IN2IT Nutrition & Fitness Ltd

MANAGING DIRECTOR'S ANNUAL REPORT FOR 2012

To Our Stockholders, Recognizing, understanding, and capitalizing on fitness trends before flighty consumers or gym members move on to the next big gym craze is a priceless business skill. While some might say this requires vision or intuition, my experience shows there's also something more tangible required. There is no special formula for fitness trend-spotting, but it's clear that focus and curiosity contribute to success. IN21T's management team is constantly probing and paying attention to what people are doing and what ideas are catching on in the gym environment globally. During my frequent international travels I often solicit information concerning exercise and diet habits from local people, health experts, and others I trust. Whether it's how women are exercising in India, what types of fitness centers are taking off in Azerbaijan, or the new fitness equipment popular among men in gyms in China or Egypt, I am always interested. And, when my information network makes a suggestion, whether it is a nutritional drink product or new gym workout regimen, I am eager to process the information. It is all about keeping your finger on the pulse of the industry, whether you're searching the Internet for information about nutrition, finding articles that have been written about successful gym membership programs, or are getting feedback from the people in our gyms. If your antenna is always up, and your team is telling you they are excited about the business, you start to realize that your timing is right. Traveling the world also has allowed me to observe nutrition and fitness programs and products that are adaptable to different markets. As an example, the Big Mac, the Quarter Pounder with Cheese, and Chicken McNuggets are all familiar menu items to McDonald's customers in Australia and America. But in Asia, the Middle East, and other parts of the world, McDonalds has released a number of foods that cater to local tastes, and many of these other menu items reflect regional specialties or adaptations due to religious or cultural choices.

Another trend that I see is that more people are now moving back toward smaller boutique fitness facilities. Many "big box" gyms are definitely feeling the migration of their members to smaller more intimate gym environments. Whether it's boxing, mixed martial arts, cross-training, or the Zumba craze, these smaller specialty centers are opening up and people are flocking back to receive more personal attention. IN21T's smaller footprint, 3,000 to 4,000 square feet, comprised of the gym and retail store definitely fits this new trend. No matter which trend we pursue, we are adamant about the importance of relationships; making, fostering, and building them. We find good people, develop good relationships, hold onto those relationships and have a lot of fun along the way. Significant Events During 2012 AUSTRALIA Listing on the active ASSOS Primary Soard in November 2012 Australian Trademark for "IN2IT" I Trade Mark: 1499488 issued in December 2012 ASSOS Stage 1 Funding nearing completion Investment banker discussions for IN21T's AIM listing on the London Stock Exchange taking place with several investment banking firms in London and U.S. anticipated in 2014-2015 Potential locations for IN21T Australian office headquarters, gym, and retail store identified with selection decision forecasted by February 1, 2013

UNITED STATES San Diego, CA. (May 14, 2012) IPRNewswire/lN21T Nutrition & Fitness franchise chain moves to larger offices in La Jolla, California, to enhance global franchise sales and franchisee support. San Diego, California (December 13, 2012) IPRNewswirel IN21T Nutrition & Fitness Franchising, Inc., announced today that it has been selected as the exclusive fitness provider for the world-famous San Diego Zoo and Safari Park. The company will establish an IN21T gym facility at the Safari Park location to accommodate the 3,000 Zoo and Park employees.

San Diego, CA. (December 24,2012) IPRNewswirel Dennis Rieder, President and CEO of IN21T Franchising, Inc., the nation's most unique chain of combined retail nutrition stores & fitness gyms, announced a move to a larger nutritional products manufacturing facility to substantially increase its product production capacity. "Our new manufacturing facility has received FDAlGMP certification providing an additional dimension of credibility to our IN21T nutritional product line," said Dennis Rieder.

AFRICA San Diego, California (July 28, 2012) IPRNewswirel Dennis Rieder, President & CEO of IN21T Franchising, Inc, announced today that the company has granted an exclusive master franchise for the Federal Republic of Nigeria.

UNITED KINGDOM San Diego, California (July 10, 2012) IPRNewswirel Dennis Rieder, President & CEO of IN21T Franchising, Inc, announced today that the company has entered into a formal Letter of Intent to grant an exclusive master franchise for the United Kingdom to a private equity firm located in the Principality of Monaco.

When we first discussed entering Australia a year ago, the global economy was experiencing profound disruption. The financial system was freezing up. Many companies and entire industries were pulling in their horns, hoping simply to ride out the storm. IN21T's nutrition and fitness industry was different; it followed its historical path of resisting bad economic times. That is the reason why I felt confident heading into 2012 that the timing of our expansion plans for Australia were correct. IN21T was entering the year strong, and we expected to exit it even stronger. Most importantly, we are now well positioned to grow as the world economy begins to recover. I believe IN21T Australia will excel in both the near-term and the longer-term future based, first, on the fitness industry's global recession-resistant history; second, on the Australian appetite for sports and fitness products and services; and third, on a unique combined nutrition and fitness business model that reliably generates strong profits and cash flow, giving us the financial flexibility to invest for future growth.

Let me close by expressing my pride in our IN21T Nutrition & Fitness Ltd Board of Directors, senior management team, and our investment banking group of professionals who have brought us to this point. And let me express my profound gratitude to you, our shareholders, for your unwavering support. I hope that you are pleased with how your company is performing and evolving. And I trust that you share our excitement about the role we can play in what promises to be a new epoch for our nutrition and fitness industry, for our customers, and for our global family.

S~d'VlY~
Carl J. Kosnar Chairman, Managing Director, and Chief Executive Officer