,000. While no assurances can be made, the Company hopes it court approved
      plan, to become effective in the latter part of 2007. The 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 and allow the Company’s continuation as a going
      concern. As discussed above, it is possible Redux will be providing a
      substantial cash infusion and and it is also possible that another investor
      will
      be providing the capital.





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.




7


2.
            *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 June 30, 2007 and December 31, 2006 Balance Sheets
                as
                Liabilities Subject to Compromise and are summarized in the table
                below.
                Such claims remain subject to future adjustments. Adjustments may
                result
                from actions of the bankruptcy court, negotiations, rejection or
                acceptance of executory contracts, determination of value of any
                collateral securing claims, proofs of claim or other
                events.





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





8


The
      liabilities subject to compromise consisted of the following items:




June
                30, 2007
              (Unaudited)
            
            December
                31, 2006Accounts
                payable
            
            $
            5,125,453
            
            $
            5,155,049Notes
                payable for acquisitions
            
            
            -
            
            
            2,663,206Accrued
                Interest
            
            
            539,835
            
            
            695,343Notes
                payable to related parties
            
            
            908,381
            
            
            658,381Accrued
                commissions
            
            
            172,443
            
            
            172,443**Total
                Liabilities Subject to Compromise**
            
            $
            6,746,112
            
            $
            9,344,422





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




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





As
      such,
      a provision of $998,234 to write-down the carrying value of the note from
      $1,248,234 to $250,000 (which represents the consideration paid by Redux and
      reimbursable by the Company) was recorded as of March 31, 2007, which is
      classified as reorganization income in the accompanying statement of operations
      for the six months ended June 30, 2007. The related accrued interest of $131,447
      at August 31, 2006 was also written off as of 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 June 30, 2007 the Company has written off to
      reorganization income the outstanding balance on the note of $1,414,972, the
      related deferred financing fees of $279,207 and has reversed the deferred
      interest expense of $116,864 that was recognized during the six months ended
      June 30, 2007.


**Reorganization
      Items**


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





*3.*
            *Impairment*-
                On June 30, 2007, based upon the Company's assessment and in accordance
                with SFAS No. 144,*Accounting
                for the Impairment or Disposal of Long-Lived Assets*,
                the Company concluded that the carrying value of the intangible customer
                lists associated with the Ageless and Symco acquisitions (see Note
                7), did
                not exceed the fair market values as determined by the Company’s
                assessment of the estimated future discounted cash flows. Consequently,
                no
                impairment charge was recognized during the six months ended June
                30,
                2007.




9




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





**June
                30, 2007**
              **(Unaudited)**
            
            **December
                31, 2006**Raw
                Materials
            
            $
            49,879
            
            $
            49,879Finished
                Goods
            
            
            256,466
            
            
            290,748Subtotal
            
            
            306,345
            
            
            340,627Less:
                Reserve for Excess and Obsolete Inventories
            
            
            (56,261
            )
            
            (81,646
            )$
            250,084
            
            $
            258,981





5.
            *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 June 30, 2007), subject to certain reductions
      based upon growth of the Company’s stock price.





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





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





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





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





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


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





10


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





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





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





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





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





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





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





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





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





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





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





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





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





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





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





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





At
      June
      30, 2007, $523,877 was outstanding under the revolving facility as pre-petition
      debt, $494,506 was outstanding under the revolving facility as post petition
      debt, and $1,350,000 was outstanding under the term loan as pre-petition debt.
      These loans are fully secured and the pre-petition amounts are not included
      in
      the liabilities subject to compromise. The majority of pre-petition accounts
      receivable under the revolving facility are deemed potentially uncollectible
      and
      consequently, the total revolver balance outstanding is under secured against
      available accounts receivable and inventory as per formula. Laurus is fully
      aware of this, has not called a default, and has indicated it is prepared to
      negotiate a repayment program with the Company after it emerges from Bankruptcy





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





11


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 June 30, 2007, there is $1,250,
      000 outstanding under the 2003 Loan Agreement of which $1,075,000will 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 June 30, 2007, $350,000 was outstanding on this unsecured loan and
      is
      accordingly included in Liabilities Subject to Compromise. There is no written
      agreement for this loan between Quincy and the Company.





