UNITED
STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM
10-KSB

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(Mark One)

|                                                 |                                                                                                                                       
|------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------
|x                                                | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2005.          
|                                                 |                                                                                                                                       
|o                                                | TRANSITION REPORT UNDER SECTION 13 OR l5(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934for the transition period from ________to________.
|                                                 |                                                                                                                                       
|Commission file number 0-7475                   
|                                                
|                                                 |                                                                                                                                       
|                                                
|                                                
|NATURE
  VISION, INC.                           
|                                                
|(Name of small business
  issuer in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|MINNESOTA                                                      |  | 41-0831186                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|                                                              
|213 NW
  4th Street, Brainerd, MN                              |  | 56401                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Issuers telephone
number (218) 825 - 0733

Securities
registered under Section 12(b) of the Exchange Act: None

Securities
registered under Section l2(g) of the Exchange Act:

|                                         
|-----------------------------------------
|Common Stock, par value
  $0.16 per share
|(Title of class)                         

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Check
whether the issuer is not required to file reports pursuant to Section 13 or
l5(d) of the Exchange
Act.     o

Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15 (d) of the Exchange Act during the past 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 o

Check
if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form
10-KSB.     x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
l2b-2 of the Exchange Act). Yes o    No x

Issuers
revenues for fiscal year ended December 31, 2005 were $ 24,254,059.

The
aggregate market value of the voting common equity held by non-affiliates of
registrant as of March 28, 2006 was $15,477,946.

The number of shares outstanding of
the
registrants common stock, par value $0.16 per share, as of March 28, 2006 was
2,217,887.

DOCUMENTS
INCORPORATED BY REFERENCE

The definitive proxy statement for the 2006 Annual
Meeting of Shareholders is incorporated by reference into Part III of this
annual report.

Transitional
Small Business Disclosure Format (Check
one): Yes o   No x





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PART I

Item 1.  DESCRIPTION
OF BUSINESS.

General

Nature Vision, Inc. (Nature Vision or the
Company) is comprised of two operating divisions. The Nature Vision division designs, manufactures and markets outdoor
recreation products primarily video viewing systems for the sport fishing market and other video based consumer and industrial
products. The Photo Control division designs, manufactures and markets professional cameras, electronic flash equipment, lens
shades and related photographic accessories and provides peripheral products for the videoconferencing and the audiovisual
markets.

Nature Vision was incorporated under the laws of the
State of Minnesota in 1959 and operated under the name Photo Control Corporation until August 31, 2004. In 1973, Photo
Control acquired all of the outstanding stock of Norman Enterprises, Inc., a California corporation. In June 1983, Photo Control
acquired all of the outstanding stock of Nord Photo Engineering, Inc., a Minnesota corporation. In October 1997, Normans
manufacturing operations were moved to Minnesota and the land and building in California was sold. In October 1998, the remaining
sales and service facility was closed and moved to Minneapolis. Effective January 1, 1998, Photo Control liquidated both
subsidiaries and transferred the assets to Photo Control Corporation, the parent company. On August 31, 2004, the corporate name
was changed to Nature Vision, Inc. in connection with a merger transaction with Nature Vision Operating Inc. (f/k/a
Nature Vision, Inc.) Our executive offices are located at 213 NW 4th Street, Brainerd, Minnesota 56401; our telephone
number is (218) 825-0733.

Our annual report on Form 10-KSB, quarterly reports on
Form 10-QSB, current reports on Form 8-K and all amendments to such reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act are available, free of charge, on or through our Internet website located at www.naturevisioninc.com, as soon
as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission.

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Merger Transaction

On August 31, 2004, PC Acquisition, Inc., a
wholly-owned subsidiary of the Company, merged with and into Nature Vision Operating Inc. (f/k/a Nature Vision, Inc.), pursuant to
the terms of a merger agreement and plan of reorganization dated April 15, 2004. As a result of the merger, Nature Vision
Operating Inc. became a wholly-owned subsidiary of the Company, and the Company amended its articles of incorporation to change
its corporate name to Nature Vision, Inc. from Photo Control Corporation. The merger received shareholder
approval on August 31, 2004 and closed on that day.

Each Nature Vision Operating Inc. shareholder received
0.58137 shares of the Companys common stock for each share of Nature Vision Operating Inc. common stock held on the closing
date of the merger. Nature Vision Operating Inc. shareholders received cash instead of any resulting fraction of a share in an
amount reflecting the market value of the fractional share. After taking into account a 1-for-2 reverse stock split of the
Companys common shares that was effected immediately after the merger on August 31, 2004, 894,619 common shares were issued
to former Nature Vision Operating Inc. shareholders.

Each outstanding Nature Vision Operating Inc. option
and warrant was converted at the closing of the merger into an option or warrant exercisable for that number of the
registrants common shares equal to the product of (a) the number of shares of Nature Vision Operating Inc. common stock
subject to the option or warrant multiplied by (b) 0.58137. The exercise price was adjusted to equal the quotient of (x) the
current exercise price of the option or warrant divided by (y) 0.58137.

A description of the merger is included in the joint
proxy statement/prospectus on Form S-4 filed with the Securities and Exchange Commission (Commission No. 333-115593).

Investment Considerations

Investors should consider all of the information
contained in this report including the factors discussed under Item 1  Description of Business  Factors That May
Affect Future Results, Item 6  Managements Discussion and Analysis of Financial Condition and Results of Operations
and Item 7  Financial Statements, before making an investment decision with regard to our securities.

Some of the statements made in this report in the
sections listed above and elsewhere in this report constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act.
Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe,
estimate, should or continue or the negatives of these terms or other variations on these words or comparable terminology. To the
extent that this report contains forward-looking statements regarding the financial condition, operating results, business
prospects or any other aspect of our business, you should be aware that our actual financial condition, operating results and
business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have
attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to
differ from their current expectations. These differences may be caused by a variety of factors including, but not limited to,
adverse economic conditions, intense competition, including entry of new competitors, inability to obtain sufficient financing to
support our operations, progress in research and development activities, variations in costs that are beyond our control, adverse
federal, state and local government regulation, unexpected costs, lower sales and net income (or higher net losses, than
forecasted), price increases for equipment, inability to raise prices, failure to obtain new customers, the possible fluctuation
and volatility of our operating results and financial condition, inability to carry out marketing and sales plans, loss of key
executives and other specific risks that may be alluded to in this report.

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Products

Nature Vision Division

Overview

The Nature Vision division designs, manufactures and
markets outdoor recreation products primarily for the sport fishing and hunting markets. We have also adapted our outdoor
recreation products and core technologies for sale into certain industrial markets. Manufacturing of most of these products is
outsourced to companies located in Asia, where we use approximately six suppliers for key components, sub-assemblies and raw
materials. We have identified but not qualified alternative Asian suppliers. Some final assembly is undertaken at our Brainerd,
Minnesota facility, which also serves as the distribution center for our outdoor recreation product line.

Our outdoor recreation products have historically been
offered to the public by traditional sporting goods distribution channels. We have continued to focus on significant retailers and
large catalog houses to offer our products as we expand our product categories, including Cabelas, Bass Pro Shops, Gander
Mountain, Dicks Sporting Goods and Mills Fleet Farm. Sales to each of Cabelas, Bass Pro Shops and Gander Mountain
accounted for in excess of 10% of our 2005 and 2004 revenues for the Nature Vision division. In addition, CSI Sports, an outdoor
products distributor, accounted for greater than 10% of our 2005 revenues. We primarily rely upon independent sales
representatives to sell our outdoor recreation products to retailers. Demand for our outdoor recreation products is seasonal, with
the majority of sales occurring in the fourth and first calendar quarters.

Underwater Viewing Systems

Our Nature Vision division manufactures and markets a
family of products called underwater viewing systems that are sold under the trade name Aqua-Vu. We are credited as
the creator of the underwater viewing system product category and were the first to market a self-contained underwater viewing
system. An underwater viewing system consists of a submersible video camera with internal lighting and a hand held monitor-viewing
device with a battery power supply. With the use of attachable weights and fins, the underwater camera can be lowered into a body
of water and used to look in the direction a boat is traveling. In the past the Aqua-Vu systems have relied on cathode ray tube
(CRT) display technology which required a sunshield to shadow the display.

In 2004, we began to market Aqua-Vu systems that
incorporate a proprietary sunlight viewable liquid crystal display (LCD) technology that allows multi-person viewing on color
display monitors. The 2004 Aqua-Vu systems also incorporated on-screen display information, including the water
temperature at the camera, camera depth and camera direction. In 2005, we expanded the Aqua-Vu systems to include the Scout series
that offers a 5-inch screen, at a retail price point of $199, Scout XL series that offers 7-inch screens, the largest on the
market, with brightness and contrast controls and the Scout SRT series that offers the same 7-inch screen along with on screen
display of water temperature at the camera and our patent-pending Spectral-Response lighting system. Another innovative product we
introduced in 2005 is our new Aqua-Vu Quad 360 Nighthawk. Instead of providing only one-directional view, our Aqua-Vu Quad 360
Nighthawk offers a split-screen 360 degrees view. We also added a digital recording Aqua-Vu DVR line that allows anglers to record
their underwater discoveries on San Disk media cards. Aside from recreational viewing, Aqua-Vu DVR allows serious anglers to
create video logs of their favorite fishing grounds to help them analyze repeatable fishing patterns. In 2005 we continued to
develop the Aqua-Vu MAV (Motorized Aqua-Vu) that allows anglers the ability to fish and view at the

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same time much more efficiently. Utilizing foot controls the angler will be able to adjust the depth of the camera
while viewing on a 10.5-inch daylight viewable LCD monitor. Production versions of Aqua-Vu MAV are expected to be released during
the summer of 2006.

In 2006 we have purchased substantially all of the assets of Vector Sportfishing, LLC. Vector marketed downriggers
and accessories for controlled depth fishing. These products have not been previously marketed through our current channels of
distribution and will be available in Spring 2006 as the Heavy Metal series of downriggers. The Vector line provides a
trolling products platform which will include our new wireless underwater video viewing system. This wireless product
line will transmit a video signal and other useful data from the camera to the boat for viewing on a large LCD monitor. The
wireless technology is scheduled for a 2007 market introduction. We anticipate new product innovation in the trolling products
platform extending beyond 2008.

Hunting Products

We also sell products for the recreational hunting
market. These products include Woodland Whisper hearing enhancers, Digital Deer Scales, Digital Archery Scales,
Digital Turkey Scales and the Quick Set Chair Blind. The Woodland Whisper hearing enhancers aid wild turkey hunters, by detecting
distant game calls, and deer and elk hunters, by amplifying the sounds of approaching prey. New for 2005, the Digital Deer Scale
allows hunters to accurately weigh their game, up to 300 lbs, and display that weight on a digital read out in order to get those
all important pictures for the brag book. In 2006 we will begin to market the Digital Archery Scale to archery shops
and shooters alike. Hook the scale on the draw string and pull. The scale will display the draw weight of a bow up to 100 lbs with
accuracy +/- .5 lbs. The scale will provide the shops and shooters the ability to set up their bows with a high degree of
accuracy. The Digital Turkey Scale will be a National Wild Turkey Federation, NWTF, licensed product and will begin to be marketed
in 2006. The scale will allow hunters to the ability to calculate their prized gobblers score based on the NWTF system utilizing
weight, beard length and spur length. Also new in 2006 is the Quick Set Chair Blind, patent pending, featuring Mossy Oak licensed
fabric. The blind is attached to a standard folding camp chair and with a series of articulating spring steel bands, pulls over
the top of the chair to conceal the hunter. The blind which fits neatly into an over the shoulder carry bag, will allow hunters to
be very mobile, set up quickly and disappear into the woods.

Ice Fishing Products

In 2003, we introduced a product for the ice fishing
market called the Buzz Stix. A Buzz Stix ice fishing rod incorporates a miniature vibrating motor activated with a
push button switch. In 2004, Nature Vision expanded the Buzz Stix ice fishing rod product line. An automatic jigging rod called
the AutoBuzz Stix was introduced that incorporates a small micro processor and three pre-programmed jigging routines. Also
introduced, was the Hot Stix ice fishing rod with a heated handle.

In 2005, we incorporated our jigging technology into
tip-ups, a mechanical device that tips up a flag signaling the fisherman when a fish is on the line, by creating the
new Jig-Up. The new Jig-Up combines traditional tip-up design with a battery powered motor that jigs the bait to
entice more strikes. Recognizing the burgeoning popularity of glow-in-the-dark ice fishing lures, we also introduced the Blazer
Stix series of fishing rods that feature a built-in LED light that anglers can use to recharge their phosphorescent ice fishing
lures. The Blazer Stix LED concept was also offered in a clip-on version that attaches to any fishing rod, ice or open-water.
Rounding out our new ice fishing product line in 2005 are the Genz Stix line of premium ice fishing rods named after Dave Genz,- a
nationally recognized ice fishing angler. Dave personally assisted in the design and development of these rods.

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Industrial Products

We have adapted our underwater viewing technology for
use in the water well inspection industry, offering a line of cameras under the trade name Well-Vu. Our Well-Vu
underwater viewing systems that are submersible to 1,000 feet. In addition, we sell viewing system products called
Tool-Vu and Mini-Vu for use in automotive and building inspections.

Photo Control Division

Overview

The Photo Control division designs, manufactures and
markets under two major product lines, Audiovisual products and Photography products. These two major product lines, are marketed
under the Vaddio product line, a valued added audiovisual peripheral line and the Norman line of photographic equipment and
accessories. Most of our photography products are manufactured in our Minneapolis, Minnesota facility.

During the year ended December 31, 2005, we had one
customer, Lifetouch, Inc. and its affiliates, that provided us with divisional revenues greater than 10%. During the year ended
December 31, 2004, we had two customers, Lifetouch Inc. and its affiliates and PCA National, Inc., that exceeded 10%. During each
of the last two years ended December 31, 2005 and 2004, less than 10% of the photography divisions sales were derived from
exports. Our photography products group does not have operations based outside of the United States. Our audiovisual products
group does have an international warehouse operation based in Europe. In 2005, Vaddios international sales amounted to 18%
of the audiovisual products net revenue.

Audiovisual Products

In January 2004, Photo Control Corp. acquired the
assets comprising the Vaddio product line. As a value-added reseller, Vaddio markets peripheral products for the videoconferencing
and audiovisual markets under the Vaddio brand to dealers, who in turn design and install automated camera systems to end-users
such as corporations, educational institutions, and religious and governmental organizations.

Our Vaddio product line is marketed throughout the
United States through a network of independent Manufacturers Representatives to audio-visual resellers and integrators. The
Vaddio line is marketed throughout Europe, The Middle East, Asia and South America through a network of distributors. In 2005,
Vaddio opened a distribution warehouse in Holland to service our growing network of European Distributors.

2005 saw the release of several new products in the
Vaddio product line. The ProductionVIEW multi-camera control system, TrackVIEW, an automated presenter camera tracking system, and
StreamVIEW, a multimedia streaming appliance for IP Networks.

Our Vaddio product line utilizes video cameras
manufactured by Sony and Canon, which are readily available through our OEM relationship with these manufacturers. Materials
required for our photographic equipment consist primarily of fabricated parts, lenses, electronic components, and lights, most of
which are readily available from numerous sources.

The Audiovisual marketplace and the Vaddio business
tends to be stronger during the second, third and fourth quarters of the year.

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Photography Products

Our photography product group designs, manufactures
and markets under the Norman brand name. Norman is a manufacturer of photographic lighting equipment and accessories. In 2005, the
decision was made to consolidate all the Photo Control photographic product brands under the Norman brand umbrella. Included in
the Norman product line are the Camerz and Lindahl products.

We market all of our photography equipment, Norman
electronic flash and lighting equipment, Camerz cameras, Lindahl lens shades, light filters, flash brackets and other photographic
accessories through two vertical market channels; OEM customers and Distributor/Dealers. Revenues from these two channels are
evenly distributed. In addition to our own sales personnel, independent representatives are used to sell the Norman product lines
to our various distributor and dealer channels.

In 2005, Norman launched several new products that
added wireless flash technology and battery portable technology to our lighting systems. In addition, the Video ViewFinder was
introduced to address the high volume portrait market. The Video ViewFinder allows photographers the ability to remotely view both
the live and captured image on their digital camera.

