INDEX





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

---

FORM 10-QSB

---

xQUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
 THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March 31, 2006



oTRANSITION REPORT UNDER SECTION 13 OR 15(D) OFTHE SECURITIES EXCHANGE ACT OF 1934



For the transition period from _________ to _________



Commission File Number :  0-7475



---

NATURE VISION, INC.

(Exact name of small business issuer as specified 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)

(218) 825-0733

(Issuers telephone number)



---

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 requirements for the past 90 days.

Yesx
Noo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yeso
Nox

The number of shares of issuers common stock, par value $0.16 per share, outstanding as of May 19, 2006, was 2,217,887. The registrant has no other classes of securities outstanding.



Transitional Small Business Disclosure Format (Check one):  Yeso
Nox





---

|NATURE VISION, INC.INDEX
|------------------------



|PART I  |            |                                                                                       | Page Number
|------- | ---------- | ------------------------------------------------------------------------------------- | -----------
|        |            |                                                                                       |            
|        | Item 1:    | Financial Information                                                                 |            
|        |            |                                                                                       |            
|        |            | Consolidated Balance Sheet - March 31, 2006 and December 31, 2005                     | 1          
|        |            |                                                                                       |            
|        |            | Consolidated Statements of Operations - Three Months Ended March 31, 2006 and 2005    | 2          
|        |            |                                                                                       |            
|        |            | Consolidated Statements of Cash Flows -  Three Months Ended March 31, 2006 and 2005   | 3          
|        |            |                                                                                       |            
|        |            | Notes to Consolidated Financial Statements                                            | 4          
|        |            |                                                                                       |            
|        | Item 2:    | Managements Discussion and Analysis of Financial Condition and Results of Operations | 15         
|        |            |                                                                                       |            
|        | Item 3:    | Controls and Procedures                                                               | 21         
|        |            |                                                                                       |            
|PART II |            |                                                                                       |            
|        |            |                                                                                       |            
|        | Item 6:    | Exhibits                                                                              | 22         
|        |            |                                                                                       |            
|        | Signatures |                                                                                       |            

i

---

INDEX

Part I

Item 1: Financial Information

Nature Vision, Inc. and Subsidiaries

Consolidated Balance Sheet (Unaudited)

March 31, 2006 and December 31, 2005

|Unaudited                                       |  | 
|----------------------------------------------- |  | 
|
|CURRENT ASSETS                                  |  | 
|Cash and Cash Equivalents                       |  | 
|Accounts Receivable, net                        |  | 
|Inventories, net                                |  | 
|Prepaid Expenses                                |  | 
|Deferred Income Taxes                           |  | 
|Total Current Assets                            |  | 
|                                               
|PROPERTY AND EQUIPMENT, NET                     |  | 
|                                               
|NON-CURRENT ASSETS                              |  | 
|Building and Land Held for Sale, Net            |  | 
|Cash Value Life Insurance                       |  | 
|Deferred Income Taxes                           |  | 
|Intangibles - net                               |  | 
|                                                |  | 
|Total Non-Current Assets                        |  | 
|                                                |  | 
|                                               
|TOTAL ASSETS                                    |  | 
|                                                |  | 
|                                               
|LIABILITIES AND STOCKHOLDERS EQUITY            |  | 
|                                               
|CURRENT LIABILITIES                             |  | 
|Checks issued in excess of cash in bank         |  | 
|Current Portion Contract Payable Vaddio         |  | 
|Current Portion of Long-Term Debt               |  | 
|Current Portion of Deferred Retirement Benefits |  | 
|Line of Credit, Bank                            |  | 
|Accounts Payable                                |  | 
|Accrued Payroll and Payroll Taxes               |  | 
|Accrued Expenses                                |  | 
|Income Taxes Payable                            |  | 
|                                                |  | 
|Total Current Liabilities                       |  | 
|                                               
|LONG-TERM LIABILITIES                           |  | 
|Long-term Debt, Net of Current Portion          |  | 
|Deferred Retirement Benefits                    |  | 
|Contract Payable Vaddio, Net of Current Portion |  | 
|Deferred Income Taxes                           |  | 
|                                                |  | 
|Total Non-Current Liabilities                   |  | 
|                                                |  | 
|                                               
|Total Liabilities                               |  | 
|                                                |  | 
|                                               
|STOCKHOLDERS EQUITY                            |  | 
|Common Stock, $.16 Par Value per Share          |  | 
|25,000,000 Shares Authorized                    |  | 
|Common Shares Issued and Outstanding at         |  | 
|March 31, 2006 were 2,217,887                   |  | 
|and December 31, 2005 were 2,178,887            |  | 
|Additional Paid-In Capital                      |  | 
|Retained Earnings                               |  | 
|                                                |  | 
|Total Stockholders Equity                      |  | 
|                                                |  | 
|                                               
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY      |  | 
|                                                |  | 

See accompanying notes to consolidated financial statements.