*6.*
            *Stock-Based
                Compensation —*Effective January 1, 2006, the Company began recording compensation
                expense associated with stock options for employees in accordance
                with
                SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”) Prior to January 1,
                2006, the Company accounted for stock-based compensation related
                to stock
                options using the intrinsic value method of accounting for stock-based
                awards granted to employees and directors in accordance with the
                Accounting Principals Board (“APB”) Opinion No. 25, “Accounting for Stock
                Issued to Employees,” and related interpretations in accounting for its
                stock option plan. The Company has adopted the modified prospective
                transition method provided under SFAS 123R, and as a result, has
                not
                retroactively adjusted results from prior periods. Under this transition
                method, compensation expense associated with stock options recognized
                in
                the three and six month periods ended June 30, 2007, includes expense
                related to the remaining unvested portion of all stock option awards
                granted prior to January 1, 2006, based on the grant date fair value





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





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





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




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





12


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
            
            $
            0.002GrantedExercisedExpired
            
            
            (33,000
            )Outstanding
                at June 30, 2007
            
            
            8,769,375
            
            $
            0.001
            
            
            8,760,125
            
            $
            0.001


____________


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





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





**Range
                of Exercise Prices**
            
            **Options**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contract
                Life**
              **In
                Years**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Options**
              **Exercisable**
            
            **Weighted**
              **Average**
              **Exercise
                Price**
              **for
                Exercisable**
              **Options**$0.001
                - $0.01
            
            
            8,721,375
            
            
            Indefinite
            
            $
            0.001
            
            
            8,721,375
            
            $
            0.001$0.10
                - $0.25
            
            
            48,,000
            
            
            4
            
            $
            0.138
            
            
            38,750
            
            $
            0.1448,769,375
            
            
            
            
            $
            0.001
            
            
            8,760,125
            
            $
            0.001





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





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





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





**Number
                of**
            
            **Grant
                Date****Shares**
            
            **Fair
                Value***Non-vested
                at December 31, 2006
            
            
            32,000GrantedVested
            
            
            (15,375
            )ExercisedExpired
            
            
            (7,375
            )Non-vested
                at June 30, 2007
            
            
            9,250


*
      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.





13


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 June 30, 2007
            
            
            28,247,743
            
            $
            0.83
            
            
            28,247,743
            
            $
            0.83





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





**Range
                of Exercise Prices**
            
            **Warrants**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contract
                Life**
              **In
                Years**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Warrants**
              **Exercisable**
            
            **Weighted**
              **Average**
              **Exercise
                Price**
              **for
                Exercisable**
              **Warrants**$0.01-$0.10
            
            
            3,647,743
            
            
            4
            
            $
            0.08
            
            
            3,647,743
            
            $
            0.08$0.80-$1.10
            
            
            24,600,000
            
            
            4
            
            $
            0.94
            
            
            24,600,000
            
            $
            0.9428,247,743
            
            
            
            
            $
            0.83
            
            
            28,247,743
            
            $
            0.83





*7.*
            *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.





14


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




**Distribution
                Channels****Health
                Food**
            
            **Mass
                Market**
            
            **Total**Three
                months ended June 30, 2007Sales
            
            $
            1,095,497
            
            $
            234,897
            
            $
            1,330,394Cost
                of sales
            
            
            623,566
            
            
            345,199
            
            
            968,765Gross
                profit
            
            $
            471,931
            
            $
            (110,302
            )
            $
            361,629Three
                months ended June 30, 2006Sales
            
            $
            1,683,766
            
            $
            1,102,856
            
            $
            2,786,622Cost
                of sales
            
            
            847,353
            
            
            596,883
            
            
            1,444,236Gross
                profit
            
            $
            836,413
            
            $
            505,973
            
            $
            1,342,386Six
                months ended June 30, 2007Sales
            
            $
            1,981,841
            
            $
            746,443
            
            $
            2,728,284Cost
                of sales
            
            
            1,192,680
            
            
            673,667
            
            
            1,866,347Gross
                profit
            
            $
            789,161
            
            $
            72,776
            
            $
            861,937Six
                months ended June 30, 2006Sales
            
            $
            4,038,117
            
            $
            2,544,017
            
            $
            6,582,134Cost
                of sales
            
            
            1,955,836
            
            
            1,414,435
            
            
            3,370,271Gross
                profit
            
            $
            2,082,281
            
            $
            1,129,582
            
            $
            3,211,863




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
      June 30, 2007 and 2006 was as follows:





