UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549


_____________________________





FORM
10-Q





T QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934





For
the quarterly period ended March 31, 2008





£ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF


THE
EXCHANGE ACT OF 1934





For the
transition period from _________ to _________





Commission
File Number :  0-7475


_____________________________





NATURE
VISION, INC.


(Exact
name of registrant as specified in its charter)





Minnesota
            41-0831186(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





1480
Northern Pacific Road





Brainerd,
MN  56401


(Address
of principal executive offices)





(218)
825-0733


(Registrant’s
telephone number)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such requirements for the past 90
days.


T
Yes   £
No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer £
            Accelerated
      filer £
            Non-accelerated
      filer £
            Smaller
      reporting company T





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


£
Yes   T
No





The
number of shares of issuer’s common stock, par value $0.16 per share,
outstanding as of May 9, 2008, was 2,312,583.  The registrant has no
other classes of securities outstanding.













NATURE VISION,INC.


INDEX











PART
      I
            
            FINANCIAL
      INFORMATION
            Page
      NumberItem 1:
            Financial StatementsConsolidated Balance Sheets - March 31, 2008 and December 31,
      2007
            1Consolidated Statements of Operations - Three Months Ended
      March 31, 2008 and 2007
            2Consolidated Statements of Cash Flows - Three Months Ended
      March 31, 2008 and 2007
            3Notes to Consolidated Financial Statements
            4Item
      2:
            Management's Discussion and Analysis of Financial Condition
      and Results of Operations
            17Item
      4T:
            Controls and Procedures
            22PART II
            
            OTHER
      INFORMATION23Item 6:
            ExhibitsSignatures
            24





Index





Part I – FINANCIAL
INFORMATION





Item 1: Financial Statements





Nature Vision, Inc. and Subsidiaries


Consolidated
Balance Sheets


March
31, 2008 and December 31, 2007





UnauditedMarch 31,
            
            
            December 31,2008
            
            
            2007ASSETSCURRENT
      ASSETSCash
      and Cash Equivalents
            
            $
            -
            
            
            $
            131,487Accounts
      Receivable, net
            
            
            778,467
            
            
            
            2,774,618Inventories,
      net
            
            
            4,146,525
            
            
            
            4,769,648Current
      Portion of Prepaid Expenses
            
            
            168,600
            
            
            
            229,594Current
      Assets Retained Relating to Discontinued Operations
            
            
            82,914
            
            
            
            343,413Total
      Current Assets
            
            
            5,176,506
            
            
            
            8,248,760PROPERTY
      AND EQUIPMENT, NET
            
            
            1,758,181
            
            
            
            1,555,052NON-CURRENT
      ASSETSBuilding
      and Land Held for Sale, Net
            
            
            701,719
            
            
            
            701,719Prepaid
      Expenses, net of Current Portion
            
            
            43,706
            
            
            
            47,468Deferred
      Income Taxes
            
            
            1,022,546
            
            
            
            1,022,546Goodwill
            
            
            666,373
            
            
            
            666,373Intangibles
      - net
            
            
            1,223,487
            
            
            
            1,056,746Total
      Non-Current Assets
            
            
            3,657,831
            
            
            
            3,494,852TOTAL
      ASSETS
            
            $
            10,592,518
            
            
            $
            13,298,664LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESChecks
      Issued in Excess of Cash in Bank
            
            $
            13,168
            
            
            $
            -Current
      Portion of Long-Term Debt
            
            
            2,074,292
            
            
            
            2,133,333Note
      Payable – Related Party
            
            
            1,000,000
            
            
            
            979,159Current
      Portion of Deferred Retirement Benefits
            
            
            71,475
            
            
            
            74,657Line
      of Credit, Bank
            
            
            786,373
            
            
            
            2,537,835Accounts
      Payable
            
            
            303,661
            
            
            
            558,040Accrued
      Payroll and Payroll Taxes
            
            
            179,978
            
            
            
            166,758Accrued
      Expenses
            
            
            601,243
            
            
            
            710,654Current
      Liabilities Retained Relating to Discontinued
    Operations
            
            
            -
            
            
            
            25,952Total
      Current Liabilities
            
            
            5,030,190
            
            
            
            7,186,388LONG-TERM
      LIABILITIESLong-term
      Debt, Net of Current Portion
            
            
            522,267
            
            
            
            466,667Deferred
      Retirement Benefits, Net of Current Portion
            
            
            468,355
            
            
            
            483,214Total
      Non-Current Liabilities
            
            
            990,622
            
            
            
            949,881Total
      Liabilities
            
            
            6,020,812
            
            
            
            8,136,269COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon
      Stock, $.16 Par Value per Share 25,000,000 Shares Authorized Common Shares
      Issued and Outstanding were 2,312,583 at March 31, 2008 and December 31,
      2007
            
            
            370,013
            
            
            
            370,013Additional
      Paid-In Capital
            
            
            7,007,142
            
            
            
            7,005,553Accumulated
      Deficit
            
            
            (2,805,449
            )
            
            
            (2,213,171
            )Total
      Stockholders’ Equity
            
            
            4,571,706
            
            
            
            5,162,395TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            10,592,518
            
            
            $
            13,298,664





See
accompanying notes to consolidated financial statements.





1
 Index





Nature Vision, Inc. and Subsidiaries


Consolidated
Statements of Operations (Unaudited)


Three
Months Ended March 31, 2008 and 2007





2008
            
            
            2007SALES,
      NET
            
            $
            2,367,065
            
            
            $
            1,756,079COST
      OF GOOD SOLD
            
            
            1,718,483
            
            
            
            1,447,114GROSS
      PROFIT
            
            
            648,582
            
            
            
            308,965SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES
            
            
            1,116,887
            
            
            
            965,717LOSS
      FROM OPERATIONS
            
            
            (468,305
            )
            
            
            (656,752
            )OTHER
      INCOME (EXPENSE)Interest
      expense
            
            
            (168,550
            )
            
            
            (60,891
            )Interest
      income
            
            
            -
            
            
            
            5,473Net
      Other Expenses
            
            
            (168,550
            )
            
            
            (55,418
            )LOSS
      FROM CONTINUING OPERATIONS BEFORE TAXES
            
            
            (636,855
            )
            
            
            (712,170
            )PROVISION
      FOR INCOME TAX BENEFIT
            
            
            -
            
            
            
            (284,000
            )LOSS
      FROM CONTINUING OPERATIONS
            
            
            (636,855
            )
            
            
            (428,170
            )GAIN
      (LOSS)  FROM DISCONTINUED OPERATIONS, NET OF $0 TAX PROVISION
      AND $14,000 TAX BENEFIT
            
            
            44,577
            
            
            
            (20,476
            )NET
      LOSS
            
            $
            (592,278
            )
            
            $
            (448,646
            )Loss
      from continuing operations per common shareBasic
            
            $
            (0.28
            )
            
            $
            (0.19
            )Diluted
            
            $
            (0.28
            )
            
            $
            (0.19
            )Income
      (loss) from discontinued operations per common shareBasic
            
            $
            0.02
            
            
            $
            (0.01
            )Diluted
            
            $
            0.02
            
            
            $
            (0.01
            )Net
      loss per common shareBasic
            
            $
            (0.26
            )
            
            $
            (0.20
            )Diluted
            
            $
            (0.26
            )
            
            $
            (0.20
            )Weighted
      average common sharesBasic
            
            
            2,312,583
            
            
            
            2,225,387Diluted
            
            
            2,312,583
            
            
            
            2,225,387





See
accompanying notes to consolidated financial statements.





