Summary of NATURAL NUTRITION INC.

Item 6.Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Annual Report on Form 10-KSB, and the accompanying MD&A, contains forward-looking statements. Statements contained in this report about Natural Nutrition, Inc.'s future outlook, prospects, strategies and plans, and about industry conditions and demand for our financial services are forward-looking. All statements that express belief, expectation, estimates or intentions, as well as those that are not statements of historical fact, are forward looking. The words "proposed", "anticipates", "anticipated", "will", "would", "should", "estimates" and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our reasonable belief and are based on our current expectations and assumptions with respect to future events. While we believe our expectations and assumptions are reasonable, they involve risks and uncertainties beyond our control that could cause the actual results or outcome to differ materially from the expected results or outcome reflected in our forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this annual report may not occur. Such risks and uncertainties include, without limitation, our success in trading marketable securities, our ability to maintain contracts that are critical to our operations, actual customer demand for our health food and nutritional products, collection of accounts and notes receivable, our ability to obtain and maintain normal terms with our vendors and service providers and conditions in the capital markets and equity markets during the periods covered by the forward-looking statements.

The forward-looking statements contained in this report speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason. All forward-looking statements attributable to Natural Nutrition, Inc. or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report filed on Form 10-KSB and in our future periodic reports filed with the SEC. The following MD&A should be read in conjunction with the audited Consolidated Financial Statements of the Company, and the related notes thereto included elsewhere herein.

Summary of Business

On August 25, 2005, Health Express USA, Inc., a Florida corporation, entered into a share exchange agreement with CSIBF and CSI, the stockholder of CSIBF. The transaction is being reflected as a reverse acquisition since control of the Company has passed to the shareholders of CSI. The Company was subsequently renamed in 2005 to CSI Business Finance, Inc. (the Florida corporation). In September of 2006, we changed our name from CSI Business Finance, Inc. to Natural Nutrition, Inc. and simultaneously migrated from Florida to Nevada.

On May 23, 2006, our Board of Directors approved a 1 for 25 reverse split of our Common Stock. On January 29, 2008, our Board of Directors approved a 5 for 4 forward common stock split. All references to our common stock in this document are stated in shares after the forward stock split.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Prior to and during 2006, our Company, through our wholly-owned operating subsidiary, CSI Business Finance, Inc., primarily generated cash and revenue from financing and investing activities. These activities included equipment leasing, factoring and loan brokerage activities earned in originating and selling business leases, providing short term secured lending, and investing in marketable securities. Management of the Company mitigates its risk in lending by securing loans with pledged assets (collateral) that, when liquidated, have a reasonable probability of realizing proceeds that would retire the liability. In some instances, we obtain personal guarantees from individuals of net worth which are adequate to repay the liability in the event of default. We also traded marketable securities and options with available cash, and on margin. Because our trading involved leveraging, these transactions contained a considerable amount of risk. These activities and all new lending activities of CSIBF were discontinued in 2007 following the settlement of the litigation and acquisition of the senior debt and operations of INII.

Our management will now concentrate its efforts on collecting the remaining notes receivable from CSIBF's former operations. CSIBF was renamed iNutrition Inc. and is currently the marketing arm of INII. CSIBF's mission is to grow the "direct to consumer" sales program for the INII sports nutrition and dietary supplement products. The core focus of all operations is now based on growing the business of INII, our largest asset, which was acquired pursuant to that certain agreement in lieu of foreclosure of a note purchased by the Company in March 2006. INII, a wholly-owned subsidiary of Natural Nutrition, Inc. (OTC Bulletin Board: NTNI), is a twelve (12) year-old specialty manufacturer of sports, nutritional and natural dietary supplement products. INII is an international leader in dietary supplements backed by over twelve (12) years of research and development. INII is authorized to sell sports nutrition products in over eighteen (18) countries throughout the world. All products are manufactured under strict Canadian government quality control measures.