1

---

INDEX

Nature Vision, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Quarters Ended March 31, 2006 and 2005

|                                             |  | 2006 |   | 2005     
|-------------------------------------------- |  | ---- | - | ---------
|                                            
|SALES, NET                                   |  |      | $ | 4,666,591
|                                            
|COST OF GOODS SOLD                           |  |      |   | 3,107,703
|                                             |  |      |   |          
|                                            
|GROSS PROFIT                                 |  |      |   | 1,558,888
|                                            
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |  |      |   | 2,250,991
|                                             |  |      |   |          
|                                            
|LOSS FROM OPERATIONS                         |  |      |   | (692,103 
|                                             |  |      |   |          
|                                            
|OTHER INCOME(EXPENSE)                        |  |     
|Interest Expense                             |  |      |   | (50,876  
|Interest Income                              |  |      |   | 0        
|Gain on Sale of Property and Equipment       |  |      |   | 2,814    
|Other Income                                 |  |      |   | 4,473    
|                                             |  |      |   |          
|Net Other Expenses                           |  |      |   | (43,589  
|                                             |  |      |   |          
|                                            
|LOSS BEFORE TAXES                            |  |      |   | (735,692 
|                                            
|PROVISION FOR INCOME TAX EXPENSE(REFUND)     |  |      |   | (294,000 
|                                             |  |      |   |          
|                                            
|NET LOSS                                     |  |      | $ | (441,692 
|                                             |  |      |   |          
|                                            
|                                            
|Loss per Common Share                        |  |     
|Basic                                        |  |      | $ | (0.20    
|Diluted                                      |  |      | $ | (0.20    
|                                            
|Weighted Average Common Shares               |  |     
|Basic                                        |  |      |   | 2,202,348
|Diluted                                      |  |      |   | 2,202,348

See accompanying notes to consolidated financial statements.

2

---

INDEX

Nature Vision, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Quarters Ended March 31, 2006 and 2005

|                                                                              |  | 2006 |   | 2005      
|----------------------------------------------------------------------------- |  | ---- | - | ----------
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |  |      |   |           
|Net Loss                                                                      |  |      | $ | (441,692  
|Adjustments to reconcile net loss to net cash flows from operating activities |  |     
|Depreciation and Amortization                                                 |  |      |   | 118,311   
|Gain on Disposal of Property and Equipment                                    |  |      |   | (2,814    
|Provision for Deferred Income Taxes                                           |  |      |   | (294,000  
|Change in Deferred Retirement Benefits                                        |  |      |   | (336      
|Change in Bad Debt Reserve                                                    |  |      |   | 6,000     
|Changes in Operating Assets and Liabilities                                   |  |     
|Accounts Receivable                                                           |  |      |   | 1,502,353 
|Income Taxes Receivable                                                       |  |      |   | 0         
|Inventories, net                                                              |  |      |   | (1,236,462
|Prepaid Expenses                                                              |  |      |   | 17,195    
|Accounts Payable                                                              |  |      |   | (301,269  
|Other Non-current Assets                                                      |  |      |   | 1,618     
|Income Taxes Payable                                                          |  |      |   | (2,000    
|Accrued Payroll and Payroll Taxes                                             |  |      |   | 27,450    
|Accrued Expenses                                                              |  |      |   | (29,054   
|Payments on Deferred Retirement Benefits                                      |  |      |   | (30,459   
|                                                                              |  |      |   |           
|Net Cash Flows from Operating Activities                                      |  |      |   | (665,159  
|                                                                              |  |      |   |           
|                                                                             
|CASH FLOWS FROM INVESTING ACTIVITIES                                          |  |     
|Purchases of Property and Equipment                                           |  |      |   | (425,996  
|Proceeds from Sale of Property and Equipment                                  |  |      |   | 42,855    
|Purchases of Intangibles                                                      |  |      |   | (56,420   
|                                                                              |  |      |   |           
|Net Cash Flows from Investing Activities                                      |  |      |   | (439,561  
|                                                                              |  |      |   |           
|                                                                             
|CASH FLOWS FROM FINANCING ACTIVITIES                                          |  |     
|Increase in checks issued in excess of Cash in Bank                           |  |      |   | 11,542    
|Net Advances (Payments) from Line of Credit, Bank                             |  |      |   | 1,330,000 
|Principal Payments on Long-term Debt                                          |  |      |   | (42,722   
|Payments on Contract Payable                                                  |  |      |   | (462,420  
|Cash Received on Exercise of Options                                          |  |      |   | 268,320   
|                                                                              |  |      |   |           
|Net Cash Flows from Financing Activities                                      |  |      |   | 1,104,720 
|                                                                              |  |      |   |           
|                                                                             
|Net Change in Cash and Cash Equivalents                                       |  |      |   | 0         
|                                                                             
|CASH AND CASH EQUIVALENTS - January 1, 2006 and 2005                          |  |      |   | 0         
|                                                                             
|CASH AND CASH EQUIVALENTS - March 31, 2006 and 2005                           |  |      | $ | 0         
|                                                                              |  |      |   |           
|                                                                             
|                                                                             
|Supplemental Cash Flow Disclosures;                                           |  |     
|Cash paid for Interest                                                        |  |      | $ | 51,600    
|Cash paid for Income Taxes                                                    |  |      | $ | 2,000     

