<PAGE>

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

 (Mark One)

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

                    For the quarterly period ended September 30, 2000
                                       or
[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

      For the transition period from  _______________ to ________________

                        Commission File Number 33-7106-A

                                 NATURADE, INC.
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
                                    --------
                         (State or other jurisdiction of
                         incorporation or organization)

                                   23-2442709
                                   ----------
                               (I. R. S. Employer
                               Identification No.)

                   14370 MYFORD RD., IRVINE, CALIFORNIA 92606
                   ------------------------------------------
                    (Address of principal executive offices)

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

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

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

                            Exhibit Index on Page 21

<PAGE>


                                    FORM 10-Q
                                QUARTERLY REPORT
                        Quarter Ended September 30, 2000



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                          PAGE NO.
PART I:     FINANCIAL INFORMATION
<S>                                                                                          <C>
   Item 1.     Financial Statements

               Balance Sheets  at September 30, 2000                                          3
               (unaudited) and December 31, 1999

               Statements  of  Operations  for the three and nine month  periods              4
               ended September  30, 2000  (unaudited)  and  September 30, 1999
               (unaudited)

               Statements  of Cash  Flows  for the nine  month  periods  ended                5
               September 30, 2000 (unaudited) and September 30, 1999 (unaudited)

               Notes to Financial Statements                                                  6

   Item 2.     Management's Discussion and Analysis of Financial Condition                   11
               and Results of Operations

PART II:    OTHER INFORMATION

   Item 1.     Legal Proceedings                                                             19

   Item 2.     Changes in Securities                                                         19

   Item 3.     Defaults upon Senior Securitie                                                19

   Item 4.     Submission of Matters to a Vote of Security Holders                           19

   Item 5.     Other Information                                                             20

   Item 6.     Exhibits and Reports on Form8-K                                               20

SIGNATURES                                                                                   21
</TABLE>

                                       2

<PAGE>




NATURADE, INC.

BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
                   ASSETS
                                                             September 30, 2000    December 31, 1999
                                                                 (Unaudited)
<S>                                                               <C>              <C>
Current assets:
   Cash and cash equivalents                                        $107,557         $1,056,240
   Accounts receivable, net                                        1,682,090          1,217,323
   Inventories                                                     1,929,140          2,225,289
   Prepaid expenses and other current assets                         329,807            178,603
                                                                  ----------         ----------
                   Total current assets                            4,048,594          4,677,455

Property and equipment, net                                          281,917            326,317
Other assets                                                          87,851             99,178
                                                                  ----------         ----------
                   Total assets                                   $4,418,362         $5,102,950
                                                                  ==========         ==========

                   LIABILITIES AND STOCKHOLDERS' DEFICIT

Current  liabilities:
   Accounts payable                                               $1,626,349         $2,035,862
   Accrued expenses                                                  676,499            547,573
   Current portion of long-term debt                               1,531,951          2,743,949
                                                                  ----------        -----------
                   Total current liabilities                       3,834,799          5,327,384

Long-term debt, less current maturities                            4,704,254          3,778,528

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
Common stock, par value $0.0001 per share; authorized, 50,000,000
  shares; issued and outstanding, 7,347,389 at September 30, 2000
  and 5,349,084 at December 31, 1999                                     697                535
Preferred stock, par value $0.0001 per share; authorized, 2,000,000
  shares; issued and outstanding, 1,250,024                              125                125

Additional paid-in capital                                        11,311,743          9,688,025
Accumulated deficit                                              (15,433,256)       (13,691,647)
                                                                  -----------       ------------
                   Total stockholders' deficit                    (4,120,691)        (4,002,962)
                                                                  -----------       -----------
                   Total liabilities and stockholders' deficit    $4,418,362         $5,102,950
                                                                  ===========       ===========
</TABLE>
                 See accompanying notes to financial statements.


                                       3

<PAGE>

NATURADE, INC

STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
   AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
                                                        Three Months         Three Months      Nine Months          Nine Months
                                                           Ended               Ended              Ended                Ended
                                                     September 30, 2000  September 30, 1999  September 30, 2000  September 30, 1999
                                                        (Unaudited)         (Unaudited)         (Unaudited)         (Unaudited)
<S>                                                    <C>                 <C>                 <C>                 <C>
Net sales                                              $  3,839,867        $  3,298,259        $ 10,898,650        $  8,432,184

Cost of sales                                             2,084,990           1,874,417           5,789,927           5,100,343
                                                       ------------        ------------        ------------        ------------

Gross profit                                              1,754,877           1,423,842           5,108,723           3,331,841
                                                       ------------        ------------        ------------        ------------

