Great question !!!!
From the Mayo Clinic: (google "where does fat go when you lose weight")
Site:
http://www.mayoclinic.com/health/body-fat/AN01327
Quote:
Answer
When you consume fewer calories than your body needs, your body turns to fat for energy. Body fat is broken down through a series of complex metabolic processes. Your body uses the energy produced by these processes. The waste products from these processes are water and carbon dioxide. You excrete water primarily through urine and sweat, and carbon dioxide by exhaling.