See accompanying notes to consolidated financial statements.

3

---

INDEX

NATURE VISION, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2006 and 2005

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 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.

INTERIM
FINANCIAL INFORMATION

The accompanying consolidated balance
sheet at March 31, 2006 and the consolidated statements of operations and cash flows for
the three months ended March 31, 2006 and 2005 are unaudited. The unaudited interim
consolidated balance sheet and consolidated statements of operations, and cash flows have
been prepared in accordance with accounting principles generally accepted in the United
States of America and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the Companys
financial position, results of operations and its cash flows for the three months ended
March 31, 2006 and 2005. The financial data and other information disclosed in these notes
to the consolidated financial statements related to these periods are unaudited. Operating
results for the three months ended March 31, 2006 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2006.

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.

4

---

INDEX

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 are 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 $43,000 at March 31, 2006 and $37,000 at December
31, 2005.

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 estimate 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 March 31, 2006 and 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 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 $7,977 and $17,166 for the three months ended March 31, 2006 and
2005, respectively. Accumulated amortization related to these assets was $71,935 at March
31, 2006 and $63,958 at December 31, 2005. Estimated remaining amortization expense for
the years ending December 31, 2006, 2007, 2008, 2009 and 2010 is $37,274, $40,705,
$25,733, $22,122 and $15,270, respectively.

5

---

INDEX

Schedule of Intangible
Assets

|                               | Gross
Amount |  | Accumulated
Amortization |         | Net Value
at March 31, 2006
|------------------------------ | ------------ |  | ------------------------ | ------- | ---------------------------
|                               |              |  |                          |         |                            
|Trademarks                     |              |  | $                        | 9,085   |                            
|Patents                        |              |  | $                        | 54,199  |                            
|Vector  Non-compete Contract  |              |  | $                        | 56,420  |                            
|Vaddio  Employment Contract   |              |  | $                        | 23,328  |                            
|Vaddio  Distribution Network  |              |  | $                        | 32,715  |                            
|Vaddio  Intellectual Property |              |  | $                        | 40,114  |                            
|                               |              |  |                          |         |                            
|                              
|Totals                         |              |  | $                        | 215,861 |                            
|                               |              |  |                          |         |                            

|                               | Gross
Amount |  | Accumulated
Amortization |         | Net Value
at December 31, 2005
|------------------------------ | ------------ |  | ------------------------ | ------- | ------------------------------
|Trademarks                     |              |  | $                        | 9,085   |                               
|Patents                        |              |  | $                        | 54,199  |                               
|Vector  Non-compete Contract  |              |  | $                        |        |                               
|Vaddio  Employment Contract   |              |  | $                        | 23,328  |                               
|Vaddio  Distribution Network  |              |  | $                        | 32,715  |                               
|Vaddio  Intellectual Property |              |  | $                        | 40,114  |                               
|                               |              |  |                          |         |                               
|                              
|Totals                         |              |  | $                        | 159,441 |                               
|                               |              |  |                          |         |                               