The photographic equipment business is somewhat
seasonal, with a larger volume of sales from the second and third quarters.

Sale of Bookendz Product Line

On October 28, 2005, we completed the sale of our
Bookendz product line, related patent and remaining inventory. We initially purchased Bookendz docking stations for Apple
PowerBook and iBook in October of 2000, but decided to sell this product line to allow the Photography division to focus on its
core products. The Bookendz products accounted for less than 10% of the divisions overall net revenues. We anticipate the sales
lost in the sale to be replaced organically through our remaining products.

Intellectual Property

Although our patents and trademarks are valuable, they
are not considered to be essential to our companys success. Innovative application of existing technology along with
providing efficient and quality products are of primary importance.

We have entered into agreements with employees that
grant us the exclusive right to use, make and sell inventions conceived by our employees during their employment. Management
believes that the right to use, make and sell such inventions adequately protects against any employee who might claim an
exclusive proprietary right in an invention developed while the employee was employed by us.

Nature Vision Division

We hold 14 patents and have numerous patent
applications pending for products offered by our outdoor recreation products division. Most patents relate to aspects of the
Aqua-Vu underwater viewing system, including the camera housing. Other patents cover our Buzz Stix ice fishing pole, a bird feeder
with a built-in video camera and transmitter and a hand-held monocular video monitor. Some of the

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pending patents include the MAV, Quick Set Chair Blind, and Game Vu. The patents expire during the period 2014
through 2023. There is no guarantee that others may not copy any of our products in whole or in part to produce a product similar
in design and purpose. Patent protection of our products does not imply that they will recognize any substantial, competitive edge
in the marketplace.

We also hold various trademarks relating to our
outdoor recreation products, including Aqua-Vu, Game-Vu, Tool-Vu, Mini-Vu, Woodland Whisper, Buzz Stix, Hot Stix, PIDS, RTG and
Ice Pro. We consider these trademarks important in assuring consumer recognition of our products.

Photo Control Division

In 2000, we acquired the exclusive license right to utility patent number 6,024,461 (which expires on October 31,
2016) and design patent number 428,661 (which expires July 25, 2014) for a lamphead having a multi-positional base and removable
mountable reflector flashtube assembly. The patented lamphead is used in the Norman flash equipment product line and allows for
interchange of the flashtube assembly on the lamphead. We received U.S. Patents No. 5,294,950 on March 15, 1994 (which expires
March 16, 2012) and No. 5,812,895 on September 22, 1998 (which expires March 16, 2012) for an identification system for automated
film and order processing including machine and human readable code. In 2005, we applied for a patent for our camera tracking
technology.

We are the owner of the registered trademarks
Camerz, Norman and Lindahl and the logo-type designs used in connection with the sale of
products under those names. We have common law rights in our Vaddio trademark.

Competition

Nature Vision Division

Our Aqua-Vu systems compete with underwater cameras
sold by several small companies. We also face competition from manufacturers of sonar and global positioning system (GPS) devices.
Sonar devices detect schools of fish and, at times, individual fish, and can provide information about lake and river bottom
contours. GPS devices allow fishers to mark spots where fish are located and then easily find them again. Large
consumer and marine electronics companies as well as established companies offering fishing and hunting equipment are sources of
potential competition.

Photo Control Division

Audiovisual Products

Competition for the Vaddio Pan/Tilt/Zoom, PTZ, camera
product line exists through alternative distribution channels for the Sony and Canon PTZ cameras. Our advantage within the
marketplace is to provide a value-added to our cameras by integrating our unique EZCamera Cable System for PTZ cameras which
enables installers to use standard CAT-5 cabling. Vaddios camera control systems are appliance based systems that compete
with custom control systems manufactured by AMX and Crestron. Large electronics companies as well as established companies
offering audiovisual equipment are sources of potential competition.

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Photography Products

Competitive products are offered by various manufacturers in the three major segments that make up the Norman
product line. Similar Monolight systems are manufactured by companies that include Photogenic, White Lightning and Elinchrom,
while the Norman Battery Portable Systems compete primarily with Quantum and Lumedyne. Manufacturers with competitive Power Pack
Systems include Profoto, Dyna-Lite, Speedotron and Novatron among others. Large lighting companies as well as established
companies offering photographic equipment and accessories are sources of potential competition.

OEM products are typically made to customer specifications, making them unique to their application. Frequently
Norman will be among several manufacturers asked to bid on various projects. Providing in-house engineering and manufacturing
capabilities is a competitive advantage.

Research and Development

For the years ended December 31, 2005 and 2004, we
spent $72,334 and $54,098, respectively, on research activities relating to the development of new outdoor recreation products
division, and $162,239 and $37,295, respectively, on research activities relating to photography products division. We anticipate
that spending on research and development in 2006 will be comparable as a percentage of net sales to that in 2005.

Government Regulation

Our outdoor recreation and photography products are
not subject to significant government regulations other than those regulations applicable to businesses generally. When they were
introduced in 1998, the Aqua-Vu systems were the subject of proposed legislation to ban the devices in Minnesota, but the
legislation was never enacted.

Employees

As of December 31, 2005, we employed 67 persons,
consisting of 64 full-time employees and 3 part-time employees. We also are utilizing the services of 6 leased personnel.

Compliance with Environmental Laws

Both of our operating divisions are in compliance with
all applicable federal, state and local laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or contaminants. Compliance with these environmental laws and
regulations has had no material effect on our capital expenditures, earnings or competitive position.

Management

Executive officers of Nature Vision are as
follows:

|                  |  |     |  |                                                    
|----------------- |  | --- |  | ---------------------------------------------------
|Name              |  | Age |  | Position                                           
|                  |  |     |  |                                                    
|                  |  |     |  |                                                    
|Jeffrey P. Zernov |  | 53  |  | President, Chief Executive Officer and a director  
|Michael R. Day    |  | 44  |  | Chief Financial Officer and Chief Operating Officer
|Robin K. Sheeley  |  | 50  |  | President - Photo Control division                 

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Jeffrey P. Zernov has served as our
President and Chief Executive Officer and as a director since August 31, 2004. Prior to August 31, 2004, Mr. Zernov served in the
same capacities for Nature Vision Operating, Inc. (f/k/a Nature Vision, Inc.), which he founded in 1998. Mr. Zernov also served as
Chief Financial Officer of Nature Vision Operating, Inc from 1998 through 2002. In 1979, Mr. Zernov founded Zercom Corporation, a
defense electronics contractor, which he sold to Communication Systems Inc. in 1990. Mr. Zernov served as Zercoms Chief
Executive Officer until 1996 and, in addition, from 1990 though 1996, he established and served as President of the Zercom Marine
division, a designer and manufacturer of sonar products for sports fishing applications. Prior to 1979, Mr. Zernov served as a
field promotion specialist with Lindy Tackle and was a co-founder of In-Fisherman, a sports fishing publisher and producer of
television shows.

Michael R. Day has served as our Chief
Financial Officer and Chief Operating Officer since August 31, 2004. Prior to August 31, 2004, Mr. Day served in the same
capacities for Nature Vision Operating, Inc. (f/k/a Nature Vision, Inc.). From 1999 through 2002, Mr. Day served as the Chief
Financial Officer of Image Rotational Enterprises, Inc., a Brainerd, Minnesota manufacturer of rotational molded plastic
parts.

Robin K. Sheeley has served as our
President - Photo Control division since October 11, 2004. Mr. Sheeley joined the Company on January 5, 2004, as Managing Director
of the Vaddio video conferencing and presentation business line, in connection with the purchase from Vaddio LLC, a Minnesota
limited liability company, of the product line. From January 2003 until he joined the Company, Mr. Sheeley served as Chief
Executive Officer of Vaddio LLC. From August 1999 through May 2002, Mr. Sheeley served as Chief Technology Officer of the
VideoLabs division of E.mergent, Inc., a publicly-held, Minnesota-based manufacturer of electronic products used in the audio
visual and video conferencing industries. Prior to August 1999, Mr. Sheeley owned and operated Acoustic Communication Systems,
Inc. a privately-held, Minnesota-based manufacturer of electronic products used in the audio visual and video conferencing
industries.

Factors That May Affect Future Results

Factors that may affect our future results include, but are not limited to, the following items as well as the
information in Item 6  Managements Discussion and Analysis of Financial Condition and Results of
Operations.

Factors Relating to the Company as a Whole

We may need additional capital in the
future. While we believe that we currently have sufficient resources with current cash and our current credit facility to
conduct business, we may need additional capital in the future. We may not be able to obtain additional debt or equity financing
or, if we do, it may not be on favorable terms. Sources of additional capital may include additional bank debt financing or the
sale of debt or equity securities, the latter of which could result in significant dilution to existing shareholders.

We depend on patents and proprietary
technology. Our long-term success may depend on our ability to defend current patents and obtain patent protection for
future products and processes. We currently have 14 United States patents. In addition, we have applied for patent protection on
additional

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aspects of our current products. These patent applications may not be granted. Even if they are, the scope of any
patent protection may be limited, allowing for competitive products, or the patents may be held invalid if challenged. We also
rely upon trade secrets, and no assurance can be given that others will not independently develop or otherwise acquire
substantially equivalent know-how or otherwise gain access to our proprietary technology.

We depend on our key personnel.Our
future success depends to a significant degree upon the continued services of key technical and senior management personnel
including, but not limited to, Jeffrey P. Zernov, our Chief Executive Officer and President, as well as our ability to attract,
retain and motivate highly qualified managerial and technical personnel if we expand. Failure to attract and retain skilled
personnel could hinder our research and development and manufacturing efforts, and could limit our ability to expand our product
offering or to manage growth. The loss of one or more key employees could similarly affect us.

Factors Relating to our Nature Vision Division

The future growth of our Nature Vision division
will depend upon our ability to continue to develop new and innovative products and enter new markets.A significant
portion of our Nature Vision divisions current revenue has been historically dependent upon sales to traditional sporting
goods dealers. In addition to current products, we intend to introduce new products for other applications in the outdoor
recreation market. Because some of these new product categories may be new to us, we may need to develop relationships with major
participants in this market, which in many cases are different from our existing customers. Any new products may not be accepted
by the ultimate users. Even if they are, we may need to continue to develop relationships with significant retailers to penetrate
markets and compete against suppliers of similar products.

We use Asian-based sources of supply for some of
our products.We currently purchase, and will continue to purchase, finished goods, components and raw materials from
Asian-based vendors for our outdoor recreation products. Although we have identified alternative finished goods manufacturers and
suppliers for key components, sub-assemblies and raw materials, at the present time we use approximately six Asian suppliers.
Should a key supplier be unwilling or unable to supply components or sub-assemblies in a timely manner or subject to
specifications, or should approval of a current or proposed supplier be delayed, withheld or withdrawn, we could experience delays
in obtaining alternative suppliers, which might result in reduced product output. In addition, the price that we pay for these
products could increase due to trade barriers, tariffs or other trade restrictions imposed by the United States or changes in
international currency rates.

Government regulation banning or restricting the
use of underwater video cameras would hurt our business.The use of the Aqua-Vu underwater viewing system is not regulated
by any federal or state governmental entity, nor is management aware of any similar restrictions in Canada or other foreign
countries. In 1998, at the time the product was introduced, the Minnesota Senate passed a bill that would have outlawed the use of
underwater video cameras for sport fishing. The Minnesota House of Representatives did not act upon the bill, and it was never
enacted. If a federal, state or foreign governmental entity were to enact legislation banning or restricting the use of underwater
video cameras, sales of the Aqua-Vu underwater viewing system would decline and our business would suffer as a result of fewer
sales of our flagship product.

Potential competitors could lower our revenues
or cause expenses to increase.Our current competition for the Aqua-Vu underwater viewing system and other products
consists of several small companies. Potential competitors include large consumer and marine electronics companies with
broader

11

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product lines and better name recognition and market acceptance. These companies also have significantly greater
financial, technical, marketing and other resources. Increased competition, especially by these larger, more established potential
competitors, may result in increased pricing pressure resulting in reduced gross profit margins. We may also be forced to increase
its spending on marketing, sales and product development, which would further reduce profits.

Factors relating to our Photo Control Division

Our Photo Control divisions business is
subject to frequent technological change.Camera technology has had rapid changes in recent years and our camera units are
subject to obsolescence as larger competitors continue to develop technologically advanced products.

We have a limited source of product supply so
our Photo Control division is subject to higher prices.A significant portion of the divisions sales are direct
distribution of camera products and supply of these products comes from large companies including Sony and Canon. Our limited
purchasing power and dependence upon vendors technology means we cannot benefit from lower prices and other favorable terms
provided to potential larger competitors.

Our Photo Control divisions sales are
seasonal, so uneven revenues are experienced throughout the year.Over 60% of revenues are realized in the second and
third quarters. However, orders from certain large customers can significantly reduce or exacerbate the seasonal pattern.
Conversely, expenses are largely constant throughout the year. Management is forced to rely on credit facilities and other sources
of funds during periods where expenses are higher than revenues. Operations would be harmed if sufficient credit was not made
available during a seasonal downturn in revenues, or if the lender imposed unfavorable credit terms.

There is a lot of competition that could hurt
our Photo Control divisions revenues or cause expenses to increase.Our current and prospective competitors include
many companies with financial, technical, marketing and other resources that are substantially greater than ours. We may not have
the financial resources, technical expertise or marketing, sales and support capabilities to compete successfully. The presence of
these competitors could hurt our business by causing us to reduce the selling prices for products and services and increase
spending on marketing, sales and product development. We may not be able to offset the effects of price reductions or increases in
spending. Further, our financial condition may put us at a competitive disadvantage relative to our competitors.

Item 2. DESCRIPTION OF PROPERTY.

Nature Vision owns two facilities used in its
business. A 35,000 square foot facility located at 213 NW 4th Street, Brainerd, Minnesota houses corporate and outdoor
recreation products division accounting, administrative, manufacturing, research and development, sales, and customer service
departments. The facility is secured by a mortgage. Nature Vision is obligated under a related promissory note with an interest
rate equal to prime plus .75%. As of December 31, 2005, the interest rate was 8% and monthly payments of principal and interest
totaled $4,126. The promissory note matures in June 2009. Approximately 5,500 square feet of the space is leased to unrelated
parties. Management feels that the current facility will not be adequate for their future growth plan and has the facility
available for sale. The Company anticipates the sale of the facility during 2006. At the time of the sale the mortgage will be
required to be satisfied. Management has entered into negotiations with a group within Brainerd to lease/purchase a facility with
approximately 75,000 square feet of warehouse space and an additional 5,000 square feet of office space. The Company anticipates
moving to this facility sometime in the third quarter of 2006.

12

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A 55,000 square feet facility located at 4800 Quebec
Avenue North, Minneapolis, Minnesota is used by the photography products division for accounting, administrative, manufacturing,
research and development, sales, and customer service departments. Management believes its present facilities are adequate for its
current level of operation and provide for a reasonable increase in production activities.

Item 3. LEGAL PROCEEDINGS.

Not
applicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.

Not
applicable.