2
 Index





Nature Vision, Inc. and Subsidiaries


Consolidated
Statements of Cash Flows (Unaudited)


Three
Months Ended March 31, 2008 and 2007





2008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (592,278
            )
            
            $
            (448,646
            )Adjustments
      to reconcile net loss to net cash flows from operating
      activitiesDepreciation
      and amortization
            
            
            168,864
            
            
            
            117,465Gain
      on sale of discontinued operations
            
            
            (81,647
            )
            
            
            (77,489
            )Benefit
      from deferred income taxes
            
            
            -
            
            
            
            (298,000
            )Stock
      based compensation
            
            
            1,589
            
            
            
            -Amortization
      of original issue discount
            
            
            20,841
            
            
            
            -Changes
      in operating assets and liabilitiesAccounts
      receivable
            
            
            1,996,151
            
            
            
            1,862,533Inventories,
      net
            
            
            686,699
            
            
            
            857,354Prepaid
      expenses
            
            
            64,756
            
            
            
            26,029Accounts
      payable
            
            
            (254,379
            )
            
            
            (753,664
            )Income
      taxes payable
            
            
            -
            
            
            
            (5,000
            )Accrued
      payroll and payroll taxes
            
            
            13,220
            
            
            
            (108,829
            )Accrued
      expenses
            
            
            (192,271
            )
            
            
            (295,992
            )Payments
      on deferred retirement benefits
            
            
            (18,041
            )
            
            
            (21,035
            )Net
      Cash Flows from Operating Activities
            
            
            1,813,504
            
            
            
            854,726CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of property and equipment
            
            
            (91,059
            )
            
            
            (89,224
            )Purchase
      of assets associated with Castaic Softbait Brand
            
            
            (340,641
            )
            
            
            -Proceeds
      from sale of discontinued operations, net
            
            
            81,647
            
            
            
            491,952Payments
      received on note receivable
            
            
            -
            
            
            
            25,000Net
      proceeds from sale of working capital associated with discontinued
      operations
            
            
            234,547
            
            
            
            1,333,500Purchases
      of intangible assets
            
            
            (6,000
            )
            
            
            -Net
      Cash Flows from (used in) Investing Activities
            
            
            (121,506
            )
            
            
            1,761,228CASH
      FLOWS FROM FINANCING ACTIVITIESIncrease
      in checks issued in excess of cash in bank
            
            
            13,168
            
            
            
            47,397Net
      payments on line of credit, bank
            
            
            (1,751,462
            )
            
            
            (2,155,000
            )Principal
      payments on long-term debt
            
            
            (85,191
            )
            
            
            -Payments
      on contract payable
            
            
            -
            
            
            
            (510,695
            )Net
      Cash Flows from (used in) Financing Activities
            
            
            (1,823,485
            )
            
            
            (2,618,298
            )Net
      Change in Cash and Cash Equivalents
            
            
            (131,487
            )
            
            
            (2,344
            )CASH
      AND CASH EQUIVALENTS - January 1, 2008 and 2007
            
            
            131,487
            
            
            
            2,344CASH
      AND CASH EQUIVALENTS - March 31, 2008 and 2007
            
            $
            -
            
            
            $
            -





See
accompanying notes to consolidated financial statements.





3
 Index





NATURE VISION, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


March 31,
2008 and 2007 (Unaudited)





NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





NATURE OF
OPERATIONS





Nature
Vision, Inc. (the Company or we) is an outdoor recreation products
Company.  The Company designs and markets primarily outdoor recreation
products for the sport fishing and sport hunting markets.  The Company
grants unsecured credit to its customers which are primarily dealers and
consumers located throughout the United States and Canada.  The
Company contracts with outside organizations for the manufacture and sale of its
products.  The geographic market in which the Company competes
consists of the entire United States and Canada and, to a lesser extent some
foreign countries.





On
October 20, 2006, Nature Vision, Inc. sold the Norman product line (Norman) of
its Photo Control division and renamed the division the Vaddio
Division.  On February 5, 2007, the Company sold certain assets and
transferred certain liabilities related to its Vaddio division
(Vaddio).  The Norman and Vaddio divisions designed, manufactured and
marketed professional cameras, electronic flash equipment, lens shades and
related photographic accessories and sold products used in the video
conferencing and presentation industry. The assets and liabilities of Vaddio at
March 31, 2008 and December 31, 2007 met the requirements of Statement of
Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets" as being held for sale. Operations and cash flows
were eliminated as a result of the sale and the Company did not have any
significant involvement in the operations after the sale. All of the financial
information in the consolidated financial statements and notes to the
consolidated financial statements has been revised to reflect only the results
of continuing operations of the Company’s outdoor recreation
products.  As a result of the sale of the Vaddio and Norman divisions,
the Company has only one segment.





LIQUIDITY





We
incurred a net loss for the three months ended March 31, 2008 and 2007 of
approximately $592,000 and $449,000, respectively.  In the event
future cash flows and borrowing capacities are not sufficient to fund operations
at the present level, additional measures will be taken including efforts to
further reduce expenditure levels.  In addition, we believe that other
sources of liquidity are available which may include the expansion of our credit
facility.  However, there is no assurance that these other sources of
liquidity will be available or on terms acceptable to the
Company.   Management plans to retain the funds received
associated with the related party note on a short-term basis while the 2008
business plan matures.





Management
believes that existing, current and future lending capacity and cash generated
from operations will supply sufficient cash flow to meet short-term and
long-term debt obligations, working capital, capital expenditure and operating
requirements for at least the next 12 months.





On April
7, 2008, the Company completed the sale of its facility located in New Hope, MN
(see Note 14).





INTERIM
FINANCIAL INFORMATION





The
accompanying consolidated balance sheet at March 31, 2008 and the consolidated
statements of operations and cash flows for the three months ended March 31,
2008 and 2007 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, 2008 and 2007. 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, 2008 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2008. The consolidated
financial statements should be read in conjunction with the audited financial
statements for the year ended December 31, 2007 included in the Annual Report on
Form 10-KSB of the Company filed with the Securities and Exchange
Commission.





PRINCIPLES
OF CONSOLIDATION





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





4
 Index





INVENTORIES





Inventories
consist of raw materials 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. Management
periodically reviews 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 sometimes difficult to make and it is possible
significant changes may be required to inventory reserves.





IMPAIRMENT
OF LONG-LIVED ASSETS





We assess
the impairment of long-lived assets whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable, in accordance with
FASB SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.”  An asset or asset group is considered impaired if its
carrying amount exceeds the undiscounted future net cash flow the asset or asset
group is expected to generate.  If an asset or asset group is
considered impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds its fair value.  If
estimated fair value is less than the book value, the asset is written down to
the estimated fair value and an impairment loss is recognized.





If we
determine that the carrying amount of long-lived assets, including intangible
assets, may not be recoverable, we measure any impairment based on a projected
discounted cash flow method using a discount rate determined by our management
to be commensurate with the risk inherent in our current business model or
another valuation technique.  Net intangible assets and long-lived
assets amounted to $3.7 million as of March 31, 2008.





Considerable
management judgment is necessary in estimating future cash flows and other
factors affecting the valuation of long-lived assets, including intangible
assets, including the operating and macroeconomic factors that may affect
them.  We use historical financial information, internal plans, and
projections and industry information in making such estimates.





We did
not recognize any impairment charges for our long-lived assets, including
intangible assets during the three months ended March 31, 2008 and
2007.  While we currently believe the expected cash flows from these
long-lived assets, including intangible assets, exceeds the carrying amount,
materially different assumptions regarding future performance and discount rates
could result in future impairment losses.  In particular, if we no
longer believe we will achieve our long-term projected sales or operating
expenses, we may conclude in connection with any future impairment tests that
the estimated fair value of our long-lived assets, including intangible assets,
are less than the book value and recognize an impairment charge.  Such
impairment would adversely affect our earnings.





DISCONTINUED
OPERATIONS





On
February 5, 2007, the Company sold certain assets and transferred certain
liabilities related to its Vaddio division. The Company negotiated the sale of
these assets and assumption of certain liabilities during the quarter ended
December 31, 2006.





These
assets met the requirements of SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets" as being held for sale. Operations and cash flows
were eliminated as a result of the sales and the Company did not have any
significant involvement in the operations after the sales. The results of the
Vaddio product line is presented on a historical basis as a separate line in the
consolidated statements of operations and the consolidated balance sheets
entitled "Assets/Liabilities sold relating to discontinued operations" and
“Assets/Liabilities retained relating to discontinued operations”. In accordance
with EITF 87-24, “Allocation of Interest to Discontinued Operations”, the
Company elected to not allocate consolidated interest expense to the
discontinued operations where the debt is not directly attributed to or related
to the discontinued operations.  All of the financial information in
the consolidated financial statements and notes to the consolidated financial
statements has been revised to reflect only the results of continuing operations
(see Note 12).