REVENUE
RECOGNITION

Sales for Photo are recorded when the
product is shipped and returns are permitted only for defective equipment. Nature Vision,
Inc. recognizes revenue on the date products are shipped to the customer. Most sales for
Nature Vision, Inc. are made with the right of return or exchange based on their policy.
Estimated reserves for returns are established by management based on historical
experience and are subject to ongoing review and adjustment by Nature Vision, Inc. 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. Nature
Vision, Inc. provides a standard one-year warranty program for its products. Photo
warrants its products for one or two years. The allowance reserve for sales returns and
warranty cost was $205,000 and $295,000 at March 31, 2006 and December 31, 2005,
respectively. The following table provides the expense recorded and charges against the
reserve for the three months ended March 31, 2006 and 2005.

6

---

INDEX

|                            | March 31
|--------------------------- | --------
|                            |         
|
|                            |         
|Accrued balance  beginning |         
|Provision                   |         
|Claims incurred             |         
|                            |         
|Accrued balance  ending    |         
|                            |         

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 then expensed
over the contract, as the television shows are aired, and when the publications and
catalogs are issued. Advertising costs for Photo are expensed as incurred. Prepaid
advertising expenses were $277,784 and $127,881 for March 31, 2006 and December 31, 2005,
respectively. Advertising expensed was $319,199 and $332,698 for the three months ended
March 31, 2006 and 2005, 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 $51,307 and $36,940 for the three months ended March 31, 2006 and 2005 respectively.

STOCK-BASED
COMPENSATION

On December 16, 2004, the Financial
Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards
(SFAS) No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123
and supersedes APB Opinion No. 25. SFAS No. 123 (R) requires all share-based payments to
employees, including grants of employee stock options, to be valued at fair value on the
date of grant, and to be expensed over the applicable vesting period. Pro forma disclosure
of the income statement effects of share-based payments is no longer an alternative. SFAS
123 (R) is effective for all share-based awards granted on or after January 1, 2006.
In addition, companies must also recognize compensation expense related to any awards that
are not fully vested as of the effective date. The Companys options as of
December 31, 2005 were fully vested and no stock-based agreements were issued during
the three months ended March 31, 2006. Therefore, there was no SFAS No. 123(R)
compensation expense for the three months ended March 31, 2006. Future awards
will be measured based on the fair value of the awards previously calculated in developing
the pro forma disclosures in accordance with the provisions of SFAS No. 123. We
implemented SFAS No. 123(R) on January 1, 2006 using the modified prospective method.

As
more fully described in our Annual Report on Form 10-KSB for the year ended December 31,
2005, the Company has granted stock options over the years to employees and directors
under various stockholder approved stock option plans. At March 31, 2006, 197,958
stock options are outstanding which were all fully vested as of December 31, 2005. The
Company expects that the impact on earnings for the remainder of the year ending December
31, 2006 for stock based compensation will be $0 and estimates the impact on future
earnings to be approximately $0 based on the options outstanding as of March 31, 2006.

7

---

INDEX

Expected
volatility is based on implied volatility from historical volatility of our stock price
since January 2, 2004. The Company uses historical Company and industry data along
with implied data to estimate the expected option life and the expected dividend yield.
The risk-free rate for periods within the contractual life of the option is based on the
U.S. Treasury rate in effect at the time of grant. Based upon the lack of history, the
Company will estimate a forfeiture rate upon the granting of options which will be
considered to be a reasonable indicator of future performance in the opinion of
management. Therefore, the Company has not assumed any forfeiture rate for options issued.

|                                   | Quarter endedMarch 31, 2005
|---------------------------------- | ---------------------------
|                                   |                            
|Net Loss:                          |                            
|As reported                        |                            
|Pro forma                          |                            
|Basic net loss per common share:   |                            
|As reported                        |                            
|Pro forma                          |                            
|Diluted net loss per common share: |                            
|As reported                        |                            
|Pro forma                          |                            
|Stock based compensation:          |                            
|As reported                        |                            
|Pro forma                          |                            

In determining the compensation cost
of options granted during the quarters ended March 31, 2006 and 2005, 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. There were no options issued that vested or were
granted during the three months ended March 31, 2006 and 2005.