PART II

Item 5. MARKET FOR COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information.The number of record
holders of our common stock on March 29, 2006 was 270. The table below sets forth the high and low sale prices for the common
stock during the two years ended December 31, 2005, and gives effect to the 1-for-2 reverse stock split of Nature Visions
common stock that was effected on August 31, 2004. The information shown is based on information provided by Yahoo! Inc. and
Nasdaq. These quotations represent prices between dealers, and do not include retail markups, markdowns or commissions, and may
not represent actual transactions. Our common stock is currently quoted on the Nasdaq Small-Cap Market under the symbol
NRVN. Nature Vision did not pay any cash dividends on our common stock during the periods presented.

|              |  |                |   |      |  |  | 
|------------- |  | -------------- | - | ---- |  |  | 
|              |  | Common
  Stock
|              |  |               
|Quarter Ended |  | Low            |   | High | 
|              |  |                |   |      | 
|              |  |                |   |      |  |  | 
|2004          |  |                |   |      |  |  | 
|March 31      |  |                | $ | 4.02 |  |  | 
|June 30       |  |                | $ | 4.34 |  |  | 
|September 30  |  |                | $ | 3.66 |  |  | 
|December 31   |  |                | $ | 4.52 |  |  | 
|              |  |                |   |      |  |  | 
|2005          |  |                |   |      |  |  | 
|March 31      |  |                | $ | 6.00 |  |  | 
|June 30       |  |                | $ | 4.00 |  |  | 
|September 30  |  |                | $ | 4.50 |  |  | 
|December 31   |  |                | $ | 4.51 |  |  | 

13

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Securities Authorized for Issuance Under Equity
Compensation Plans.The following table sets forth the securities authorized for issuance under Nature Visions
compensation plans as of December 31, 2005.

|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |      |  |  |  |        
|------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  |  |  | -------
|                                                              |  | Number of securities to be issued upon exercise of outstanding
  options, warrants and rights |  | Weighted average exercise price of outstanding options,
  warrants and rights |  | Number of securities remaining available for future
  issuance under equity compensation plans (excluding securities reflected in
  column (a)) |     
|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |     
|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |      | 
|                                                              |  | (a)                                                                                           |  |                                                                               |  |                                                                                                                                                 | (b)  |  |  |  | (c)    
|Equity compensation plans approved by security holders        |  | 165,456                                                                                       |  |                                                                               |  | $                                                                                                                                               | 3.04 |  |  |  | 103,500
|Equity compensation plans not  approved by securities
holders |  | 76,002                                                                                        |  |                                                                               |  | $                                                                                                                                               | 5.92 |  |  |  | 55,786 
|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |      |  |  |  |        
|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |      |  |  |  |        
|Total                                                         |  | 241,458                                                                                       |  |                                                                               |  | $                                                                                                                                               | 3.95 |  |  |  | 159,286
|                                                              |  |                                                                                               |  |                                                                               |  |                                                                                                                                                 |      |  |  |  |        

Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition, results of
operations, liquidity and capital resources should be read in conjunction with our audited consolidated financial statements and
notes thereto appearing elsewhere in this report. This discussion contains forward-looking statements that involve risks and
uncertainties, including information with respect to our plans, intentions and strategies for our businesses. Our actual results
may differ materially from those estimated or projected in any of these forward-looking statements.

# Company History and Overview

Nature Vision, Inc., (f/k/a
Photo Control Corporation) (the Company or we) was incorporated as a Minnesota corporation in 1959. On
August 31, 2004, the Company changed its name to Nature Vision, Inc. in connection with a merger transaction with Nature Vision
Operating Inc. (f/k/a Nature Vision, Inc.) a Minnesota corporation that was incorporated in 1998. As a part of the merger, Nature
Vision Operating Inc. became a wholly-owned subsidiary of the Company. The shares of the combined company trade on the Nasdaq
SmallCap Market under the symbol, NRVN.

The Company has two distinct
operating divisions, the Nature Vision Division for outdoor recreation products, located in Brainerd, Minnesota, and the Photo
Control Division for photography and audio visual products, located in Minneapolis, Minnesota. The long-term growth plans for the
Company will be in the outdoor recreation markets. This growth will be generated organically and through strategic acquisitions.

# Revenue

Revenue consists of sales of
our products net of returns and allowances. Direct revenue includes sales from orders to distributors, dealers and direct
consumers and includes customer service and shipping charges. New product innovation through the use of technology will continue
to be the basis of our organic growth. We will look to strategic acquisitions to provide penetration into new product categories
and channels.

# Cost of Goods Sold

Cost of goods sold for our
products consists of the cost of direct materials, labor to produce the products, freight in, depreciation, amortization,
warehousing, associated management, occupancy costs, customer service and warranty, shipping and receiving costs, quality
assurance and other indirect miscellaneous manufacturing costs. Cost of goods sold can fluctuate based on the product mix sold for
a given period. The increased cost of oil continues to drive up the cost of components and the freight to receive and ship
products. We continue to evaluate make versus outsource opportunities to reduce these costs. We look to increase our distribution
abilities and capacities.

# Gross Profit

We define gross profit as the
difference between revenue and cost of goods sold. We believe our gross profit is our best metric to manage the business on a
divisional and product line basis.

# Selling, General and Administrative Expenses

Selling, general and
administrative expenses include directly identifiable operating costs and other expenses. The majority of these costs are fairly
consistent from month to month. Selling costs for both of our divisions consist of payroll, commissions, product management,
marketing, advertising and servicing accounts costs. General and administrative costs for both divisions include payroll, product
design, product development, engineering, order processing costs, management information systems, accounting and administrative.
Shared general and administrative expenses include costs associated with general corporate management and shared departmental
services such as legal, external accounting, management information systems, finance, insurance and human resources. Other costs
consist primarily of interest on the existing line of credit. The interest rate on the credit facility floats with prime, at prime
plus .75%. As rates have increased over 15 consecutive quarters, these costs have continued to rise.

# Income from Operations

Income from Operations is
defined as revenue less cost of goods sold and selling, general and administrative expenses.

14

---

# Trends and Opportunities

Retail Expansion by Larger Customers.Our large customers, such as
Cabelas, Bass Pro Shops and Dicks Sporting Goods continue to expand the quantity and regional coverage of stores.
While these customers continue to grow, our smaller customers continue to reduce in quantity and quality. These new large retail
store expansion plans will provide significant opportunities for continued growth at the expense of the smaller owner operator
establishments. We anticipate the number of customers within the Outdoor recreation products market to continue to reduce as the
average size of our customer continues to increase. This consolidation puts significant pressure on the business with its
increased reliance on fewer customers. Failure to continue business with an existing customer or even maintain an existing sales
level with a customer could have a significant impact on earnings.

Turnaround in Photo Control Division.In a short period of 10 months
the photographic division was able to return to profitability. Increased sales, improved gross profit margins and focus on
efficiencies were the main drivers in the turnaround. Sales increased by the addition of new channels and new products. The new
products also improved gross profit margins and internal manufacturing efficiencies.

Increased Inventories. Inventory has increased substantially within
both divisions. Within the Nature Vision division, inventories were substantially below a required level at the end of 2004 as we
were unable to ship product due to being out of stock. At the end of 2005, we increased our required levels to insure a high rate
of order fulfillment. We currently have stock in place to fulfill orders. At the Photo Control division, inventories increased
primarily due to new product introductions and taking advantage of an ability to level load production capabilities. We anticipate
the ability to reduce the required levels within both divisions in future quarters. Should sales of existing products not achieve
forecasted levels, a change in product components or customer requirements occur, such reductions may not be obtainable.

Increased oil prices.Increased oil prices may affect us more
negatively than our competition. If gasoline prices should continue to increase, consumers may opt to reduce the amount of
discretionary spending on entertainment items and take fewer vacations. Increased oil prices continue to impact the costs of
material components. We rely on outsourced production and the costs for the associated shipping could materially impact the cost
of product and gross profit margins.

Increased interest costs.Given the cyclical nature of our business we
are reliant on a credit facility. As growth rates dictate additional borrowing, interest rates have consistently increased
impacting the costs of financing. If we are unable to maintain favorable financing arrangements it will impact the overall
profitability of the Company.

Acquisition opportunities. We continue to evaluate opportunities for
strategic acquisitions. These acquisitions are expected to be accretive to earnings. These potential acquisitions will require
financing which we anticipate we will be able to obtain.

Investment in infrastructure.We anticipate that we will continue
investing in our infrastructure to support our proposed new distribution facility and in our management information systems. We
will also continue to invest in qualified employees to support our organic growth with new product innovation. We expect that we
will make investments in our data systems, and we expect to hire additional employees in our distribution services, engineering
and administrative areas in a manner appropriate to support our revenue growth.

# Influences on Period Comparability

Because the merger has been accounted for as a reverse merger, the
consolidated financial statements as reported include the operations of the Nature Vision division for all the periods presented,
whereas, the Photo Control division has been included as of August 31, 2004, the date of the merger and forward. The pro forma
financial information in the tables set forth below is prepared as if the merger occurred on January 1, 2004 and thus includes a
full year of the Photo Control division comparative financial results for 2004. The following discussion of operations comparing
2005 to 2004 uses the 2004 pro forma results to make the comparison more meaningful.

15

---

# Results of Operations

The following table provides the percentage increase in our net sales, gross
profit, income from operations, and net income on an as-reported basis and the percentage increase in our net sales and net income
for 2005 and 2004 on a pro forma basis.

|                       | As Reported |  | Pro forma
|---------------------- | ----------- |  | ---------
|
|NET SALES              |             |  | $        
|                      
|GROSS PROFIT           |             |  |          
|                      
|INCOME FROM OPERATIONS |             |  |          
|                      
|                      
|NET INCOME             |             |  | $        

The following table presents
our gross profit, income from operations and net income as a percentage of net sales, on an as-reported basis and net income as a
percentage of net sales on a pro forma basis for 2005 and 2004.

|                       | As Reported |  | Pro forma
|---------------------- | ----------- |  | ---------
|
|GROSS PROFIT           |             |  |          
|                      
|INCOME FROM OPERATIONS |             |  |          
|                      
|NET INCOME             |             |  |          

Sales increased through new product introductions and new sales channels.
These new products were also sold at increased gross profit margins. The sales increase did not require sales, general and
administrative costs to increase at the same rate therefore increasing the level of operating income substantially. During 2006
the Company will incur the cost of stock based compensation. We anticipate additional one-time costs in 2006 from the sales of
Vaddio product exceeding the amount accrued at the time of the reverse merger. These costs will also be absorbed within the Photo
Control division and are not comparable to 2005.

Divisional Analysis

Nature Vision Division

The following table provides
the percentage increase in net sales and gross profit and gross profit as a percentage of net sales of the Nature Vision Division
for 2005 and 2004 on an as reported and a pro forma basis:

|                                      | As Reported |  | Pro forma
|------------------------------------- | ----------- |  | ---------
|
|NET SALES                             |             |  | $        
|                                     
|GROSS PROFIT                          |             |  |          
|                                     
|GROSS PROFIT AS A PERCENTAGE OF SALES |             |  |          

16

---

Increased sales were due to the introduction of new products and the
carryover of unfilled demand from 2004. The sales carryover from 2004 resulted from the demand for new product that was not
available prior to year-end. This carryover increased the first quarter sales for 2005 which are not anticipated to be repeatable
at the same level in 2006. We were able to get back to a stocking level by the start of the second quarter of 2005. This situation
also shows up as a substantial increase in inventory levels at year-end 2005 due to inventories being at minimal levels at 2004
year-end. Management also increased the stocking levels for 2005 in order to return to our high order fill rate weve
experienced in the past. We moved our production offshore in 2004 which also contributed higher gross profits. Product mix and
seasonality of products can have a substantial impact on the gross profit margin for any given period.

Photo Control Division

The
following table provides the percentage increase in net sales and gross profit and gross profit as a percentage of net sales of
the Photo Control Division on an as reported and the percentage increase in net sales on a pro forma basis for 2005 and 2004:

|                                      | As Reported |  | Pro forma
|------------------------------------- | ----------- |  | ---------
|
|NET SALES                             |             |  | $        
|                                     
|GROSS PROFIT                          |             |  |          
|                                     
|GROSS PROFIT AS A PERCENTAGE OF SALES |             |  |          

Increased sales as reported in 2005 vs pro forma 2004 amounts were due to the
introduction of new products and new distribution channels. These increased sales and new products provided increased efficiencies
within internal manufacturing and improved gross profits. The following three major objectives were provided and achieved within
the Photo Control division during 2005:

|- |  | increase sales
|- |  | --------------

|- |  | reduce expense and become more efficient
|- |  | ----------------------------------------

|- |  | become profitable
|- |  | -----------------

While those objectives occurred, we increased our level of inventory to
assist in fueling these improvements. A focus on reducing inventory levels will be implemented in future quarters in order to
reduce capital resource requirements.

# Liquidity and Capital Resources

Cash decreased to $0 at
December 31, 2005 from $41,572 at December 31, 2004. The decrease is a combination of factors including cash used in operations of
$1,475,000 from operations. A major factor in this decrease was an increase in net inventory levels of $3,088,000. The increase is
due to minimal levels of stock on hand at December 31, 2004 in the Nature Vision division. Additionally, the division brought in
additional product in 2005 in order to continue to maintain a high order fill rate. The Photo Control division also increased
inventory to accommodate increased sales. Both divisions will work to reduce the levels of inventories and increase turns. Another
major component of the decrease was an increase in the level of receivables of $945,000. This increase was due to the increased
sales in the fourth quarter of 2005. These decreases were offset by earnings of $887,000. The final major component is an increase
in current payables of $372,000. Investing activities also netted a decrease from capital expenditures of $618,000, after the sale
of the Bookendz product line. Management anticipates that it will continue to invest in capital expenditures for new product lines
to be similar to that of 2005. On October 28, 2005, the Company completed the sale of its Bookendz product line, related patent,
equipment and remaining inventories. The Company has received $200,000 at the closing for the related patent and equipment. The
Company received approximately $212,000 for inventory in the fourth quarter of 2005. The Company will also receive 10% of all
future revenues from sales of product related to the patent from the buyer for a period of 3 years from the date of the sale. The
sale of the product line will allow the Photo Control division the opportunity to focus on its two core products lines,
audiovisual peripheral products and photographic equipment and accessories. All of the activity for 2005 for working capital needs
was financed within the current structure of the current credit facility.

17

---

As of December 31, 2005
working capital increased to $6,899,783, from $6,061,137 at December 31, 2004.

Nature Vision Inc. has a
secured line of credit for $4,000,000 at prime plus .75%. The prime rate at December 31, 2005 was 7.25%. The line expires on June
30, 2006. Management believes it can renegotiate a new line of credit at that time. Management anticipates continued advances
against the renegotiated line of credit to fund anticipated sales growth in future quarters. The agreement requires the following
affirmative covenants, minimum net worth of $7,000,000, debt to equity ratio of less than 1.0 to 1.0 and debt service ratio of not
to exceed 1.2 to 1.0. The Company was in compliance with all covenants at December 31, 2005. Management believes short-term
liquidity needs of the Company will be provided through working capital and the line of credit, and will be sufficient to finance
operations for a period of at least the next 12 months. The Company currently has its Brainerd facility available for sale.
Management anticipates the facility to be sold during 2006. Upon sale, the existing mortgage will be required to be satisfied.
Management is currently negotiating to lease a new 80,000 square foot facility with an option to purchase. The Company anticipates
that the proceeds from the sale will pay off the current debt on the building and fund a portion of the new facility improvements.
At this time, management believes that any debt required to relocate and improve the new facility will not be substantially
different than the amount currently on the balance sheet. Management believes that it will be able to obtain long-term financing
for the new facility improvements. Management also believes that financing will be readily available should the purchase option be
exercised.

In the first quarter of 2006,
the Company received approximately $268,000 from the exercise of options for 39,000 shares. These options were granted prior to
the reverse merger. Associated expenses will be incurred during the same period.

It is managements
belief that it will fund any potential acquisitions through additional financing and the potential issuance of common stock.
Management believes that any additional long-term debt requirements and additional lines of credit will be readily available.

It is managements
belief that long-term liquidity needs for the foreseeable future will be provided by working capital, and the expectation that the
current line of credit will be renewed and any additional long-term debt requirements will be readily available.

At this time, management does
not believe that there are any uncertainties regarding the reverse merger that would materially impact our future liquidity needs.

The Company believes that the
effect of inflation has not been material during the year ended December 31, 2005.

# Off Balance Sheet Financing Arrangements

As of December 31, 2005,
there were no off-balance sheet arrangements, unconsolidated subsidiaries and commitments or guaranties of other parties.

18

---

# Critical Accounting Policies

Managements estimate of
the warranty reserve is based on historical company data and managements best estimate. We evaluated the key factors and
assumptions used to develop the warranty reserve in determining that it is reasonable in relation to the consolidated financial
statements taken as a whole.

The Company recognizes revenue when products are shipped and the customer
takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement
exists and the sales price is fixed or determinable.  The Companys revenue recognition policy is in accordance with SEC
Staff Accounting Bulletin, No. 104.

Management records a reserve on accounts receivable which is an estimate of
the amount of accounts receivable that are uncollectible. The reserve is based on a combination of specific customer knowledge,
general economic conditions and historical trends. Management believes the results could be materially different if economic
conditions change for our customers.

The carrying value of long-lived assets is periodically assessed to insure
their carrying value does not exceed their estimated net realizable future value. This assessment includes certain assumptions
related to future needs for the asset to help generate future cash flow. Changes in those assessments, future economic conditions
or technological changes could have a material adverse impact of the carrying value of these assets.