Effective May 31, 2007, we closed on the Purchase Agreement with the Vendor pursuant to which the Company purchased from the Vendor, and the Vendor sold, assigned transferred and conveyed to the Company, certain Indebtedness owed to the Vendor by INII under that certain Subsidiary Note in the original principal amount of Fifteen Million Canadian Dollars (Cdn$15,000,000) issued (in part) by INII to the Vendor on March 31, 2004 and (b) a general security agreement, of even date with the Subsidiary Note, and a share pledge agreement, of even date with the Subsidiary Note, both granted concurrently by INII and its shareholder, the Company (as successor in interest to the now defunct Bio-One) in connection with the Indebtedness (together, both instruments are hereinafter referred to as the "Security") for a purchase price equal to (i) Seven Million Six Hundred Fifty Thousand Canadian Dollars (Cdn$7,650,000) and (ii) the execution by the Company of that certain Mutual Release. The Company and the Vendor entered into that certain Assignment, of even date with the Purchase Agreement, in order to properly effectuate the assignment by the Vendor to the Company of all of the right, title, benefit and interest in and to the Purchased Assets (as defined therein), which such Purchased Assets include, without limitation, the Indebtedness, the Security and all loan, security and other documentation relating to the Indebtedness and the Security purchased under the Purchase Agreement. The Company and the Vendor executed the Purchase Agreement, the Mutual Release and the Assignment on May 25, 2007; however, the parties closed the transactions upon the execution of the SPA on May 31, 2007.

INII manufactures quality sport nutrition and health food products as is more fully set forth in the Section entitled "Description of Business" herein.

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 clarifies the application of SFAS No. 109, Accounting for Income Taxes, by establishing a threshold condition that a tax position must meet for any part of the benefit of that position to be recognized in the financial statements. In addition to recognition, FIN 48 provides guidance concerning measurement, derecognition, classification and disclosure of tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006; accordingly, the Company adopted FIN 48 effective as of January 1, 2007. The adoption of FIN 48 did not have a material impact on its effective tax rate.

In September 2006, the SEC staff issued Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. SAB 108 established a dual approach that requires quantification of errors under two methods:
(1) roll-over method which quantifies the amount by which the current year income statement is misstated, and (2) the iron curtain method which quantifies the error as the cumulative amount by which the current year balance sheet is misstated. In some situations, companies will be required to record errors that occurred in prior years even though those errors were immaterial for each year in which they arose. Companies may choose to either restate all previously presented financial statements or record the cumulative effect of such errors as an adjustment to retained earnings at the beginning of the period in which SAB 108 is applied. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of this pronouncement did not have an impact on the Company's financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement clarifies how to measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. SFAS No. 157 was originally effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. On February 12, 2008, the FASB issued Final FASB Staff Position ("FSP") No. Financial Accounting Standard ("FAS") 157-2, Effective Date of FASB Statement No. 157 ("FSP No. 157-2"). FSP No. 157-2, which was effective upon issuance, delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value at least once a year, to fiscal years beginning after November 15, 2008. The Company expects to adopt FAS No. 157 on January 1, 2008 and 2009 for financial assets and financial liabilities and nonfinancial assets and nonfinancial liabilities, respectively. The Company does not believe that the adoption of FAS No. 157 will have a material effect on the Company's consolidated financial statements.

In July 2006, the FASB issued FIN 48, which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in our financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of our 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoption of FIN 48 did not have a material effect on the Company's financial condition or results of operations for the year ended December 31, 2007.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities Including an amendment of FASB Statement No.
115 ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. The Company expects to adopt SFAS No. 159 on January 1, 2008. The Company has evaluated the impact of adopting SFAS No. 159 and has determined that it will not elect the fair value option under SFAS No.159 for any financial instruments that are not required to be presented at fair value under generally accepted accounting principles.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS 160"). SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Before this statement, limited guidance existed for reporting noncontrolling interests (minority interest). As a result, diversity in practice exists. In some cases minority interest is reported as a liability and in others it is reported in the mezzanine section between liabilities and equity. Specifically, SFAS 160 requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financials statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interests. SFAS 160 is effective for the Company on January 1, 2009. Earlier adoption is prohibited. The Company is currently evaluating the impact, if any, of the adoption of SFAS 160 will have on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 141R is not permitted. The Company is currently evaluating the impact SFAS No. 141R will have on any future business combinations.

Critical Accounting Policies

Our year end is December 31st.

Derivative Financial Instruments - The Convertible Debenture payable to the Investor (the "Debenture") has been accounted for in accordance with SFAS 133 and EITF No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock".

The Company has determined that the following instruments have derivatives requiring evaluation and accounting under the relevant guidance applicable to financial derivatives:

� Debenture payable issued September 9, 2005 to the Investor in the face amount of $15,635,199

� Note payable issued May 31, 2007 to the Investor in the face amount of $9,292,894

The Company has identified that the above Debenture and Note have embedded derivatives. These embedded derivatives have been bifurcated from their respective host debt contracts and accounted for as derivative liabilities in accordance with EITF 00-19. When multiple derivatives exist within the Debenture, they have been bundled together as a single hybrid compound instrument in accordance with SFAS No. 133 Derivatives Implementation Group Implementation Issue No. B-15, "Embedded Derivatives: Separate Accounting for Multiple Derivative Features Embedded in a Single Hybrid Instrument".