NET
LOSS PER COMMON SHARE

Net loss per common share was based
on the weighted average number of common shares outstanding during the periods when
computing the basic net loss per share. When dilutive, stock options and warrants are
included as equivalents using the treasury stock market method when computing the diluted
net loss per share. There were no dilutive common stock equivalents, options and warrants,
for the three months ended March 31, 2006 and March 31, 2005, respectively. Anti-dilutive
options were 197,958 and 283,958 at March 31, 2006 and March 31, 2005, 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, net
operating losses, deferred retirement benefits, contract payable, allowance for doubtful
accounts, sales returns 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.

8

---

INDEX

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 adoption of SFAS No.
151 was not material on the Companys 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 adoption of SFAS No. 153 was not material on the Companys
consolidated financial statements.

NOTE 2  INVENTORIES

Inventories consisted of the
following at:

|                          | March 31,
2006 |  | December 31,
2005
|------------------------- | -------------- |  | -----------------
|                          |                |  |                  
|Raw Materials             |                |  | $                
|Work in Progress          |                |  |                  
|Finished Goods            |                |  |                  
|                          |                |  |                  
|Total                     |                |  |                  
|Less: Valuation Allowance |                |  |                  
|                          |                |  |                  
|Inventories, net          |                |  | $                
|                          |                |  |                  

9

---

INDEX

Foreign
Inventory

Included in the consolidated balance
sheets are international inventories of $296,043 and $1,164,865 at March 31, 2006 and
December 31, 2005, 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.

NOTE 3  PROPERTY
AND EQUIPMENT

Property and equipment consisted of
the following:

|                               | March 31,
2006 |  | December 31,
2005
|------------------------------ | -------------- |  | -----------------
|                               |                |  |                  
|Land                           |                |  | $                
|Buildings and improvements     |                |  |                  
|Tooling                        |                |  |                  
|Office furniture and equipment |                |  |                  
|Warehouse equipment            |                |  |                  
|Vehicles                       |                |  |                  
|Construction in progress       |                |  |                  
|                               |                |  |                  
|Total                          |                |  |                  
|Less: Accumulated depreciation |                |  |                  
|                               |                |  |                  
|Net                            |                |  | $                
|                               |                |  |                  

Depreciation expense of $110,334 and
$83,368 was recorded for the three months ended March 31, 2006 and 2005, respectively.

NOTE
4  LINE OF CREDIT, BANK

The Company had a line of credit
financing agreement with First National Bank of Deerwood up to a maximum amount of
$4,000,000 which was to expire July 1, 2006. Interest will be payable monthly at prime
plus .75%, (8.50% at March 31, 2006), with a minimum interest rate of 5%. The line of
credit is collateralized by accounts receivable, inventories, property and equipment. The
agreement requires the following affirmative covenants measured based upon December 31
financial results, 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 has revised the line of
credit financing agreement with First National Bank of Deerwood up to a maximum amount of
$5,000,000 which expires July 1, 2006. Interest will be payable monthly at prime plus .75%
with a minimum interest rate of 5%. The line of credit is collateralized by accounts
receivable, inventories, property and equipment. The agreement requires the following
affirmative covenants measured based upon December 31 financial results, 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. The balance outstanding on the line of credit was $3,560,000, and $2,230,000 at
March 31, 2006 and December 31, 2005, respectively. As of March 31, 2006 the Company had
$440,000 of funds available. In April upon the revision additional funds were available up
to $5,000,000.

10

---

INDEX

NOTE
5  LONG-TERM DEBT

Long-term debt consisted of the
following at:

