UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   Form 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

     For the fiscal year ended January 31, 2006

                                       OR

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the transition period from _______________ to _____________


                        Commission file number   0-18349
                                                ---------


                           Medical Nutrition USA, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                     11-3686984
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


 10 West Forest Avenue, Englewood, New Jersey             07631
--------------------------------------------------------------------------------
   (Address of principal executive offices)             (Zip Code)


Registrant's telephone number, including area code: (201) 569-1188
                                                    --------------


Securities registered under Section 12(b) of the Exchange Act:

                                      None


Securities registered under Section 12(g) of the Exchange Act:

                                  Common Stock
                                  ------------

Check whether the issuer is not required to file reports pursuant to section 13
or 5(d) of the Exchange Act. [ ]

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12B-2 of the Exchange Act): Yes [ ] No [X]

State issuer's revenues for its most recent fiscal year: $7,310,500.
                                                         -----------
<PAGE>

The aggregate market value of voting stock held by non-affiliates of the
registrant as of April 19, 2006 was approximately $35,750,441 (based on the
average of the closing bid price and closing ask price for shares of the
registrant's common stock as reported on the OTC Bulletin Board for the last
trading date prior to that date).

As of April 19, 2006 there were 9,586,151 shares of the registrant's common
stock outstanding.

Portions of the registrant's Proxy Statement for the 2005 Annual Meeting of
Shareholders scheduled to be held June 7, 2005 are incorporated by reference in
Part III hereof.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [ ]

<PAGE>

                                TABLE OF CONTENTS

 PART I
      Item 1-DESCRIPTION OF BUSINESS                                          2
      Item 2-DESCRIPTION OF PROPERTIES                                        8
      Item 3-LEGAL PROCEEDINGS                                                8
      Item 4-SUBMISSION OF MATTER TO SECURITY HOLDERS                         8

 PART II
      Item 5-MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
               MATTERS                                                        9
      Item 6-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                           10
      Item 7- FINANCIAL STATEMENTS                                           14
      Item 8-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE                           14
      Item 8A-CONTROLS AND PROCEDURES                                        14
      Item 8B-OTHER INFORMATION                                              14

 PART III
      Item 9-DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
               PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT    14
      Item 10-EXCUTIVE COMPENSATION                                          14
      Item 11-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT                                                    15
      Item 12-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 15
      Item 13-EXHIBITS AND REPORTS ON FORM 8K                                15
      Item 14-PRINCIPAL ACCOUNTANT FEES AND SERVICES                         15
 Signatures                                                                  16
 Index to Consolidated Financial Statements                                  F-1
 Exhibit Index


                                                                               1
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         This document contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements other
than statements of historical fact are "forward-looking statements" for purposes
of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements of belief;
and any statements of assumptions underlying any of the foregoing.

         Forward-looking statements may include the words "may," "could,"
"will," "estimate," "intend," "continue," "believe," "expect" or "anticipate" or
other similar words. These forward-looking statements present our estimates and
assumptions only as of the date of this annual report. Except for our ongoing
obligation to disclose material information as required by the federal
securities laws, we do not intend, and undertake no obligation, to update an
forward-looking statements.

         Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed or any of our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and inherent risks and
uncertainties.

         For a detailed description of factors that could cause actual results
to differ materially from those expressed in any forward-looking statement
please see "Risk Factors" below.

Item 1.  DESCRIPTION OF BUSINESS
         -----------------------

INTRODUCTION

         Medical Nutrition USA, Inc. (the "Company") develops and distributes
nutritional supplements primarily for use in long-term care facilities,
hospitals, dialysis clinics and bariatric surgery clinics. Some of the Company's
products are also sold through health food stores under private label or
licensing agreements.

         On April 22, 2003, the Company's shareholders approved the
re-incorporation of the Company. To implement this, the Company formed a new
Delaware corporation, Medical Nutrition USA, Inc., a wholly-owned subsidiary of
the Company, which was then named Gender Sciences, Inc. Gender Sciences, Inc.
merged into Medical Nutrition USA, Inc. pursuant to an Agreement and Plan of
Merger. As a result of the merger, Medical Nutrition USA, Inc. was the surviving
entity. Pursuant to the merger agreement, each outstanding share of the
Company's common stock automatically converted into one share of common stock of
Medical Nutrition USA, Inc. upon the effective date of the merger. Each of the
Company's shareholders owns shares in Medical Nutrition USA, Inc. in the same
amount and percentage as they held in Gender Sciences, Inc. immediately before
the re-incorporation.

         Effective as of the close of business on February 7, 2003, Gender
Sciences, Inc. implemented a one-for-twenty-five reverse split of its
outstanding shares of common stock. The effect of the reverse stock split was to
reduce the outstanding shares from 39,109,680 to 1,564,387. The reverse stock
split also affected options, warrants and other securities convertible into or
exchangeable for shares of the Gender Sciences, Inc.'s common stock that were
issued and outstanding immediately prior to the effective time of the stock
combination. Unless stated otherwise, all amounts reflected in the January 31,
2006 financial statements give effect to the reverse stock split.

INDUSTRY OVERVIEW

         Annual sales of nutrition products, including supplements, fortified
foods and beverages and nutraceuticals in the United States are estimated to be
approximately $100 billion. Annual sales of nutritional supplements to health
care institutions, the industry segment in which the Company primarily competes,
are estimated to be approximately $4.2 billion annually and growing at a rate of
approximately 12% per year. The nutritional supplements industry is fragmented
and highly competitive and includes vitamins, minerals, dietary supplements,
herbs, botanicals and compounds derived therefrom. With certain limited

                                                                               2
<PAGE>

exceptions, the sale of nutritional supplements is not subject to FDA approval
prior to sale. See "Government Regulation" below. Opportunities in the
nutritional supplements industry were enhanced by the enactment of the Dietary
Supplement Health and Education Act of 1994 ("DSHEA"). Under DSHEA, vendors of
dietary supplements are able to educate consumers regarding the effects of
certain component ingredients.

