FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Quarterly Report on Form 10-QSB, 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 quarterly report may not occur. Such risks and uncertainties include, without limitation, our successful efforts in the outcome of our litigation concerning our investment in INII, or the extension of our agreement in lieu of foreclosure, our success in trading marketable securities, our ability to maintain contracts that are critical to our operations, actual customer demand for our financing and related services, 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 our Form 10-KSB and in our future periodic reports filed with the SEC. The following M,D&A should be read in conjunction with these unaudited Consolidated Financial Statements of the Company, and the related notes thereto included elsewhere herein, and in conjunction with our audited financial statements, together with footnotes and the MD&A, in our 2007 annual report filed on Form 10-KSB with the SEC.

Overview

On August 25, 2005, Health Express USA, Inc., a Florida corporation, entered into a share exchange agreement with CSI-BF and CSI, the stockholder of CSI-BF. 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 a part of 2007, 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 CSI-BF 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 CSI-BF's former operations. CSI-BF was renamed iNutrition Inc. and is currently the marketing arm of INII. CSI-BF'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.

Recent Accounting Pronouncements

In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 (SFAS 161). This statement requires enhanced disclosures about an entity's derivative and hedging activities and is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with earlier application encouraged. The Company will adopt SFAS 161 in the first fiscal quarter of 2009. Since SFAS 161 requires only additional disclosures concerning derivatives and hedging activities, adoption of SFAS 161 will not have an impact on the Company's consolidated financial condition, results of operations or cash flows.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2008 and September 30, 2007

INII was acquired by us on May 31, 2007.

Sales revenue for the three months ended September 30, 2008 included sales for INII of $3,910,138 as compared to $4,201,764 for the three months ended September 30, 2007. This revenue was generated from sales of nutritional products from INII.

Interest Income was $49,249 for the three months ended September 30, 2008 as compared to $52,826 for the three months ended September 30, 2007. Interest income was derived mainly from notes receivable relating to investments. Dividend income was $7,332 for the three months ended September 30, 2008 and $546 for the three months ended September 30, 2007. Dividend income is primarily derived from various investments in marketable securities. For the three months ended September 30, 2008, we recorded net trading gains from various investments in marketable securities in the amount of $11,527 as compared to losses of $8,114 for the three months ended September 30, 2007. The gains in the 2008 period are primarily a result of mark-to-market adjustments at September 30, 2008. We intend to wind down these activities and make the primary focus of management as well as devoting the Company's resources to expanding the international marketing, sales and distribution or INII's nutritional products.

Cost of goods sold, selling, general and administrative expenses and other income and expenses

INII

Cost of sales for our revenue in INII was $3,173,853 for the three months ended September 30, 2008 as compared to $3,467,897 for the three months ended September 30, 2007. Cost of sales includes material, labor and manufacturing costs associated with the production of our products.

Selling, general and administrative expenses were $517,793 for the three months ended September 30, 2008 as compared to $513,954 for the three months ended September 30, 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 approximately $1,324,396 for the three months ended September 30, 2008 as compared to $638,739 for three months ended September 30, 2007. Approximately $925,000 of the total expenses in 2008 relates to bad debt expense on notes receivable as compared to $447,377 for the three months ended September 30, 2007.

Salaries and Benefits were $160,964 for the three months ended September 30, 2008 as compared to $134,742 for the three months ended September 30, 2007. The primary reason for the increase was the allocation of manpower due to the acquisition of INII in May 2007 including the assignment of a full time executive assistant to the Company.

Professional fees were $108,951 for the three months ended September 30, 2008 as compared to $20,475 for the same period ending September 30, 2007. The primary reason for the increase is consulting fees paid in 2008 for internet marketing consulting.

Interest expense was $484,074 for the three months ended September 30, 2008 and $475,729 for the three months ended September 30, 2007. Interest expense primarily relates to the expense associated with the $15,635,199 five percent (5%) convertible debenture entered into in September 2005 and interest on our May 31, 2007 note.

The Company was allocated overhead from a former affiliate in the amount of $-0- for the three months ended September 30, 2008, as compared to $50,114 for the three months ended September 30, 2007. The expenses included rent, office supplies, travel and other ordinary expenses necessary to carry out our corporate operations. The arrangement with the former affiliate was discontinued at the end of 2007 due to a change in ownership of the former affiliate.

We recorded expenses of $104,024 for the net change in fair value of our derivatives associated with our convertible debenture and note.

Nine Months Ended September 30, 2008 and September 30, 2007

INII was acquired by us on May 31, 2007.

Sales revenue for the nine months ended September 30, 2008 included sales for INII of $12,264,672 as compared to $5,771,105 for the nine months ended September 30, 2007. Revenue for 2007 included INII operations for the four months ended September 30, 2007. This revenue was generated from sales of nutritional products from INII.