**United
                  States**
              
              **International**
              
              **Total**Three
                  months ended June 30, 2007Sales
              
              $
              1,219,956
              
              $
              110,438
              
              $
              1,330,394Cost
                  of sales
              
              
              912,065
              
              
              56,700
              
              
              968.765Gross
                  profit
              
              $
              307,891
              
              $
              53,738
              
              $
              361,629Three
                  months ended June 30, 2006Sales
              
              $
              2,664,763
              
              $
              121,859
              
              $
              2,786,622Cost
                  of sales
              
              
              1,377,213
              
              
              67,023
              
              
              1,444,236Gross
                  profit
              
              $
              1,287,550
              
              $
              54,836
              
              $
              1,342,386


Six
                months ended June 30, 2007Sales
            
            $
            2,463,449
            
            $
            264,835
            
            $
            2,728,284Cost
                of sales
            
            
            1,710,509
            
            
            155,838
            
            
            1,866,347Gross
                profit
            
            $
            752,940
            
            $
            108,997
            
            $
            861,937Six
                months ended June 30, 2006Sales
            
            $
            6,389,664
            
            $
            192,470
            
            $
            6,582,134Cost
                of sales
            
            
            3,364,412
            
            
            105,859
            
            
            3,370,271Gross
                profit
            
            $
            3,025,252
            
            $
            86,611
            
            $
            3,211,863





15


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




**Major
                Customer Table****Customer
                One**
            
            **Customer
                Two**
            
            **Customer
                Three****Sales**
            
            **Accounts**
              **Receivable**
              **Balance**
              **Quarter-end**
            
            **Sales**
            
            **Accounts**
              **Receivable**
              **Balance**
              **Quarter-end**
            
            **Sales**
            
            **Accounts**
              **Receivable**
              **Balance**
              **Quarter-end**Three
                Months ended June 30, 2007
            
            $
            348,951
            
            $
            186,024
            
            $
            421,534
            
            $
            145,818
            
            $
            142,937
            
            $
            46,528Three
                Months ended June 30, 2006
            
            $
            588,221
            
            $
            330,099
            
            $
            413,520
            
            $
            305,707
            
            $
            365,414
            
            $
            144,472Six
                Months ended June 30, 2007
            
            $
            594,188
            
            $
            186,024
            
            $
            748,144
            
            $
            145,818
            
            $
            255,517
            
            $
            46,528Six
                Months ended June 30, 2006
            
            $
            1,306,788
            
            $
            330,099
            
            $
            920,219
            
            $
            305,707
            
            $
            833,935
            
            $
            144,472







8.
            *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 June 30, 2007.





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





9.
            *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:





**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, as to Naturade only, through
      the Chapter 11 Bankruptcy proceedings and the Company is no longer a party
      to
      this litigation.


16


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 June 30, 2007
      and is included in Liabilities Subject to Compromise.





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





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





The
      following litigation matters are currently pending:





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





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





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





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





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





17


f) **** **Other
      Bankruptcy Related Litigation:** **** The
      Company filed a motion to reject an Asset Purchase Agreement dated November
      2,
      2004, between the Debtor and L.O.D.C., Ltd. (the “Agreement”) on the grounds
      that the Agreement was executory, burdensome and of no value to the Company’s
      reorganization efforts. On July 9, 2007, the Bankruptcy Court entered an
      order denying the Company’s motion to reject the Agreement on the basis that the
      Agreement was not executory. The Company has timely filed an appeal of the
      Bankruptcy Court order and the appeal is pending before the Ninth Circuit
      Bankruptcy Appellate Panel.