LONG-TERM CARE

         The Long-Term Care Market includes nursing, convalescent and
assisted-living facilities. There are approximately 17,000 nursing home
facilities in the United States with approximately 535 nursing home chains, both
large and small. The number of Americans aged 65 and over is projected to
increase from 35 million to over 70 million by 2030. An important component of
the Older Americans Act (the "OAA") includes programs and services to
specifically address nutrition among older persons. Nursing home facilities are
required by law to assure that each resident maintain "acceptable parameters of
nutritional status, such as body weight and protein levels, unless the clinical
condition demonstrates that this is not possible." Within the nursing home
patient population, Protein Energy Malnutrition (PEM), a deficiency of protein
and energy (calories), is a common condition resulting in loss of lean body
mass, development of pressure ulcers, impaired immune response and organ
function. In observational studies, Pro-Stat(R), the Company's, modular protein
supplement has been shown to be effective nutritional support in the treatment
of pressure ulcers, unintended weight loss and malnutrition. It delivers high
nitrogen donor amino acids to replenish depleted protein stores and correct PEM.
In March 2006, a randomized, controlled clinical trial was published in the
peer-reviewed journal Advances in Skin and Wound Care, reporting a 96% greater
improvement in pressure ulcer healing among nursing home residents receiving
standard care plus Pro-Stat(R), compared to a control group receiving standard
care plus a placebo.

BARIATRIC SURGERY

         Bariatric surgery for the morbidly obese is widely accepted as an
effective treatment for many of those who have waged a life-long and
unsuccessful struggle to control their weight. Common co-morbidities of obesity
include heart disease, cancer, stroke and diabetes. It is estimated that over
150,000 bariatric surgeries were performed in the US in 2005, a number that is
expected to grow in the future.

         The most common surgical procedures include, among other things,
reducing the size of the stomach to a fraction of its normal size. Most surgeons
recommend that bariatric surgery patients remain on a clear liquid diet
immediately after surgery. Full liquids can generally be introduced after weeks
of recovery. Post-surgical patients are typically able to ingest only small
amounts at each feeding before becoming sated. One of the primary nutritional
issues that results is ensuring adequate intake of protein, which is notably
lacking in most clear liquid diets and is required by the body for post-surgical
wound healing. The Company is marketing its Pro-Stat(R), 64, Aloe-Stat(TM) and
Hema-Stat(TM) to the bariatric surgery market. Sales are generated both to the
surgical practices as well as directly to the patients through the Company's
on-line fulfillment service.

RENAL CARE

         There are more than 400,000 End Stage Renal Disease patients undergoing
dialysis treatments in the United States. Dialysis patients need to maintain
high protein and calorie intake to avoid becoming malnourished. Dialysis causes
a higher need for protein intake because some protein loss occurs with each
treatment. Additionally, dialysis patients may suffer from poor appetite and are
typically restricted in the volume of liquids they can consume. Pro-Stat(R) has
important benefits for dialysis patients: high protein to volume ratio; small
serving size; enhanced absorption; ease of administration; and low sodium,
potassium and phosphorous. Additionally, the Company has agreed to sponsor a
study in cooperation with Renal Care Group and Vanderbilt University to measure
the efficacy of Pro-Stat(R) supplementation in improving and maintaining serum
albumin levels among dialysis patients.

                                                                               3
<PAGE>

INDUSTRY TRENDS

         The Company believes that the market for its institutional nutritional
supplements will continue to expand as a result of the following:

     o   The aging of the United States population and the resulting increase in
         the number of assisted living/nursing home residents.
     o   The growth in understanding of the link between diet, nutrition, and
         health, especially among the geriatric population;
     o   Increased research into the beneficial effects of targeted nutritional
         intervention in reducing the severity of age-related disease and the
         incidence of nutritional deficiencies among institutionalized patients;
     o   The growth in the number of bariatric surgery procedures performed
         annually in the United States.

PRODUCTS AND STRATEGY

         During the past year , the Company has continued to implement its
strategy to increase the proportion of its sales generated by its own branded
products, primarily to nursing homes, nursing home distributors, dialysis
clinics, bariatric surgery clinics and their patients. These products include
primarily the Pro-Stat(R) line of enzyme-hydrolyzed liquid protein used to treat
unintended weight loss, protein energy malnutrition and pressure ulcers.

         The Company's strategy includes increasing the number of nursing homes,
dialysis and bariatric surgery clinics employing Pro-Stat(R) therapy through
expansion of its own sales force and through a network of consultant dietitians,
and sales representatives. The Company also uses advertising and exhibitions at
trade shows that focus on the long-term care, dialysis and bariatric markets. As
a result of this strategy, sales of the Company's branded products increased
over 82% for the fiscal year ended January 31, 2006.

         During the fiscal year ending January 31, 2006, the revenues generated
by the Company resulted from the sale of branded products and private label
products.

         For the fiscal year ended January 31, 2006, two customers accounted for
approximately 34% of total sales as compared to 40% in the prior year. The
Company has no contractual arrangements with these customers and if either of
these customers were to discontinue purchasing from the Company, it would have a
material impact on the Company's sales.

         In the past year, the Company has developed a number of new products
including Fiber-Stat(TM) laxation liquid and Pro-Stat(R) Advanced Wound Care
(AWC). Pro-Stat(R) AWC expands the potential uses of Pro-Stat(R) for patients
with advanced wounds and Fiber-Stat(TM) provides an alternative and novel method
of providing fiber supplementation. The Company has been able to successfully
market these new products.

         The market for nutritional supplements is extremely competitive. There
are many companies with substantially greater resources than the Company and
with established brands presently being marketed. The Company believes that the
success of its strategy will depend upon the quality and effectiveness of its
products; its ability to establish brand name recognition for its products; its
ability to continue to develop new products, as well as the ability of its
management and sales force to implement and execute its strategy.

         During the fiscal years ended January 31, 2006 and 2005, the Company
recorded expenses, not including salaries and wages, on Research and Development
of approximately $9,000 and $21,400, respectively. During the fiscal years ended
January 31, 2006 and 2005, the Company also capitalized costs relating to the
patents of approximately $217,000 and $163,300, respectively.

MANUFACTURING

         The Company uses contracted third parties to manufacture its products.
In August 2003, the Company entered into a cross-ownership agreement with its
principal manufacturer whereby mutual protections were established regarding

                                                                               4
<PAGE>

intellectual property and pricing. The third party manufacturers are responsible
for receipt and storage of raw material, production and packaging, and labeling
of finished goods. At present, the Company is dependent upon manufacturers for
the production of all of its products. To the extent the manufacturers should
discontinue their relationship with the Company, the Company's sales could be
adversely impacted. The Company believes at the present time it will be able to
obtain the quantity of products it will need to meet orders.