|                                                                                                                                                                                                                                                                                                                                                        | March 31,
2006 |  | December 31,
2005
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- |  | -----------------
|                                                                                                                                                                                                                                                                                                                                                        |                |  |                  
|Note Payable  First National Bank of Deerwood  monthly installments of $4,126 including interest at a variable rate of .75% over the index rate (7.25%, and
6.0% at September 30, 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 |                |  | $                
|                                                                                                                                                                                                                                                                                                                                                       
|Note Payable  GMAC  paid in full in January 2006                                                                                                                                                                                                                                                                                                      |                |  |                  
|                                                                                                                                                                                                                                                                                                                                                        |                |  |                  
|                                                                                                                                                                                                                                                                                                                                                       
|Totals                                                                                                                                                                                                                                                                                                                                                  |                |  |                  
|Less: Current portion                                                                                                                                                                                                                                                                                                                                   |                |  |                  
|                                                                                                                                                                                                                                                                                                                                                        |                |  |                  
|                                                                                                                                                                                                                                                                                                                                                       
|Net Long-term Debt                                                                                                                                                                                                                                                                                                                                      |                |  | $                
|                                                                                                                                                                                                                                                                                                                                                        |                |  |                  

NOTE 6  INCOME TAXES

The provision for income taxes
consists of the following components for the three months ended March 31;

|                                 | 2006 |  | 2005
|-------------------------------- | ---- |  | ----
|                                 |      |  |     
|Current                          |      |  | $   
|Deferred                         |      |  |     
|                                 |      |  |     
|                                
|Total Provision for Income Taxes |      |  | $   
|                                 |      |  |     

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

|                                                           | 2006 |  | 2005
|---------------------------------------------------------- | ---- |  | ----
|                                                           |      |  |     
|Federal statutory rate                                     |      |  |     
|State tax, net of federal benefit                          |      |  |     
|Permanent differences and other including surtax exemption |      |  |     
|Research and development credit                            |      |  |     
|                                                           |      |  |     
|Effective Tax Rate                                         |      |  |     
|                                                           |      |  |     

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

|                                       | 3/31/06 |  | 12/31/05
|-------------------------------------- | ------- |  | --------
|                                       |         |  |         
|Current Amounts                        |         |  |         
|                                      
|Deferred tax assets                    |         |  | $       
|                                       |         |  |         
|                                      
|Net Current Deferred Tax Assets        |         |  | $       
|                                       |         |  |         
|                                      
|Non-current Amounts                    |         | 
|                                      
|Deferred Tax Assets                    |         |  | $       
|Deferred Tax Liabilities, net          |         |  |         
|                                       |         |  |         
|                                      
|Net Non-current Deferred Tax Liability |         |  | $       
|                                       |         |  |         
|                                      
|Net Deferred Tax Asset                 |         |  | $       
|                                       |         |  |         

11

---

INDEX

NOTE 7  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:

|                               |  | 
|------------------------------ |  | 
|Assets                         |  | 
|                               |  | 
|Nature Vision, Inc.            |  | 
|Vaddio                         |  | 
|Photographic                   |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 
|                              
|Property & Equipment Additions |  | 
|                               |  | 
|Nature Vision, Inc.            |  | 
|Vaddio                         |  | 
|Photographic                   |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 
|                              
|                               |  | 
|                               |  | 
|Sales                          |  | 
|                               |  | 
|Nature Vision, Inc.            |  | 
|Vaddio                         |  | 
|Photographic                   |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 
|                              
|Gross Profit                   |  | 
|                               |  | 
|Nature Vision, Inc.            |  | 
|Vaddio                         |  | 
|Photographic                   |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 
|                              
|Depreciation and Amortization  |  | 
|                               |  | 
|Nature Vision, Inc.            |  | 
|Vaddio                         |  | 
|Photographic                   |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 

12

---

INDEX

NOTE 8  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, provide for an annual
base salary and bonus payments under each employment agreement, equal to 3.4% of annual
sales of Vaddio products (net of allowances for returns and billing errors) in excess of
$2,000,000 in 2006. 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 $462,420, have been paid in March 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 9  STOCK
OPTIONS

The Company had 39,000 options
exercised in January and February 2006. Total proceeds from the exercise were $268,320.

NOTE 10  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 are recognized over the period of service and recorded as accrued retirement
benefits. The total accrued balance due was $692,329 and $723,125 at March 31, 2006 and
December 31, 2005, respectively.

NOTE 11 
COMMITMENTS AND CONTINGENCIES

Employment
Agreement 
The Company has entered into an
employment agreement 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 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 is 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 $0 and $0 for the quarters ended March
31, 2006 and 2005, respectively.

13

---

INDEX

NOTE 12  CONCENTRATIONS

Major
Customers 
During the quarter ended March 31,
2006, there were no customers that accounted for greater than 10% of total net sales. For
the quarter ended March 31, 2005, sales to a customer amounted to approximately 14% of net
sales. At March 31, 2005, approximately 10% of total accounts receivable was due from that
customer.

