Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statement Notice

This Form 10-Q contains certain forward-looking statements. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

Executive Overview

We were formed under the laws of the State of Nevada on March 7, 2001 under the name Wren, Inc. Our activities had been limited to identifying and purchasing certain merchandise for resale. Our online inventory resale business did not grow to our expectations. We encountered a potential business opportunity in the form of a license for the marketing and distribution of the NextFit Keychain Trainer. Consequently, during the fourth quarter of 2008, we had a change in management and on March 4, 2009, the Company entered into an Exclusive License and Distribution Agreement (the "License and Distribution Agreement") with NextFitness, Inc. for the right to market and sell the NextFit Keychain Trainer and associated Service. The License and Distribution Agreement as amended calls for a license fee to be paid as follows: issuance of 600,000 Class A Preferred Stock, issuance of 600,000 Class B Preferred Stock, $800,000 payable in the form of a Promissory Note, and further payments of $1,100,000, $300,000, $200,000 and $200,000 and warrants to purchase 4,500,000 shares of common stock, valued at $54,000 using the Black-Scholes method. In addition, the Company must pay to NextFitness, Inc. $2.00 for every subscriber each month excluding subscriber's first month and a minimum monthly payment of $30,000.

With the purchase of the License and Distribution Agreement we have moved our focus to the consumer-direct selling of the NextFit Keychain Trainer and associated Service using a network marketing strategy, which consists of a person-to-person, hand-to-hand selling approach. In keeping with the focus on the NextFit Keychain Trainer we have changed the name of the Company to NextFit, Inc.

The NextFit Keychain Trainer and associated Service combine technology, expert coaching, and music to motivate people to reach their fitness goals. The keystone of the Company's business is the appeal of the NextFit Keychain Trainer as a training and fitness aid, which appeal is used to sell both the Keychain Trainer and associated content, which results in an initial retail sale of the Keychain Trainer and in a subscription, with associated monthly payments, for the download of dynamic and personalized health and fitness audio workouts featuring celebrities and/or preeminent trainers to the Keychain Trainers (the "Service").

Advantages of the Keychain Trainer and associated Service:

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Offers a fun, simple, easy way to get fit: Subscribers just listen to the music and follow their trainers' instructions.

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Each session is custom-tailored for the individual Subscriber. Trainers call each Subscriber by name.

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Gives Subscribers access to celebrity trainers like "America's Trainer," Kathy Smith; David Kirsch, who trains Heidi Klum and Anne Hathaway; running expert Jeff Galloway; and more than 40 other preeminent coaches.

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Coaching for every fitness level.

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Content library of more than 2,500 exercises, hundreds of kinds of equipment, and 150,000 audio clips form the world's largest audio exercise database. Every audio clip is professionally scripted, tested, and recorded.

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Over 100 tracks of professionally designed fitness music included (with ability for advanced users to mix in their own music).

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Over $15 million invested by NextFitness, Inc. in the technology platform.

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8 patents pending on technology, such as the "Dynamic Media Production" system, which tailors workouts based upon the results of prior sessions and the conditions (home, gym, etc.).

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The Keychain Trainer naturally lends itself to network marketing. A distributor can hand a demonstration Keychain Trainer to a prospective subscriber and ask him or her to listen for themselves to a pre-loaded promotional session. This process takes little time and replaces millions of dollars in advertising to get a Keychain Trainer into the hands of a prospective customer.

As NextFit, Inc. takes the Keychain Trainer to the world; about 7,000 Keychain Trainers have been sold. Celebrity Trainer Kathy Smith has begun the first of a series of large group trainings with the Kathy Smith 12 Week Program. Leadership training and health and fitness summit is planned for October 2009 in Utah to further train the NextFit, Inc. affiliates worldwide on how to more effectively use and market the Keychain Trainer and increase the marketing excitement surrounding NextFit, Inc. The new and improved Keychain Trainer with greater stability, marketability, more memory, and other added features has been announced for launch during the third quarter of 2009, which we believe is creating increasing excitement for our product.

Liquidity and Capital Resources

At June 30, 2009 we had $20,254 in cash. The net loss for the three months and six months ended June 30, 2009 are $1,874,408 and $2,010,975 respectively. Excluding non-cash expenses relating to shares, options, and warrants issued, the net loss for the three and six months ended June 30, 2009 are $1,145,993 and $1,228,560 respectively. At June 30, 2009 we also had total liabilities of $5,675,084, of which current liabilities are $5,502,446. We have primarily financed our operations through the sale of common stock and borrowing using equity inducements. In order to raise the necessary capital to maintain our reporting company status, we may sell additional stock, arrange debt financing or seek advances from our officers or shareholders.

The Company is also raising capital through a private placement. During the three months ended June 30, 2009, the Company raised $305,000 of capital through private placement offerings of a debenture that pays interest of 16% annually and are convertible to common stock at $0.30 per share at the three year maturity or if the Company decides to prepay the offering in full. There are also, on a dollar per share basis, warrants granted with the debenture that are exercisable for three years at an exercise price of $0.60 per share.

During the three months ended June 30, 2009, the Company raised $140,000 of capital through interest bearing notes payable with varying interest rates. At maturity, the note holders have the option to convert their notes into the private placement offering described immediately above.

During the three months ended June 30, 2009, the Company raised $487,000 of capital through interest bearing short-term loans with varying interest rates.

Results of Operations

Our revenues for the three and six months ended June 30, 2009 total $502,041 and $539,811, respectively, and we have a net loss for the same periods of $1,874,408 and $2,010,975 respectively compared to $4,095 in revenue and a net loss of $7,643 for the three months and $4,095 in revenue and a net loss of $15,305 for the six month period in 2008. Expenses during the three months ended June 30, 2009, consisted of $1,140,819 in general and administrative expense and $142,390 in non-cash compensation from employee stock option issuances. Expenses during the comparable period in 2008 consisted of $9,261 in general and administrative expenses. Expenses during the six months ended June 30, 2009, consisted of $1,217,183 in general and administrative expense and $196,390 in non-cash compensation from warrant and employee stock option issuances. Expenses during the comparable period in 2008 consisted of $16,923 in general and administrative expenses. Net loss for the three and six months ended June 30, 2009 were $1,874,408 and $2,010,975, excluding non-cash expenses relating to shares, options, and warrants issued and $103,000 in cost for the inventory loss due to product discontinuance, the net loss for the three and six months ended June 30, 2009 are $1,042,993 and $1,125,560 respectively.

As of June 30, 2009 our total assets were $4,306,688, consisting of $20,254 in cash, $825 of net inventory, $21,523 in prepaid expenses and deposits, $1,615,222 in deferred loan costs, $47,664 in net fixed assets, and a license agreement of $2,601,200. Total liabilities at June 30, 2009 are $5,675,084 of which current liabilities are $5,502,446.

Off-balance Sheet Arrangements

None