COMPETITION

         The nutritional supplement industry is highly competitive. Many of the
Company's competitors are large, well-known companies that have considerably
greater financial, sales, marketing and technical resources than the Company.
Additionally, these competitors have research and development capabilities that
may allow them to develop new or improved products that may compete with product
lines the Company markets and distributes. In addition, competitors may elect to
devote substantial resources to marketing their products to similar outlets and
may choose to develop educational and information programs like those developed
by the Company to support their marketing efforts. The Company's business,
financial condition and results of operations could be materially and adversely
affected by any one or more of such developments.

         Competition for the institutional nutritional supplement products the
Company offers is significant. These products compete against a number of
well-known brands of alternative or similar products. As the Company's sales
have grown, competitors have attempted to introduce products that compete
directly against the Company's liquid protein supplement. The Company's failure
to adequately respond to the competitive challenges faced by the products it
offers could have a material adverse effect on its business, financial condition
and results of operations.

INTELLECTUAL PROPERTY

         The Company regards the protection of copyrights, trademarks and other
proprietary rights that it may own or license as material to its future success
and competitive position. The Company intends to rely on a combination of laws
and contractual restrictions such as confidentiality agreements to establish and
protect its proprietary rights. Laws and contractual restrictions, however, may
not be sufficient to prevent misappropriation of proprietary rights or deter
others from independently developing products that are substantially equivalent
or superior.

PATENTS

         Since 1977, the Company has been issued four patents for its collagen
hydrolysate product. These are for (1) Method Of Providing High-Protein
Nutrition By The Oral Administration Of A Predigested Protein Composition, (2)
Method Of Composition For Preventing Nutritional Deficiency, (3) Method Of
Treating Nutritional Deficiency During Cardiac Cachexia, Diabetes, Hypoglycemia,
Gastro-enterology, Lipid, Cell Glycogen And Keratin Related Skin Conditions And
Alcoholism, and (4) Method Of Treating Obesity By The Oral Administration Of A
Predigested Protein Composition. The Company has been granted provisional rights
for a patent-pending for "Method for treating Wounds to Promote Healing".

TRADEMARKS

         The Company has been using the Pro-Stat(R) mark since August 2002,
Aloe-Stat(TM), Hema-Stat(TM) and the pbs Nutrition Support System(TM) since
August 2003, and the Fiber-Stat(TM) mark since August 2005. The Company intends
to take the actions that it believes are necessary to protect its proprietary
rights with respect to these marks, but it may not be able to do so on
commercially reasonable terms, if at all.

GOVERNMENT REGULATION

         The formulation, manufacture and labeling of the Company's products are
subject to regulation by one or more federal agencies, including, principally,
the Food and Drug Administration ("FDA"). These activities are also regulated by
various agencies of the states and localities in which the Company's products
are sold.

                                                                               5
<PAGE>

         Principally through the efforts of the dietary supplement industry, the
Dietary Supplement Health and Education Act of 1994 ("DSHEA") was signed into
law in 1994. DSHEA amends the Federal Food, Drug, and Cosmetic Act and, in the
judgment of the Company, is favorable to the dietary supplement industry. First
and foremost, the legislation creates a new statutory class of "dietary
supplements". This new class includes vitamins, minerals, herbs, amino acids and
other dietary substances for human use to supplement the diet. A dietary
supplement which contains a new dietary ingredient, one not on the market as of
October 15, 1994, will require evidence of a history of use or other evidence of
safety establishing that it will reasonably be expected to be safe, such
evidence to be provided by the manufacturer or distributor to the FDA before it
may be marketed. DSHEA also recognizes the need for the dissemination of
information about the link between nutrition and health and provides that
publications, which are not false and misleading and present a balanced view of
available scientific information on a dietary supplement, may be used in
connection with the sale of dietary supplements to consumers. Among other
changes, DSHEA prevents the further regulation of dietary ingredients as "food
additives" and allows the use of statements of nutritional support on product
labels and in other labeling.

         In September 1997, the FDA issued final new regulations to implement
DSHEA. Among other things, these regulations establish a procedure for dietary
supplement companies to notify the FDA about the intended marketing of a new
dietary ingredient or about the use in labeling of statements of nutritional
support. The regulations also establish a new format for nutrition labeling on
dietary supplements. The new format became mandatory on March 23, 1999, and the
Company revised all of its dietary supplements labels to be in compliance by
that date.

         The FDA and other federal authorities are reviewing alternative
approaches to assure the safety of vitamins, minerals, herbals and other
products sold as dietary supplements. Increased regulatory oversight could
subject the Company and other manufacturers and distributors of dietary
supplements to increased production and compliance costs and possibly require
capital expenditures. Future regulation affecting dietary supplements could
result in a recall or discontinuance of certain products.

EMPLOYEES

         The Company has 24 full time employees.

RISK FACTORS

         The Company Generates A Significant Amount Of Revenues From Two
Customers.

         For the fiscal year ended January 31, 2006, two customers accounted for
approximately 34% of total revenues, as compared to 40% in the prior year. The
Company does not have contracts with these customers and, as a result, there is
no assurance that these customers will continue to order products from the
Company or will continue to order the products in the same amount. The loss of
either of these customers would have a material effect upon the sales of the
Company.

         The Company May Encounter Problems Implementing Its Business Strategy.

         The Company may encounter problems, delays and expenses in implementing
its business strategy. These may include, but not be limited to, unanticipated
problems and additional costs related to marketing, competition and product
acquisitions and development. These problems may be beyond the Company's
control, and in any event, could adversely affect the Company's results of
operations. See "Management's Discussion and Analysis or Plan of Operation."

         If The Company Does Not Successfully Manage Any Growth It Experiences,
It May Experience Increased Expenses Without Corresponding Revenue Increases.

         The Company's business is growing at a rapid rate. This growth may
place a significant strain on management, financial and other resources. It also
may require the Company to increase expenditures before it generates
corresponding revenues. The Company's ability to manage future growth, should it
occur, will depend upon its ability to identify, attract, motivate, train and
retain highly skilled managerial, financial, business development, sales and
marketing and other personnel. Competition for these employees is intense.
Moreover, the growth in the Company's businesses will require the Company's
management to integrate and manage an increasing number of employees. The
Company may not be able to implement successfully and maintain its operational

                                                                               6
<PAGE>

and financial systems or otherwise adapt to growth. Any failure to manage
growth, if attained, would have a material adverse effect on the Company's
business.