Foreign
Sales 
Included in the consolidated
statements of operations are foreign sales of $310,059 and $542,662 for the quarters ended
March 31, 2006 and 2005 respectively.

Major
Suppliers
Purchases for the quarter ended March
31, 2006 include purchases from two different major suppliers, an offshore manufacturer of
outdoor recreation products and a major camera manufacturer, that individually accounted
for 48% and 28%, respectively, of the materials and supplies used by the Company.
Purchases for the quarter ended March 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 18% and 15%, respectively, of the materials
and supplies used by the Company. 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.

14

---

INDEX

Item 2: 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 unaudited 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.





15

---

INDEX





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 several 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.

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.



Turn around in Photo Control Division.In a short period of 10 months from the date of the merger 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.





16

---

INDEX





Increased Inventories.Inventory has increased again during the first quarter of 2006 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. Lower than anticipated first quarter 2006 sales were the main cause for the increase in inventories. We currently have stock in place to fulfill orders and management feels that all inventory is saleable. 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.



Results of Operations



The following table provides the percentage change in our net sales, gross profit, loss from operations, and net loss.



|                       |  | Quarters Ended March 31 |      
|---------------------- |  | ----------------------- | -----
|                       |  |                         |      
|(in thousands)         |  |                         | 2006 
|                       |  |                         |      
|                       |  |                         |      
|NET SALES              |  | $                       | 4,667
|                       |  |                         |      
|GROSS PROFIT           |  |                         | 1,559
|                       |  |                         |      
|(LOSS) FROM OPERATIONS |  |                         | (692 
|                       |  |                         |      
|NET (LOSS)             |  |                         | ($442





17

---

INDEX

The sales decrease is primarily due to a drop in Nature Vision Division sales and is discussed in the Division Analysis below. The Photo Control Division meanwhile continued to provide double digit growth, quarter over quarter. While sales have decreased, margins continue to improve primarily as a result of new products being sold at increased gross profit margins. Operating costs for sales, marketing, general and administrative are not linear to sales during the first quarter and therefore create losses from operations. During the first quarter the Company has incurred a cost for stock based compensation. We anticipate additional one-time costs in 2006 for additional stock based compensation and for the compensation bonus resulting 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 change in net sales and gross profit as a percentage of net sales of the Nature Vision Division:



|                                      |  | Quarters Ended March 31 |      
|------------------------------------- |  | ----------------------- | -----
|                                      |  |                         |      
|(in thousands)                        |  | 2006                    |      
|                                      |  |                         |      
|NET SALES                             |  | $                       | 1,671
|                                      |  |                         |      
|GROSS PROFIT                          |  |                         | 464  
|                                      |  |                         |      
|GROSS PROFIT AS A PERCENTAGE OF SALES |  |                         | 27.8 



Decreased sales were due to the carryover of unfilled demand from 2004 increasing first quarter sales for 2005 to an unusual level. 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 was not repeated during the quarter ended March 31, 2006. Additionally, sales of ice fishing products and underwater viewing systems for ice fishing were impacted by a warmer than normal winter. Ice formed early in the Northern reaches of the country only to see 40-60 degree daily highs before the end of the year. Ice never reformed in many of these areas or was unstable at best, and never formed at all in other areas. Inventories were ordered in anticipation of a normal ice season and have provided for increased levels as of the end of the first quarter 2006. While sales decreased gross profit
margins continue to increase. Product mix and seasonality of products can have a substantial impact on the gross profit margin for any given period.

Margins increases continue to come from our move of production offshore in 2004.





18

---

INDEX

Photo Control Division



The following table provides the percentage increase in net sales and gross profit as a percentage of net sales of the Photo Control Division:



|                                      |  | Quarters Ended March 31 |      
|------------------------------------- |  | ----------------------- | -----
|                                      |  |                         |      
|(in thousands)                        |  | 2006                    |      
|                                      |  |                         |      
|                                      |  |                         |      
|NET SALES                             |  | $                       | 2,996
|                                      |  |                         |      
|GROSS PROFIT                          |  |                         | 1,095
|                                      |  |                         |      
|GROSS PROFIT AS A PERCENTAGE OF SALES |  |                         | 36.5 



Sales continue to increase primarily on the Vaddio products group new products and additional distribution channels. These new products continue to provide improved gross profit margins as well as provide additional operational efficiencies within the division. Inventory increased from year end in anticipation of the divisions historical peak selling periods in the second and third quarters. A focus on reducing inventory levels has been implemented in order to reduce future capital resource requirements.