5
 Index





BUILDING
AND LAND HELD FOR SALE





In
November 2006, management signed an agreement and began marketing for sale the
building and land located in New Hope, Minnesota. Accordingly, we have reflected
the carrying value of the building as held for sale as of March 31, 2008 and
December 31, 2007. As a result, we have discontinued recording depreciation on
the building in the fourth quarter of the year ended December 31,
2006.  On April 7, 2008, the Company sold the building for net
proceeds of approximately $2,290,000 (see Note 14).





GOODWILL
AND INTANGIBLE ASSETS





The
Company applies SFAS No. 142, “Goodwill and Other Intangible Assets,” which sets
forth financial and reporting standards for the acquisition of intangible
assets, other than those acquired in a business combination, and for goodwill
and other intangible assets subsequent to their acquisition.  This
accounting standard requires that goodwill no longer be amortized but tested for
impairment on a periodic basis.  The balance of goodwill related to
the Cass Creek International, LLC (Cass Creek) and Fish Hawk Electronics (Fish
Hawk) acquisitions (Note 2) and which combined totaled $666,373 at March 31,
2008 and December 31, 2007.





Other
intangible assets consisted primarily of patents and identifiable intangible
assets including customer lists, other intellectual property and non-compete
agreements, which are being amortized using the straight-line method over their
estimated useful lives ranging from three to fifteen years.





The
long-term portion of prepaid expenses consists of deferred financing costs of
$43,706 and $47,468 at March 31, 2008 and December 31, 2007.





REVENUE
RECOGNITION





The
Company recognizes revenue on the date products are shipped to customers and
does not sell products with the guaranteed right of return.  The
Company maintains a warranty on new products up to one year from the date of
retail purchase and therefore permits returns for defective product within the
first few months of purchase and repairs products up through the end of the
warranty period. Estimated reserves for sales / warranty returns are established
by management based on historical experience and are subject to ongoing review
and adjustment by the Company. Sales 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.





In June
2006, the Financial Accounting Standards Board (FASB) ratified the consensus of
Emerging Issues Task Force Issue No. 06-3, “How Taxes Collected from Customers
and Remitted to Governmental Authorities Should Be Presented in the Income
Statement (That Is, Gross versus Net Presentation)” (EITF 06-3). EITF
06-3 concluded that the presentation of taxes imposed on revenue-producing
transactions (sales, use, value added, and excise taxes) on either a gross
(included in revenues and costs) or a net (excluded from revenues) basis is an
accounting policy that should be disclosed. The Company adopted EITF 06-3 during
the year ended December 31, 2007, and it did not have any impact on our results
of operations or financial condition.  The Company's policy is to
present taxes imposed on revenue-producing transactions on a net
basis.





SALES AND
WARRANTY RESERVE





The
Company has established a sales and warranty reserve for sales returns and
warranty costs. 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 sales and
warranty reserve for sales returns and warranty costs relating to continuing
operations was $210,000 and $300,000 at March 31, 2008 and December 31, 2007,
respectively. The sales and warranty reserve represents a significant estimate
and actual results could differ from the estimate. The following table provides
the activity through the returns and warranty accounts as recorded and charged
against the reserve relating to continuing operations for the periods ended
March 31, 2008 and 2007.





6
 Index








2008
            
            
            2007Accrued
      balance - beginning
            
            $
            300,000
            
            
            $
            175,000Provision
            
            
            201,000
            
            
            
            368,000Claims
      incurred
            
            
            (291,000
            )
            
            
            (368,000
            )Accrued
      balance - ending
            
            $
            210,000
            
            
            $
            175,000





RESEARCH
AND DEVELOPMENT





The
Company expenses all costs related to product research and development as
incurred.





STOCK-BASED
COMPENSATION





EffectiveJanuary 1, 2006, the Company adopted the fair value
recognition and measurements provisions of SFAS No. 123(R), using the
modified-prospective-transition method. Under that transition method,
compensation cost for stock options recognized during the years endedMarch 31, 2008and 2007 includes compensation cost
for all options granted prior to, but notvested as ofJanuary 1, 2006, based on the grant date fair value
estimated in accordance with the provisions of SFAS No. 123. Compensation cost
will be recorded for all options granted, if any, subsequent toJanuary 1, 2006, based on the grant-date fair value
estimated in accordance with the provisions of SFAS No. 123(R). Results for
prior periods have not been restated.





In
accordance with SFAS No. 123(R), cash flows from income tax benefits resulting
from tax deductions in excess of the compensation cost recognized for
stock-based awards have been classified as financing cash flows prospectively
from January 1, 2006. Prior to adoption of SFAS No. 123(R), such excess income
tax benefits were presented as operating cash flows. There were no cash flows
from income tax benefits for the periods ended March 31, 2008 and
2007.





The
following assumptions were used to calculate the value of the options granted
during the period ended March 31, 2008: dividend yield of 0%, risk-free interest
rate of 3%, expected life equal to 3.5 years, and volatility of
76%.





The
following are the assumptions used for the Black-Scholes model:





·
            The
      Company calculates expected volatility for stock options and awards using
      historical volatility.


·
            The
      Company used 0% as a forfeiture rate and the Company does not consider
      forfeitures to be material.


·
            The
      Company has not, and does not intend to, issue dividends; therefore, the
      dividend yield assumption is 0%.


·
            The expected term of options is
      based on the simplified method as allowed under Staff Accounting Bulletins
      (SAB) No’s. 107 and 110 issued by the SEC.  The simplified
      method assumes the option will be exercised midway between the vesting
      date and the contractual term of the option.  The Company is
      able to use the simplified method as the options qualify as “plain
      vanilla” options as defined by SAB No. 107 and since the Company does not
      have sufficient historical exercise data to provide a reasonable basis to
      estimate expected term.


·
            The risk-free rates for the
      expected terms of the stock options and awards are based on the U.S.
      Treasury yield curve in effect at the time of
  grant.





The
Company recognizes stock-based compensation costs on a straight-line basis over
the requisite service period of the award, which is generally the option vesting
term.  As of March 31, 2008, there was $19,661 of total unrecognized
compensation costs related to the outstanding options, which is expected to be
recognized over a period of 34 months.





The
weighted average fair value of stock options granted on the date of grant during
the period ended March 31, 2008 was $.89.





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





7
 Index





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, 2008 and 2007. Anti-dilutive
options and warrants were 219,450 and 190,458 at March 31, 2008 and 2007,
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.





In June
2006, the Financial Accounting Standards Board, or FASB, issued FASB
Interpretation No. 48, or FIN 48, "Accounting for Uncertainty in Income Taxes -
an interpretation of FASB Statement No. 109," which prescribes comprehensive
guidelines for recognizing, measuring, presenting and disclosing in the
financial statements tax positions taken or expected to be taken on tax returns.
FIN 48, effective for fiscal years beginning after December 15, 2006, seeks to
reduce the diversity in practice associated with certain aspects of the
recognition and measurement related to accounting for income taxes. The Company
adopted provisions of FASB Interpretation 48, Accounting for Uncertainty in
Income Taxes: an interpretation of FASB Statement 109, Accounting for Income
Taxes (“FIN 48) on January 1, 2007. As a result of the implementation of FIN 48,
the Company reclassified $400,000 of deferred tax liabilities to unrecognized
tax benefits with no impact to previously recorded retained
earnings.   The amount of the unrecognized tax benefits adjusted
the net operating loss carryforward for federal purposes by approximately
$1,000,000.  To the extent interest and penalties would be assessed by
taxing authorities on any underpayment of income taxes, such amounts would be
accrued and classified as a component of income tax expenses on the consolidated
statement of operations. The Company has no material amount of accrued
liabilities for interest or penalties recorded related to unrecognized tax
benefits.   The federal and state tax returns are open to
examination for the years 2004-2007.





ESTIMATES





The preparation of financial statements
in conformity with accounting principles generally accepted in theUnited States of Americarequires 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 revenuesand expenses during the reporting
period. Actual results could differ from those estimates. For the Company,
significant estimates include the allowance for doubtful accounts receivable,
reserves for inventory valuation, reserves for sales returns, reserves for
warranty services, and the valuation allowance for deferred tax
assets.