         The Company Is Dependent On A Limited Number Of Sources Of Supply For
Many Of The Products It Offers. If There Was An Interruption Of Supply Of
Products, The Company's Sales May Suffer And The Company Could Be Required To
Abandon A Product Line.

         The Company is dependent on a limited number of sources of supply for
many of the products it offers. With respect to these products, the Company
cannot guarantee that these third parties will be able to provide adequate
supplies of products in a timely fashion. If the Company is unable to renew or
extend an agreement with a third-party supplier, if an existing agreement is
terminated or if a third-party supplier otherwise cannot meet the Company's need
for a product, the Company may not be able to obtain an alternative source of
supply in a timely manner or at all. In these circumstances, the Company may be
unable to continue to market products as planned and could be required to
abandon or divest itself of a product line on terms which would materially
affect it.

The Company May Be Exposed To Product Liability Claims Not Covered By Insurance
That Would Harm Its Business.

         The Company may be exposed to product liability claims. Although the
Company believes that it currently carries and intends to maintain a
comprehensive multi-peril liability insurance package, the Company cannot
guarantee that this insurance will be sufficient to cover all possible
liabilities. A successful suit against the Company could have an adverse effect
on its business and financial condition if the amounts involved are material.

         The Company's Future Capital Requirements Will Depend On Many Factors.
If The Company Needed To Obtain Additional Financing and Were Unable To Do So,
It Might Not Be Able To Continue To Operate At Its Current Level.

         The Company believes that it has sufficient cash on hand to fully
implement its business strategy for fiscal year 2007. See "Management's
Discussion and Analysis or Plan of Operation - Liquidity and Capital Resources".
The Company's future capital requirements will depend on many factors including:
the costs of its sales and marketing activities and its education programs for
its markets, competing product and market developments, the costs of developing
new products, the costs of expanding its operations, and its ability to generate
positive cash flow from its sales.

         If needed, additional funding may not be available on acceptable terms,
if at all. If additional funds were needed but were not available, the Company
might be required to curtail significantly or defer one or more of its marketing
programs or to limit or postpone obtaining or developing new products. If the
Company raises additional funds through the issuance of equity securities, the
percentage ownership of its then-current stockholders may be reduced and such
equity securities may have rights, preferences or privileges senior to those of
the holders of its common stock. If the Company raises additional funds through
the issuance of additional debt securities, these new securities would have
certain rights, preferences and privileges senior to those of the holders of its
common stock, and the terms of these debt securities could impose restrictions
on its operations. For a further discussion of expenditures and other factors
that could affect the Company's need for future capital, see "Management's
Discussion and Analysis or Plan of Operation -- Liquidity and Capital
Resources."

         The Company's Inability To Obtain New Proprietary Rights Or To Protect
And Retain Its Existing Rights Could Impair Its Competitive Position And
Adversely Affect Its Sales.

         The Company believes that the trademarks, copyrights and other
proprietary rights that it owns or licenses, or that it will own or license in
the future, will continue to be important to its success and competitive
position. If the Company fails to maintain its existing rights or cannot acquire
additional rights in the future, its competitive position may be harmed. While
some products the Company offers incorporate patented technology, most of the
products the Company sells are not protected by patents.

         The Company intends to take the actions that it believes are necessary
to protect its proprietary rights, but it may not be successful in doing so on
commercially reasonable terms, if at all. In addition, parties that license
their proprietary rights to the Company may face challenges to their patents and
other proprietary rights and may not prevail in any litigation regarding those

                                                                               7
<PAGE>

rights. Moreover, the Company's trademarks and the products it offers may
conflict with or infringe upon the proprietary rights of third parties. If any
such conflicts or infringements should arise, the Company would have to defend
itself against such challenges. The Company also may have to obtain a license to
use those proprietary rights or possibly cease using those rights altogether.
Any of these events could harm the Company's business.

         The Public Market For The Company's Common Stock May Be Volatile, And
The Price Of The Common Stock May Fluctuate For Reasons Unrelated To The
Company's Operating Performance.

         There has been a very limited public market for the Company's common
stock, and the Company does not know whether investor interest in the Company
will lead to the development of a more active trading market. The market prices
and trading volumes for securities of emerging companies, such as the Company,
historically have been highly volatile and have experienced significant
fluctuations both related and unrelated to the operating performance of those
companies. The price of the Company's common stock may fluctuate widely,
depending on many factors, including factors that may cause the Company's
quarterly operating results to fluctuate as well as market expectations and
other factors beyond the Company's control. This could restrict the Company's
ability to access the capital markets for necessary funding.

Item 2. DESCRIPTION OF PROPERTY
        -----------------------

         The principal executive offices of the Company are located at 10 West
Forest Avenue, Englewood, New Jersey 07631, where it leases approximately 7,500
square feet. The lease is for a period of five years commencing January 1, 2005.
The annual rent for the fiscal year ending January 31, 2006 was $77,800, for the
fiscal year ending January 31, 2007 it will be $80,200, for the fiscal year
ending January 31, 2008 it will be $82,600, for the fiscal year ending January
31,2009 it will be $85,000 and for the fiscal year ending January 31, 2010 it
will be $80,100.

         Approximately 2,500 square feet of this facility house the Company's
administrative offices with the balance utilized for shipping and warehousing.
The Company has arrangements with co-packers pursuant to which such suppliers
manufacture, package and ship the Company's products to major customers. The
Company believes its present facility is adequate for its present and reasonably
foreseeable future operational needs.

Item 3. LEGAL PROCEEDINGS
        -----------------

         None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------

         None.


                                                                               8
<PAGE>


PART II

Item 5.  MARKET FOR COMMON EQUITY RELATED STOCKHOLDER MATTERS AND SMALL
         ---------------------------------------------------------------
         BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
         ----------------------------------------------

         The Company's common stock is currently quoted on the OTC Bulletin
Board under the symbol "MDNU". Information as to the range of high and low bid
quotations for the Company's common stock, for the periods indicated, as
furnished by National Quotation Bureau Incorporated, is set forth below and
adjusted for the "one for twenty five reverse split" effected on February 7,
2003:


                 THREE MONTHS ENDED                   HIGH             LOW
                 ------------------                   -----           -----
                 April 30, 2004                       $3.40           $1.95
                 July 31, 2004                        $3.55           $2.70
                 October 31, 2004                     $2.15           $1.25
                 January 31, 2005                     $2.70           $1.60
                 April 30, 2005                       $2.95           $2.25
                 July 31, 2005                        $3.10           $2.70
                 October 31, 2005                     $3.15           $2.46
                 January 31, 2006                     $4.75           $2.70


         The above bid quotations represent prices between dealers and do not
include actual retail mark-ups, mark-downs or commissions and may not represent
actual transactions.