Costs and expenses:
 Selling, general and administrative expenses             2,105,350           2,022,637           6,184,074           5,963,585
 Depreciation and amortization                               40,508               3,093             122,576              94,538
 Other operating expense (income)                                 -              (7,494)                  -           2,766,506
                                                       ------------        ------------        ------------        ------------

 Total operating costs and expenses                       2,145,858           2,018,236           6,306,650           8,824,629
                                                       ------------        ------------        ------------        ------------

Operating loss                                             (390,981)           (594,394)         (1,197,927)         (5,492,788)

Other expense:
 Interest expense                                           131,261           1,412,723             520,018           1,636,209
 Other expense (income)                                      (1,673)             72,951              22,864             (93,965)
                                                       ------------        ------------        ------------        ------------

Loss before provision for income taxes                     (520,569)         (2,080,068)         (1,740,809)         (7,035,032)

Provision for income taxes                                        -                 537                 800               2,937
                                                       ------------        ------------        ------------        ------------

Net loss                                               ($   520,569)       ($ 2,080,605)       ($ 1,741,609)       ($ 7,037,969)
                                                       ============        ============        ============        ============

Basic and Diluted Loss per share                       ($      0.07)       ($      0.39)       ($      0.25)       ($      1.32)
                                                       ============        ============        ============        ============

Weighted Average Number of Shares used in Computation     7,347,389           5,349,084           6,864,394           5,345,012
of Basic and Diluted Loss per Share                    ============        ============        ============        ============
</TABLE>
                 See accompanying notes to financial statements


                                       4

<PAGE>

NATURADE, INC

STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
  ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
                                                                Nine Months Ended        Nine Months Ended
                                                                September 30, 2000       September 30,1999
                                                                   (Unaudited)             (Unaudited)
<S>                                                                <C>                     <C>
Cash flows from operating activities:
   Net loss                                                        ($1,741,609)            ($7,037,969)
      Adjustments to reconcile net loss to
      net cash used in operating activities:
         Depreciation and amortization                                 122,576                  94,538
         Provision for bad debt expense                               (187,177)                202,293
         Provision for excess and obsolete inventories                  29,527                 367,750
         (Gain) on disposition of property and equipment                     -                (146,757)
         Writeoff of intangible assets                                                         992,506
         Writeoff of debt discount                                     174,481                       -
         Issuance of warrants                                                                1,288,115
         Legal settlement payable under terms of a note                                        424,000
         Changes in assets and liabilities:
            Accounts receivable                                       (277,590)               (293,960)
            Inventories                                                266,622                (894,225)
            Prepaid expenses and other current assets                 (211,622)                114,581
            Other assets                                                11,327                  12,815
            Refundable income taxes                                                            163,416
            Accounts payable and accrued expenses                     (280,587)                542,666
                                                                    -----------             ----------
              Net cash used in operating activities:                (2,094,052)             (4,170,231)

Cash flows from investing activities:
         Purchase of property and equipment                            (21,316)               (186,479)
         Proceeds from sale of property and equipment                    3,558                 538,307
                                                                    ----------              ----------
              Net cash (used in) provided by investing activities:     (17,758)                351,828

Cash flows from financing activities:
         Net borrowings under line of credit (payments)                519,402                (469,692)
         Payments of long-term debt, including capital lease          (306,275)                (35,333)
         Proceeds from issuance of debt  to related party              950,000               4,600,000
         Proceeds from sale of stock                                                            38,800
         Proceeds from exercise of stock options/warrants                   -                    1,059
                                                                    ----------              ----------
              Net cash provided by financing activities:             1,163,127               4,134,834

Net increase (decrease) in cash and cash equivalents                  (948,683)                316,431
Cash and cash equivalents, beginning of period                       1,056,240                 842,029
                                                                    ----------              ----------
Cash and cash equivalents, end of period                              $107,557              $1,158,460
                                                                    ==========              ==========

Supplemental  Disclosures of Cash Flow  Information
       Cash paid during the period for:
          Interest                                                    $255,946                $242,275
          Taxes                                                           $800                  $2,937
</TABLE>
                 See accompanying notes to financial statements


                                       5

<PAGE>

                                 NATURADE, INC.

                          Notes to Financial Statements

1.   The results of operations for the interim periods shown in this report are
     not necessarily indicative of results to be expected for the fiscal year.
     In the opinion of management, the information contained herein includes all
     adjustments necessary for fair presentation of the financial statements.
     All such adjustments are of a normal recurring nature. These financial
     statements do not include all disclosures associated with the Company's
     annual financial statements on Form 10-K and accordingly, should be read in
     conjunction with such statements.