RECENT
ACCOUNTING PRONOUNCEMENTS





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations” (“SFAS No. 141(R)”), The objective of SFAS No. 141(R) is to
improve the information provided in financial reports about a business
combination and its effects. SFAS No. 141(R) requires an acquirer to recognize
the assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree at the acquisition date, measured at their fair values as of that
date. SFAS No. 141(R) also requires the acquirer to recognize and measure the
goodwill acquired in a business combination or a gain from a bargain purchase
and provides guidance on how to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) will be applied on a prospective basis for
business combinations where the acquisition date is on or after the beginning of
the Company’s 2009 fiscal year.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51”. The objective of
SFAS No. 160 is to improve the financial information provided in consolidated
financial statements. SFAS No. 160 amends ARB No. 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS No. 160 also changes the way the
consolidated income statement is presented, establishes a single method of
accounting for changes in a parent’s ownership interest in a subsidiary that do
not result in deconsolidation, requires that a parent recognize a gain or loss
in net income when a subsidiary is deconsolidated, and expands disclosures in
the consolidated financial statements in order to clearly identify and
distinguish between the interests of the parent’s owners and the interest of the
noncontrolling owners of a subsidiary. SFAS No. 160 is effective for the
Company’s 2009 fiscal year. The Company does not anticipate that SFAS No. 160
will have any material impact on its consolidated financial
statements.





8
 Index





NOTE 2 –
ACQUISITIONS





Castaic Softbait
brand acquisition





On
January 21, 2008 the Company acquired substantially all of the assets associated
with the Castaic Softbait brand under an asset purchase
agreement.  The amount of $323,100 was paid at closing, $81,750 is
payable pursuant to three year promissory notes, and $82,860 of liabilities were
assumed.  The Company incurred transaction costs of $17,541 in
connection with the acquisition. The purchase provides the Company with a proven
fishing tackle product platform.The
assets acquired and liabilities assumed in the acquisition are based on their
value estimated at the date of acquisition.  These estimates if
necessary will be revised during the allocation period, which generally does not
exceed one year.  Additional pro forma disclosures required under SFAS
No. 141 “Business Combinations”, related to this acquisition were not considered
material.





Cass
Creek Acquisition





On
September 20, 2007, Nature Vision closed on the acquisition of substantially all
of the assets of Cass Creek, a manufacturer and distributor of electronic game
calling devices, pursuant to the terms of an Asset Purchase
Agreement.  The transaction involved the acquisition of equipment,
inventories, intellectual property, books and records, permits, licenses,
accounts receivable, cash, goodwill, general intangibles and certain other
assets of Cass Creek for a total purchase price of approximately $2,600,000. The
purchase price was paid as follows: (i) $1,560,000 cash was paid at closing,
(ii) $386,000 by the assumption of an existing line of credit for Cass Creek
that was paid off, by the Company upon closing, and (iii) $500,000 by a five
year unsecured promissory note payable in annual installments of $100,000 of
principal plus interest accrued at 8% per annum.  In connection with
the acquisition, the Company incurred transaction costs of $167,036. The assets
acquired and liabilities assumed in the acquisition are based on their value
estimates at the date of acquisition.  The assets and liabilities were
recorded at fair value pursuant to SFAS No. 141.  The purchase
provides the Company with an expanded hunting platform and is intended to smooth
the seasonal sales cycle.  The goodwill is deductible for tax purposes
over 15 years.





In order
to fund the acquisition, the Company borrowed $2,000,000 from M&I Business
Credit, LLC (“M&I”) under the terms of a Demand Term Note dated September
19, 2007 in the principal amount of $2,000,000. The amount borrowed was payable
upon demand and bore interest at an annual rate of .75% per annum above the
prime rate of interest publicly announced by M&I Bank. If not sooner
demanded, principal on the Demand Term Note was due and payable in equal
consecutive monthly installments of $16,677 commencing on November 1, 2007 and
continuing until April 1, 2008.  In connection with the sale of the
building on April 7, 2008, this note was paid in full (See Note
14).





In
connection with the financing of the Cass Creek acquisition, on September 20,
2007, the Company granted a non-qualified stock option for the purchase of
33,000 shares of its common stock at an exercise price of $2.10 per share to the
Company’s Chief Executive Officer, in consideration of his personal guarantee of
the payment of the demand term note (Note 8) and the promissory note payable
(Note 8).  The fair value of the options granted (associated with debt
guarantee) was calculated at $50,256 using the Black-Scholes model and are
included in long-term prepaid expenses on the balance sheet and will be
amortized over the life of the guarantee. The following assumptions were used to
calculate the value of the options: dividend yield of 0%, risk-free interest
rate of 5%, expected life equal to 6 years, and volatility of 81%.





Fish
Hawk Acquisition





On July
3, 2007, the Company purchased substantially all the assets of Fish Hawk
Electronics Corporation, for $323,310.  The amount of $100,000 was
paid at closing, $68,979 was due and paid in October 2007, and $100,000 is
payable pursuant to a three year promissory note in addition, the Company
incurred transaction costs of $54,331 connection with the acquisition. The note
bears interest at 8% and requires annual principal payments of $33,333 plus
interest at 8% through July 2010.  The purchase provides the Company
with downrigger display technology that compliments its Vector line of
downrigger trolling products.  In Connection with this transaction,
the Company expensed in process research and development of $15,000 during the
year ended December 31, 2007.  The goodwill is deductible for tax
purposes over 15 years. The pro forma results of operations for Fish Hawk
Electronics Corporation are not included as of January 1, 2007 as they were not
considered material.





9
 Index





The
results of Cass Creek, Fish Hawk and the Castaic Softbait brand have been
included in the consolidated financial statements since the date of the
acquisitions.  The following un-audited pro forma condensed results of
operations for the period ended March 31, 2007 give effect to the acquisition of
Cass Creek as if such transaction had occurred on January 1,
2007.  The unaudited pro forma information does not purport to
represent what the Company's results of operations would actually have been if
such transaction in fact had occurred at such date or to project the Company's
results of future operations.





For the
period ended March 31, 2007:





March31, 2007As reported
            
            
            Pro formaNet
      sales
            
            $
            1,756,079
            
            
            $
            2,391,428Loss
      from continuing operations
            
            
            (428,170
            )
            
            
            (358,699
            )Gain
      from discontinued operations
            
            
            (20,476
            )
            
            
            (20,476
            )Net
      loss
            
            $
            (448,646
            )
            
            $
            (379,175
            )Loss
      per common share:Basic
            
            $
            (0.20
            )
            
            $
            (.17
            )Diluted
            
            $
            (0.20
            )
            
            $
            (.17
            )





NOTE 3 -
INVENTORIES





Inventories
consisted of the following at:





March31,2008
            
            
            December31,2007Raw
      Materials
            
            $
            1,581,032
            
            
            $
            1,953,000Finished
      Goods
            
            
            2,778,493
            
            
            
            3,011,510Total
            
            
            4,359,525
            
            
            
            4,964,510Less:
      Valuation Allowance
            
            
            (213,000
            )
            
            
            (194,862
            )Inventories,
      net
            
            $
            4,146,525
            
            
            $
            4,769,648





NOTE 4 -
PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following at:





March31,2008
            
            
            December31,2007Tooling
            
            $
            1,412,714
            
            
            $
            1,268,868Office
      furniture and equipment
            
            
            468,272
            
            
            
            459,586Warehouse
      equipment
            
            
            387,526
            
            
            
            305,724Vehicles
            
            
            27,697
            
            
            
            20,279Leasehold
      improvements
            
            
            256,750
            
            
            
            256,750Construction
      in progress
            
            
            178,338
            
            
            
            106,717Total
            
            
            2,731,297
            
            
            
            2,417,924Less:
      Accumulated depreciation
            
            
            (973,116
            )
            
            
            (862,872
            )Net
            
            $
            1,758,181
            
            
            $
            1,555,052





10
 Index





NOTE 5 -
INTANGIBLES





Schedule
of Intangible Assets at March 31:





2008GrossAmount
            
            AccumulatedAmortization
            
            Net Valueat March31,
      2008Intangible
      assets subject to amortization:Trademarks
            
            $
            149,234
            
            
            $
            19,103
            
            
            $
            130,131Patents
            
            
            229,227
            
            
            
            41,314
            
            
            
            187,913Non-compete
            
            
            212,420
            
            
            
            38,401
            
            
            
            174,019Customer
      lists
            
            
            550,000
            
            
            
            54,387
            
            
            
            495,613Intellectual
      property
            
            
            260,000
            
            
            
            26,000
            
            
            