         As of April 19, 2006, there were approximately 94 holders of record of
the Company's common stock.

         The Company has not declared any cash dividends on its common stock and
it has no intention to pay cash dividends in the foreseeable future.

         As of January 31, 2006, the following information is provided with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the Company are authorized for issuance,
aggregated as follows:
<TABLE>
<CAPTION>


                                         Number of      Weighted average       Number of
                                     securities to be   exercise price of     securities
                                       issued upon        outstanding     remaining available
                                        exercise of    options, warrants      for future
                                        outstanding        and rights          issuance
                                     options, warrants
      Plan category                     and rights
                                           (a)                 (b)               (c)
<S>                                      <C>                 <C>                <C>
Equity compensation plans
approved by security
holders                                  2,796,900           $2.15              604,000
                                     --------------------------------------------------------
Equity compensation plans
not approved by security
holders                                    458,600           $0.84                --
                                     --------------------------------------------------------
Total                                    3,255,500           $1.97                --
                                     ========================================================
</TABLE>

                                                                               9
<PAGE>

ITEM 6.  Management's Discussion and Analysis or Plan of Operation
         ----------------------------------------------------------

Executive Summary

Overview - During fiscal 2006, we were successful in implementing our strategy
to expand the distribution of our own branded products. As a result, the
Company's branded products are now being used in approximately 2,700 long term
care facilities, dialysis clinics and bariatric clinics. Additionally, in March
2006, a randomized, controlled clinical trial was published in the peer-reviewed
journal Advances in Skin and Wound Care, reporting a 96% greater improvement in
pressure ulcer healing among nursing home residents receiving standard care plus
Pro-Stat(R), compared to a control group receiving standard care plus a placebo.

Fiscal 2006 Highlights

Sales - Our sales increased approximately 55%, to $7,310,500, during the fiscal
year. The sales increase was primarily the result of expanded distribution of
our Pro-Stat(R) line of hydrolyzed, liquid, modular protein. Sales of the
Company's branded products increased approximately 82%, to $5,397,100, during
the fiscal year. The number of nursing homes and clinics using our products
increased by approximately 1,565 during the fiscal year, with approximately 325
additional facilities added in the fourth fiscal quarter.

New Product Development - We completed development of, and began marketing, our
Pro-Stat(R) Advanced Wound Care and Fiber-Stat(TM) laxation liquid products
during the fourth fiscal quarter. Both products are expected to contribute to
our sales during fiscal year 2007.

Cash Balance and Cash Flow - Our cash balance at January 31, 2006 was
$2,361,200. For the year, cash provided by operating activities totaled $358,600
on a reported net loss of $176,900. The Company's total cash position increased
by $358,500 and accounts receivable increased by $232,600 from the prior year.

Fiscal 2007 Expectations

         We expect our revenues to continue to grow as a result of: our ongoing
efforts to expand distribution of our branded products; the sales of new
products introduced in the fourth quarter of fiscal year 2006; and the
publication of the pressure ulcer clinical trial results. We expect these
efforts to result in a profit from operations during fiscal year 2007. However,
after including non-cash charges for the amortization of debt discount from our
2002-2003 convertible notes and warrants, and non-cash equity-based compensation
charges, we expect to report a net loss for fiscal year 2007.

Results of Operations

         The following discussion of the financial condition and results of
operation of the Company should be read in conjunction with the Consolidated
Financial Statements and the related Notes included elsewhere in this report.

Fiscal Year Ended January 31, 2006 Compared to Fiscal Year Ended January 31,
2005

         Sales for the fiscal year ended January 31, 2006 were $7,310,500 as
compared with $4,727,400 for the fiscal year ended January 31, 2005, an increase
of 54.6%. This increase was primarily attributable to an increase in branded
product sales to approximately $5,397,100 from $2,959,800. Almost all of the
Company's branded product sales were from formulations of hydrolyzed collagen.
Private label sales increased to approximately $1,913,400 from $1,767,600 for
the comparable prior year period.

         Cost of sales for the fiscal year ended January 31, 2006 was $3,523,900
or 48.2% of sales, as compared with $2,307,800 for the fiscal year ended January
31, 2005, or 48.8% of sales. Gross profit percentage increased from 51.2% to
51.8% for the fiscal year ended January 31, 2006 compared to the fiscal year
ended January 31, 2005. This increase in gross profit percentage was primarily
due to an increase in the sales of branded products.

         Selling, general and administrative expenses for the fiscal year ended
January 31, 2006, increased by $840,000 to $3,274,900, from $2,434,900 for the
fiscal year ended January 31, 2005. This increase was primarily attributable to

                                                                              10
<PAGE>

an increase in selling and marketing expenses of $457,400. This increase is due
to expanded marketing of the Company's branded products. For the fiscal year
ended January 31, 2006 selling, general and administrative expenses consisted of
personnel costs of $845,600; selling and marketing expenses of $1,600,000; legal
and professional costs of $339,900; insurance expense of $174,100; rent expense
of $105,900; travel expenses of $90,600 and other operating costs of $118,800.

         For the fiscal year ended January 31, 2006, the Company had operating
income of $511,700 as compared to an operating loss of $15,300 for the fiscal
year ended January 31, 2005. The operating income for the fiscal year ended
January 31, 2006 was primarily due to an increase in gross profit resulting from
increased sales of branded products.

         Interest expense was $749,500 for the fiscal year ended January 31,
2006 and interest income was $60,900 as compared to $350,500 and $33,600,
respectively, for the fiscal year ended January 31, 2005. The increase in
interest expense was primarily due to an increase in the non-cash amortization
of debt discount from $81,800 in the prior fiscal year to $526,300 for the
fiscal year ended January 31, 2006. (See Note 12-Restatements to the
consolidated financial statements)

         The Company incurred a net loss for the fiscal year ended January 31,
2006 of $176,900 or ($0.06) per share compared to a net loss for the fiscal year
ended January 31, 2005 of $332,200 or ($0.12) per share. (See Note
12-Restatements to the consolidated financial statements).