Fee income from brokerage fees earned in originating and selling business leases and loans was $0 for the nine months ended September 30, 2008 versus $2,965 for the nine months ended September 30, 2007. We intend to wind down this activity and make 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 $167,462 for the nine months ended September 30, 2008 as compared to $206,309 for the nine months ended September 30, 2007. Interest income was derived mainly from notes receivable relating to investments. Dividend income was $36,257 for the nine months ended September 30, 2008 and $9,015 for the nine months ended September 30, 2007. Dividend income is primarily derived from various investments in marketable securities. For the nine months ended September 30, 2008, we recorded net trading losses from various investments in marketable securities in the amount of $129,500 as compared to gains of $3,897 for the nine months ended September 30, 2008. The losses in 2008 were primarily attributable to losses relating to the auction rate securities discussed below. We intend to wind down these activities and make 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.

Cost of goods sold, selling, general and administrative expenses and other income and expenses

INII

Cost of sales for our revenue in INII was $9,790,380 for the nine months ended September 30, 2008 as compared to $4,767,414 for the nine months ended September 30, 2007 which included only four months after the acquisition of INII on May 31, 2007. Cost of sales includes material, labor and manufacturing costs associated with the production of our products.

Selling, general and administrative expenses were $1,654,192 for the nine months ended September 30, 2008 as compared to $647,057 for the nine months ended September 30, 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 approximately $2,118,777 for the nine months ended September 30, 2008 as compared to $2,770,730 for nine months ended September 30, 2007.

Salaries and Benefits were $498,261 for the nine months ended September 30, 2008 as compared to $412,405 for the nine months ended September 30, 2007. The primary reason for the increase was the allocation of manpower due to the acquisition of INII in May 2007 including the assignment of a full time executive assistant to the Company.

Professional fees were $347,141 for the nine months ended September 30, 2008 as compared to $1,154,218 for the same period ending September 30, 2007. The primary reason for the decrease is an approximate $890,000 one-time fee paid to a former affiliate for past services rendered for control of INII in 2007.

Interest expense was $1,430,541 for the nine months ended September 30, 2008 and $956,344 for the nine months ended September 30, 2007. Interest expense primarily relates to the expense associated with the $15,635,199 five percent (5%) convertible debenture entered into in September 2005 and four month's interest in 2007 on our May 31, 2007 note.

The Company was allocated overhead from a former affiliate in the amount of $-0- for the nine months ended September 30, 2008, as compared to $199,835 for the nine months ended September 30, 2007. The expenses included rent, office supplies, travel and other ordinary expenses necessary to carry out our corporate operations. The arrangement with a former affiliate was discontinued at the end of 2007 due to a change in ownership of the former affiliate.

We recorded income of $6,389,641 for the net change in fair value of our derivatives associated with our convertible debenture and note.

Liquidity and Capital Resources

Operating Activities

We recorded net income for the nine months ended September 30, 2008 in the amount of $3,124,441. During the nine months ended September 30, 2008, our operations used cash in the amount of $245,527. Cash used by operating activities was primarily due to increases in accounts receivable, inventory and prepaid expenses, offset by increases in accounts payable and accrued liabilities. Cash also increased as a result of reductions in investments in marketable securities.

Investing Activities

We used cash totaling $147,391 for the acquisition of fixed assets during the nine months ended September 30, 2008.

As of September 30, 2008, we had approximately $1,680,000 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

We used cash totaling $47,606 for payment on capital lease obligations during the nine months ended September 30, 2008. The Company's secured convertible promissory note in the amount of $9,292,894 requires that the Company maintain EBITDA for each accounting period which equals or exceeds the applicable EBITDA threshold for such accounting period. Our EBITDA for nine months ended September 30, 2008 was CDN$1,392,119 versus CDN$1,387,238 as required under the Exhibit to the Note for the nine months.

The Company had working capital in the amount of $1,041,407 at September 30, 2008. Included in our working capital is $280,561 of short term notes receivable and $50,000 in investments in marketable securities.

Our cash flows for the periods are summarized below:

                                   Nine Months   Nine Months
                                      Ended         Ended
                                    September     September
                                    30, 2008       30, 2007

Net cash provided by (used in)
operating activities               $   (71,847 ) $    961,522
Net cash provided by (used in)
investing activities               $  (147,391 ) $    613,799
Net cash provided by (used in)
financing activities               $   (47,606 ) $  1,054,787

Our cash has decreased by $245,527 since December 31, 2007.

Management believes the Company has adequate working capital and cash to be provided from operating activities to fund current levels of operations. We anticipate that our company will grow. As our business grows we believe that we will have to raise additional capital in the private debt and public equity markets to fund our investments.

Off-Balance Sheet Arrangements

The Company leases administrative office space in Houston, Texas at a current minimum annual cost of $74,032. The Company is also responsible for its share of property tax, maintenance and utility costs on the office building lease. The lease expires in January 2010.

INII leases its building and warehouse in Ottawa, Canada at a current minimum annual cost of $308,230. The Company is also responsible for its share of property tax, maintenance and utility costs on the warehouse lease. The leases expire on April 30, 2009.

Future minimum payments under the office, building and warehouse leases described above, on a fiscal year basis are as follows:

2008 $ 96,373 2009 177,852 2010 6,169 $ 280,394

Inflation

The Company believes that inflation has not had a significant impact on operations since inception.