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


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





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





18




**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.*





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





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





**The
      Company**





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





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


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


·
            Naturade®
                protein powders;


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


·
            Symbiotics®
                Colostrum products; and


·
            Other
                niche 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. 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 June 30, 2007 balance sheet. Generally, actions to enforce
      or
      otherwise effect repayment of all pre-Chapter 11 liabilities and pending
      litigation against the Company are stayed while the Company continues as a
      debtor-in-possession during bankruptcy proceedings. Schedules have been filed
      by
      the Company with the Bankruptcy Court setting forth the assets and liabilities
      of the Company as of the Petition Date as reflected in the Company's accounting
      records. Differences between amounts reflected in such schedules and claims
      filed by creditors will be investigated and either amicably resolved or
      adjudicated by the Bankruptcy Court. The ultimate amount of and settlement
      terms
      for such liabilities are not presently determinable.





19


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 June 30, 2007 balance sheet. In addition, the Company has reported all
      transactions (other than interest expense) directly related to the Chapter
      11
      Matter as reorganization items in its statement of operations for the three
      months ended June 30, 2007. SOP 90-7's definition of reorganization items
      excludes (1) interest expense and (2) transactions required to be reported
      as
      discontinued operations or extraordinary items in conformity with GAAP.





***Basis
      of Presentation***





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




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




***Change
      in Control***





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





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


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


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


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





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





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




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


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


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


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


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





20


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





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





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





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





The
      Company’s reorganization plan as approved by the court is expected to become
      effective in the latter part of 2007 (the “Plan”). 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 95% equity and voting interest in the Company. All remaining
      shareholders will have a total of 5% equity interest in the Company. As
      discussed above, although no assurances can be made, it is possible that another
      investor will take the place of Redux and the Plan will be amended to reflect
      this. It is also possible that Redux will provide the funding to the Company
      that would entitle it to the 95% interest.





***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.





21


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




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





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





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





For
      the
      six months ended June 30, 2007 and 2006, distributor and promotional allowances
      were $0 or 0% of gross sales, and $297,706, or 6.9%of gross sales,
      respectively.





*Damages
      & Returns.* In
      the
      six months ended June 30, 2007 and 2006, damages and returns were charged
      against revenues based upon historical return rates. Actual damages and returns
      are charged against the reserve when the product is returned, charges deducted
      or a consumer deduction is received. On a periodic basis, actual charges are
      compared to the reserve and, if required, the reserve rate is adjusted to
      reflect new trends. For the six months ended June 30, 2007 and 2006, damages
      and
      returns charged against revenues were $286,226, or 9.4 % of gross sales, and
      $155,731, or 2.1 % of gross sales, respectively.




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





Six
                Months Ended
              June
                30, 2007
            
            Six
                Months Ended
              June
                30, 2005Beginning
                balance
            
            $
            736,985
            
            $
            42,910Provision
                for damages and returns
            
            
            286,226
            
            
            155,731Actual
                damages and returns during the period
            
            
            (928,336
            )
            
            (164,553
            )Ending
                balance
            
            $
            94,875
            
            $
            34,088





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.





22





*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
      six months ended June 30, 2007 and 2006, cash discounts were $49,008, or 1.6%
      of
      gross sales, and $68,698, or 0.9 % of gross sales, respectively.





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





For
      the
      six months ended June 30, 2006 and 2005, slotting costs were $(6,209), or 0.0%
      of gross sales, and $75,537, or 1.0% of gross sales, respectively. Slotting
      expense was a credit during the period due to the fact that the Company no
      longer allows slotting charges; and, as a result, reserves were reversed
      resulting in a credit for the 6 month period.





*Coupon
      & Rebate Redemption.*  Coupon
      and rebate costs are charged against revenues as redeemed. Historically,
      Naturade has incurred insignificant redemption of its consumer coupons or
      rebates. For the six months ended June 30, 2007 and 2006, coupon and rebate
      costs were $0 and $1,007, respectively.