Fiscal Year Ended January 31, 2005 Compared to Fiscal Year Ended January 31,
2004

         Sales for the fiscal year ended January 31, 2005 were $4,727,400 as
compared with $2,173,400 for the fiscal year ended January 31, 2004, an increase
of 118%. This increase was primarily attributable to an increase in branded
product sales to approximately $2,959,800 from $586,300. Almost all of the
Company's branded product sales were from formulations of hydrolyzed collagen.
Private label sales increased to approximately $1,767,600 from $1,587,100 for
the comparable prior year period.

         Cost of sales for the fiscal year ended January 31, 2005 was $2,307,800
or 48.8% of sales, as compared with $1,127,500 for the fiscal year ended January
31, 2004, or 51.9% of sales. Gross profit percentage increased from 48.1% to
51.2% for the fiscal year ended January 31, 2005 compared to the fiscal year
ended January 31, 2004. This increase in gross profit percentage was primarily
due to an increase in higher margin branded product sales and included the
negative impact of a non-recurring $31,000 reserve for obsolete inventory for
the fiscal year ended January 31, 2005.

         Selling, general and administrative expenses for the fiscal year ended
January 31, 2005, increased by $445,000 to $2,434,900, from $1,989,900 for the
prior year comparable period. This increase was primarily attributable to an
increase in selling and marketing expenses of $621,600. This increase is due to
expanded marketing of the Company's branded products. For the fiscal year ended
January 31, 2005 selling, general and administrative expenses consisted of
personnel costs of $819,900; selling and marketing expenses of $1,142,600; legal
and professional costs of $102,300; insurance expense of $108,300; and other
operating costs of $261,800.

         Interest expense was $350,500 for the fiscal year ended January 31,
2005 and interest income was $33,600 as compared to $635,200 and $20,100,
respectively, for the fiscal year ended January 31, 2004. The decrease in
interest expense was primarily due to the lower charge to interest expense for
the unamortized debt discount of converted debt (from $450,000 to $74,900). (See
Note 12-Restatements to the consolidated financial statements) offset by the
accrual of a full year of interest for convertible promissory notes issued
during fiscal 2004.

         For the fiscal year ended January 31, 2005, the Company had an
operating loss of $15,300 as compared to an operating loss of $944,000 for the
fiscal year ended January 31, 2004. The decrease in operating loss was primarily
due to an increase in gross profit resulting from increased sales of higher
margin branded products.

         The Company incurred a net loss for the fiscal year ended January 31,
2005 of $332,200 or ($.12) per share compared to a net loss for the fiscal year
ended January 31, 2004 of $1,559,100 or ($.67) per share. (See Note
12-Restatements to the consolidated financial statements).

                                                                              11
<PAGE>

Liquidity and Capital Resources

         At January 31, 2006, the Company had cash of $2,361,200 as compared to
cash of $2,002,700 at January 31, 2005. At January 31, 2006, approximately 99%
of accounts receivable were less than 30 days past due. Cash provided by
operations during the fiscal year ended January 31, 2006 was $358,600 as
compared to the cash used for operations of $137,200 in the comparable period of
the prior fiscal year.

         From April 29, 2003 to August 1, 2003, the Company borrowed $3,127,500
from various individuals and issued its 2003 Notes. Each of the 2003 Notes
evidencing the loans is substantially the same, other than the principal amount
thereof. The 2003 Notes are for a term of three years. The 2003 Notes, including
accrued and unpaid interest, are convertible at any time prior to maturity at
the option of the note-holder into shares of the Company's common stock at a
conversion price of $0.75 per share. The 2003 Notes, including accrued and
unpaid interest, automatically convert at any time prior to maturity if the
Company completes an equity financing in which the Company obtains net proceeds
of $2,000,000 or more, at a conversion rate that is the lower of $0.75 per share
or the price per share sold in the equity financing. If the price per share in
such equity financing is equal to or less than $0.75, the 2003 Notes will be
converted into shares of either the Company's preferred stock or common stock,
depending upon the class of equity securities sold by the Company in such
financing. If the price per share in such equity financing is more than $0.75,
the 2003 Notes will be converted into shares of the Company's common stock. In
connection with this transaction, the Company also issued to the investors
common stock purchase warrants. On August 5, 2004, $37,500 of the 2003 Notes and
accrued interest of $3,000 was converted into 54,066 shares of common stock. On
November 18, 2004, $37,500 of the 2003 Notes and accrued interest of $3,900 was
converted into 55,140 shares of common stock. At January 31, 2006, the
outstanding balance of the 2003 Notes was $3,052,500 ($527,700 net of
unamortized debt discount, See Note 12 to the consolidated financial statements)
and the accrued and unpaid interest was approximately $633,200, all of which
will become due between April 29 and August 1, 2006 unless converted into shares
of the Company's common stock prior to those dates. Given the current price of
its shares, the Company expects that the notes and interest will be converted
into shares of common stock on or before the due dates of the notes. However, if
the notes are not converted into shares of common stock, the Company expects
that the proceeds from the exercise of its warrants, when combined with its
previously existing cash on hand, will be sufficient to redeem the notes for
cash.

         In December 2003, the Company entered into a Clinical Trial Agreement
wherein the Company agreed to implement a clinical development program and
pursue a patent for one of its products in exchange for two loans aggregating
$250,000 from two private investors. As additional consideration, the Company
issued warrants to the investors to purchase up to 111,111 shares of the
Company's common stock. The warrants have a three-year term and are exercisable
at $3.00 per share. In addition, the investors have agreed to assist the Company
in the completion of the clinical trials and the dissemination and publication
of the clinical trial results. The loans are evidenced by convertible promissory
notes that are payable in a single installment on their third anniversary. The
interest rate was to be determined by calculating one-half percent for each one
percent increase in actual sales over projected sales (as set forth in the
convertible promissory notes) during the period July 1, 2004 through June 30,
2005. Since actual sales did not exceed projected sales as set forth in the
notes, no additional interest will be accrued and the interest previously
accrued through April 30, 2005, was reversed. The notes are convertible at any
time at a conversion price of $2.25 per share. The notes are unsecured and may
be prepaid without penalty. At January 31, 2006, the outstanding balance of the
2003 notes was $250,000 ($5,500 net of unamortized debt discount, See Note 12 to
the consolidated financial statements).

         The Company's future capital requirements will depend on many factors
including: the amount of its 2003 Notes it is required to redeem for cash, the
number of its outstanding warrants that are exercised, costs of its sales and
marketing activities and its education programs for its markets, competing
product and market developments, the costs of developing new products, the costs
of expanding its operations, and its ability to continue to generate positive
cash flow from its sales.