2.   Inventories are stated at the lower of weighted average cost or market.
     Weighted average cost is determined on a first-in, first-out basis.
     Inventories at September 30, 2000 and December 31, 1999 consisted of the
     following:
<TABLE>
<CAPTION>
                                               September 30, 2000   December 31, 1999
                                                    (Unaudited)
                                                     ---------           ---------
<S>                                                  <C>                 <C>
Raw Materials                                         $245,837           $ 180,174
Finished Goods                                       2,307,297           2,639,582
                                                     ---------           ---------

Subtotal                                             2,553,134           2,819,756
Less: Reserve for Excess and Obsolete Inventories     (623,994)           (594,467)
                                                     ---------           ---------
                                                   $ 1,929,140         $ 2,225,289
</TABLE>

3.   As previously reported, on March 11, 1999, a civil judgment (the "PNI
     Judgment") was entered against the Company and a co-defendant for a total
     of $2,774,000 by the United States Bankruptcy Court for the Northern
     District of Texas following trial in a proceeding initiated by the Trustee
     (the "PNI Trustee") in the Chapter 7 bankruptcy case of Performance
     Nutrition, Inc. ("PNI"). On August 5, 1999, the Bankruptcy Court approved a
     settlement agreement between the Company and the PNI Trustee (the
     "Settlement Agreement"). The Settlement Agreement provided the Company with
     a full release of the Judgment and required the Company to deliver to the
     PNI Trustee (1) a cash payment of $1,350,000 which was made in 1999, (2) a
     promissory note in the amount of $424,000, payable over 12 months at 5%
     interest, which has been completely paid off by September 30, 2000, and (3)
     a contingent promissory note (the obligations under which have lapsed
     without payment by the Company). Consequently, the adjusted total cost to
     the Company of the settlement is $1,774,000, exclusive of interest on the
     promissory note.


                                       6

<PAGE>

4.   The Company rents property and equipment under certain noncancellable
     operating leases expiring in various years through 2006. Future minimum
     commitments under operating leases as of September 30, 2000 are as follows:
<TABLE>
<CAPTION>
        YEAR                              AMOUNT
        -----                             -------
<S>                                   <C>
        2000 (October 1 - December 31)    107,353
        2001                              454,054
        2002                              432,795
        2003                              428,510
        2004                              415,266
        Thereafter                        743,072
                                      -----------
                 Total                $ 2,581,050
</TABLE>
5.   In March 1999, the Company entered into a Finance Agreement (the "Finance
     Agreement") with Health Holdings and Botanicals, Inc., a majority
     stockholder of the Company ("Health Holdings"). The Finance Agreement
     provided that the Company was entitled to borrow up to $1 million at an
     interest rate of 8% per annum. The Finance Agreement further provided that
     for each dollar borrowed, the Company would issue a warrant to Health
     Holdings to purchase three-tenths (0.3) of a share of common stock of the
     Company at an exercise price of $2.125 per share. As of June 30, 1999, the
     Company had issued 300,000 warrants under the Finance Agreement prior to
     the Amendment referred to below. The warrants are exercisable for a period
     of ten years commencing on the date of grant.

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


                                       7

<PAGE>

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

6.   In August 1999, the Company entered into a Credit Agreement (the "Credit
     Agreement") with Health Holdings. The Credit Agreement allows for advances
     (the "Advances") of $4 million at an interest rate of 8% per annum with a
     due date of July 31, 2004. Interest only payments are required on a
     quarterly basis. As of September 30, 2000, the Company has borrowed
     $4,000,000 under this facility. The Credit Agreement further provides that
     any time upon written notice, Health Holdings may convert any portion of
     the Advances into shares of the Company's common stock at a conversion
     price equal to the lower of $.75 per share or the then fair market value of
     the Company's common stock. On October 1, 2000, Health Holdings agreed to
     convert the interest earned from April 1 to September 30, 2000 of $153, 788
     to the outstanding principal amount as a payment-in-kind (PIK). With this
     PIK amount added to the original September 30, 2000 borrowings of $4M, the
     October 1, 2000 borrowings total $4,153,788.