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





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




**Results
      of Operations**





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





**Percent
                of Net Sales**
              **Six
                Months Ended June 30,**
            
            **Percentage
                Dollar Increase (Decrease)**
              **Six
                Months Ended March 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                sales
            
            
            100%
            
            
            100%
            
            
            (59%)
            
            
            16%Gross
                profit
            
            
            32%
            
            
            49%
            
            
            (73%)
            
            
            24%Selling,
                general and administrative expenses
            
            
            92%
            
            
            66%
            
            
            (43%)
            
            
            42%Depreciation
                & amortization.
            
            
            6%
            
            
            8%
            
            
            (66%)
            
            
            1,581%Operating
                loss
            
            
            (67%)
            
            
            (25%)
            
            
            (72%)
            
            
            (226%)Interest
                expense
            
            
            19%
            
            
            24%
            
            
            (66%)
            
            
            800%Net
                Income (loss) before provision for income taxes
            
            
            (6%)
            
            
            (49%)
            
            
            (66%)
            
            
            375%Provision
                for income taxes
            
            
            0%
            
            
            0%
            
            
            0%
            
            
            0%Net
                Income (loss)
            
            
            (6%)
            
            
            (49%)
            
            
            (76%)
            
            
            375%





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





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





·
            The
                Company’s filing for protection under Chapter 11 Bankruptcy has had a
                negative effect on the Company’s ability to purchase inventory for the six
                months ended June 30, 2007. The Company believes this trend is likely
                to
                continue until the Company emerges from
                bankruptcy.




23




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





*Net
      Sales*





Net
      sales
      for the three months ended June 30, 2007 of $1,330,394, decreased $1,456,228
      or
      52.3% as compared to net sales of $2,786,622 for the three months ended June
      30,
      2006. Net sales for the six months ended June 30, 2007 of $2,728,284,
      decreased,58.6% as compared to net sales of $6,582,134 for the six months ended
      June 30, 2006The 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.





**Critical
      Accounting Policies and Use of Estimates** - **Revenue
      Recognition.**





*Mass
      Market Net Sales-* For the
      three months ended June 30, 2007, mass market revenues decreased $867,959 or
      79% to $234,897 from $1,102,856 for the three months ended June 30,
      2006. For the six months ended June 30, 2007, mass market revenues decreased
      $1,797,574 or 71% to $746,443 from $2,544,017 for the six months ended
      June 30, 2006. The decrease in net sales during the period is related to the
      to
      the lack of promotional funds available for consumer advertising coupled with
      decreased inventory availability due to the Company’s Chapter 11 filing.





*Health
      Food Net Sales-* For the
      three months ended June 30, 2007, health food channel net sales decreased
      $588,269, or 35%, to $1,095,497 from $1,683,766 for the three months ended
      June 30, 2006. For the six months ended June 30, 2007, health food channel
      net
      sales decreased $2,056,276, or 51%, to $1,981,841 from $4,038,117 for the
      three months ended June 30, 2006.The sales decrease is principally related
      to
      sales of Ageless and Symco brands partially offset by reductions in sales of
      core protein powders related to lower fill rates on customer orders as a result
      of cash restrictions on inventory purchases. The health food decrease was lower
      than that seen in the mass channel as a result of the buying habits of health
      channels customers. Typically, the health food channel purchases through
      distributors who do not have a just in time need for product resulting in higher
      tolerance to out-of stock situations caused by the Company’s cash
      constraints.




*Channels
      of Distribution-* On a
      percent of net sales basis, the breakdown of sales between the mass market
      and
      health food channels was 82% for the health food channel and 18 % for mass
      market channel for the three months periods ended June 30, 2007 as compared
      to
      60.4% for the health food channel and 39.6% for the mass market channel,
      respectively, for the same period in 2006. On a percent of net sales basis,
      the
      breakdown of sales between the mass market and health food channels was 73%
      for
      the health food channel and 27 % for mass market channel for the six months
      periods ended June 30, 2007 as compared to 60.4% for the health food channel
      and
      39.6% 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 and the
      higher tolerance to stock outs created by the Company’s cash constraints in the
      health food channel .