         If the Company raises additional funds through the issuance of common
stock or convertible preferred stock, the percentage ownership of its
then-current stockholders will be reduced and such equity securities may have
rights, preferences or privileges senior to those of the holders of its common
stock. If the Company raises additional funds through the issuance of additional
debt securities, these new securities could have certain rights, preferences and
privileges senior to those of the holders of its common stock, and the terms of
these debt securities could impose restrictions on its operations.

                                                                              12
<PAGE>

Critical Accounting Policies:

Accounts Receivable - The Company provides an allowance for doubtful accounts
equal to the estimated uncollectible amounts in trade accounts receivable. The
Company's estimate is based on a review of the current status of these accounts.
It is reasonably possible that the Company's estimate of the allowance for
doubtful accounts will change. Accounts receivable are presented net of an
allowance for doubtful accounts of $29,600 and $9,600 at January 31, 2006 and
2005, respectively.

Patent Application Costs - Patent application costs relate to the Company's U.S.
patent applications and consist primarily of legal fees, the underlying clinical
studies and other direct fees. The recoverability of the patent application
costs is dependent upon, among other factors, the success of the underlying
clinical studies used to support the patent.

Stock-Based Compensation - The Company accounts for employee stock options in
accordance with Accounting Principles Board Opinion No. 25 (APB 25), "Accounting
for Stock Issued to Employees." The Company recognized no compensation expense
related to employee stock options, as no options were granted at a price below
the market price on the day of grant.

         Statement of Financial Accounting Standards No. 123 "Accounting for
Stock Based Compensation" (SFAS 123) which prescribes the recognition of
compensation expense based on the fair value of options on the grant date,
allows companies to continue applying APB 25 if certain pro forma disclosures
are made assuming hypothetical fair value method application. See Note 9 -
Stockholders' Equity for pro forma disclosures required by SFAS 123 plus
additional information on the Company's stock options.

         In December 2004, the Financial Accounting Standards Board issued a
revision of SFAS 123, Accounting for Stock-Based Compensation, Statement No.
123R. Statement No. 123R supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees, and its related implementation guidance and it establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity's equity instruments or that may be
settled by the issuance of those equity instruments. Statement No. 123R requires
a public entity to measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date fair value of the
award. That cost will be recognized over the period during which an employee is
required to provide service in exchange for the award (usually the vesting
period). No compensation cost is recognized for equity instruments for which
employees do not render the requisite service. The Company will be required to
apply the provisions of Statement No. 123R beginning with its fiscal quarter
commencing on February 1, 2006, and therefore the Statement had no impact to the
consolidated financial statements for the year ended January 31, 2005. The
Company has not yet determined the method of adoption or the effect that the
adoption will have on its financial position or results of operations.

                                                                              13
<PAGE>

Item 7: FINANCIAL STATEMENTS
        --------------------

         See the Company's Consolidated Financial Statements, including the
related notes thereto, beginning on page F-1.

Item 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        ---------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

         None

Item 8A: CONTROLS AND PROCEDURES
         -----------------------

         An evaluation was performed, under the supervision and with the
participation of management, including the Company's principal executive officer
and principal accounting officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined under
Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act of 1934, as
amended) as of the end of the fiscal year covered by this report. Based upon
that evaluation, the Company's principal executive officer and principal
accounting officer concluded that the Company's disclosure controls and
procedures were effective as of January 31, 2006, in timely alerting them to
material information regarding the Company and its business (including the
Company's consolidated subsidiary) that is required to be included in the
Company's periodic Securities and Exchange Commission reports.

         There were no changes in the Company's internal controls over financial
reporting that materially affected, or are reasonably likely to materially
affect the Company's internal control over financial reporting during the fiscal
quarter ended January 31, 2006.

         It should be noted that a control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. As a result, there can be no assurance
that a control system will succeed in preventing all possible instances of error
and fraud. The Company's disclosure controls and procedures are designed to
provide reasonable assurance of achieving their objectives, and the conclusions
of our Chief Executive Officer, and Principal Accounting Officer are made at the
"reasonable assurance" level.

Item 8B. OTHER INFORMATION
         -----------------

         Effective April 17, 2006, the Company entered into an employment
agreement with Mr. Francis A. Newman, Chief Executive Officer. (See Notes to
Consolidated Financial Statements, Note 11 Commitments and Contingencies).

PART III

Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
         -------------------------------------------------------------
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
         -------------------------------------------------

         Information regarding the Company's directors and officers is set forth
in "Proposal 1 - Election of Directors" under the caption "Biographical
Information Regarding Directors" in the Company's definitive proxy statement for
its 2006 Annual Meeting of Shareholders to be held June 7, 2006. Such
information is incorporated herein by reference. Information regarding
compliance by the Company's directors and executive officers and owners of more
than ten percent of common stock with the reporting requirements of Section
16(a) of the Exchange Act is set forth in the proxy statement under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance." Such information is
incorporated herein by reference.

Item 10.  EXECUTIVE COMPENSATION
          ----------------------

         Information regarding the compensation of the Company's executive
officers and directors is set forth in "Proposal 1 - Election of Directors"
under the caption "Director Compensation" and under the caption "Summary of Cash
and Certain Other Compensation" in the proxy statement. Such information is
incorporated herein by reference.

                                                                              14
<PAGE>

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------
          AND RELATED STOCKHOLDER MATTERS
          -------------------------------

         Information regarding ownership of the Company's common stock by
certain persons is set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the proxy statement. Such information is
incorporated herein by reference.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

         Information regarding relationships or transactions between the Company
and its affiliates is set forth under the caption "Certain Relationships and
Related Transactions" in the proxy statement. Such information is incorporated
herein by reference.

Item 13. EXHIBITS
         --------

         See the Exhibit Index at the end of this report.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
         --------------------------------------

         Information regarding the Company's principal accountant fees and
services is set forth in "Proposal 2 - Ratification of Appointment of
Independent Public Accountants" in the proxy statement. Such information is
incorporated herein by reference.

                                                                              15
<PAGE>

SIGNATURES

         In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:  April 24, 2006             MEDICAL NUTRITION USA, INC.