7.   In August 2000, the Company entered into a Loan Agreement (the "Loan
     Agreement") with Health Holdings and other investors (the "Lender
     Group"). The Loan Agreement allows for advances (the "Loan Advances") of
     up to $1.2 million at an interest rate of 8% per annum with a due date of
     August 31, 2003. Interest only payments are required on a quarterly
     basis. As of September 30, 2000, the Company has borrowed $600,000 under
     this facility. The Loan Agreement further provides that the Lender Group
     may convert all or any part of the Loan Advances into shares of the
     Company's common stock at a conversion price equal to the lower of (a) the
     average closing bid of the Company's common stock for the ten trading
     days prior to the making of a Loan Advance or (b) the average closing
     bid of the Company's common stock for the ten trading days prior to the
     date of receipt of notice of conversion.

8.   On January 27, 2000, the Company entered into a three year Credit and
     Security Agreement with Wells Fargo Business Credit (Wells Fargo) that
     allows for maximum borrowings of up to $3,000,000, based on certain
     percentages of eligible accounts receivable and inventories as defined.
     Amounts due under the Credit and Security Agreement bear interest at the
     prime rate plus 1.5%. Borrowings under the Credit and Security Agreement
     are collateralized by substantially all assets of the Company. The Credit
     and Security Agreement contains covenants which, among other things,
     require that certain financial ratios are met. As of September 30, 2000,
     the Company borrowed $1,499,710 under the Credit and Security Agreement.
     As of June 30, 2000, the Company was not in technical compliance with the
     minimum net income covenant. On October 23, 2000, Wells Fargo waived their
     default rights as of June 30, 2000 with respect to the breach of the
     minimum net income covenant. As of September 30, 2000, the Company was
     also not in technical compliance with the minimum net income covenant
     as its net income for the nine months ended September 30, 2000 was
     $816,609 below the net income required by such covenant.


                                       8

<PAGE>

     The Company is pursuing a waiver from Wells Fargo  similar to the one
     received for the June 30, 2000 period.

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

10.  Operating segments are defined as components of an enterprise about which
     separate financial information is available that is evaluated regularly by
     the Company's chief operating decision-maker, or decision-making group, in
     deciding how to allocate resources and in assessing performance.

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

     Operating segment data for the three and nine months ended September 30,
     2000 and September 30, 1999 was as follows:
<TABLE>
<CAPTION>
                                             Distribution Channels
                                          Health Food     Mass Market        Total
                                          -----------     -----------     -----------
<S>                                       <C>             <C>             <C>
Three months ended September 30, 2000
  Sales                                   $ 2,621,168     $ 1,218,699     $ 3,839,867
  Cost of Sales                             1,476,176         608,814       2,084,990
                                          -----------     -----------     -----------
        Gross Profit                        1,144,992         609,885       1,754,877

Nine months ended September 30, 2000
  Sales                                   $ 7,880,913     $ 3,017,737     $10,898,650
  Cost of Sales                             4,270,329       1,519,598       5,789,927
                                          -----------     -----------     -----------
        Gross Profit                        3,610,584       1,498,139       5,108,723

<CAPTION>

Three months ended September 30, 1999
  Sales                                   $ 2,965,298     $   332,961     $ 3,298,259
  Cost of Sales                             1,739,681         134,736       1,874,417
                                          -----------     -----------     -----------
        Gross Profit                        1,225,617         198,225       1,423,842

Nine months ended September 30, 1999
  Sales                                   $ 7,945,186     $   486,998     $ 8,432,184
  Cost of Sales                             4,889,165         211,178       5,100,343
                                          -----------     -----------     -----------
        Gross Profit                        3,056,021         275,820       3,331,841
</TABLE>

                                       9

<PAGE>

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 and nine
months ended September 30, 2000 and September 30, 1999 is as follows:
<TABLE>
<CAPTION>
                                         United States    International        Total
                                         -------------     -----------      -----------
<S>                                       <C>              <C>              <C>
     Three months ended September 30, 2000
       Sales                              $ 3,733,721      $   106,146      $ 3,839,867
       Cost of Sales                        2,015,909           69,081        2,084,990
                                         ------------      -----------      -----------
          Gross Profit                      1,717,812           37,065        1,754,877

     Nine months ended September 30, 2000
       Sales                              $10,536,588      $   362,062      $10,898,650
       Cost of Sales                        5,568,216          221,711        5,789,927
                                          -----------      -----------      -----------
          Gross Profit                      4,968,372          140,351        5,108,723


                                         United States    International        Total
                                         -------------     -----------      -----------
     Three months ended September 30, 1999
       Sales                              $3,164,627          $133,632      $ 3,298,259
       Cost of Sales                       1,780,652            93,765        1,874,417
                                          ----------       -----------      -----------
          Gross Profit                     1,383,975            39,867        1,423,842

     Nine months ended September 30, 1999
       Sales                             $ 8,009,521          $422,663      $ 8,432,184
       Cost of Sales                       4,688,359           411,984        5,100,343
                                          ----------       -----------      -----------
          Gross Profit                     3,321,162            10,679        3,331,841
</TABLE>

During the three and nine months ended September 30, 2000 one customer which
includes six distribution centers accounted for 23.7% and 22.5%, respectively,
of total net sales. During the three and nine months ended September 30, 1999,
this same customer accounted for 23.7% and 25.7%, respectively, of total net
sales.