The inventory reserve is an estimate of the future net realizable value of
our inventory. It is based on historical trends, product life cycles, forecast of future inventory needs and on-hand inventory
levels. Management believes reserve levels could be materially affected by changes in technology, our customer base, customer
needs, general economic conditions and the success of certain Company sales programs.

Realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities and projected future taxable income in making this assessment. Actual future operating
results, as well as changes in future performance, could have a material adverse impact on the valuation reserves.

Item 7. FINANCIAL STATEMENTS.

See Financial Statements beginning on page
F-1.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

Item 8A. CONTROLS AND PROCEDURES.

Our Chief Executive Officer, Jeffrey P. Zernov, and
our Chief Financial Officer, Michael R. Day, have reviewed our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon this review, Messrs. Zernov
and Day believe that our disclosure controls and procedures are effective in ensuring that material information related to Nature
Vision is made known to them by others within Nature Vision.

19

---

There have been no significant changes in internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the
fourth quarter covered by this report that have materially affected, or are reasonably likely to materially affect, Nature
Visions internal control over financial reporting.

Item 8B. OTHER INFORMATION.

Executive Base Salaries and Cash Bonus Plans

On March 30, 2006, the Companys
Compensation/Nominating Committee (the Compensation Committee) approved the following Base Salaries and Cash Bonus
Plans for the fiscal year ending December 31, 2006 for its three executive officers, Jeffrey P. Zernov, President and
Chief Executive Officer, Michael R. Day, Chief Financial Officer and Chief Operating Officer, and Robin K. Sheeley,
President of the Photo Control Division.

Base Salaries. The Companys
executive officers were awarded Base Salaries retroactive to January 1, 2006 as follows:

|                  |         
|----------------- | --------
|Jeffrey P. Zernov | $200,000
|Michael R. Day    | $150,000
|Robin K. Sheeley  | $125,000

2006 Cash Bonus Plans. The 2006 Cash
Bonus Plan consists of two components: (a) formula-based bonuses and (b) a discretionary bonus.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Formula-Based Bonuses. Jeffrey P. Zernov and
Michael R. Day are each entitled to earn a formula-based bonus to be determined by comparing the Companys actual 2006
earnings before interest, taxes, depreciation and amortization (EBITDA), to the budgeted EBITDA for 2006 as
established by the Board of Directors. The Companys actual 2006 EBITDA must meet or exceed 90% of the budgeted EBITDA for
2006 in order for these executive officers to be entitled to bonuses under this part of the 2006 Cash Bonus Plans.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The following table describes the results of the
formula-based bonus plan assuming that Nature Visions 2006 EBITDA is 90%, 100%, and 110% of the budgeted EBITDA for 2006:                                                                                                                                                                                                                                                                                                                                                    

|                                                           |  |                           |  |                     |   |                      |  |                  |         |  |  |  |  |    |   |  |  |   |        |  | 
|---------------------------------------------------------- |  | ------------------------- |  | ------------------- | - | -------------------- |  | ---------------- | ------- |  |  |  |  | -- | - |  |  | - | ------ |  | 
|Actual 2006  EBITDA Compared  to 2006 Budgeted  EBITDA (%) |  | Zernov  Bonus  Amount (%) |  | Zernov Bonus Amount |   | Day  BonusAmount (%) |  | Day Bonus Amount |        
|                                                           |  |                           |  |                     |   |                      |  |                  |        
|                                                           |  |                           |  |                     |   |                      |  |                  |         |  |  |  |  |    |   |  |  |   |        |  | 
|90%                                                        |  |                           |  | 25                  | % |                      |  | $                | 50,000  |  |  |  |  | 15 | % |  |  | $ | 22,500 |  | 
|                                                           |  |                           |  |                     |   |                      |  |                  |         |  |  |  |  |    |   |  |  |   |        |  | 
|100%                                                       |  |                           |  | 50                  | % |                      |  | $                | 100,000 |  |  |  |  | 30 | % |  |  | $ | 45,000 |  | 
|                                                           |  |                           |  |                     |   |                      |  |                  |         |  |  |  |  |    |   |  |  |   |        |  | 
|110%                                                       |  |                           |  | 75                  | % |                      |  | $                | 150,000 |  |  |  |  | 45 | % |  |  | $ | 65,500 |  | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|These bonuses under the 2006 Bonus Plan will be
prorated in cases where Nature Visions actual 2006 EBITDA exceeds 90% of the budgeted EBITDA but is less than 110% of the
budgeted EBITDA for fiscal 2006. By way of example, if Nature Visions actual fiscal 2006 EBITDA exceeds 105% of the budgeted
EBITDA, then Mr. Day would be entitled to a formula-based bonus of 37.5% of his 2006 base salary. In the event that Nature
Visions actual 2006 EBITDA exceeds 110% of the budgeted EBITDA, then Mr. Zernov and Mr. Day will receive a formula-based
bonus equal to 75% and 45%, respectively, of their 2006 base salary, which will be subject to increase as determined in the
discretion of the Compensation Committee.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Mr. Sheeley is entitled to a bonus of 30% of his base
salary, $37,500, should the Photo Control Division achieve its budgeted EBITDA. Mr. Sheeley is also entitled to a bonus of 5% of
the budgeted adjusted EBITDA of the Photo Control Division if budgeted adjusted EBITDA is achieved and 10% of any adjusted EBITDA
in excess of the budgeted amount. Mr. Sheeley is not eligible for a discretionary bonus or an award of 2006 Long Term
Incentive Compensation. Mr. Sheeley is eligible for a bonus under his Employment Agreement entered into in connection with
the purchase of Vaddio from Mr. Sheeley.                                                                                                                 

20

---

|                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Discretionary Bonus. In addition to the
formula-based bonus plan described above, Messrs. Zernov and Day may be entitled to a discretionary bonus up to 20% of each such
executive officers 2006 base salary, which shall be determined by the Compensation Committee in its discretion in light of
each executive officers individual performance during fiscal 2006.

The foregoing cash bonus plans are subject to
adjustment by the Committee as a result in a material change in the 2006 budget due to acquisition, divestiture or other event in
the discretion of the Committee.

Long Term Incentive Compensation

On March 30, 2006, the Compensation Committee approved
the following long term incentive compensation relating to performance for the fiscal year ending December 31, 2006 for Jeffrey P.
Zernov, Michael R. Day and the non-employee directors of the Company.

Mr. Zernov and Mr. Day and the non-employee members of
the Board of Directors are entitled to earn long term incentive compensation in the form of restricted stock if the Company meets
or exceeds 90% of the budgeted EBITDA for 2006. A target economic value for the non-employee directors, Mr. Zernov, and Mr. Day
has been established and is indicated below. The restricted stock will be awarded in April 2007 under the 2004 Stock Incentive
Plan based on the actual 2006 EBITDA compared to the 2006 budgeted EBITDA. The number of shares to be awarded is determined by a
formula adopted by the Committee setting the value of a share of restricted stock. The Company resereves the right to adjust the
awards of restricted stock for achieving 2006 EBITDA under or over the 2006 budgeted EBITDA or as a result of material change in
the 2006 budget due to an acquisition, divestiture or other event in the discretion of the Committee.

The following table describes the economic value
established for the indicated individuals, assuming that the Companys 2006 budgeted EBITDA is achieved:

|                     |  |                       
|-------------------- |  | ----------------------
|                     |  | Target  Economic Value
|                     |  |                       
|Nonemployee Director |  | $  16,000             
|Jeffrey P. Zernov    |  | $150,000              
|Michael R. Day       |  | $  45,000             

The restricted stock will vest as follows:

|                     |  |                   
|-------------------- |  | ------------------
|Anniversary of Grant |  | Percentage Vesting
|                     |  |                   
|First                |  | 40%               
|Second               |  | 30%               
|Third                |  | 20%               
|Fourth               |  | 10%               

Board of Directors Annual Cash Compensation

On March 30, 2006, the Compensation Committee approved
the following Board of Directors annual cash compensation:

|                                    |  |                   |  |                          |  |  |  |  |        |     | 
|----------------------------------- |  | ----------------- |  | ------------------------ |  |  |  |  | ------ | --- | 
|                                    |  | Regular 
  Member |  | Committee Chair
  Member | 
|                                    |  |                   |  |                          | 
|Retainer per
  year                 |  |                   |  | 12,000                   |  |  |  |  | 12,000 | (1) | 
|Board
  meeting fees                |  |                   |  | 1,500                    |  |  |  |  | 1,500  | (2) | 
|Committee
  Chair Retainer per year |  |                   |  | N/A                      |  |  |  |  | 2,000  | (3) | 
|Committee
  meeting fees            |  |                   |  | 1,500                    |  |  |  |  | 1,500  | (4) | 
|                                    |  |                   |  |                          |  |  | 
|Annual Cash
  Compensation          |  |                   |  | 15,000                   |  |  |  |  | 17,000 |     | 
|                                    |  |                   |  |                          |  |  | 

(1)
Raise retainer to $3,000 per quarter

(2)
Raise to $750 per meeting and assume continued 2 in-person meetings(3)
Raise to $2,000 per year(4)
Begin paying $750 per meeting x 2 meetings

21

---

PART III

Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT.

Incorporated
by reference from Nature Visions definitive proxy statement for the 2006
Annual Meeting of Shareholders.

Item 10. EXECUTIVE COMPENSATION.

Incorporated
by reference from Nature Visions definitive proxy statement for the 2006
Annual Meeting of Shareholders.

Item 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Incorporated
by reference from Nature Visions definitive proxy statement for the 2006
Annual Meeting of Shareholders.

Item 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.

Incorporated
by reference from Nature Visions definitive proxy statement for the 2006
Annual Meeting of Shareholders.

Item 13. EXHIBITS.

For
a list of Exhibits filed as a part of this report, see Exhibit Index page
following the signature page to this annual report on Form 10-KSB.

Item 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES.

Incorporated
by reference from Nature Visions definitive proxy statement for the 2006
Annual Meeting of Shareholders.

22

---

SIGNATURES

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

|                       |  |  |                               
|---------------------- |  |  | ------------------------------
|                       |  |  | Nature Vision, Inc.           
|                       |  |  |                               
|Date: March
  30, 2006 |  |  | By: /s/
  Jeffrey P. Zernov   
|                       |  |  |                               
|                       |  |  | Jeffrey P.
  Zernov, President
|                       |  |  | and Chief
  Executive Officer 

Know
all persons by these presents, that each person whose signature appears below
hereby constitutes and appoints Jeffrey P. Zernov and Michael R. Day, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments to this report and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full powers and authority to do
and perform each and every act and things requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

|                                      |  |                 
|------------------------------------- |  | ----------------
|/s/ Jeffrey
  P. Zernov               |  | March 30,
  2006
|                                      |  |                 
|Jeffrey P.
  Zernov                   | 
|(President,
  Chief Executive Officer | 
|and a
  Director)                     | 

|                                                     |  |                 
|---------------------------------------------------- |  | ----------------
|/s/ Michael
  R. Day                                 |  | March 30,
  2006
|                                                     |  |                 
|Michael R.
  Day                                     | 
|(Chief
  Financial Officer, Chief Accounting Officer | 
|and Chief
  Operating Officer)                       | 

|                         |  |                 
|------------------------ |  | ----------------
|/s/ Richard
  P. Kiphart |  | March 30,
  2006
|                         |  |                 
|Richard P.
  Kiphart     | 
|(Director)               | 

|                    |  |               
|------------------- |  | --------------
|/s/ Steve
  Shanesy |  | March 30, 2006
|                    |  |               
|Steve
  Shanesy     | 
|(Director)          | 

|                      |  |                 
|--------------------- |  | ----------------
|/s/ Scott S.
  Meyers |  | March 30,
  2006
|                      |  |                 
|Scott S.
  Meyers     | 
|(Director)            | 

|                        |  |                 
|----------------------- |  | ----------------
|/s/ Curtis
  A. Sampson |  | March 30,
  2006
|                        |  |                 
|Curtis A.
  Sampson     | 
|(Director)              | 

|                      |  |                 
|--------------------- |  | ----------------
|/s/ Thomas
  F. Leahy |  | March 30,
  2006
|                      |  |                 
|Thomas F.
  Leahy     | 
|(Director)            | 

22

---

Exhibit Index

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   | Merger agreement and plan of reorganization dated April 15, 2004, by and among Nature Vision,
Inc. (n/k/a Nature Vision Operating Inc.), Photo Control Corporation (n/k/a Nature Vision, Inc.), PC Acquisition, Inc.,
Jeffrey P. Zernov (as shareholders representative) and certain Nature Vision, Inc. (n/k/a Nature Vision Operating Inc.)
shareholders (previously filed as Exhibit 10.2 to the registrants Quarterly Report on Form 10-QSB for the period
ended March 31, 2004).
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.1   | Amended and restated articles of incorporation (previously filed as Exhibit 3.1 to the
registrants Report on Form 8-K dated September 7, 2004).                                                                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.2   | Amended and restated bylaws (previously filed as Exhibit 3.2 to the registrants Report
on Form 8-K dated September 7, 2004).                                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.1  | Amended and restated retention agreement with Curtis R. Jackels (previously filed as Exhibit 10.1
to the registrants Quarterly Report on Form 10-QSB for the period ended March 31, 2004).                                                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.2  | Amended and
  Restated 2004 Stock Incentive Plan, dated June 3, 2004 (previously filed as
  Exhibit 10.1 to Registrants Form 10-QSB Registration for the period ended
  June 30, 2005).                                                                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.3  | Executive
  salary continuation plan adopted August 9, 1985, including exhibits
  (previously filed as Exhibit 10.4 to the registrants Annual Report on Form
  10-K for the year ended June 30, 1986).                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.4  | 1983 Stock
  Option Plan (previously filed as Exhibit 10.4 to the registrants Annual
  Report on Form 10-K for the fiscal year ended June 30, 1989).                                                                                                                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.5  | Form of
  stock option agreement under the 1983 Stock Option Plan (previously filed as
  Exhibit 5 to the registrants Registration Statement on Form S-8, Commission
  File No. 2-85849).                                                                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.6  | Form of
  Nonstatutory Option Agreement under the 2004 Stock Incentive Plan and Form of
  First Amendment thereto.                                                                                                                                                                                                                                                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.7  | Incentive
  Stock Option Agreement for Jeffrey Zernov, dated August 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.8  | Amendment to
  the registrants 1983 Stock Option Plan dated August 29, 1994 (previously
  filed as Exhibit 10.5 to the registrants Annual Report on Form 10-K for the
  fiscal year ended December 31, 1994).                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.9  | Amendment to
  the registrants 1983 Stock Option Plan dated February 23, 1996 (previously
  filed as Exhibit 10.6 to the registrants Annual Report on Form 10-K for the
  fiscal year ended December 31, 1995).                                                                                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.10 | Amendment to
  the registrants 1983 Stock Option Plan dated November 7, 1997 (previously
  filed as Exhibit 10.7 to the registrants Annual Report on Form 10-K for the
  fiscal year ended December 31, 1997).                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.11 | Subscription
  and investment representation agreement with Richard P. Kiphart, including
  form of irrevocable proxy (previously filed as Exhibit 10.3 to the
  registrants Quarterly Report on Form 10-QSB for the period ended March 31,
  2004).                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.12 | Employment
  agreement between Nature Vision, Inc. and Jeff Zernov dated August 31, 2004
  (previously filed as Exhibit 10.1 to the registrants Report on Form 8-K
  dated September 7, 2004).                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.13 | Employment
  Agreement by and between Photo Control Corporation (n/k/a Nature Vision,
  Inc.) and Robin K. Sheeley, dated January 5, 2004 (previously filed as
  Exhibit 10.1 to the registrants Report on Form 8-K dated October 15, 2004).                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.14 | Bonus plan
  for the fiscal year ending December 31, 2005 for certain executive officers
  (previously disclosed in the registrants Report on Form 8-K dated March 23,
  2005).                                                                                                                                                                                                                                                                                                       

23

---

|      |                                                                                                                                              
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------
|10.15 | Summary of director compensation for 2005 (previously filed as Exhibit 10.16 to the Registrants Report on
Form 10-KSB dated April 14, 2005).
|     
|14.1  | Code of Business Conduct and Ethics.                                                                                                         
|     
|21.1  | Subsidiaries.                                                                                                                                
|     
|23.1  | Consent of Independent Registered Public Accounting Firm.                                                                                    
|     
|31.1  | Certification of Chief Executive Officer.                                                                                                    
|     
|31.2  | Certification of Chief Financial Officer.                                                                                                    
|     
|32.1  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                      

24

---

Item 7.  FINANCIAL STATEMENTS..