For
      the
      three months ended June 30, 2007, domestic net sales decreased $1,444,807 or
      54.2%, to $1,219,956 from $2,664,763 for the three months ended June 30, 2006.
      For the six months ended June 30, 2007, domestic net sales decreased $3,926,215
      or 61%, to $2,463,449 from $6,389,664 for the six months ended June 30, 2006.
      The decrease in domestic net sales is principally due to Sales shortfalls in
      the
      mass and health channels. For the three months ended June 30, 2007,
      international sales decreased $11,421 or 9% to $110,438 from $121,859. For
      the
      six months ended June 30, 2007, international sales increased $72,365 or 38%
      to
      $264,835 from $192,470. International sales for the six months ended June 30,
      2007 increased principally due to the expansion of the Ageless and Symco
      products to international customers in the fourth quarter of 2006 which
      continued to grow during the period.




*Gross
      Profit*





Gross
      profit for the three months ended June 30, 2007 decreased $ 980,756 or 73.1
      % to
      $361,630 as compared to $1,342,386 for the same period in 2006. Gross profit
      for
      the six months ended June 30, 2007 decreased $ 2,349,926 or 73.2% to $861,937
      as
      compared to $3,211,864 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
      48.2% to 27.2% of net sales and from 48.8% to 31.6%, in the three and six month
      periods ended June 30, 2007 respectively, compared to the three and six month
      periods ended June 30, 2006 respectively, due to lower margins related to
      increased costs to purchase product due to vendor changes related to the Chapter
      11 filing.





24


*Operating
      Costs and Expenses*





Operating
      costs and expenses for the three months ended June 30, 2007 decreased by
      $1,380,497 to $1,183,574, or 89.0% of net sales, from $2,564,071, or 92% of
      net
      sales, for the same period in 2006. Operating costs and expenses for the six
      months ended June 30, 2007 decreased by $2,195,334 to $2,684,677, or 98.4%
      of
      net sales, from $4,880,011, or 74.1% 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;





·
            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 June 30, 2007 decreased $458,552 to $247,124
      from $705,676 in the same period in 2006. Interest expense for the six months
      ended June 30, 2007 decreased $1,033,833 to $526,683 from $1,560,516 in the
      same
      period in 2006. Interest expense decreased principally due to a reduction in
      the
      amortization of deferred financing fees and debt discounts of $349,748, and
      $788,041 in 2007 as compared to the same periods in 2006. The amortization
      is
      related to the recapitalization of the Registrant coupled with the acquisitions
      of Symbiotics and Ageless. The remainder of the decrease 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 $39,322 in the six months ended June
      30, 2007, compared to cash used of $50,211 from operating activities in the
      six
      months ended June 30, 2006. This decrease in cash used from operating activities
      is primarily due to Company’s limited cash availability due to the Chapter 11
      filing and strong management controls over expenditures.




Net
      cash
      provided by amortization of loan discounts and deferred financing fees was
      $398,450 for the six month period ended June 30, 2007 compared to net cash
      provided by amortization of loan discounts and deferred financing fees of
      $1,186,491 for the same period of 2006 principally due a modification in
      financing terms in 2006 resulting in a write-off of deferred financing fees
      and
      loan discounts.




Net
      cash
      provided by accounts receivable was $397,861 for the 6 months ended June 30
      2007
      compared to $187,784 for the same period in 2006 principally due to lower sales
      during the six months ended June 30, 2007. General customer terms, receivable
      days outstanding and the Company’s collection policies have remained
      constant.





Net
      cash provided by inventories was $8,897 for the six months ended June 30, 2007,
      compared with net cash provided by inventories of $163,208 for the six months
      ended June 30, 2006. The ongoing shortage of cash required management to closely
      monitor inventory levels and only purchase inventory as needed for shipments.




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




Net
      cash
      provided by accounts payable and accrued expenses was $1,635,704 for the six
      month period ended June 30, 2007 compared to net cash provided of $1,157,120
      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 $1,402,464 from $1,728,224 at
      December 31, 2006 to $3,130,688 at June 30, 2007. This increase was largely
      due to a decrease in accounts receivable of $397,861 related to
      decreased sales during the period coupled with an increase in accounts payable
      of $1,489,159 due to the cash constraints on the Company partially offset by
      repayments of $782,064 on the revolving debt during the period.