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

     In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin 101, Revenue Recognition ("SAB 101"). SAB 101
     summarizes certain of the SEC staff's views in applying generally accepted
     accounting principles to selected revenue recognition issues in financial
     statements. Implementation of SAB 101 is required by the fourth quarter
     of 2000. The implementation of SAB 101 did not have a material impact on
     the Company's financial condition or results of operations.

     In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44")
     Accounting for Certain Transactions involving Stock Compensation, an
     interpretation of APB Opinion No. 25. FIN 44 clarifies the application of
     Opinion 25 for (a) the definition of employee for the purposes of applying
     Opinion 25, (b) the criteria for determining whether a plan qualifies as a
     non-compensatory plan, (c) the accounting consequence for various
     modifications to the terms of a previously fixed stock option or award,
     and (d) the accounting for an exchange of stock compensation awards in a
     business combination. The Company adopted the provisions of FIN 44 in the
     third quarter of 2000. The adoption of FIN 44 did not have a material
     impact on the Company's financial condition or results of operations.

                                       10

<PAGE>

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

     This discussion contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Although Naturade, Inc. (the
"Company" or the "Registrant") believes that the expectations reflected in such
forward looking statements are reasonable, such statements are inherently
subject to risk and the Company can give no assurances that such expectations
will prove to be correct. Such forward looking statements involve risks and
uncertainties and actual results could differ from those described herein and
future results may be subject to numerous factors, many of which are beyond the
control of the Company. Such risk factors include, without limitation, the risk
of changes or developments in the regulatory framework or product liability
principles applicable to the Company and its products, and the risk of
consolidation in the distribution channels expected to be used by the Company to
distribute its products. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unexpected events.

All comparisons below are for the three and nine month period ended September
30, 2000 compared to the three and nine months ended September 30, 1999.

RESULTS OF OPERATIONS

     Total net sales for the three months ended September 30, 2000 increased
$541,608 or 16% to $3,839,867 from $3,298,259 for the three months ended
September 30, 1999. Total net sales for the nine months ended September 30, 2000
increased $2,466,466 or 29.3% to $10,898,650 from $8,432,184 for the nine months
ended September 30, 1999. For the three months ended September 30, 2000,
domestic sales increased $569,094 or 18% to $3,733,721 from $3,164,627 for the
three months ended September 30, 1999 and for the nine months ended September
30, 2000, increased $2,527,067 or 31.6% to $10,536,588 from $8,009,521 for the
nine months ended September 30, 1999. For the three months ended September 30,
2000, international sales decreased $27,477 or 20.6% to $106,146 from $133,623
for the three months ended September 30, 1999 and for the nine months ended
September 30, 2000, decreased $60,601 or 14.3% to $362,062 from $422,663 for the
nine months ended September 30, 1999.

     For the three months ended September 30, 2000, the top 40 customers
accounted for $3.5 million or 92.1% of sales, with 25 health food customers
contributing $2.4 million or 63.5% of sales, 13 mass market customers
contributing $1.1 million or 28.9% of sales, and two international customers
contributing $49,000 or 1.3% of sales. For the three months ended September
30, 2000, the Company continued its rollout of Naturade Total Soy products,
with twelve powder products contributing $1.1 million or 30% of sales. During
the quarter, the Company launched the Naturade Total Soy Bars which
contributed $101,700 or 2.7%. Overall, the top 25 products represented
$2,118,000 or 55% of sales with thirteen protein powders contributing
$961,000 or 25% of sales, seven Naturade Total Soy products contributing
$917,000 or 24% of sales and five Aloe Vera products representing $240,000 or
6% of sales.

                                       11

<PAGE>

     Gross profit as a percentage of sales for the three months ended September
30, 2000 increased 2.5% to 45.7% of sales from 43.2% for the three months ended
September 30, 1999. Gross profit as a percentage of sales for the nine months
ended September 30, 2000 increased 7.4% to 46.9% of sales from 39.5% for the
nine months ended September 30, 1999. The gross profit percentage for the three
months ended September 30, 1999 was adversely impacted by a $160,000 inventory
reserve while the three months ended September 30, 2000 was adversely impacted
by a $70,000 inventory reserve. Additionally, the gross profit percentage for
the nine months ended September 30, 1999 was also impacted by the March 1999
sale of $148,164 of raw materials to copackers. Since this sale was at cost, it
produced no gross margin, thus lowering the gross margin for the nine months
ended September 30, 1999.