            234,000Other
            
            
            2,000
            
            
            
            189
            
            
            
            1,811Totals
            
            $
            1,402,881
            
            
            $
            179,394
            
            
            $
            1,223,487





Schedule
of Intangible Assets at December 31:





2007GrossAmount
            
            AccumulatedAmortization
            
            Net Valueat December31,
      2007Intangible
      assets subject to amortization:Trademarks
            
            $
            109,234
            
            
            $
            13,873
            
            
            $
            95,361Patents
            
            
            59,865
            
            
            
            38,332
            
            
            
            21,533Non-compete
            
            
            206,420
            
            
            
            28,080
            
            
            
            178,340Customer
      lists
            
            
            540,000
            
            
            
            27,333
            
            
            
            512,667Intellectual
      property
            
            
            260,000
            
            
            
            13,000
            
            
            
            247,000Other
            
            
            2,000
            
            
            
            155
            
            
            
            1,845Totals
            
            $
            1,177,519
            
            
            $
            120,773
            
            
            $
            1,056,746





11
 Index





NOTE 6 –
RELATED PARTY NOTE PAYABLE AND WARRANTS





On
October 19, 2007, the Company borrowed $1,000,000 from a member of its Board of
Directors in order to meet its short-term cash flow requirement. This demand
promissory note is unsecured and bears an interest rate of 15% (55.8% effective
rate including fair value of warrants amortized over a three month term).
Interest is payable on the first day of each month commencing on December 1,
2007. The entire principal and accrued interest is payable upon demand anytime
after January 19, 2008. In connection with the loan, the Company issued warrants
to purchase 100,000 shares of common stock at an exercise price of $2.21. The
warrants are exercisable from October 19, 2007 through October 19, 2009. The
fair value of the warrants was calculated at $102,010 using the Black Scholes
model. The following assumptions were used to calculate the value of the
warrants: dividend yield of 0%, risk free interest of 5% expected life to two
years, and volatility of 81%. The resulting original issue discount, the fair
value of the warrants, was being amortized over the life of the debenture using
the straight-line method.  Amortization expense on the original issue
discount was $20,841 for the period ended March 31, 2008 and is included in
interest expense.  The note payable is subordinate to the bank notes
(see Notes 7 and 8).





NOTE 7 -
LINE OF CREDIT, BANK





On
November 8, 2007, the Company entered into a line of credit agreement, a demand
note, with M&I Bank up to a maximum amount of $6,000,000.  This
line of credit was used to pay off its existing line of credit with First
National Bank of Deerwood. The Demand Term Note with M&I Bank (Note 8) was
incorporated into this facility.  Interest is payable monthly at prime
plus .75% (6.00% at March 31, 2008).  The line of credit is
collateralized by accounts receivable, inventories, property and equipment, and
other assets of the Company. The line of credit facility is considered a demand
type loan and henceforth does not have a maturity date.  The terms of
the credit agreement are written such that the line will stay in place for up to
three years if the Company can satisfactorily perform within certain parameters
outlined by the bank.  The agreement required the Company to be in
compliance with the following affirmative covenants as of March 31, 2008,
minimum net worth (including subordinated debt) of $5,500,000, and minimum
tangible net worth of $2,200,000.   Minimum stockholders' equity
annual increases will be $100,000 year over year during the duration of the
agreement.  The facility is based on the following borrowing base
restrictions, 75% of eligible accounts receivable and 50% of eligible
inventories.  In connection with this agreement, the Company is
required to pay an annual line fee of $45,000 and minimum interest of $120,000
on an annual basis.  The balance outstanding on the line of credit was
$786,373 and $2,537,835 at March 31, 2008 and December 31, 2007
respectively.





NOTE 8 -
LONG-TERM DEBT





Long-term
debt consisted of the following at:





March31,2008
            
            
            December31,2007Unsecured
      Promissory Note – Cass Creek – annual installments of $100,000 plus
      interest at 8% from September 2008 through September 2012, guaranteed by
      the CEO of the Company
            
            $
            500,000
            
            
            $
            500,000Unsecured
      Note Payable – Fish Hawk -  annual installments of $33,333 plus
      interest at 8% from July 2008 through July 2010
            
            
            100,000
            
            
            
            100,000Demand
      Term Note – M&I Business Credit, LLC - monthly installments of $16,667
      starting November 2007 plus interest at a variable rate of .75% over the
      prime rate (6.0% at March 31, 2008) with a final payment due April 1,
      2008, secured by the property located in New Hope, MN and a second lien on
      substantially all of the Company’s assets including its inventory,
      accounts, equipment, fixtures, investment property, and general
      intangibles.  Paid in full on April 7, 2008 in connection with
      the sale of the building.
            
            
            1,916,665
            
            
            
            2,000,000Unsecured
      Note Payable – Castaic -  annual installments of $17,171,
      including interest at 8%, from January 2009 through January
      2011
            
            
            44,250
            
            
            
            -Unsecured
      Note Payable – Castaic -  monthly installments of $1,175,
      including interest at 8%, from February 2008 through January
      2011
            
            
            35,644
            
            
            
            -Totals
            
            
            2,596,559
            
            
            
            2,600,000Less:
      Current portion
            
            
            2,074,292
            
            
            
            2,133,333Net
      Long-term Debt
            
            $
            522,267
            
            
            $
            466,667





12
 Index





Future
maturities of long-term debt for years ending after March 31, 2008 are as
follows:





TotalYear
      ending March 31:2009
            
            $
            2,074,2922010
            
            
            160,6112011
            
            
            161,6562012
            
            
            100,0002013
            
            
            100,000Total
      Long-Term Debt
            
            $
            2,596,559





NOTE 9 -
INCOME TAXES





The
provision for income taxes for continuing operations consists of the following
components for the three months ended March 31:





2008
            
            
            2007Current
            
            $
            -
            
            
            
            -Deferred
            
            
            -
            
            
            $
            (284,000
            )Total
      Benefit from Income Taxes
            
            $
            -
            
            
            $
            (284,000
            )





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:





2008
            
            
            2007Federal
      statutory rate
            
            
            (34.0
            )
      %
            
            
            (34.0
            )
      %State
      tax, net of federal benefit
            
            
            (3.3
            )
            
            
            (2.8
            )Permanent
      differences and other including surtax exemption
            
            
            0.1
            
            
            
            (3.1
            )Valuation
      allowance
            
            
            37.2
            
            
            
            (0.0
            )Effective
      Tax Rate
            
            
            -
            %
            
            
            (39.9
            )
      %





13
 Index





NOTE 10 -
COMMITMENTS AND CONTINGENCIES





Lease
Commitment





The
Company entered into a lease agreement for its assembly and distribution
facility and corporate headquarters in Brainerd, Minnesota. The lease commenced
on September 1, 2006 and expires August 31, 2016.  The lease was
amended in May 2008 for additional space, a sprinkler system improvement being
added, and the term being extended through August 31, 2018.  The
monthly base rent increases from $16,900 to $24,400 over the revised term of the
lease. In addition, the Company is contractually obligated to pay for costs up
to $88,000 relating to the sprinkler system.  The Company will record
monthly rent expense equal to the total of the payments due over the lease term,
divided by the number of months of the lease term. The difference between rent
expense recorded and the amount paid will be credited or charged to deferred
rent. The Company is also required to pay its portion of operating
expenses.





Future
minimum lease payments are as follows for the years ending March
31:





2009
            
            $
            182,5632010
            
            
            214,2742011
            
            
            222,0162012
            
            
            230,9552013
            
            
            240,570Thereafter
            
            
            1,468,901Total
            
            $
            2,559,279





NOTE 11 -
CONCENTRATIONS





Major
Customers





The
Company derived more than 10% of its revenues from the following unaffiliated
customers in the following amounts for the three months ended March
31:





2008
            
            
            2007Customer
      A
            
            $
            
            *
            
            $
            268,807Customer
      B
            
            
            407,879
            
            
            
            447,806





The
Company had receivable balances greater than 10% of its accounts receivable from
the following unaffiliated customers:





March 31, 2008
            
            
            December 31, 2007Customer
      A
            
            $
            
            *
            
            $
            579,127Customer
      B
            
            
            146,959
            
            
            
            321,934





*Did not
represent more than 10% of the Company’s revenues or accounts receivable for the
period indicated.