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders, Audit Committee and Board of Directors
Nature Vision, Inc.
Brainerd, Minnesota

We have audited the accompanying consolidated balance sheets of Nature Vision, Inc. as of December 31, 2005 and
2004, and the related consolidated statements of operations, stockholders equity and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management as well as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Nature Vision, Inc. as of December 31, 2005 and 2004 and the results of their operations and their cash
flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Virchow, Krause & Company, LLP

Minneapolis, Minnesota
March 23, 2006

F-1

---

Nature Vision, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2005 and 2004

|                                                                                                                                                          |  |      |            |      |   |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|                                                                                                                                                          |  | 2005 |            | 2004 |  
|                                                                                                                                                          |  |      |            |      |  
|ASSETS                                                                                                                                                    |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|CURRENT
  ASSETS                                                                                                                                          |  |      |            |      |   |            | 
|Cash and Cash Equivalents                                                                                                                                 |  | $    |           |      | $ | 41,572     | 
|Accounts Receivable, net                                                                                                                                  |  |      | 3,672,353  |      |   | 2,721,697  | 
|Inventories, net                                                                                                                                          |  |      | 8,321,002  |      |   | 5,006,852  | 
|Prepaid Expenses                                                                                                                                          |  |      | 410,459    |      |   | 346,591    | 
|Income Taxes Receivable                                                                                                                                   |  |      | 0          |      |   | 89,800     | 
|Inventories held for sale                                                                                                                                 |  |      | 0          |      |   | 226,237    | 
|Deferred Income Taxes                                                                                                                                     |  |      | 350,000    |      |   | 48,600     | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Current Assets                                                                                                                                      |  |      | 12,753,814 |      |   | 8,481,349  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|PROPERTY
  AND EQUIPMENT, NET                                                                                                                             |  |      | 1,887,926  |      |   | 1,384,252  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|NON-CURRENT
  ASSETS                                                                                                                                      |  |      |            |      |   |            | 
|Building and Land Held for Sale, Net                                                                                                                      |  |      | 641,086    |      |   | 647,455    | 
|Cash Value Life Insurance                                                                                                                                 |  |      | 135,698    |      |   | 126,540    | 
|Deferred Income Taxes                                                                                                                                     |  |      | 435,746    |      |   | 850,000    | 
|Intangibles held for sale - net (Patent)                                                                                                                  |  |      | 0          |      |   | 212,518    | 
|Intangibles - net                                                                                                                                         |  |      | 95,483     |      |   | 103,555    | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Non-Current Assets                                                                                                                                  |  |      | 1,308,013  |      |   | 1,940,068  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|TOTAL ASSETS                                                                                                                                              |  | $    | 15,949,753 |      | $ | 11,805,669 | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|LIABILITIES
  AND STOCKHOLDERS EQUITY                                                                                                                    |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|CURRENT
  LIABILITIES                                                                                                                                     |  |      |            |      |   |            | 
|Checks issued in excess of cash in bank                                                                                                                   |  | $    | 377,552    |      | $ | 90,127     | 
|Current Portion Contract Payable Vaddio                                                                                                                   |  |      | 462,420    |      |   | 187,149    | 
|Current Portion of Long-Term Debt                                                                                                                         |  |      | 55,649     |      |   | 42,619     | 
|Current Portion of Deferred Retirement
  Benefits                                                                                                         |  |      | 71,400     |      |   | 73,854     | 
|Line of Credit, Bank                                                                                                                                      |  |      | 2,230,000  |      |   | 240,000    | 
|Account Payable                                                                                                                                           |  |      | 1,481,334  |      |   | 1,109,704  | 
|Accrued Payroll and Payroll Taxes                                                                                                                         |  |      | 483,352    |      |   | 228,781    | 
|Accrued Expenses                                                                                                                                          |  |      | 690,324    |      |   | 447,978    | 
|Income Taxes Payable                                                                                                                                      |  |      | 2,000      |      |   | 0          | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Current Liabilities                                                                                                                                 |  |      | 5,854,031  |      |   | 2,420,212  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|LONG-TERM
  LIABILITIES                                                                                                                                   |  |      |            |      |   |            | 
|Long-term Debt, Net of Current Portion                                                                                                                    |  |      | 387,016    |      |   | 438,666    | 
|Deferred Retirement Benefits                                                                                                                              |  |      | 651,725    |      |   | 767,624    | 
|Contract Payable Vaddio, Net of Current
  Portion                                                                                                         |  |      | 250,431    |      |   | 712,851    | 
|Deferred Income Taxes                                                                                                                                     |  |      | 514,200    |      |   | 60,900     | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Non-Current Liabilities                                                                                                                             |  |      | 1,803,372  |      |   | 1,980,041  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Liabilities                                                                                                                                         |  |      | 7,657,403  |      |   | 4,400,253  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|STOCKHOLDERS
  EQUITY                                                                                                                                    |  |      |            |      |   |            | 
|Common Stock, $.16 Par Value per Share
  25,000,000 Shares Authorized Common Shares Issued and Outstanding at both
  December 31, 2005 and 2004 2,178,877 |  |      | 348,620    |      |   | 348,620    | 
|Additional Paid-In Capital                                                                                                                                |  |      | 6,436,409  |      |   | 6,436,409  | 
|Retained Earnings                                                                                                                                         |  |      | 1,507,321  |      |   | 620,387    | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|Total Stockholders Equity                                                                                                                                |  |      | 8,292,350  |      |   | 7,405,416  | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                          |  |      |            |      |   |            | 
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                |  | $    | 15,949,753 |      | $ | 11,805,669 | 
|                                                                                                                                                          |  |      |            |      |   |            | 

See accompanying notes to
consolidated financial statements.

F-2

---

Nature Vision, Inc. and
Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2005 and 2004

|                                               |  |      |            |      |   |            |  
|---------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                               |  | 2005 |            | 2004 |  
|                                               |  |      |            |      |  
|                                               |  |      |            |      |   |            |  
|SALES, NET                                     |  | $    | 24,254,059 |      | $ | 12,361,543 |  
|                                               |  |      |            |      |   |            |  
|COST OF GOOD SOLD                              |  |      | 16,623,927 |      |   | 8,962,089  |  
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|GROSS PROFIT                                   |  |      | 7,630,132  |      |   | 3,399,454  |  
|                                               |  |      |            |      |   |            |  
|SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES |  |      | 6,007,722  |      |   | 3,156,166  |  
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|INCOME FROM OPERATIONS                         |  |      | 1,622,410  |      |   | 243,288    |  
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|OTHER INCOME(EXPENSE)                          |  |      |            |      |   |            |  
|Interest Expense                               |  |      | (141,514   | )    |   | (40,952    | )
|Interest Income                                |  |      | 519        |      |   | 4,094      |  
|(Loss) on Sale of Bookendz Product Line        |  |      | (29,378    | )    |   | 0          |  
|Other Income                                   |  |      | 19,897     |      |   | 11,836     |  
|                                               |  |      |            |      |   |            |  
|Net Other Expenses                             |  |      | (150,476   | )    |   | (25,022    | )
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|INCOME BEFORE TAXES                            |  |      | 1,471,934  |      |   | 218,266    |  
|                                               |  |      |            |      |   |            |  
|PROVISION FOR INCOME TAX EXPENSE               |  |      | 585,000    |      |   | 79,136     |  
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|NET INCOME                                     |  | $    | 886,934    |      | $ | 139,130    |  
|                                               |  |      |            |      |   |            |  
|                                               |  |      |            |      |   |            |  
|Earnings per Common Share                      |  |      |            |      |   |            |  
|Basic                                          |  | $    | 0.41       |      | $ | 0.11       |  
|Diluted                                        |  | $    | 0.39       |      | $ | 0.10       |  
|                                               |  |      |            |      |   |            |  
|Weighted Average Common Shares                 |  |      |            |      |   |            |  
|Basic                                          |  |      | 2,178,877  |      |   | 1,303,375  |  
|Diluted                                        |  |      | 2,263,746  |      |   | 1,440,361  |  

See accompanying notes to
consolidated financial statements.

F-3

---

Nature Vision, Inc. and
Subsidiaries
Statements of Stockholders Equity
Years Ended December 31, 2005 and 2004

|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|-------------------------------------------------------------------------------- |  | ------ | --------- | -------------- | - | ------------------------------ |  | ------------------- | --------- | ------------------------------ | - | --------- |  | - | --------- | 
|                                                                                 |  | Shares |           | Common
  Stock |   | Additional
  Paid-In
  Capital |  | Retained
  Earnings |           | Total
  Stockholders
  Equity |  
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |  
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|Balance, December 31, 2003                                                       |  |        | 894,619   |                | $ | 143,139                        |  | $                   | 789,524   |                                | $ | 481,257   |  | $ | 1,413,920 | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|Reverse Merger August 31, 2004 -
  Conversion of Photo Control Corporation Stock |  |        | 860,082   |                |   | 137,613                        |  |                     | 4,644,772 |                                |   |          |  |   | 4,782,385 | 
|Reverse Merger August 31, 2004 - Sale of
  Stock to Richard Kiphart              |  |        | 324,395   |                |   | 51,903                         |  |                     | 948,097   |                                |   |          |  |   | 1,000,000 | 
|Exercise of Common Stock Warrants                                                |  |        | 12,575    |                |   | 2,012                          |  |                     | (1,011    | )                              |   |          |  |   | 1,001     | 
|Exercise of Common Stock Options                                                 |  |        | 87,206    |                |   | 13,953                         |  |                     | 55,027    |                                |   |          |  |   | 68,980    | 
|Net Income                                                                       |  |        |          |                |   |                               |  |                     |          |                                |   | 139,130   |  |   | 139,130   | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|Balance, December 31, 2004                                                       |  |        | 2,178,877 |                |   | 348,620                        |  |                     | 6,436,409 |                                |   | 620,387   |  |   | 7,405,416 | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|Net Income                                                                       |  |        |          |                |   |                               |  |                     |          |                                |   | 886,934   |  |   | 886,934   | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 
|Balance, December 31, 2005                                                       |  |        | 2,178,877 |                | $ | 348,620                        |  | $                   | 6,436,409 |                                | $ | 1,507,321 |  | $ | 8,292,350 | 
|                                                                                 |  |        |           |                |   |                                |  |                     |           |                                |   |           |  |   |           | 

See accompanying notes to
financial statements.

F-4

---

Nature Vision, Inc. and
Subsidiaries
Consolidated Statements of Cash Flows
For Years Ended December 31, 2005 and 2004

|                                                                                  |  |      |            |      |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                                                  |  | 2005 |            | 2004 |  
|                                                                                  |  |      |            |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |      |            |      |   |            |  
|Net Income                                                                        |  | $    | 886,934    |      | $ | 139,130    |  
|Adjustments to reconcile net income to net
  cash flows from operating activities |  |      |            |      |   |            |  
|Depreciation and Amortization                                                     |  |      | 347,864    |      |   | 240,248    |  
|Loss on Disposal of Property and Equipment                                        |  |      | 29,378     |      |   | 0          |  
|Provision for Deferred Income Taxes                                               |  |      | 566,154    |      |   | 168,000    |  
|Change in Deferred Retirement Benefits                                            |  |      | 3,482      |      |   | (3,050     | )
|Change in Bad Debt Reserve                                                        |  |      | (6,000     | )    |   | 12,000     |  
|Changes in Operating Assets and
  Liabilities                                     |  |      |            |      |   |            |  
|Accounts Receivable                                                               |  |      | (944,656   | )    |   | (53,238    | )
|Income Taxes Receivable                                                           |  |      | 89,800     |      |   | (89,800    | )
|Inventories, net                                                                  |  |      | (3,314,150 | )    |   | (1,457,149 | )
|Inventories held for Sale                                                         |  |      | 226,237    |      |   | 0          |  
|Prepaid Expenses                                                                  |  |      | (99,608    | )    |   | (187,259   | )
|Accounts Payable                                                                  |  |      | 371,630    |      |   | (914,687   | )
|Other Non-current Assets                                                          |  |      | (9,158     | )    |   | 20,877     |  
|Income Taxes Payable                                                              |  |      | 2,000      |      |   | (176,750   | )
|Accrued Payroll and Payroll Taxes                                                 |  |      | 254,571    |      |   | (24,279    | )
|Accrued Expenses                                                                  |  |      | 242,346    |      |   | (24,897    | )
|Payments on Deferred Retirement Benefits                                          |  |      | (121,835   | )    |   | (40,612    | )
|                                                                                  |  |      |            |      |   |            |  
|Net Cash Flows from Operating Activities                                          |  |      | (1,475,011 | )    |   | (2,391,466 | )
|                                                                                  |  |      |            |      |   |            |  
|                                                                                  |  |      |            |      |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |      |            |      |   |            |  
|Purchases of Property and Equipment                                               |  |      | (765,166   | )    |   | (469,299   | )
|Proceeds from Sale of Property and
  Equipment                                    |  |      | 155,624    |      |   | 0          |  
|Purchases of Intangibles                                                          |  |      | (8,675     | )    |   | 0          |  
|Cash acquired in reverse merger, net of
  merger costs of $92,663                 |  |      | 0          |      |   | 1,453,001  |  
|                                                                                  |  |      |            |      |   |            |  
|Net Cash Flows from Investing Activities                                          |  |      | (618,217   | )    |   | 983,702    |  
|                                                                                  |  |      |            |      |   |            |  
|                                                                                  |  |      |            |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |      |            |      |   |            |  
|Increase in checks issued in excess of
  Cash in Bank                             |  |      | 287,425    |      |   | 90,127     |  
|Net Advances (Payments) from Line of
  Credit, Bank                               |  |      | 1,990,000  |      |   | 240,000    |  
|Principal Payments on Long-term Debt                                              |  |      | (38,620    | )    |   | (42,282    | )
|Payments on Contract Payable                                                      |  |      | (187,149   | )    |   | 0          |  
|Cash Received on Exercise of Options                                              |  |      | 0          |      |   | 68,980     |  
|Cash Received on Exercise of Warrants                                             |  |      | 0          |      |   | 1,001      |  
|Proceeds from sale of stock                                                       |  |      | 0          |      |   | 1,000,000  |  
|                                                                                  |  |      |            |      |   |            |  
|Net Cash Flows from Financing Activities                                          |  |      | 2,051,656  |      |   | 1,357,826  |  
|                                                                                  |  |      |            |      |   |            |  
|                                                                                  |  |      |            |      |   |            |  
|Net Change in Cash and Cash Equivalents                                           |  |      | (41,572    | )    |   | (49,938    | )
|                                                                                  |  |      |            |      |   |            |  
|CASH AND CASH EQUIVALENTS - January 1,
  2005 and 2004                            |  |      | 41,572     |      |   | 91,510     |  
|                                                                                  |  |      |            |      |   |            |  
|                                                                                  |  |      |            |      |   |            |  
|CASH AND CASH EQUIVALENTS - December 31,
  2005 and 2004                          |  | $    |           |      | $ | 41,572     |  
|                                                                                  |  |      |            |      |   |            |  

See accompanying notes to
consolidated financial statements.

F-5

---

NATURE VISION, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2005 and 2004

NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE
OF OPERATIONS

On August 31,
2004, the Company changed its name from Photo Control Corporation to Nature
Vision, Inc. in connection with a reverse merger transaction with Nature Vision
Operating, Inc. (f/k/a, Nature Vision, Inc.), a Minnesota corporation that was
incorporated in 1998. As part of the merger transaction, Nature Vision
Operating, Inc. became a wholly owned subsidiary of the Company. The merger
transaction has been accounted for as a reverse merger.