     Selling, general and administrative expenses for the three months ended
September 30, 2000 increased $82,713 to $2,105,350 or 54.8% of sales from
$2,022,637 or 61.3% for the three months ended September 30, 1999. Selling,
general and administrative expenses for the nine months ended September 30, 2000
increased $220,489 to $6,184,074 or 56.7% of sales from $5,963,585 or 70.7% for
the nine months ended September 30, 1999.

     Within selling, general and administrative expenses, for the three months
ended September 30, 2000, variable marketing, commissions and freight out costs
were $493,568, $136,239 and $216,721, respectively, compared to $507,389,
$148,029 and $161,822 for the three months ended September 30, 1999. For the
nine months ended September 30, 2000, variable marketing, commissions and
freight out costs were $1,535,094, $430,314 and $656,732, respectively compared
to $1,249,671, $370,921 and $494,315 for the nine months ended September 30,
1999. For the nine months ended September 30, 2000, the increase of $285,423 in
variable marketing costs is attributable to costs associated with increased
trade promotions. Commissions and freight out costs as a percent of sales were
3.5% and 5.6%, respectively, for the three months ended September 30, 2000
compared to 4.5% and 4.9%, respectively, for the three months ended September
30, 1999 and 3.9 and 6.0%, respectively, for the nine months ended September 30,
2000 compared to 4.4% and 5.9%, respectively, for the nine months ended
September 30, 1999. For the three and nine months ended September 30, 2000,
these higher variable marketing, commissions and freight-out costs were
partially offset by lower general and administrative expenses resulting in a net
selling, general and administrative expense increase of $82,713 and $220,489,
respectively, compared to the three and nine months ended September 30, 1999.

     Other operating expense for the three months ended September 30, 1999
consisted of the write off of $992,506 of intangible assets related to the
acquisition of the Performance Nutrition assets in 1997 and a $1,000,000
reversal relating to the PNI Judgment. Other operating expense for the nine
months ended September 30, 1999 consisted of the same write off of $992,506 of
intangible assets and a net $1,774,000 relating to the PNI Judgment. See Note 3
to the Financial Statements. There was no comparable amount for the nine months
ended September 30, 2000.

     Interest expense for the three months ended September 30, 2000 decreased
$1,281,462 compared to the three months ended September 30, 1999 and decreased
$1,116,192 for the nine months ended September 30, 2000 compared to the nine
months ended September 30, 1999. This


                                       12

<PAGE>

decrease was due primarily to the granting of warrants and the issuance of debt
with a beneficial conversion feature in 1999 for which there is no comparable
activity in Yr 2000. See Notes 5 and 6 to the Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

     The Company used cash of $2,094,052 in operating activities in the nine
months ended September 30, 2000 compared to $4,170,231 for operating activities
for the nine months ended September 30, 1999.

     The Company's working capital increased from a deficit of ($649,929) at
December 31, 1999 to $213,795 at September 30, 2000. This increase was
largely due to the conversion of $1.6 million due to Health Holdings into the
Company's common stock in March 2000. See Note 5 to the Financial Statements.
This increase was offset by the Company's operating losses for the nine
months ended September 30, 2000.

     Cash used in investment activities during the nine months ended September
30, 2000 was $17,758 compared to cash provided by investing activities during
the nine months ended September 30, 1999 of $351,828.

     The Company's cash provided by financing activities was $1,163,127 for
the nine months ended September 30, 2000 compared to cash provided in
financing activities of $4,134,434 for the nine months ended September 30,
1999. The September 30, 2000 amount was the result of an increase in
borrowings under the Credit and Security Agreement, borrowings under the
Credit Agreement, borrowings under the Loan Agreement and the final repayment
under the Settlement Agreement. See Notes 3, 6, 7 and 8 to the Financial
Statements.

     As of June 30, 2000, the Company was not in technical compliance with
the minimum net income covenant of the Credit and Security Agreement with
Wells Fargo. On October 23, 2000, Wells Fargo waived their default rights as
of June 30, 2000 with respect to the breach of the minimum net income
covenant. As of September 30, 2000, the Company was also not in technical
compliance with the minimum net income covenant of the Credit and Security
Agreement with Wells Fargo requiring that the net loss of the Company for the
nine months ended September 30, 2000 not exceed $925,000. The Company has
notified Wells Fargo of the foregoing and is in discussions with Wells Fargo
regarding a potential waiver of this covenant. However, there can be no
assurance that the Company will be successful in having this covenant waived.
In such event, Wells Fargo would be entitled to exercise certain remedies
under the Credit and Security Agreement including termination of this
agreement.