Foreign
Sales





Included
in the consolidated statements of operations are foreign sales related to
continuing operations of $433,498 and $143,030 for the three months ended March
31, 2008 and 2007, respectively.





Foreign
Inventory





Included
in the consolidated balance sheets are international inventories related to
continuing operations of $236,989 and $196,154 at March 31, 2008 and December
31, 2007, respectively.  Foreign inventories consist of raw material
goods held in Asia and used in the production of Nature Vision
products.





14
 Index





NOTE 12 -
DISCONTINUED OPERATIONS





Vaddio product line
sale





The sale
of Nature Vision’s Vaddio product line to New Vad closed on February 5, 2007
pursuant to the terms of the Asset Purchase Agreement. The transaction involved
the sale of fixed assets, equipment, licenses, intellectual property and certain
other assets relating to Nature Vision’s Vaddio product line. The original
purchase price paid by the Buyer was $757,372 which consisted of $710,694 in
cash at closing and $46,678 in assumed paid time off. In addition, Nature Vision
will receive 2% of receipts from the gross sale of all Vaddio products sold by
New Vad after March 1, 2007, paid on a monthly basis with a six month deferral,
until a total payment of $750,000 is received. The potential deferral proceeds
of up to $750,000 will be recorded when earned and collection is deemed
probable.  Deferred sale proceeds of $81,647 were recorded during the
three months ended March 31, 2008.  There is $619,879 remaining of the
deferred sale proceeds to be recorded and collected at March 31,
2008.





As part
of the transaction, the parties also entered into a Consignment Sale Agreement,
providing for the sale of Nature Vision’s inventory to New Vad over the next 12
months at a book value estimated to be $2,031,359.  Under the terms of
the Consignment Sale Agreement, New Vad purchased, at the Company’s cost, the
consigned inventory from Nature Vision as needed before purchasing a similar
type of item from a third party until the inventory is sold in its entirety, or
January 31, 2008, at which time the remaining inventory was
purchased.  The Company has sold all of its inventory to New Vad as of
March 31, 2008.  There is $82,914 included in current assets relating
to discontinued operations that is due from New Vad as part of inventory sold
during the three months ended March 31, 2008.





The
following are condensed statements of operations of the discontinued operations
(Vaddio) for the three months ended March 31:





2008
            
            
            2007Sales,
      net
            
            $
            -
            
            
            $
            736,802Cost
      of goods sold
            
            
            -
            
            
            
            574,763Gross
      profit
            
            
            -
            
            
            
            162,039Selling,
      general, and administrative
            
            
            37,070
            
            
            
            274,004Loss
      from operations
            
            
            (37,070
            )
            
            
            (111,965
            )Gain
      on sale of Vaddio product line
            
            
            81,647
            
            
            
            77,489Income
      and gain (loss) from discontinued operations
            
            
            44,577
            
            
            
            (34,476
            )Benefit
      from income taxes
            
            
            -
            
            
            
            14,000Gain
      from discontinued operations
            
            $
            44,577
            
            
            $
            (20,476
            )





Assets
and liabilities retained relating to the discontinued operations (Vaddio)
consisted of the following at March 31, 2008 and December 31, 2007:





2008
            
            
            2007Current
      assets retained relating to discontinued operations:Accounts
      receivable
            
            $
            82,914
            
            
            $
            44,999Inventory
            
            
            -
            
            
            
            298,414Total
            
            $
            82,914
            
            
            $
            343,413Current
      liabilities retained relating to discontinued
      operations:Accrued
      transaction costs
            
            
            -
            
            
            
            25,952Total
            
            $
            -
            
            
            $
            25,952





15
 Index





NOTE 13 -
SUPPLEMENTAL CASH FLOWS





2008
            
            
            2007Supplemental
      Cash Flow DisclosuresCash
      paid for interest
            
            $
            112,896
            
            
            $
            77,887Cash
      paid for income taxes
            
            
            -
            
            
            
            5,000Noncash
      investing and financing activitiesTransaction
      costs related to sale of segment included in current liabilities retained
      related to discontinued operations
            
            $
            -
            
            
            
            202,274Supplemental
      cash flow information regarding the Company’s acquisition of assets
      associated with Castaic Softbait brandFair
      value of assets acquired
            
            $
            505,251Less
      liabilities assumed
            
            
            (82,860
            )Net
      assets acquired
            
            
            422,391Less
      note payable issued
            
            
            (81,750
            )Less
      cash acquired
            
            
            -Net
            
            $
            340,641





NOTE 14 –
SUBSEQUENT EVENTS





Building
Sale





On April
7, 2008, the Company sold its facility located in New Hope, Minnesota. Under the
terms of the Agreement, the Buyer purchased from the Company the real property,
building, improvements and certain personal property for a purchase price of
$2,290,000.  The Company recorded a pre-tax gain of approximately
$1,587,000.  The Company used $1,917,000 of the proceeds from the sale
to pay off the mortgage loan with M&I Business Credit, LLC with the
remainder used for general working capital purposes.





MarCum
Technologies asset  acquisition





On April
30, 2008, Nature Vision closed on the acquisition of certain assets of MarCum
Technologies, Inc. (MarCum) a manufacturer and distributor of electronic sonar
and underwater camera devices, pursuant to the terms of an Asset Purchase
Agreement. The transaction involved the acquisition by Nature Vision of select
equipment, inventories, intellectual property, and general intangibles of MarCum
for a purchase price of $650,000.  The purchase price was paid in cash
at closing.  The purchase price is subject to adjustment for the final
inventory reconciliation as provided in the Asset Purchase
Agreement.





16
 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 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 Capital Market under the
symbol, “NRVN.”





The
Company’s continuing operations are composed of one operating division, the
Nature Vision Division for outdoor recreation products, located in Brainerd,
Minnesota. On October 20, 2006, Nature Vision, Inc. sold the Norman product line
of its Photo Control division (Norman) and renamed the division the Vaddio
Division. On February 5, 2007, the Company sold certain assets and transferred
certain liabilities related to its Vaddio division (Vaddio). The Norman and
Vaddio divisions designed, manufactured and marketed professional cameras,
electronic flash equipment, lens shades and related photographic accessories and
sold audio visual peripheral products used in the video conferencing and
presentation industry.





On
January 21, 2008 the Company acquired substantially all of the assets associated
with the Castaic Softbait brand under an asset purchase agreement. The
purchase provides the Company with a proven fishing tackle product platform.The addition of the Castaic Softbait brand provides Nature Vision not
only a proven fishing tackle product platform, but will immediately generate
additional revenues during the spring and summer periods, traditionally the
Company’s historically slower season. Castaic Softbait’s brand founder Jason
Scott will remain active within the organization, and has been hired as research
and development director for Nature Vision’s tackle division.





On
September 20, 2007, Nature Vision closed on the acquisition of substantially all
of the assets of Cass Creek International, LLC (Cass Creek), a manufacturer and
distributor of electronic game calling devices, pursuant to the terms of an
Asset Purchase Agreement. The transaction involved the acquisition of equipment,
inventories, intellectual property, books and records, permits, licenses,
accounts receivable, cash, goodwill, general intangibles and certain other
assets of Cass Creek for a total purchase price of approximately
$2,600,000.





On July
3, 2007, the Company purchased substantially all the assets of Fish Hawk
Electronics Corporation, for $323,310.   The purchase provides
the Company with downrigger display technology that compliments its Vector line
of downrigger trolling products.





The
long-term plans for the Company are to continue to expand its sales base in the
outdoor recreational markets. This growth will be achieved organically and
through anticipated 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.
Demand for our outdoor recreation products is seasonal, with the majority of
sales occurring in the fourth and first quarters. We will look to strategic
acquisitions to provide penetration into new product categories and channels as
well as level seasonality.





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 of production equipment,
amortization of molds and patents, 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. Increasing
oil costs continue to drive up the cost of components and freight to receive and
ship products. In addition, currency fluctuations can impact our landed costs in
the U.S.A. We continue to evaluate make versus outsource opportunities to
minimize product costs. We look to increase our distribution abilities and
capacities in order to achieve efficiencies in certain operating
costs.