For
      the
      six months ending June 30, 2007, the provision for excess and obsolete inventory
      decreased by $25,385, to $56,261. There was no change in the provision for
      the
      six month period ended June 30, 2006.




The
      Company’s cash provided by financing activities was $ 137,883 for the six months
      ended June 30, 2007, compared to cash used by financing activities of
      $420,022 for the same period of 2006 principally due to the reduction of
      $396,070 in deferred financing fees related to debt modifications and additional
      proceeds of $523,877 from the Term Loan.





25


As
      of
      June 30, 2007, the Company was in compliance with all of the covenants of the
      Credit Agreement with Laurus.  At
      June
      30, 2007, $523,877 was outstanding under the revolving facility as pre-petition
      debt, $494,506 was outstanding under the revolving facility as post petition
      debt, and $1,350,000 was outstanding under the term loan as pre-petition debt.
      These loans are fully secured and the pre-petition amounts are not included
      in
      the liabilities subject to compromise. The majority of pre-petition accounts
      receivable under the revolving facility are deemed potentially uncollectible
      and
      consequently, the total revolver balance outstanding is under secured against
      available accounts receivable and inventory as per formula. Laurus is fully
      aware of this, has not called a default, and has indicated it is prepared to
      negotiate a repayment program with the Company after it emerges from Bankruptcy





The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. At June 30, 2007, the Company had an
      accumulated deficit of $41,499,710, and a stockholders’ capital deficiency of
      $18,504,419. 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**





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





**Payments
                Due by Period***Contractual
                Obligations*
            
            **Total**
            
            **Less
                than**
              **1
                Year**
            
            **1-3
                Years**
            
            **4-5
                Years**
            
            **After
                5 Years**Laurus
                Term Loan (a)
            
            $
            1,751,774
            
            $
            730,623
            
            $
            1,021,151
            
            
            -0-
            
            
            -0-Health
                Holdings Loan (a)
            
            
            2,155,720
            
            
            -0-
            
            
            165,825
            
            
            331,649
            
            
            1,658,246Revolving
                Credit (a)
            
            
            1,080,441
            
            
            1,080,441
            
            
            -0-
            
            
            -0-
            
            
            -0-Unsecured
                Creditors (b)
            
            
            6,746,112
            
            
            168,653
            
            
            505,958
            
            
            6,071,500
            
            
            -0-Operating
                Leases
            
            
            236,294
            
            
            108,301
            
            
            127,993
            
            $
            -0-
            
            
            -0-Total
                Contractual Cash Obligations
            
            $
            11,970,341
            
            $
            2,088,018
            
            $
            1,820,927
            
            $
            6,403,149
            
            $
            1,658,246


(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.





26


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





Recently
      Issued Accounting Principles





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








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





**Forward
      Looking Statements**





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


27




**RISK
      FACTORS**





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





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





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





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





***The
      Company’s reorganization plan under Chapter 11 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 secured lender Laurus, and Health Holdings, to amend
      the plan to allow the Plan to go effective with an initial $1,500,000 capital
      infusion. It is possible Redux will be providing the cash infusion and it is
      also possible that another investor will be providing the capital. . If for
      any
      reason 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, 2002, 2003,
      2005, and 2006, respectively, and net income of approximately $368,000 for
      the
      fiscal year ended 2004. At June 30, 2007, the Company had an accumulated deficit
      of $41,499,710, and a stockholders’ capital deficiency of $18,504,419. The
      Company anticipates that it will incur net losses for the foreseeable future
      and
      will need access to additional financing for working capital and to expand
      its
      business. If unsuccessful in those efforts, the Company could be forced to
      cease
      operations and investors in its common stock could lose their entire investment.
      The Company’s independent registered public accounting firm issued a going
      concern opinion on the Company’s December 31, 2006 financial statements by
      including an explanatory paragraph in which they expressed substantial doubt
      about its ability to continue as a going concern.