     The Company believes that its existing cash balances and financing
arrangements will provide it with sufficient funds to finance its operations
during the next twelve months provided that Wells Fargo does not exercise its
right to terminate, or demand immediate payment of all amounts outstanding
under, the Credit and Security Agreement. However, the Company may seek to
raise additional funds through the sale of public or private equity and/or
debt financings or from other sources. 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 favorable to the Company or its
stockholders.

RISK FACTORS

     The short and long-term success of the Company is subject to certain risks,
many of which are substantial in nature. Shareholders and prospective
shareholders in the Company should consider carefully the following risk
factors, in addition to other information contained herein.


                                       13

<PAGE>

     Dependence on Current and Ongoing Financing

     The Company's success is dependent on its current financing as well as new
financing to support its working capital requirements and fund its operating
losses. Currently, the Company is not in technical compliance with the minimum
net income covenant of the Credit and Security Agreement with Wells Fargo
Business Credit which, if not waived by Wells Fargo Business Credit, could
result in termination of this agreement. See "Management's Discussion and
Analysis of Financing Condition and Results of Operations - Liquidity and
Capital Resources." Although the Company is seeking additional third party
financing, no assurance can be given that the Company will have access to
additional funds or, if funds can be obtained, that the terms on which they can
be obtained will be satisfactory. In such event, the Company's business and
results of operations, and its ability to continue as a going concern, will be
materially adversely affected. See Financial Statements to the Company's Form
10-K for the fiscal year ended December 31, 1999, Note 1 - Going Concern.

     Impact of Government Regulation

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

     As a result of the Company's efforts to comply with applicable statutes and
regulations, the Company has from time to time reformulated, eliminated or
relabeled certain of its products and revised certain aspects of its sales,
marketing and advertising programs. The Company may be subject in the future to
additional laws or regulations administered by federal, state or foreign
regulatory authorities, the repeal or amendment of laws or regulations which the
Company considers favorable, such as the Dietary Supplement Health and Education
Act (DSHEA), or more stringent interpretations of current laws or regulations.
The Company is unable to predict the nature of such future laws, regulations,
interpretations or applications, nor can the Company predict what effect
additional governmental regulations or administrative orders, when and if
promulgated, would have on the Company's business in the future. Such future
laws and regulations could, however, require the reformulation of certain
products to meet new standards, the recall or discontinuance of certain products
that cannot be reformulated, the imposition of additional recordkeeping
requirements, expanded documentation of product efficacy, and expanded or
modified labeling and scientific substantiation. Any or all of such requirements
could have a material adverse effect on the Company's results of operations and
financial condition.



                                       14

<PAGE>

     Technological Changes

     The Company currently is engaged in developing nutraceuticals, which are
characterized by extensive research efforts and rapid technological progress and
change. New process developments are expected to continue at a rapid pace in
both industry and academia. The Company's future success will depend on its
ability to develop and commercialize its existing product candidates and to
develop new products. There can be no assurance that the Company will
successfully complete the development of any of its existing product candidates
or that any of its future products will be commercially viable or achieve market
acceptance. In addition, there can be no assurance that research and development
and discoveries by others will not render some or all of the Company's programs
or potential product candidates uncompetitive or obsolete.

     Dependence on Third-Party Manufacturers

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

     Competition

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

     Dependence on Qualified Personnel

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



                                       15

<PAGE>

     Product Liability Exposure

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

     Effect of Adverse Publicity

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

     Intellectual Property Protection

     Our success depends in part on our ability to obtain and maintain patent
protection for our technologies and products, preserve our trade secrets, and
operate without infringing on the property rights of third parties. The
Company's policy is to pursue registrations for all of the trademarks associated
with its key products. The Company relies on common law trademark rights to
protect its unregistered trademarks as well as its trade dress rights. Common
law trademark rights generally are limited to the geographic area in which the
trademark rights generally are limited to the geographic area in which the
trademark is actually used, while a United States federal registration of a
trademark enables the registrant to stop the unauthorized use of the trademark
by any third party anywhere in the United States. The Company intends to
register its trademarks in certain foreign jurisdictions where the Company's
products are sold.