The embedded derivatives within the Debenture and the Note have been recorded at fair value at the date of issuance; and are marked-to-market each reporting period with changes in fair value recorded to the Company's income statement as "Net change in fair value of derivatives". The Company has utilized a third party valuation firm to fair value the embedded derivatives using a layered discounted probability-weighted cash flow approach. The fair value model utilized to value the various embedded derivatives in the Debenture and the Note, comprises multiple probability-weighted scenarios under various assumptions reflecting the economics of the Debenture, such as the risk-free interest rate, expected Issuer stock price and volatility, likelihood of conversion and or redemption, and likelihood default status.

The fair value of the derivative liabilities are subject to the changes in the trading value of the Company's Common Stock, as well as other factors. As a result, the Company's financial statements may fluctuate from quarter-to-quarter based on factors, such as the price of the Common Stock at the balance sheet date and the amount of shares converted by the holder of the Debenture and the Note. Consequently, our financial position and results of operations may vary from quarter-to-quarter based on conditions other than our operating revenues and expenses.

Results of Operations

Operational control of INII was assumed by us on May 31, 2007. Accordingly, the results of operations for INII include only the seven (7) months from June 1, 2007 through December 31, 2007. Sales revenue for the seven (7) months ended December 31, 2007 was $9,357,137. This revenue was generated from sales of nutritional products by INII.

Our subsidiary, CSI Business Finance, Inc. (NKA iNutrition, Inc.) had no leasing income for the year ended December 31, 2007. Leasing income for the year ended December 31, 2006 was $39,684. Fee income from brokerage fees earned in originating and selling business leases and loans was $2,965 for the year ended December 31, 2007 versus $93,071 for the year ended December 31, 2006. We have discontinued these activities and made the primary focus of management as well as devoting the Company's resources to expanding the international marketing, sales and distribution of INII's nutritional products.

Interest Income was $255,939 for the year ended December 31, 2007 as compared to $282,147 for the year ended December 31, 2006. Interest income was derived mainly from notes receivable relating to investments as well as interest from a debenture and notes that were subsequently traded on March 22, 2006 for stock in a Canadian subsidiary of the maker of the debentures. Dividend income was $10,352 for the year ended December 31, 2007 and $362,528 for the year ended December 31, 2006. Dividend income is primarily derived from various investments in marketable securities. For the year ended December 31, 2007, we recorded net trading losses from various investments in marketable securities in the amount of $6,554 and $168,398 for the year ended December 31, 2006.

Cost of Goods Sold, Selling, General and Administrative Expenses and Other Income and Expenses

INII

Cost of sales for our revenue in INII was $7,843,117 for the seven (7) months ended December 31, 2007. Cost of sales includes material, labor and manufacturing costs associated with the production of our products.

Selling, general and administrative expenses were $939,735 for the seven months ended December 31, 2007. These expenses include salaries and benefits, professional fees and other ordinary expenses necessary to carry out our operations.

Houston Operations

Our Houston operating expenses were $3,255,616 for the year ended December 31, 2007 as compared to $1,441,989 for the year ended December 31, 2006. Approximately $890,000 of the total expenses was a one-time fee paid to a former affiliate for past services rendered for control of INII. In addition, we incurred bad debt expense of $856,233 for the year ended December 31, 2007 and $0 for the year ended December 31, 2006.

Salaries and benefits for the year ended December 31, 2007 were $524,381 as compared to $333,830 fro the year ended December 31, 2006. The primary reason for the increase was for the hiring of a part-time CFO in July 2006 and an acquisition specialist in January 2007. Our acquisition specialist resigned in May 2007 after the completion of the INII purchase, and our part-time CFO resigned December 31, 2007.

Professional fees were $1,257,221 for the year ended December 31, 2007 as compared to $553,855 for the same period ending December 31, 2006. The increase is primarily a result of legal fees incurred for our INII litigation in 2006 offset by the $890,000 one-time fee in 2007 referred to above.

Interest expense was $1,940,716 for the year ended December 31, 2007 and $1,219,718 for the year ended December 31, 2006. Interest expense primarily relates to the expense associated with the $15,635,199 five percent (5%) Debenture entered into in September 2005, and seven (7) months interest on our May 31, 2007 Note. The balance of the interest expense is from amortization of the discount on the convertible Note and Debenture debt.

The Company was allocated overhead from a former affiliate in the amount of $240,094 for the year ended December 31, 2007 as compared to $305,482 for the year ended December 31, 2006. The expenses include rent, office supplies, travel and other ordinary expenses necessary to carry out our corporate operations. No contractual arrangement exists between the two (2) companies.