The Company is
organized into two divisions  Nature Vision and Photo Control (Photo). The
Nature Vision division designs and markets video viewing systems for the sport
fishing market and other video based consumer and industrial products. The
Photo division designs, manufactures and markets professional cameras,
electronic flash equipment, lens shades and related photographic accessories
and sells products used in the video conferencing and presentation industry.
Nature Vision, Inc. grants unsecured credit to its customers which are
primarily dealers and consumers located throughout the United States and
Canada. Nature Vision, Inc. contracts with outside organizations for the
manufacture and sale of its products. The geographic market in which Photo
competes consists of the entire United States and, to a lesser extent, some
foreign countries and also grants unsecured credit to its customers.

PRINCIPLES
OF CONSOLIDATION

The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary. All significant
inter-company transactions and balances have been eliminated in consolidation.

FINANCIAL
INSTRUMENTS

The carrying amounts for all financial
instruments approximate fair value. The carrying amounts for cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value because of the short maturity of these instruments. The
fair value of long-term debt, line of credit-bank, contract payable and
deferred liabilities  retirement benefits approximates the carrying amounts
based upon the Companys expected borrowing rate for debt with similar
remaining maturities and comparable risk.

CASH
AND CASH EQUIVALENTS

The Company maintains its cash balances in
various area banks. Cash balances are insured up to $100,000 per bank by the
FDIC. The balances, at times, may exceed federally insured limits. The Company
defines cash and cash equivalents as highly liquid, short-term investments with
a maturity at the date of acquisition of three months or less.

ACCOUNTS
RECEIVABLE

The Company
reviews customers credit history before extending unsecured credit and
establishes an allowance for uncollectible accounts based upon factors
surrounding the credit risk of specific customers and other information.
Accounts receivable are generally due 30 days after invoice date. Accounts
receivable over 30 days are considered past due. The Company does not accrue
interest on past due accounts receivable. If accounts receivable in excess of
the provided allowance are determined uncollectible, they are charged to
expense in the year that determination is made. Accounts receivable are written
off after all collection efforts have failed. Accounts receivable have been reduced by an
allowance for uncollectible accounts of approximately $37,000 at December 31,
2005 and $43,000 at December 31, 2004.

F-6

---

INVENTORIES

Inventories consist of raw materials, work in process and finished goods and are valued at lower of cost using the
first-in, first-out (FIFO) method or market. Market represents estimated realizable value in the case of finished goods and
replacement or reproduction cost in the case of other inventories. Because of changing technology and market demand, inventory is
subject to obsolescence. An annual review is made of all inventories to determine if any obsolete, discontinued or slow moving
items are in inventory. Based on this review, inventory is disposed of or an allowance for obsolescence established to cover any
future disposals. Such estimates are difficult to make under current volatile economic conditions and it is possible significant
changes in required inventory reserves may occur in the future.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets, including property and equipment and intangible assets, for impairment
whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable.
An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying
amount of that asset. To date, there have been no such losses.

DEPRECIATION

Property and equipment are recorded at cost. Depreciation is provided for using the straight-line method over an
estimated useful life of 25 to 30 years for buildings and improvements and over useful lives ranging from three to seven years for
all other property and equipment. Improvements are capitalized while maintenance, repairs and minor renewals are expensed when
incurred.

BUILDING AND LAND HELD FOR SALE

On June 30, 2005, management signed an agreement to market for sale the building and land located in Brainerd,
Minnesota. The building and land includes our current assembly and distribution facility and our corporate headquarters.
Accordingly, we have reflected the carrying value of the building as held for sale as of December 31, 2005. As a result, we have
discontinued recording depreciation on the building effective July 1, 2005 and management believes that the current market value
of the building and land is in excess of its carrying value. The building and land held for sale related to the Nature Vision,
Inc. segment.

INTANGIBLE ASSETS

Intangible assets consisted primarily of patents, (see Note 13), and indefinable intangible assets, (distribution
network, intellectual property and employment contract for the Vaddio product line), and are being amortized using the
straight-line method over their estimated useful lives ranging from three to six years. Amortization expense was $83,990 and
$26,114 for the year ended December 31, 2005 and 2004, respectively. Accumulated amortization related to these assets was $63,958
at December 31, 2005 and $37,986 at December 31, 2004. Estimated remaining amortization expense for the years ending December 31,
2006, 2007, 2008, 2009 and 2010 is $36,789, $29,421, $14,449, $10,838 and $3,986, respectively.

F-7

---

Schedule of Intangible Assets

|                               |  |                |         |                            |  |                                  |        |  |  |  |   |        | 
|------------------------------ |  | -------------- | ------- | -------------------------- |  | -------------------------------- | ------ |  |  |  | - | ------ | 
|                               |  | Gross
  Amount |         | Accumulated
  Amortization |  | Net Value
  at December 31, 2005
|                               |  |                |         |                            |  |                                 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |        | 
|Trademarks                     |  | $              | 9,085   |                            |  | $                                | 5,730  |  |  |  | $ | 3,355  | 
|Patents                        |  | $              | 54,199  |                            |  | $                                | 24,027 |  |  |  | $ | 30,172 | 
|Vaddio  Employment Contract   |  | $              | 23,328  |                            |  | $                                | 9,854  |  |  |  | $ | 13,474 | 
|Vaddio  Distribution Network  |  | $              | 32,715  |                            |  | $                                | 13,820 |  |  |  | $ | 18,895 | 
|Vaddio  Intellectual Property |  | $              | 40,114  |                            |  | $                                | 10,527 |  |  |  | $ | 29,587 | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |        | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |        | 
|Totals                         |  | $              | 159,441 |                            |  | $                                | 63,958 |  |  |  | $ | 95,483 | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |        | 

|                               |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|------------------------------ |  | -------------- | ------- | -------------------------- |  | -------------------------------- | ------ |  |  |  | - | ------- | 
|                               |  | Gross
  Amount |         | Accumulated
  Amortization |  | Net Value
  at December 31, 2004
|                               |  |                |         |                            |  |                                 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|Trademarks                     |  | $              | 5,490   |                            |  | $                                | 4,992  |  |  |  | $ | 498     | 
|Patents                        |  | $              | 26,830  |                            |  | $                                | 11,906 |  |  |  | $ | 14,924  | 
|Vaddio  Employment Contract   |  | $              | 23,328  |                            |  | $                                | 2,336  |  |  |  | $ | 20,992  | 
|Vaddio  Distribution Network  |  | $              | 32,715  |                            |  | $                                | 3,276  |  |  |  | $ | 29,439  | 
|Vaddio  Intellectual Property |  | $              | 40,114  |                            |  | $                                | 2,412  |  |  |  | $ | 37,702  | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|Totals                         |  | $              | 128,477 |                            |  | $                                | 24,922 |  |  |  | $ | 103,555 | 
|                               |  |                |         |                            |  |                                  |        |  |  |  |   |         | 

|                                               |  |                |   |                            |  |                                  |   |  |  |  |   |   | 
|---------------------------------------------- |  | -------------- | - | -------------------------- |  | -------------------------------- | - |  |  |  | - | - | 
|Schedule of Intangibles held for sale - Patent |  | Gross
  Amount |   | Accumulated
  Amortization |  | Net Value
  at December 31, 2004
|                                               |  |                |   |                            |  |                                 
|                                               |  |                |   |                            |  |                                  |   |  |  |  |   |   | 
|Totals                                         |  | $              |  |                            |  | $                                |  |  |  |  | $ |  | 
|                                               |  |                |   |                            |  |                                  |   |  |  |  |   |   | 

|       |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|------ |  | -------------- | ------- | -------------------------- |  | -------------------------------- | ------ |  |  |  | - | ------- | 
|       |  | Gross
  Amount |         | Accumulated
  Amortization |  | Net Value
  at December 31, 2005
|       |  |                |         |                            |  |                                 
|       |  |                |         |                            |  |                                  |        |  |  |  |   |         | 
|Totals |  | $              | 225,582 |                            |  | $                                | 13,064 |  |  |  | $ | 212,518 | 
|       |  |                |         |                            |  |                                  |        |  |  |  |   |         | 

REVENUE RECOGNITION

The Company recognizes revenue on the date products are shipped to the customer and returns are permitted for
defective equipment. The Company does not sell products with the guaranteed right of return. Estimated reserves for returns are
established by management based on historical experience and are subject to ongoing review and adjustment by the Company. Sales
and cost of goods sold are reported net of the provision for actual and estimated future returns in the accompanying consolidated
statements of operations. Revenues are reported net of discounts and allowances. The Companys revenue is recognized in
accordance with generally accepted accounting principles as outlined in the SECs Staff Accounting Bulletin No. 104
Revenue Recognition, which requires that four basic criteria be met before revenue can be recognized: (i) persuasive
evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) reasonably assured it is collectible; and (iv)
product delivery has occurred. The Company recognizes revenue as products are shipped based on FOB shipping point terms when title
passes to customers.

SHIPPING AND HANDLING COSTS

Shipping and handling costs charged to customers are included in sales and shipping and handling costs incurred by
the Company have been included in cost of goods sold.

ALLOWANCE ACCOUNTS

The Company has established allowance reserves for sales returns and warranty cost. Reserves are estimated based
on historical experience, current product lines being sold, and managements estimates. The Company provides a standard one
or two-year warranty program for its products. The allowance reserve for sales returns and warranty cost was $295,000 and $200,000
at December 31, 2005 and December 31, 2004, respectively. The following table provides the expense recorded and charges against
the reserve for the years ended December 30, 2005 and 2004.

F-8

---

|                                    |  |      |          |      |   |          |  
|----------------------------------- |  | ---- | -------- | ---- | - | -------- | -
|                                    |  | 2005 |          | 2004 |  
|                                    |  |      |          |      |  
|Accrued balance  beginning         |  | $    | 200,000  |      | $ | 80,000   |  
|Accrued warranty recorded on merger |  |      | 0        |      |   | 120,000  |  
|Provision                           |  |      | 248,272  |      |   | 106,714  |  
|Claims incurred                     |  |      | (153,272 | )    |   | (106,714 | )
|                                    |  |      |          |      |   |          |  
|                                    |  |      |          |      |   |          |  
|Accrued balance  ending            |  | $    | 295,000  |      | $ | 200,000  |  
|                                    |  |      |          |      |   |          |  

PREPAID EXPENSES

Included in prepaid expenses is purchased advertising time on television programs, advertising space in outdoor
publications and catalogs for Nature Vision, Inc. products. These costs are expensed over the contract, as the television shows
are aired, or when the publications and catalogs are issued. Advertising costs for Photo are expensed as incurred. Prepaid
advertising expenses were $127,881 and $155,701 for December 31, 2005 and December 31, 2004, respectively. Advertising expensed
was $1,142,405 and $762,888 for the years ended December 31, 2005 and 2004, respectively.

SELF-FUNDED INSURANCE

The Company maintains a partially self-funded group health and fully-funded short-term disability employee benefit
plan. Specific and aggregate stop loss coverage on the health plan is provided to limit the ultimate exposure of the Company. A
liability is provided for claims incurred but not reported. Management reviews this accrual on an on-going basis and believes it
is adequate to cover such claims.

RESEARCH AND DEVELOPMENT

The Company expenses all costs related to product research and development as incurred. Research and development
expense was $234,573 and $91,393 for years ended December 31, 2005 and 2004, respectively.

STOCK-BASED COMPENSATION

The Company uses the intrinsic value-based method prescribed by Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in accounting for employee stock options. Under
the intrinsic value method, compensation expense is recorded only to the extent that the market price of common stock exceeds the
exercise price of the stock option on the date of grant.

In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 148 as an amendment to SFAS No. 123 providing alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation and also provides required additional disclosures
about the method of accounting for stock-based employee compensation. The amendments are effective for financial statements for
fiscal years ending after December 15, 2002. The Company adopted the annual disclosure provision of SFAS No. 148 during the year
ended December 31, 2002. The Company has currently chosen to not adopt the voluntary change to the fair value based method of
accounting for stock-based employee compensation, pursuant to SFAS No. 148.

The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation. Pursuant to APB No. 25 and related interpretations, no compensation cost was recognized in the statements of
operations for the years ended December 31, 2005 and 2004 as the fair value of the Companys stock approximated the option
price. Had compensation cost for employees been recognized based on the fair values of options at the grant dates consistent with
the provisions of SFAS No. 123, the Companys net income would have changed as follows for the periods presented.

F-9

---

|                                       |  |                              |         |      |   |         | 
|-------------------------------------- |  | ---------------------------- | ------- | ---- | - | ------- | 
|                                       |  | Years
  Ended
  December 31, |        
|                                       |  |                              |        
|                                       |  | 2005                         |         | 2004 |  
|                                       |  |                              |         |      |  
|Net income:                            |  |                              |         |      |   |         | 
|As reported                            |  | $                            | 886,934 |      | $ | 139,130 | 
|Pro forma                              |  | $                            | 687,234 |      | $ | 139,130 | 
|Basic net income
  per common share:   |  |                              |         |      |   |         | 
|As reported                            |  | $                            | .41     |      | $ | .11     | 
|Pro forma                              |  | $                            | .32     |      | $ | .11     | 
|Diluted net
  income per common share: |  |                              |         |      |   |         | 
|As reported                            |  | $                            | .38     |      | $ | .10     | 
|Pro forma                              |  | $                            | .30     |      | $ | .10     | 
|Stock based
  compensation:            |  |                              |         |      |   |         | 
|As reported                            |  | $                            | 0       |      | $ | 0       | 
|Pro forma                              |  | $                            | 199,700 |      | $ | 0       | 

In determining the compensation cost of options granted during the years ended December 31, 2005 and 2004, as
specified by SFAS No. 123, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes
option pricing model and the weighted average assumptions used in these calculations are summarized as follows:

|                                 |  |                              |     |      |  |         |  
|-------------------------------- |  | ---------------------------- | --- | ---- |  | ------- | -
|                                 |  | Years
  Ended
  December 31, |    
|                                 |  |                              |    
|                                 |  | 2005                         |     | 2004 | 
|                                 |  |                              |     |      | 
|                                 |  |                              |     |      |  |         |  
|Risk-free rate                   |  |                              | N/A |      |  | 3.5     | %
|Expected life of options granted |  |                              | N/A |      |  | 5 years |  
|Expected volatility              |  |                              | N/A |      |  | 105.49  | %
|Expected dividend yield          |  |                              | N/A |      |  | 0       | %

Stock options issued to non-employees, (which no options were issued to non-employees), are accounted for in
accordance with SFAS No. 123 and Emerging Issues Task Force, (EITF), 96-18.

NET INCOME PER COMMON SHARE

Net income per common share was based on the weighted average number of common shares outstanding during the
periods when computing the basic net income per share. When dilutive, stock options and warrants are included as equivalents using
the treasury stock market method when computing the diluted net income per share. There were dilutive common stock equivalents,
options and warrants, of 197,958 and 136,986 for the years ended December 31, 2005 and December 31, 2004, respectively.
Anti-dilutive options were 43,500 and 76,500 at December 31, 2005 and December 31, 2004, respectively.

INCOME TAXES

The Company accounts for income taxes using the asset and liability approach, which requires the recognition of
deferred tax assets and liabilities for tax

consequences of temporary differences between the financial statement and income tax reporting bases of assets and
liabilities based on currently enacted rates and laws. These temporary differences principally include depreciation, amortization,
net operating losses, deferred retirement benefits, paid time off and performance benefits, contract payable, allowance for
doubtful accounts, inventory obsolescence allowance, and warranty reserves. Deferred taxes are reduced by a valuation allowance to
the extent that realization of the related deferred tax assets is not assured.

F-10

---

ESTIMATES

The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

RECENT
ACCOUNTING PRONOUNCEMENTS

SFAS
No. 151

In November 2004,
FASB issued SFAS No. 151 Inventory Costs which amends the guidance in ARB No.
43, Chapter 4 Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight, and re-handling costs may be so abnormal as to require treatment as
current period charges. SFAS No. 151 requires that those items be recognized
as current-period charges regardless of whether they meet the criterion of so
abnormal. In addition, SFAS No, 151 requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. SFAS No. 151 shall be effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier application
is permitted for inventory costs incurred during fiscal years beginning after
the date SFAS No. 151 was issued. SFAS No. 151 shall be applied prospectively.
The Company does not expect the adoption of SFAS No. 151 to have a material
effect on its consolidated financial statements.