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





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




28


***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 its profitability. Any
      unfavorable change in the Company’s cash position could result in additional
      costs for product affecting its profitability. From time to time, the Company
      has experienced difficulties with various vendors requiring it to purchase
      product on cash upon delivery (“COD”) basis. As a result of purchasing on a COD
      basis, The Company could experience significant delays in shipments to its
      customers, which could have a material affect on its operating results. Although
      the Company believes that alternative sources of materials and contract
      manufacturing services are available, the loss of one or more suppliers or
      manufacturers as a result of the Chapter 11 Bankruptcy Matter could have a
      material adverse effect on results of operations until an alternative source
      is
      located and has commenced producing the Company’s products. ******





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





The
      Company’s three largest customers together account for 58.6% of net sales for
      the six months ended June 30, 2007. One mass market customer, Wal-Mart/Sam’s
      Club, represented approximately 21.8% of the Company’s net sales, and two health
      food distributors, United Natural Foods, Inc. (“UNFI”) and Tree of Life, Inc.,
      accounted for 27.4% and 9.4%, respectively, of the Company’s net sales, during
      the six months ended June 30, 2007. The loss of any of these customers could
      have a material adverse effect on the Company’s results of operations. From time
      to time, major customers have experienced financial difficulties. Additionally,
      the issuance of a going concern opinion by the Company’s independent registered
      public accounting firm may create concern among existing and potential customers
      that the Company may be unable to fulfill product needs. As a result, due to
      the
      Chapter 11 Bankruptcy, existing and potential customers may determine not to
      do
      business with the Company, or only do so on less favorable terms, which may
      cause net sales to decline. The Company does not have long-term contracts with
      any of its customers and, accordingly, there can be no assurance that any
      customer will continue to place orders with the Company to the same extent
      it
      has in the past, or at all.




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





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





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





29


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





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





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





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





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





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





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





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





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





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





30


***Certain
      stockholders have the ability to control the Company and have
      other***  ***substantial
      rights, preferences and privileges.***





Assuming
      the cash infusions required by the Plan are received by the Company, the
      investor, as the owner of 95% of the outstanding equity of the Company will
      control the Company. As a result, the investor will have the ability to elect
      all of the Company’s directors, control the outcome of all matters requiring
      stockholder approval and control the Company’s management and
      affairs.





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





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





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





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





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





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




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





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





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





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


31


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





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





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





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





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





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




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




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





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





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





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





32


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





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





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





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





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





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





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





***ITEM
      3***-**Quantitative
      and Qualitative Disclosures About Market Risk.**





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





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





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





For
      the
      six months ended June 30, 2007, the interest expense on the line of credit
      was
      $124,591 if the interest rate were to increase by one percent; this would result
      in an interest expense of $136, 746 for the six months ended June 30,
      2007.




33


***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.


34




**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:





**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 December 31,
      2006 and is included in Liabilities Subject to Compromise.





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





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





The
      following litigation matters are currently pending:





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





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





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





35


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





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





f) **** **Other
      Bankruptcy Related Litigation:** **** The
      Company filed a motion to reject an Asset Purchase Agreement dated November
      2,
      2004, between the Debtor and LODC (the “Agreement”) on the grounds that the
      Agreement was executory, burdensome and of no value to the Company’s
      reorganization efforts. On July 9, 2007, the Bankruptcy Court entered an
      order denying the Company’s motion to reject the Agreement on the basis that the
      Agreement was not executory. The Company has timely filed an appeal of the
      Bankruptcy Court order and the appeal is pending before the Ninth Circuit
      Bankruptcy Appellate Panel.




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


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





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





***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


36


***ITEM
      6*** **.
      Exhibits**





(a)
      Exhibits








**Exhibit**
              **Number**
            **Document****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 Rule 15d-14(a) of the Securities Exchange Act of 1934,
                Adopted
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002**32
            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.






37




**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:
                September 11, 2007
            By
            */s/*Richard MunroRichard
                MunroChief
                Executive OfficerDATE:
                September 11, 2007
            By
            */s/*Adam
                MichelinAdam
                MichelinPrincipal
                Accounting Officer









38




**EXHIBIT
      INDEX**





**Exhibit**
              **Number**
            **Document****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 Rule 15d-14(a) of the Securities Exchange Act of 1934,
                Adopted
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002**32
            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.








39