We recorded a non-cash expense of $10,834,139 for the net change in fair value of our derivatives associated with the Debenture and Note.

Liquidity and Capital Resources

Operating Activities

For the year ended December 31, 2007, our operations generated cash in the amount of $333,562. Our operating cash flow was generated primarily by our INII operating subsidiary ($2.5 million before payment made on its note payable to the Company) partially offset by investments in marketable securities and intercompany and affiliate advances. The Company recognized what management believes to be a large amount of non-cash, non-recurring expenses during 2007. These included a write down of notes receivable in the discontinued CSI Business Finance, Inc. operation of $856,233, a one time professional fee expense related to the INII litigation settlement of $889,804, non-cash derivative expenses of $10,834,139 on convertible securities and $487,221 non-cash interest expense from amortization of the discount on the convertible Note and debenture Debt. These expenses contributed to our net loss for the year ended December 31, 2007 in the amount of $14,661,254.

Investing Activities

For the year ended December 31, 2007, our investing activities generated cash of $513,042. We received cash in the amount of $609,022 from our subsidiary upon the acquisition of INII and invested $95,980 in equipment for INII.

As of December 31, 2007, $1,400,000 of our short-term investments was invested in auction rate securities, or ARSs. The $1,400,000 we have invested in ARSs at March 21, 2008 is collateralized by portfolios of AAA municipal obligations.
Through March 21, 2008, auctions of these securities were not successful, resulting in our continuing to hold these securities and the issuers paying interest at the maximum contractual rate. Based on current market conditions, it is likely that auctions related to these securities will be unsuccessful in the near term. Unsuccessful auctions will result in our holding securities beyond their next scheduled auction reset dates and limiting the short-term liquidity of these investments. While these failures in the auction process have affected our ability to access these funds in the near term, we do not believe that the underlying securities or collateral have been affected. We believe that the higher reset rates on failed auctions provide sufficient incentive for the security issuers to address this lack of liquidity. If the credit rating of the security issuers deteriorates, we may be required to adjust the carrying value of these investments through an impairment charge. Excluding ARSs, at March 21, 2008, we had approximately $1,344,000 in cash and short-term investments. We believe the working capital available to us will be sufficient to meet our cash requirements for at least the next 12 months.

Financing Activities

Effective September 9, 2005, the Company issued the secured convertible Debenture to the Investor in the amount of $15,635,199. Effective May 31, 2007, the Debenture was renegotiated and the due date was extended until June 1, 2012 and the fixed conversion price was reset. All other terms and conditions remained the same. The Debenture bears interest at 5%, which is accrued until maturity on June 1, 2012. The Debenture is convertible, at the option of the Investor, into Common Stock at a price of $0.012 per share, subject to standard anti-dilution provisions relating to splits, reverse splits and other transactions plus a reset provision whereby the conversion prices may be adjusted downward to a lower price per share based on the average of the three lowest closing prices for the five (5) trading days prior to conversion. The Investor has the right to cause the Debenture to be converted into Common Stock, subject to an ownership limitation of 4.99% of the outstanding Common Stock. The Company has the right to repurchase the Debenture at 106% of the face amount.

On May 31, 2007, the Company entered into the SPA with the Investor pursuant to which the Company sold to the Investor, and the Investor purchased from the Company, the Note in the principal amount of Nine Million Two Hundred Ninety-Two Thousand Eight Hundred Ninety-Four United States Dollars (US$9,292,894), the proceeds of which shall be used by the Company to finance the consideration paid by the Company to the Vendor in connection with the Purchase Agreement and Assignment (as discussed herein above) and for other general corporate purposes.

The Note shall accrue interest at a rate equal to twelve percent (12%) per annum, except that from and after the occurrence and during the continuance of an Event of Default (as defined in the Note), the interest rate shall be increased to eighteen percent (18%). The Note shall mature, unless extended by the holder, upon the earlier of (i) June 1, 2012, (ii) the consummation of a Change of Control (as defined in the Note) and (iii) the occurrence of an Event of Default or any event that with the passage of time and the failure to cure would result in an Event of Default. The Company may prepay the Note at any time upon not less than thirty (30) days prior written notice to the holder; provided, that any such prepayments shall applied first to unpaid late charges on principal and interest, if any, then to unpaid interest and then unpaid principal thereon. Furthermore, the Note shall be convertible into fully paid and nonassessable shares of Common Stock, at the holder's discretion, at a conversion rate to be determined by dividing the amount to be converted by the lesser or (x) $0.04, subject to adjustment as provided herein and (y) eighty . . .