SFAS
No. 153

In December 2004,
FASB issued SFAS No. 153 Exchanges of Non-monetary Assets which amends APB
Opinion No. 29, Accounting for Non-monetary Transactions. APB No. 29 is based
on the principle that exchanges of non-monetary assets should be measured based
on the fair value of the assets exchanged. The guidance in that Opinion,
however, included certain exceptions to that principle. SFAS No. 153 amends APB
No. 29 to eliminate the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
non-monetary assets that do not have commercial substance. A non-monetary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. SFAS No. 153
shall be effective for non-monetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. Earlier application is permitted for
non-monetary asset exchanges occurring in fiscal periods beginning after the
date SFAS No. 153 was issued. SFAS No. 153 shall be applied prospectively. The
Company does not expect the adoption of SFAS No. 153 to have a material effect
on its consolidated financial statements.

SFAS
No. 123R

In December 2004, FASB issued SFAS No. 123 (revised
2004), Share-Based Payment, that focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based
payment transactions. This statement replaces SFAS No. 123, Accounting for
Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees. Beginning with our quarterly period that begins
January 1, 2006, we will be required to expense the

F-11

---

fair value of employee stock options and similar awards. As a public company, we are allowed to select from two
alternative transition methods, each having different reporting implications. Currently, the Company stock options have been fully
vested as of December 31, 2005. The impact of SFAS No. 123R for future stock-based compensation grants has not been determined at
this time.

NOTE 2  REVERSE MERGER

Effective August 31, 2004, Photo Control Corporation completed its merger pursuant to an Agreement and Plan of
Merger dated April 15, 2004 by and among Photo Control Corporation, Nature Vision, Inc. and PC Acquisition, a wholly owned
subsidiary of Photo Control Corporation. The consolidated statements of operations include the results of Nature Vision, Inc. for
each of the three and nine months ended September 30, 2005 and 2004, respectively. The following pro forma consolidated statements
of operations assume the merger was effective January 1, 2004.

|                                           |  |                          |            |      |   |            |  
|------------------------------------------ |  | ------------------------ | ---------- | ---- | - | ---------- | -
|                                           |  | Years Ended December 31, |           
|                                           |  |                          |           
|                                           |  | 2005                     |            | 2004 |  
|                                           |  |                          |            |      |  
|Net sales                                  |  |                          |            |      |   |            |  
|As reported                                |  | $                        | 24,254,059 |      | $ | 12,361,543 |  
|Add: Photo Control Corporation             |  |                          |            |      | $ | 5,942,516  |  
|Pro forma                                  |  | $                        | 24,254,059 |      | $ | 18,304,059 |  
|Net income (loss)                          |  |                          |            |      |   |            |  
|As reported                                |  | $                        | 886,934    |      | $ | 139,130    |  
|Add: Photo Control Corporation             |  |                          |            |      | $ | (885,414   | )
|Pro forma adjustments                      |  |                          |            |      | $ | 262,195    |  
|Pro forma                                  |  | $                        | 886,934    |      | $ | (484,089   | )
|Basic net income(loss) per common share:   |  |                          |            |      |   |            |  
|As reported                                |  | $                        | .41        |      | $ | .11        |  
|Pro forma                                  |  | $                        | .41        |      | $ | (.37       | )
|Diluted net income(loss) per common share: |  |                          |            |      |   |            |  
|As reported                                |  | $                        | .39        |      | $ | .10        |  
|Pro forma                                  |  | $                        | .39        |      | $ | (.37       | )

The allocation of
the purchase, prior to the $1,000,000 stock purchase by Mr. Kiphart, is as
follows:

|Cash                                                           |  | $ | 1,545,665  |  
|-------------------------------------------------------------- |  | - | ---------- | -
|Accounts
  receivable                                          |  | $ | 1,269,729  |  
|Inventories                                                    |  | $ | 2,685,653  |  
|Other current
  assets                                         |  | $ | 57,627     |  
|Property and
  equipment, net of negative goodwill             |  | $ | 700,543    |  
|Intangible assets
  and other assets, net of negative goodwill |  | $ | 448,395    |  
|Deferred Tax
  Asset                                           |  | $ | 1,050,000  |  
|Current
  liabilities                                          |  | $ | (1,372,747 | )
|Long-term
  liabilities                                        |  | $ | (1,509,817 | )
|Total equity                                                   |  | $ | (4,875,048 | )

F-12

---

The amount assigned to intangible assets were identifiable intangible assets and have a weighted average life of
4.5 years. The intangible assets include patents, Vaddio-employment contracts, Vaddio distribution network and Vaddio intellectual
property and Bookendz patent rights of $23,328, $32,715, $40,114 and $225,582, respectively. There is no contingent consideration
specified in the Merger Agreement.

NOTE 3 - INVENTORIES

Inventories consisted of the following at:

|                          |  |                     |           |                     |   |           |  
|------------------------- |  | ------------------- | --------- | ------------------- | - | --------- | -
|                          |  | December 31,
  2005 |           | December 31,
  2004 |  
|                          |  |                     |           |                     |  
|Raw Materials             |  | $                   | 3,672,745 |                     | $ | 2,320,849 |  
|Work in Progress          |  |                     | 318,145   |                     |   | 97,952    |  
|Finished Goods            |  |                     | 4,550,112 |                     |   | 2,723,051 |  
|                          |  |                     |           |                     |   |           |  
|Total                     |  |                     | 8,541,002 |                     |   | 5,141,852 |  
|Less: Valuation Allowance |  |                     | (220,000  | )                   |   | (135,000  | )
|                          |  |                     |           |                     |   |           |  
|Inventories, net          |  | $                   | 8,321,002 |                     | $ | 5,006,852 |  
|                          |  |                     |           |                     |   |           |  

NOTE
4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

|                                 |  |                     |           |                     |   |           |  
|-------------------------------- |  | ------------------- | --------- | ------------------- | - | --------- | -
|                                 |  | December 31,
  2005 |           | December 31,
  2004 |  
|                                 |  |                     |           |                     |  
|Land                             |  | $                   | 169,460   |                     | $ | 169,460   |  
|Buildings and
  improvements     |  |                     | 415,621   |                     |   | 412,511   |  
|Tooling                          |  |                     | 977,073   |                     |   | 746,017   |  
|Office furniture
  and equipment |  |                     | 326,019   |                     |   | 247,079   |  
|Warehouse
  equipment            |  |                     | 173,793   |                     |   | 112,393   |  
|Vehicles                         |  |                     | 82,708    |                     |   | 82,708    |  
|Construction in
  progress       |  |                     | 687,665   |                     |   | 306,678   |  
|                                 |  |                     |           |                     |   |           |  
|Total                            |  |                     | 2,832,339 |                     |   | 2,076,846 |  
|Less:
  Accumulated depreciation |  |                     | (944,412  | )                   |   | (692,594  | )
|                                 |  |                     |           |                     |   |           |  
|Net                              |  | $                   | 1,887,926 |                     | $ | 1,384,252 |  
|                                 |  |                     |           |                     |   |           |  

Depreciation expense of $263,875 and $214,134 was recorded for the years ended December 31, 2005 and 2004,
respectively.

F-13

---

NOTE 5 - LINE OF CREDIT, BANK

The Company has a line of credit financing agreement with First National Bank of Deerwood up to a maximum amount
of $4,000,000 which expires July 1, 2006. Interest will be payable monthly at prime plus .75%, (8.00% at December 31, 2005), with
a minimum interest rate of 5%. The line of credit is collateralized by accounts receivable, inventories, property and equipment.
Line availability is based on a combination of 80% of Accounts Receivable less than 90 days and 50% of Net Inventory. As of
December 31, 2005, the availability calculation provided approximately $7,100,000, giving the Company the ability to draw against
the entire $4,000,000 credit facility. The agreement requires the following affirmative covenants, minimum of net worth of
$7,000,000, debt to equity of less than 1.0 to 1.0, and a debt service ratio to exceed 1.2 to 1.0. The Company is in compliance
with all covenants at December 31, 2005. The Company had a line of credit financing agreement with First National Bank of Deerwood
up to a maximum amount of $1,500,000 which expired June 30, 2005. Interest was payable monthly at prime, which was at 5.25% at
December 31, 2004, plus 1% with a minimum interest rate of 5%. The line of credit was collateralized by accounts receivable,
inventories, property and equipment. The balance outstanding on the line of credit was $2,230,000, and $240,000 at December 31,
2005 and December 31, 2004, respectively.

NOTE
6 - LONG-TERM DEBT

Long-term debt consisted of the following at:

|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | ------------------- | - | ------- | -
|                                                                                                                                                                                                                                                                                                                                                                  |  | December 31,
  2005 |         | December 31,
  2004 |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|Note Payable -
  First National Bank of Deerwood - monthly installments of $4,126 including interest
  at a variable rate of .75% over the index rate (8.00%, and 6.0% at December
  31, 2005 and December 31, 2004, respectively), with a final payment due June
  10, 2009, secured by a mortgage on the Companys land and building located in
  Brainerd, MN. |  | $                   | 404,068 |                     | $ | 424,768 |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|Note Payable -
  GMAC - monthly installments of $1,378 through April 2008. The note is
  non-interest bearing, and is secured by two vehicles                                                                                                                                                                                                                     |  |                     | 38,597  |                     |   | 56,517  |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|Totals                                                                                                                                                                                                                                                                                                                                                            |  |                     | 442,665 |                     |   | 481,285 |  
|Less: Current portion                                                                                                                                                                                                                                                                                                                                             |  |                     | (55,649 | )                   |   | (42,619 | )
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  
|Net Long-term
  Debt                                                                                                                                                                                                                                                                                                                                              |  | $                   | 387,016 |                     | $ | 438,666 |  
|                                                                                                                                                                                                                                                                                                                                                                  |  |                     |         |                     |   |         |  

Principal requirements on long-term debt for years
ending after December 31, 2005 are as follows:

|      |  |   |         | 
|----- |  | - | ------- | 
|2006  |  | $ | 55,649  | 
|2007  |  | $ | 18,265  | 
|2008  |  | $ | 19,831  | 
|2009  |  | $ | 348,920 | 
|      |  |   |         | 
|      |  |   |         | 
|Total |  | $ | 442,665 | 
|      |  |   |         | 

The mortgage with First National Bank of Deerwood is
secured by our facility in Brainerd which is currently for sale. Upon such time
when the building is sold, the mortgage will be required to be satisfied. The
note with GMAC has been paid in full after December 31, 2005 and the entire
balance is classified as current, see Note 17.

F-14

---

NOTE
7  STOCKHOLDERS EQUITY

The Company has a Stock Option Plan, (the Plan), which
provides for granting of incentive and non-statutory stock options to employees
and others. The aggregate of 344,958 shares of the Companys common stock may
be granted at exercise prices not less than fair market value at the date of
grant. The Compensation Committee from the Board of Directors administers the
Plan. In general, options vest immediately and up to 4.5 years, and expire 5
years from the date of grant.

Information regarding stock options is summarized
below:

|                                         |  |                     |         |                                        |   |      | 
|---------------------------------------- |  | ------------------- | ------- | -------------------------------------- | - | ---- | 
|Price                                    |  | Number of
  Options |         | Weighted
  Average
  Option
  Exercise |  
|                                         |  |                     |         |                                        |  
|                                         |  |                     |         |                                        |   |      | 
|Options
  Outstanding, December 31, 2003 |  |                     | 174,412 |                                        | $ | .85  | 
|Granted                                  |  |                     | 80,250  |                                        |   | 5.43 | 
|Expired                                  |  |                     |        |                                        |   |     | 
|Exercised                                |  |                     | (87,206 | )                                      |   | .79  | 
|Options assumed
  in Reverse Merger      |  |                     | 116,502 |                                        |   | 6.06 | 
|                                         |  |                     |         |                                        |   |      | 
|                                        
|Options
  Outstanding, December 31, 2004 |  |                     | 283,958 |                                        |   | 4.30 | 
|Granted                                  |  |                     |        |                                        |   |     | 
|Expired                                  |  |                     | (42,500 | )                                      |   | 6.29 | 
|                                         |  |                     |         |                                        |   |      | 
|Options Outstanding, December 31, 2005   |  |                     | 241,458 |                                        | $ | 3.95 | 
|                                         |  |                     |         |                                        |   |      | 

The weighted average fair market value of options
issued during the years ended December 31, 2005 and 2004, were $.00 and $4.25,
respectively. The weighted average contractual life of options outstanding at
December 31, 2005 and 2004 was 2.82 and 3.15 years, respectively.

Following is a schedule of options outstanding and
exercisable at December 31, 2005

|                    |            |                      |  |                                |  |                             |      |                               |   |                             |  |  |         |  |   |      | 
|------------------- | ---------- | -------------------- |  | ------------------------------ |  | --------------------------- | ---- | ----------------------------- | - | --------------------------- |  |  | ------- |  | - | ---- | 
|Options Outstanding |            | Options Exercisable  | 
|Exercise Price      |            | Number
  Outstanding |  | Remaining
  Contractual
  Life |  | Wgt-Ave
  Exercise
  Prices |      | Number Exercise
  Exercisable |   | Wgt-Ave
  Exercise
  Prices | 
|                    |            |                      |  |                                |  |                             |      |                               |   |                             | 
|$                   | 0.89       |                      |  | 87,206                         |  |                             | 3.39 |                               | $ | 0.89                        |  |  | 87,206  |  | $ | 0.89 | 
|$                   | 4.40       |                      |  | 7,500                          |  |                             | 0.84 |                               | $ | 4.40                        |  |  | 7,500   |  | $ | 4.40 | 
|$                   | 4.72       |                      |  | 25,002                         |  |                             | 3.02 |                               | $ | 4.72                        |  |  | 25,002  |  | $ | 4.72 | 
|$                   | 5.43       |                      |  | 78,250                         |  |                             | 3.84 |                               | $ | 5.43                        |  |  | 78,250  |  | $ | 5.43 | 
|$                   | 6.88       |                      |  | 43,500                         |  |                             | 0.09 |                               | $ | 6.88                        |  |  | 43,500  |  | $ | 6.88 | 
|                    |            |                      |  |                                |  |                             |      |                               |   |                             |  |  |         |  |   |      | 
|$                   | 0.89-$6.88 |                      |  | 241,458                        |  |                             | 2.82 |                               | $ | 3.95                        |  |  | 241,458 |  | $ | 3.95 | 
|                    |            |                      |  |                                |  |                             |      |                               |   |                             |  |  |         |  |   |      | 

On November 11, 2005, the Company accelerated the vesting of the remaining unvested options granted in 2004
(58,687 options), through a written action of the Board of Directors. The Directors had been advised by its compensation
consultant that the Companys officer and director compensation is generally below that paid by similarly-sized corporations.
The options had no intrinsic value as of the modification date, and therefore no accounting impact was a result of this action.
Beginning in 2006, the Company will be required to expense the value of all stock-based compensation against
operations.

F-15

---

Stock Warrants

In connection with the private placement offering the Company did in 1998, the Company issued 31,292 six year
common stock warrants exercisable at $3.44 per warrant. All the warrants were either exercised or expired during the year ended
December 31, 2004.