17
 Index





Gross
Profit





We define
gross profit as the difference between revenue and cost of goods sold. We
believe that 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, with the exception of sales commissions. Selling expenses
consist of payroll, commissions, product management, marketing, advertising and
customer relationship costs. General and administrative expenses include
payroll, product design, product development, engineering, order processing,
management information systems, accounting and administrative costs. 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%.





Income
(Loss) from Operations





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





Gain
(Loss) from Discontinued Operations





On
October 20, 2006, Nature Vision, Inc. sold the Norman product line of its Photo
Control division (Norman) and renamed the division the Vaddio Division. On
February 5, 2007, the Company sold certain assets and transferred certain
liabilities related to its Vaddio division (Vaddio). In accordance with
Statement of Financial Accounting Standards No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets,” this operating segment was
classified as discontinued operations and the financial results are reported
separately as discontinued operations for all periods presented.





Trends
and Opportunities





Retail Expansion by Larger
Customers.Our large customers, such as Cabela’s, Bass Pro Shops and
Gander Mountain continue to represent a large concentration of our revenue.
Our smaller customers continue to reduce in quantity and quality. These new
large retail store expansion plans will provide significant opportunities for
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.





Increased Inventories.
Inventory has increased in comparison to historic levels from 2006 and
2005.  At the end of 2007, our inventory increased primarily relating
to the purchase of Cass Creek. We currently have stock in place to fulfill
incoming orders and management feels that the inventory is readily saleable. We
anticipate the ability to increase inventory turnover during future quarters,
with a corporate goal during 2008 to achieve a 2.0 turnover ratio compared to
approximately a 1.7 ratio during fiscal 2006 and 2007. A high rate of inventory
turnover will be difficult to achieve as the Company experiences approximately a
twelve week lead time to land goods from foreign markets. Should sales of
existing products not achieve forecasted levels, 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 the Company continues to grow additional borrowings maybe
necessary.  An increased debt structure and changing interest rates
may impact the costs of operating the business. If we are unable to obtain
favorable financing arrangements it may impact the ability of the Company to
expand.





18
 Index





Acquisition opportunities. We
continue to evaluate opportunities for strategic acquisitions in order to expand
sales and net income.  Potential acquisitions will require financing
which management believes will be reasonably available.   There
is no assurance, however, that acquisitions will occur or financing would be
available on terms acceptable to the Company or at all.





Investment in infrastructure.We anticipate the continuing investment in infrastructure to support our
current distribution facility. We will also continue to invest in qualified
employees to support our organic growth with new product
innovation.





Foreign Currency.The Company
sources a significant amount of its products from overseas.  As
foreign currencies fluctuate with the U.S. dollar it may impact the overall
profitability of the operations.





Results
of Operations





The following table provides the
percentage change in our net sales, gross profit, loss from operations, and net
loss for the three months ended March 31:





(in
      thousands)
            
            2008
            
            
            2007
            
            
            % Change Favorable /
      (Unfavorable)NET
      SALES
            
            $
            2,367
            
            
            $
            1,756
            
            
            
            34.8.
            %GROSS
      PROFIT
            
            
            649
            
            
            
            309
            
            
            
            110.0
            %LOSS
      FROM OPERATIONS
            
            
            (468
            )
            
            
            (657
            )
            
            
            28.8
            %NET
      LOSS
            
            $
            (592
            )
            
            $
            (449
            )
            
            
            (31.8
            %)





The following table presents our gross
profit, loss from operations and net loss as a percentage of net sales for the
three months ended March 31:





2008
            
            
            2007GROSS
      PROFIT
            
            
            27.4
            %
            
            
            17.6
            %LOSS
      FROM OPERATIONS
            
            
            (19.8
            %)
            
            
            (37.4
            %)NET
      LOSS
            
            
            (25.0
            %)
            
            
            (25.6
            %)





Year to
date net sales as of March 31, 2008 of $2,367,000 were up by approximately
$611,000, or 34.8% compared to net sales of $1,756,000 during the same period
last year. Net sales gains were primarily driven through acquisitions and strong
sales of viewing systems. Recent acquisitions during the last two years have
produced net sales gains during the first quarter of 2008 of $582,000 with Cass
Creek, Crazy Crank/Castaic and Fish Hawk delivering net sales gains of $522,000,
$43,000 and $17,000 respectively. In addition,  net sales of viewing
systems was up by $114,000 or 11.3%. These sales gains were partially offset by
lower hunting and industrial sales.  Overall, net sales gains during
the quarter were also favorably impacted by actual returns which are down by
18.2% for the first quarter of 2008 versus the same period last
year.  Gross profit yield during the first quarter of 27.4% of net
sales is significantly favorable to 17.6% of net sales reported during the first
quarter of 2007.  Gross profit gains were primarily driven by higher
margins associated with the Cass Creek product line and the favorable impact of
less returns.





19
 Index





Selling,
General and Administrative Expenses





Total
selling, general and administrative expenses of $1,117,000, or 47.2% of sales,
were up from spending of $966,000, or 55.0% of sales during the comparative
period in fiscal 2007 and are improving favorably on a percentage of sales
basis.  Selling, general and administrative costs have increased due
to higher accounting and legal expenses and higher research & development
expenses, and were partially offset by lower advertising costs. Accounting and
legal fees were up relative the comparative period in fiscal 2007 and were
primarily as a result of the timing of the expenses related to the preparation
of the form 10K-SB. Research and development expenses increased to $60,000 for
the three months ended March 31, 2008 from $14,000 for the three months ended
March 31, 2007.





Liquidity
and Capital Resources





The
Company had a cash balance of $0 at March 31, 2008 compared to $131,487 at
December 31, 2007. The change is a combination of many economic factors
including the results of operations, new borrowings, and the daily cash
management of the Company.  Since the Company is a net borrower and
maintains an open line of credit our daily cash management strategy is to hold a
minimum cash balance in order to minimize debt and related interest
expense.  Cash provided from operations was $1,814,000 for the three
months ended March 31, 2008.  Cash provided from operating activities
included depreciation and amortization of $169,000, stock based compensation and
amortization of original issue discount of $22,000 decrease in accounts
receivable of $1,996,000, decrease in inventories of $687,000, decrease in
prepaid expenses of $65,000, and an increase of $13,000 in accrued payroll and
related expenses. These amounts were offset by operating activities consuming
cash including a net loss of $592,000, gain on sale of discontinued operations
of $82,000, the reduction of accounts payable of $254,000, lower accrued
expenses of $192,000, and payments of $18,000 of deferred retirement
benefits.





Cash used
in investing activities was approximately $122,000 for the three months ended
March 31, 2008 and primarily resulted from the acquisition of the assets
associated with the Castaic Softbait brand and purchases of property and
equipment, partially offset by cash provided by the discontinued
operations.





The
Company received various cash proceeds from the sale of assets from discontinued
operations of $235,000 and deferred sale proceeds associated with the
discontinued operations of $82,000.





On
January 21, 2008 the Company acquired substantially all of the assets associated
with the Castaic Softbait brand under an asset purchase agreement. The
purchase provides the Company with a proven fishing tackle product platform.The
total purchase price net of promissory notes and liabilities was
$341,000.





In
addition, the Company purchased $97,000 of property, equipment, and intangibles
during the three months ended March 31, 2008.





Cash used
in financing activities was $1,823,000 for the three months ended March 31,
2008. Financing activities consuming cash include net payments on the Company’s
line of credit of $1,751,000 and principal payments on long-term debt of
$85,000.  Financing activities providing cash include an increase of
checks issued in excess of cash in bank of $13,000.





As of
March 31, 2008 working capital decreased to $146,000 from $1,062,000 at December
31, 2007. The Company’s current ratio as of March 31, 2008 is 1.02 compared with
1.15 at December 31, 2007.  The reduction in working capital is
primarily driven by the net loss of $592,000.  On April 7, 2008, the
Company sold its facility located in New Hope, Minnesota. The sale resulted in
the increase of working capital of approximately $2,290,000.





On April
30, 2008, Nature Vision closed on the acquisition of certain assets of MarCum
Technologies, Inc. (MarCum) a manufacturer and distributor of electronic sonar
and underwater camera devices, pursuant to the terms of an Asset Purchase
Agreement. The transaction involved the acquisition by Nature Vision of select
equipment, inventories, intellectual property, general intangibles of MarCum for
a purchase price of $650,000.  The purchase price was paid in cash at
closing.  The purchase price is subject to adjustment for the final
inventory reconciliation as provided in the Asset Purchase
Agreement.