Liquidity and Capital Resources



The Company did not record a cash balance as of March 31, 2006 and December 31, 2005. Operations for the Company are financed through an existing line of credit with a local credit facility. The major factors in uses of cash from operations netting a decrease of $798,000 were the following. The after tax loss for the quarter of $442,000 and corresponding accrual for a deferred tax credit of $294,000 are the major factors for this decrease in the first quarter of 2006. Other major factors such as a net increase in inventory levels of $1,236,000 and reduction of payables in the amount of $301,000 were offset by a reduction of receivables in the amount of $1,502,000. The inventory increase in the Nature Vision division is due to reduced sales levels for the quarter. Additionally, the Nature Vision 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 and ramp up for its historically increased sales in the second and third quarters. Both divisions are working to reduce the levels of inventories and increase inventory turns. Another major component of the decrease was a decrease in the level of receivables of $1,502,000. This decrease was due to the increased collections in the first quarter of 2006 and reduced sales during the first quarter of 2006. The final major component is a decrease in current payables of $301,000. Reduced purchases and payments upon fourth quarter receipts are the cause of this change. Investing activities also netted a decrease from capital expenditures of $307,000, including the purchase of the Vector product line. On February 28,2006, we completed a purchase of the assets of Vector Teknologies, a small downrigger company located in Illinois for $250,000 plus inventory of approximately $70,000. The purchase
has been absorbed within the Nature Vision division of operations. Management continues to review opportunities of acquisitions. Management anticipates that it will continue to invest in capital expenditures for the development of product lines to be similar to that of 2005. All of the activity for 2006 for working capital needs was financed within the current structure of the current credit facility.





19

---

INDEX







As of March 31, 2006 working capital decreased to $6,254,339, from $6,899,783 at December 31, 2005.



Nature Vision Inc. has a secured line of credit for $5,000,000 at prime plus .75%. The prime rate at March 31, 2006 was 7.75%. As of March 31, 2006, the Company had the ability to borrow against the entire line of credit. 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 line of credit to fund anticipated sales growth in future quarters. The agreement requires the following affirmative covenants measured based on December 31 audited results, 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. Associated stock based compensation expenses of approximately $100,000 were 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.



The Company believes that the effect of inflation has not been material during the quarter ended March 31, 2006.



Off Balance Sheet Financing Arrangements



As of March 31, 2006, there were no off-balance sheet arrangements, unconsolidated subsidiaries and commitments or guaranties of other parties.





20

---

INDEX





Critical Accounting Policies



Managements estimate of the warranty reserve is based on historical company data and managements 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 3: Controls and Procedures

(a)           As of March 31, 2006 an evaluation was performed by the registrants President and Chief Financial Officer of the effectiveness of the design and operation of the registrants disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Based upon, and as of the date of that evaluation, the President and Chief Financial Officer concluded that the registrants disclosure controls and procedures were effective.

(b)Changes in internal controls. There were no significant changes in the registrants internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses, and therefore there were no corrective actions taken.

21

---

INDEX

Part II

Item 1. Legal Proceedings.Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Not applicable.

Item 3. Defaults Upon Senior Securities.Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.Not applicable.

Item 5. Other Information.Not applicable.

Item 6. Exhibits and Reports on Form 8-K

| | (a) Listing of Exhibits:
| | ------------------------

| | 10.1 | Executive Cash Bonus Plan for the fiscal year ending December 31, 2006 for certain executive officers (previously disclosed as Item 8B of the registrants Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | ---- | -----------------------------------------------------------------------------------------------------------------------

(b) Reports on Form 8-K:

There were no reports on Form 8-K filed during this quarter.



Signatures



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





|                    |  | NATURE VISION, INC.
|------------------- |  | -------------------
|                    |  |                    
|Date:  May 19, 2006 |  | By:                
|                    |  |                    

|                    |  |    
|------------------- |  | ---
|Date:  May 19, 2006 |  | By:
|                    |  |    

22

---