                                       16

<PAGE>

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

YEAR 2000 ISSUE UPDATE

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

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

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


                                       17

<PAGE>

RECENTLY ISSUED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS

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

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, Revenue Recognition ("SAB 101"). SAB 101 summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to selected revenue recognition issues in financial statements.
Implementation of SAB 101 is required by the fourth quarter of 2000. The
implementation of SAB 101 did not have a material impact on the Company's
financial condition or results of operations.

     In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44")
Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25. FIN 44 clarifies the application of
Opinion 25 for (a) the definition of employee for the purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
non-compensatory plan, (c) the accounting consequence for various modifications
to the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. The
Company adopted the provisions of FIN 44 in the third quarter of 2000. The
adoption of FIN 44 did not have a material impact on the Company's financial
condition or results of operations.


                                       18

<PAGE>

PART II. Other Information

     ITEM 1. Legal Proceedings

       As previously reported, on March 11, 1999, a civil judgment (the "PNI
Judgment") was entered against the Company and a co-defendant for a total of
$2,774,000 by the United States Bankruptcy Court for the Northern District of
Texas following trial in a proceeding initiated by the Trustee (the "PNI
Trustee") in the Chapter 7 bankruptcy case of Performance Nutrition, Inc.
("PNI"). On August 5, 1999, the Bankruptcy Court approved a settlement agreement
between the Company and the PNI Trustee (the "Settlement Agreement"). The
Settlement Agreement provided the Company with a full release of the Judgment
and required the Company to deliver to the PNI Trustee (1) a cash payment of
$1,350,000 which was made in 1999, (2) a promissory note in the amount of
$424,000, of which $0 is outstanding at September 30, 2000, payable over 12
months at 5% interest, and (3) a contingent promissory note (the obligations
under which have lapsed resulting in the termination of this note without
payment by the Company). Consequently, the adjusted total cost to the Company of
the settlement is $1,774,000, exclusive of interest on the promissory note.

     ITEM 2. Changes in Securities

          NONE

 ITEM 3. Defaults upon Senior Securities

          As of June 30, 2000, the Company was not in technical compliance
with the minimum net income covenant of the Credit and Security Agreement
with Wells Fargo. On October 23, 2000, Wells Fargo waived their default
rights as of June 30, 2000 with respect to the breach of the minimum net
income covenant. As of September 30, 2000, the Company was also not in
technical compliance with the minimum net income covenant of the Credit and
Security Agreement with Wells Fargo requiring that the net loss of the
Company for the nine months ended September 30, 2000 not exceed $925,000. The
Company has notified Wells Fargo of the foregoing and is in discussions with
Wells Fargo regarding a potential waiver of this covenant. However, there can
be no assurance that the Company will be successful in having this covenant
waived. In such event, Wells Fargo would be entitled to exercise certain
remedies under the Credit and Security Agreement including termination of
this agreement.

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

     At the Annual Meeting of Shareholders held on July 31, 2000, the following
     proposals were adopted by the margins indicated:

          1. To elect a Board of Directors to hold office until their successors
             are elected and qualified:
<TABLE>
<CAPTION>
                                         Number of Shares
                                    For        Against    Abstain
<S>                               <C>            <C>      <C>
Lionel P. Boissiere, Jr.          6,521,384      847      16,122
William B. Doyle, Jr.             6,521,384      847      16,122
Derek Hall                        6,521,384      847      16,122
Bill D. Stewart                   6,521,384      847      16,122
David Weil                        6,521,384      847      16,122
</TABLE>


                                       19

<PAGE>

          2. To approve an  amendment  of the 1998  Incentive  Stock Option Plan
             increasing  from  575,000 to 850,000 the number of shares of the
             Company's Common Stock which may be subject to awards granted
             pursuant thereto:

          For                   6,509,884
          Against                  18,325
          Abstain                   1,111


 ITEM 5. Other Information

          NONE


 ITEM 6. Exhibits & Reports on Form 8-K

       Exhibits
        Number           Description                       Page
        ------           -----------                       ----

          27            Financial Data Schedule              23

          Reports on Form 8-K

            NONE

                                       20

<PAGE>

                               S I G N A T U R E S

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

                                                        NATURADE, INC.
                                                        -----------------------
                                                        (Registrant)

   DATE:  November 14, 2000                             By /s/ Bill D. Stewart
                                                        ------------------------
                                                        Bill D. Stewart
                                                        Chief Executive Officer

   DATE:  November 14, 2000                             By /s/Lawrence J. Batina
                                                        ------------------------
                                                        Lawrence J. Batina
                                                        Chief Financial Officer

                                       21

<PAGE>

                                  EXHIBIT INDEX



    Number         Description                                          Page

      27      Financial Data Schedule                                    23

                                       22