The
Company maintains a line of credit for financing inventory and accounts
receivable up to $6,000,000 at prime plus .75%.  The prime rate at
March 31, 2008 was 5.25%.  As of March 31, 2008, the Company had the
ability to borrow amounts up to approximately $2,500,000 under the facility for
working capital requirements.  In addition, $2,000,000 of the loan was
carved out against the mortgage on the New Hope building
facility.  The loan is secured against the accounts receivable,
inventory, equipment and other assets of the Company, with the $2,000,000
mortgage secured against the New Hope building. Borrowings under the line are
subject to advanced rates of 75% of eligible accounts receivable and 50% of
eligible inventory.  The line of credit facility is considered a
demand type loan and henceforth does not have a maturity date.  The
terms of the credit agreement are written such that the line will stay in place
for up to three years if the Company can satisfactorily perform within certain
parameters outlined by the bank.  The agreement requires and the
Company is in compliance with the following affirmative covenants as of March
31, 2008, minimum net worth (including subordinated debt) of $5,500,000, and
minimum tangible net worth of $2,200,000.  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.Management
anticipates continued advances against the line of credit to fund anticipated
sales growth in future quarters.





20
 Index





The
Company sold its Vaddio product line to New Vad, LLC on February 5, 2007
pursuant to the terms of the Asset Purchase Agreement. The transaction involved
the sale most of the assets relating to Nature Vision’s Vaddio product line. The
original purchase price paid by the Buyer was $757,372 which consisted of
$710,694 in cash at closing and $46,678 in assumed vacation pay. The Company
utilized the net proceeds to pay down the contract payable liability that was
retained by the Company in the sale and to reduce the line of credit. In
connection with the asset purchase agreement, Nature Vision will receive 2% of
receipts from the gross sale of all Vaddio products sold by New Vad after March
1, 2007, paid on a monthly basis with a six month deferral, until a total
payment of $750,000 is received. Through March 31, 2008 the Company has received
$130,000 of royalty payments.  The proceeds from these deferred
payments are recognized into income as received. As part of the transaction, the
parties also entered into a Consignment Sale Agreement, providing for the sale
of Nature Vision’s inventory to New Vad LLC over the next 12 months at a book
value estimated to be $2,031,359. As of March 31, 2008 all of the inventory has
been sold under this agreement, of which $83,000 is due.





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 available. There is no assurance the Company will be able to
obtain the necessary financing if needed.




We
incurred a net loss for the three months ended March 31, 2008 and 2007 of
approximately $592,000 and $449,000, respectively.  In the event
future cash flows and borrowing capacities are not sufficient to fund operations
at the present level, additional measures will be taken including efforts to
further reduce expenditure levels.  In addition, we believe that other
sources of liquidity are available which may include the expansion of our credit
facility.  However, there is no assurance that these other sources of
liquidity will be available or on terms acceptable to the
Company.   In addition, management plans to retain the funds
received associated with the related party note on a short-term basis while the
2008 business plan matures.





Management
believes that existing, current and future lending capacity and cash generated
from operations will supply sufficient cash flow to meet short-term and
long-term debt obligations, working capital, capital expenditure and operating
requirements for at least the next 12 months.





The
Company believes that the effect of inflation has not been material during the
three months ended March 31, 2008.





Off-Balance
Sheet Financing Arrangements





As of
March 31, 2008, there were no off-balance sheet arrangements, unconsolidated
subsidiaries and commitments or guaranties of other parties.





Critical
Accounting Policies





The
accompanying consolidated financial statements are based on the selection and
application of United States generally accepted accounting principles (“GAAP”),
which require estimates and assumptions about future events that may affect the
amounts reported in these financial statements and the accompanying notes.
Future events and their effects cannot be determined with absolute certainty.
Therefore, the determination of estimates requires the exercise of judgment.
Actual results could differ from those estimates, and any such differences may
be material to the financial statements. We believe that the following
accounting policies may involve a higher degree of judgment and complexity in
their application and represent the critical accounting policies used in the
preparation of our financial statements. If different assumptions or conditions
were to prevail, the results could be materially different from reported
results.





Management’s
estimate of the sales and warranty reserve is based on historical company data
and management’s best estimate. We evaluated the key factors and assumptions
used to develop the sales and warranty reserve in determining that it is
reasonable in relation to the consolidated financial statements taken as a
whole.  Should actual claims exceed our estimate, the impact maybe
material to the results of operations.





21
 Index





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.





Considerable
management judgment is necessary in estimating future cash flows and other
factors affecting the valuation of long-lived assets, including intangible
assets, including the operating and macroeconomic factors that may affect them.
The Company uses historical financial information, internal plans and
projections and industry information in making such estimates. The Company did
not recognize any impairment charges for our long-lived assets, including
intangible assets, during the . Although the Company has not generated positive
cash flows in 2007 and 2006, management believes that based on cost reduction
actions and estimated revenue growth and margin improvement initiatives, that
the Company will have cash flows from these long-lived assets in the future.
While the Company currently believes the expected cash flows from these
long-lived assets, including intangible assets, exceeds the carrying amount,
materially different assumptions regarding future performance and discount rates
could result in future impairment losses. In particular, if the Company no
longer believes it will achieve its long-term projected sales or operating
expenses, the Company may conclude in connection with any future impairment
tests that the estimated fair value of its long-lived assets, including
intangible assets, are less than the book value and recognize an impairment
charge. Such impairment would adversely affect the Company’s
earnings.





The
Company’s inventory obsolescence reserve is an estimate of the 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.





Significant
management judgment is required in determining the provision for income taxes,
deferred tax assets and liabilities and any valuation allowance recorded against
net deferred tax assets. We record a current provision for income taxes based on
amounts payable or refundable. Deferred tax assets and liabilities are
recognized for the future tax consequences of differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period that includes
the enactment date. The overall change in deferred tax assets and liabilities
for the period measures the deferred tax expense or benefit for the period. We
recognize a valuation allowance for deferred tax assets when it is more likely
than not that deferred assets are not recoverable.   In addition,
we recognized deferred tax assets of approximately $1 million based on when it
is more likely than not the deferred tax assets are recoverable.  A
significant portion of deferred tax assets recorded ($650,000) is based on a
large gain we anticipate to realize in 2008 upon the sale of our building and
land held for sale, which closed on April 7, 2008.  If actual taxable
income by jurisdiction and the period over which our deferred tax assets are
recoverable are materially different than our estimate, the change could be
material to our consolidated financial statements.





Item
3: Quantitative and Qualitative Disclosures About Market Risk.





Not
Applicable





Item
4T: Controls and Procedures.





Disclosure
Controls and Procedures





An
evaluation was carried out under the supervision and with the participation of
Nature Vision’s management, including our Chief Executive Officer, Jeffrey P.
Zernov, and our Chief Financial Officer, David M. Kolkind, of the effectiveness
of Nature Vision’s 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 Kolkind concluded that our disclosure controls and procedures are
effective.





22
 Index





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





Management’s
Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-5(f)
under the Exchange Act).  Our management assessed the effectiveness of
our internal control over financial reporting as of March 31,
2008.  In making this assessment, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control-Integrated Framework.  Our management has
concluded that, as of March 31, 2008, our internal control over financial
reporting is effective based on these criteria.  This report does not
include an attestation report of Nature Vision’s registered public accounting
firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by
Nature Vision’s independent registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit Nature
Vision to provide only management’s report in this report.





Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our internal control over financial reporting will prevent
all error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within Nature Vision have been detected.  Nature Vision’s
internal control over financial reporting, however, are designed to provide
reasonable assurance that the objectives of internal control over financial
reporting are met.





Part II – OTHER
INFORMATION





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.





Item6.  Exhibits.





Listing
of Exhibits:





10.1           Purchase
Agreement, dated March 10, 2008, between Nature Vision, Inc. and Natzel, LLC
(previously filed as Exhibit 10.1 to the Registrant's Report on Form 8-K dated
March 11, 2008).





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.





23
 Index





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
      13, 2008
            By:
            /s/
      Jeffrey P.
      ZernovIts:  Chief
      Executive Officer and PresidentDate:  May
      13, 2008
            By:
            /s/
      David M.
      KolkindIts:  Chief
      Financial Officer






24