NOTE 8 - INCOME TAXES

The provision for income taxes consists of the following components for the years ended December 31;

|                                   |  |      |         |      |   |         |  
|---------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                   |  | 2005 |         | 2004 |  
|                                   |  |      |         |      |  
|                                   |  |      |         |      |   |         |  
|Current                            |  | $    | 18,846  |      | $ | (88,864 | )
|Deferred                           |  |      | 566,154 |      |   | 168,000 |  
|                                   |  |      |         |      |   |         |  
|                                   |  |      |         |      |   |         |  
|Total Provision
  for Income Taxes |  | $    | 585,000 |      | $ | 79,136  |  
|                                   |  |      |         |      |   |         |  

The provision for taxes differs from the expected
provision that would result from the application of federal tax rates to
pre-tax income. A comparison of the provision for income tax expense at the
federal statutory rate of 34% for the years ended December 31 to the Companys
effective rate is as follows;

|                                                             |  |      |      |      |  |      |  
|------------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | -
|                                                             |  | 2005 |      | 2004 | 
|                                                             |  |      |      |      | 
|Federal statutory rate                                       |  |      | 34.0 | %    |  | 34.0 | %
|State tax, net of federal benefit                            |  |      | 2.8  |      |  | 2.8  |  
|Permanent differences and other including surtax
  exemption |  |      | 2.9  |      |  | 0.1  |  
|Research and development credit                              |  |      | (0.0 | )    |  | (0.6 | )
|                                                             |  |      |      |      |  |      |  
|Effective Tax
  Rate                                         |  |      | 39.7 | %    |  | 36.3 | %
|                                                             |  |      |      |      |  |      |  

The net deferred tax assets and liabilities included
in the financial statements include the following amounts at December 31;

|                                                 |  |      |          |      |   |         |  
|------------------------------------------------ |  | ---- | -------- | ---- | - | ------- | -
|                                                 |  | 2005 |          | 2004 |  
|                                                 |  |      |          |      |  
|                                                 |  |      |          |      |   |         |  
|Current Amounts                                  |  |      |          |      |   |         |  
|                                                 |  |      |          |      |   |         |  
|Deferred tax assets                              |  | $    | 350,000  |      | $ | 48,600  |  
|                                                 |  |      |          |      |   |         |  
|                                                
|Net Current
  Deferred Tax Assets                |  | $    | 350,000  |      | $ | 48,600  |  
|                                                 |  |      |          |      |   |         |  
|                                                 |  |      |          |      |   |         |  
|Non-current Amounts                              |  |      |          |      |   |         |  
|                                                 |  |      |          |      |   |         |  
|Deferred Tax Assets                              |  | $    | 435,746  |      | $ | 850,000 |  
|Deferred Tax Liabilities, net                    |  |      | (514,200 | )    |   | (60,900 | )
|                                                 |  |      |          |      |   |         |  
|Net Non-current
  Deferred Tax Asset (Liability) |  | $    | (78,454  | )    | $ | 789,100 |  
|                                                 |  |      |          |      |   |         |  
|Total Net Deferred Tax Asset                     |  | $    | 271,546  |      | $ | 837,700 |  
|                                                 |  |      |          |      |   |         |  

F-16

---

|                                   |  |      |           |      |    |           |  
|---------------------------------- |  | ---- | --------- | ---- | -- | --------- | -
|                                   |  | 2005 |           | 2004 |   
|                                   |  |      |           |      |   
|                                   |  |      |           |      |    |           |  
|Deferred Tax
  Assets              |  |      |           |      |    |           |  
|Net Operating
  Loss Carryforwards |  | $    | 182,500   |      | $  | 313,800   |  
|Contract Payable                   |  |      | 264,000   |      |    | 333,000   |  
|Depreciation
  & Amortization      |  |      |          |      |    | 424,000   |  
|Deferred
  Compensation            |  |      | 267,500   |      |    | 311,400   |  
|Returns
  Allowance                |  |      | 114,500   |      |    | 76,800    |  
|Inventory
  Reserve                |  |      | 84,000    |      |    | 225,300   |  
|Bad Debt Reserve                   |  |      | 14,500    |      |    | 16,500    |  
|Other Allowances                   |  |      | 134,000   |      |    | 44,800    |  
|                                   |  |      |           |      |    |           |  
|                                  
|Total                              |  |      | 1,061,000 |      |    | 1,745,600 |  
|Less Valuation
  Allowances        |  |      | (275,254  | )    |    | (847,000  | )
|                                   |  |      |           |      |    |           |  
|                                  
|Net Deferred
  Taxes               |  | $    | 785,746   |      | $  | 898,600   |  
|                                   |  |      |           |      |    |           |  
|                                  
|Deferred Tax
  Liabilities         |  |      |           |      |    |           |  
|Depreciation
  & Amortization      |  | ($   | 514,200   | )    | ($ | 60,900    | )
|                                   |  |      |           |      |    |           |  

The change in the valuation allowance was $571,746 and $847,000 for the years ended December 31, 2005 and 2004,
respectively. The principal reason for the change in the valuation allowance for the year ended December 31, 2005 was due to the
sale of the Bookendz product line (see note 15) which was fully reserved at December 31, 2004 but as a result of the sale in 2005,
required the Company to record a deferred tax liability at December 31, 2005. The valuation allowance recorded for the year ended
December 31, 2004 was based on the Companys review of the temporary differences that resulted from the reverse merger and
recording a valuation allowance on the deferred tax assets for the items which more likely than not were not realizable. In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, historical taxable income including available net operating loss
carryforwards to offset taxable income, and projected future taxable income in making this assessment.

The Company has a federal and state net operating loss of approximately $490,000, which, if not used, will expire
in 2024. Future changes in the ownership of the Company may place limitations on the use of these net operating losses.

F-17

---

NOTE 9  SEGMENT REPORTING

The Company has three product lines, the Nature Vision, Inc. products, Vaddio video equipment used for video
conferencing and presentations, and photographic cameras and lighting equipment. The following summarizes the Companys
segments:

|                               |  |             |            |          |   |            | 
|------------------------------ |  | ----------- | ---------- | -------- | - | ---------- | 
|                               |  | 12-31-05    |            | 12-31-04 |  
|                               |  |             |            |          |  
|Assets                         |  |             |            |          |   |            | 
|Nature Vision, Inc.            |  | $           | 9,180,801  |          | $ | 5,666,577  | 
|Vaddio                         |  |             | 2,419,618  |          |   | 1,516,347  | 
|Photographic                   |  |             | 4,349,334  |          |   | 4,622,745  | 
|                               |  |             |            |          |   |            | 
|Total                          |  | $           | 15,949,753 |          | $ | 11,805,669 | 
|                               |  |             |            |          |   |            | 
|                               |  |             |            |          |   |            | 
|                               |  | 12-31-05    |            | 12-31-04 |  
|                               |  |             |            |          |  
|Property & Equipment Additions |  |             |            |          |   |            | 
|Nature Vision, Inc.            |  | $           | 657,065    |          | $ | 398,936    | 
|Vaddio                         |  |             |           |          |   |           | 
|Photographic                   |  |             | 108,101    |          | $ | 70,363     | 
|                               |  |             |            |          |   |            | 
|Total                          |  | $           | 765,166    |          | $ | 469,299    | 
|                               |  |             |            |          |   |            | 
|                               |  |             |            |          |   |            | 
|                               |  | Years Ended |           
|                               |  |             |           
|                               |  |             |            |          |   |            | 
|                               |  | 12-31-05    |            | 12-31-04 |  
|                               |  |             |            |          |  
|Sales                          |  |             |            |          |   |            | 
|Nature Vision, Inc.            |  | $           | 11,663,438 |          | $ | 8,972,752  | 
|Vaddio                         |  |             | 6,233,922  |          |   | 1,440,213  | 
|Photographic                   |  |             | 6,356,699  |          |   | 1,948,578  | 
|                               |  |             |            |          |   |            | 
|Total                          |  | $           | 24,254,059 |          | $ | 12,361,543 | 
|                               |  |             |            |          |   |            | 
|                               |  |             |            |          |   |            | 
|                               |  | 12-31-05    |            | 12-31-04 |  
|                               |  |             |            |          |  
|Gross Profit                   |  |             |            |          |   |            | 
|Nature Vision, Inc.            |  | $           | 4,118,582  |          | $ | 2,571,358  | 
|Vaddio                         |  |             | 2,005,051  |          |   | 341,579    | 
|Photographic                   |  |             | 1,506,499  |          |   | 486,517    | 
|                               |  |             |            |          |   |            | 
|Total                          |  | $           | 7,630,132  |          | $ | 3,399,454  | 
|                               |  |             |            |          |   |            | 
|                               |  |             |            |          |   |            | 
|                               |  | 12-31-05    |            | 12-31-04 |  
|                               |  |             |            |          |  
|Depreciation and Amortization  |  |             |            |          |   |            | 
|Nature Vision, Inc.            |  | $           | 211,460    |          | $ | 197,739    | 
|Vaddio                         |  |             | 32,090     |          |   | 9,338      | 
|Photographic                   |  |             | 104,314    |          |   | 33,171     | 
|                               |  |             |            |          |   |            | 
|Total                          |  | $           | 347,864    |          | $ | 240,248    | 
|                               |  |             |            |          |   |            | 

Foreign Sales

Included in the consolidated statements of operations are foreign sales of $2,080,226 and $566,074 for the years
ended December 31, 2005 and 2004, respectively.

Foreign Inventory

Included in the consolidated balance sheets are international inventories of $1,164,865 and $273,647 at December
31, 2005 and December 31, 2004, respectively. Foreign inventories consist of raw material goods held in Asia and used in the
production of Nature Vision division products and finished goods held in Europe for sale of Photo Control division
products.

F-18

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NOTE 10  CONTRACT PAYABLE - VADDIO

Photo Control Corporation entered into employment agreements with 3 employees in connection with the acquisition
of the Vaddio assets. The agreements, which expire on December 31, 2006, provides for an annual base salary and bonus payments
under each employment agreement, equal to 3.4% to each employee of annual sales of Vaddio products (net of allowances for returns
and billing errors) in excess of $1,600,000 and $2,000,000 in 2005 and 2006, respectively. If the Company terminates the
employment agreement with the employee without cause prior to December 31, 2006, or if the employee terminates his employment
prior to December 31, 2006 under certain conditions (including a sale of all or substantially all of the assets comprising the
Vaddio division or the discontinuation of the Vaddio division), then the employee is entitled to the bonus payment as defined in
the agreement at the time of the termination of his employment. The employee has agreed, during his employment and for a period of
three years thereafter, not to compete with the Company in any business that the Company is conducting on the date of termination,
nor will he solicit employees, customers and suppliers of the Company or accept employment or provide services to the
Companys customers during this three-year time period. Since the bonus payment is not contingent on the continued employment
of the employee and the amount due can be estimated and is likely to be paid, the amount of $900,000 (the estimated bonus payment
due) was accrued at the date of the reverse merger. The amount accrued was the fair value of the liability at the date of the
reverse merger. The contract payments of $187,149 and $462,420 have been paid in 2005 and 2006, respectively. Future bonuses are
estimated to be $250,431, for 2006. The Company anticipates the balance, $250,431, of the original $900,000 accrued at the time of
the reverse merger may be exceeded. Those additional bonuses, if any, will be expensed as earned in 2006.

NOTE 11  DEFERRED RETIREMENT BENEFITS

The Company has retirement benefit agreements with past employees, which are funded by life insurance. Under the
agreements, covered individuals become vested immediately upon death or if employed at age 65. Benefit costs were recognized over
the period of service and recorded as accrued retirement benefits. The total accrued balance due was $723,125 and $841,478 at
December 31, 2005 and December 31, 2004, respectively.

NOTE 12  COMMITMENTS AND
CONTINGENCIES

Employment Agreement

The Company has entered into an employment with the President and Chief Executive Officer. Upon termination of
employment the agreement provides for a non-compete period of 5 years. In exchange for the non-compete, the Company is obligated
to pay the employee at his base rate for a period of up to 2 years.

License Agreement

In January 2002, Waterstrike Incorporated, (Waterstrike) granted the Company an exclusive license for the use of
certain underwater camera technologies. Under

F-19

---

the agreement, the Company is required to pay Waterstrike a royalty of $23 for each licensed product sold
beginning on January 1, 2002. The agreement requires the Company to pay annual royalties based on a minimum level of unit sales.
If the minimum level of unit sales in not met, the Company must pay additional royalties up to the minimum required, or forfeit
the exclusivity of the agreement. For the years ended December 31, 2005 and 2004, the Company did not meet the minimum unit sales
level required under the agreement and may lose the exclusivity of the license agreement. The license will terminate upon the
later of the date of expiration of the last to expire patent included in the licensed technology, or the date that the Company
permanently ceases the sale of the devises using the technology. Royalty expense pursuant to this exclusive license agreement was
$34,754 and $26,036 for the years ended December 31, 2005 and 2004, respectively.

NOTE 13  CONCENTRATIONS

Major Customers

During the year ended December 31, 2005, there were no customers that accounted for greater than 10% of total net
sales. For the year ended December 31, 2004, sales to two customers amounted to approximately 12% and 11% of net sales,
respectively. At December 31, 2004, approximately 14% and 12% of total accounts receivable were due from those
customers.

Major Suppliers

Purchases for the year ended December 31, 2005 include purchases from two different major suppliers, an offshore
manufacturer of outdoor recreation products and a major camera manufacturer, that individually accounted for 23% and 21%,
respectively, of the materials and supplies used by the Company. During 2004, the Company has moved its contract
manufacturing offshore. This same offshore manufacturer accounted for 29% of overall purchases in 2004. Management believes
minimal risk is present under this offshore manufacturing arrangement due to other suppliers being readily available. Management
believes no risk is present under this camera purchasing arrangement due to other suppliers being readily available.

NOTE 14  SUPPLEMENTAL CASH FLOWS

|                                                                                            |  |   |         |      |   |           |  |  |      |  |  | 
|------------------------------------------------------------------------------------------- |  | - | ------- | ---- | - | --------- |  |  | ---- |  |  | 
|                                                                                            |  |   |         | 2005 |   |           |  |  | 2004 |  |  | 
|                                                                                            |  |   |         |      |   |           |  |  |      |  |  | 
|Supplemental
  Cash Flow Disclosures                                                        |  |   |         |      |   |           |  | 
|Cash paid for Interest                                                                      |  | $ | 120,191 |      | $ | 37,706    |  | 
|Cash (received) paid for Income Taxes                                                       |  |   | (72,954 | )    |   | 177,686   |  | 
|                                                                                           
|Noncash
  investing and financing activities                                                |  |   |         |      |   |           |  | 
|Issuance of common stock related to reverse
  merger and assumptions of certain liabilities |  |   |         |      |   |           |  | 
|Cash acquired                                                                               |  | $ |        |      | $ | 1,545,665 |  | 
|Accounts receivable                                                                         |  |   |        |      |   | 1,269,729 |  | 
|Inventories                                                                                 |  |   |        |      |   | 2,685,653 |  | 
|Other current assets                                                                        |  |   |        |      |   | 57,627    |  | 
|Property and equipment                                                                      |  |   |        |      |   | 700,543   |  | 
|Intangible assets and other assets                                                          |  |   |        |      |   | 448,395   |  | 
|Deferred tax assets                                                                         |  |   |        |      |   | 1,050,000 |  | 
|Current liabilities                                                                         |  |   |        |      |   | 1,372,747 |  | 
|Long-term liabilities                                                                       |  |   |        |      |   | 1,509,817 |  | 
|Common stock                                                                                |  |   |        |      |   | 4,875,048 |  | 
|Transfer of Prepaid Expenses to Property
  & Equipment                                      |  |   | 35,740  |      |   |          |  | 

F-20

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NOTE 15  SALE OF BOOKENDZ PRODUCT
LINE

On October 28, 2005, the Company sold its Bookendz product line, related patent and remaining inventory. Upon the
sale closing, the Company received gross $200,000 for the equipment and patent related to the product line. The Company paid
selling expenses of $45,576. The Company received $211,582 for the inventory on November 28, 2005. The Company will also receive
10% of all future sales of product related to the patent from the buyer for a period of three years from the date of sale. These
payments are to be paid quarterly, beginning in the first Quarter of 2006. These payments will be recognized as income as earned
in future periods.

NOTE 16  RETIREMENT PLAN

As part of the reverse merger agreement, the Company adopted a 401(K) Employee Retirement Plan that was in place
at Photo Control Corporation. Company contributions made to the Plan for the year end December 31, 2005 were $102,608 and for the
four months from September 1, 2004 to December 31, 2004, were $13,339.

The Company has a Savings Incentive Match Plan for Employees, (SIMPLE), retirement plan for its employees. Company
contributions made to the plan for the years ended December 31, 2004 were, $13,385. As of January 1, 2005, the SIMPLE plan was
discontinued.

NOTE 17  SUBSEQUENT EVENTS

In January 2006, the Company sold both vehicles owned and paid off the remaining balance due to GMAC.

On February 28, 2006, the Company purchased substantially all the assets of Vector Sportfishing LLC., for
$370,722 in cash. The Company also entered into a royalty agreement for sales of the purchased products until December 31, 2009.
The royalty agreement is not anticipated to be material. The purchase provides the Company with a new line of products,
downriggers for controlled depth fishing, for the outdoor recreation division, Nature Vision. The product line will also provide a
platform for additional product innovation. The acquisition was financed with the existing line of credit. The pro forma results
of operations as if the Vector Sportfishing LLC purchase occurred on January 1, 2004 are not material.

F-21

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