                                  By: /s/ FRANCIS A. NEWMAN
                                      ------------------------------------------
                                      Francis A. Newman, Chief Executive Officer


         In accordance with the Exchange Act this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


Signature                     Title                                Date
---------                     -----                                ----

/s/ FRANCIS A. NEWMAN         Chairman, Chief Executive Officer   April 24, 2006
---------------------------   and Director
Francis A. Newman


/s/ JEFFREY JANCO             Principal Accounting Officer        April 24, 2006
---------------------------   (Principal Financial Officer)
Jeffrey Janco


/s/ BERNARD KORMAN            Director                            April 24, 2006
---------------------------
Bernard Korman


/s/ ANDREW HOROWITZ           Director                            April 24, 2006
---------------------------
Andrew Horowitz


/s/ MARK H. ROSENBERG         Director                            April 24, 2006
---------------------------
Mark H. Rosenberg

                                                                              16
<PAGE>

                           MEDICAL NUTRITION USA, INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                     Page(s)
                                                                     -------

Report of Independent Registered Public Accounting Firm              F-2

Consolidated Balance Sheets at January 31, 2006 and 2005             F-3

Consolidated Statements of Operations for the Years Ended
January 31, 2006 and 2005                                            F-4

Consolidated Statements of Cash Flows for the Years Ended
January 31, 2006 and 2005                                            F-5

Consolidated Statements of Stockholders' Equity for the
Years Ended January 31, 2006 and 2005                                F-6

Notes to Consolidated Financial Statements                           F-7 to F-20


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                      <C>
                             GOLDSTEIN & GANZ, P.C.

                          CERTIFIED PUBLIC ACCOUNTANTS
                                                                          Member of the American Institute
                                98 CUTTERMILL ROAD                        of Certified Public Accountants

                             GREAT NECK, NEW YORK 11021                   Member of The New York State
                                                                          Society of Certified Public
                                  ------------                            Accountants

                                (516) 487-0110

                          Facsimile (516) 487-2928
</TABLE>


             Report of Independent Registered Public Accounting Firm

To the Board of Directors of
Medical Nutrition USA, Inc.


         We have audited the accompanying consolidated balance sheets of Medical
Nutrition USA, Inc. as of January 31, 2006 and 2005 and the related consolidated
statements of operations, cash flows, and stockholders' equity for each of the
two years in the period ended January 31, 2006. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Medical Nutrition
USA, Inc. as of January 31, 2006 and 2005, and the results of its operations and
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

As described in Note 12, the January 31, 2005 financial statements have been
restated.

                                              Goldstein & Ganz, CPA's, PC
Great Neck, NY
April 14, 2006


                                      F-2
<PAGE>
<TABLE>
<CAPTION>

                           MEDICAL NUTRITION USA, INC.

                           CONSOLIDATED BALANCE SHEETS

                                                                             January 31,
                                                                     ----------------------------
                                                                         2006            2005
                                                                     ------------    ------------
                                                                                    (As Restated)
<S>                                                                  <C>             <C>
ASSETS

Current Assets:
     Cash                                                            $  2,361,200    $  2,002,700
     Accounts receivable, net of allowance of $29,600 and
     $9,600 at January 31, 2006 and January 31, 2005, respectively        711,500         498,900
     Inventories                                                          271,700          71,300
     Other current assets                                                  72,400          65,800
                                                                     ------------    ------------

       Total current assets                                             3,416,800       2,638,700

     Fixed assets, net of accumulated depreciation of
     $157,400 and $133,400, respectively                                   83,000          71,900

Other assets:
     Security deposits                                                     15,300          15,300
     Investment in Organics Corporation of America                        125,000         125,000
     Intangible assets, net of amortization                               260,100         205,700
                                                                     ------------    ------------

                                                                     $  3,900,200    $  3,056,600
                                                                     ============    ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Accounts payable and accrued expenses                           $    486,100    $    307,200
     Convertible promissory notes, net of discount                        533,200              --
     Accrued interest payable                                             633,200              --
                                                                     ------------    ------------

       Total current liabilities                                        1,652,500         307,200
Non-current Liabilities:
     Convertible promissory notes, net of discount                             --           6,900
     Accrued interest payable                                                  --         410,000
                                                                     ------------    ------------
      Total Liabilities                                                 1,652,500         724,100
                                                                     ------------    ------------
Shareholders' Equity:
     Common stock, $0.001 par value; 20,000,000 shares
       authorized; 3,015,781 and 2,892,965 issued and outstanding
       at January 31, 2006 and January 31, 2005, respectively               3,000           2,900
     Additional paid-in-capital                                        14,835,700      14,743,700
     Accumulated deficit                                              (12,580,600)    (12,403,700)
                                                                     ------------    ------------
                                                                        2,258,100       2,342,900
     Less: treasury stock, at cost                                        (10,400)        (10,400)
                                                                     ------------    ------------
     Total stockholders' equity                                         2,247,700       2,332,500
                                                                     ------------    ------------
                                                                     $  3,900,200    $  3,056,600
                                                                     ============    ============
</TABLE>

                 See notes to consolidated financial statements.

                                      F-3
<PAGE>

                           MEDICAL NUTRITION USA, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                    Years Ended January 31,
                                                 ---------------------------
                                                     2006           2005
                                                 ------------   ------------
                                                               (As Restated)

Sales                                            $  7,310,500   $  4,727,400
Cost of sales                                       3,523,900      2,307,800

                                                 ------------   ------------
Gross profit                                        3,786,600      2,419,600
                                                 ------------   ------------

Selling, general and administrative expenses        3,274,900      2,434,900

                                                 ------------   ------------
Operating income (loss)                               511,700        (15,300)
                                                 ------------   ------------
Other income (expense):
    Interest income                                    60,900         33,600
    Interest expense                                 (749,500)      (350,500)

                                                 ------------   ------------
Total other income (expense)                         (688,600)      (316,900)
                                                 ------------   ------------
Net (loss)                                       $   (176,900)  $   (332,200)
                                                 ============   ============
Basic and diluted per share data:
Net (loss)                                       $      (0.06)  $      (0.12)
                                                 ============   ============

Weighted average number of shares outstanding       2,930,448      2,821,350
                                                 ============   ============

                 See notes to consolidated financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                           MEDICAL NUTRITION USA, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                             Years Ended January 31,
                                                           ---------------------------
                                                               2006           2005
                                                           ------------   ------------
                                                                         (As Restated)
<S>                                                        <C>            <C>
Operating Activities:
  Net (loss)                                               $   (176,900)  $   (332,200)
  Adjustments to reconcile net cash provided
  by (used for) operating activities:
      Depreciation and amortization expense                      26,700         17,300
      Provision for losses on accounts receivable                20,000          6,300
      Interest expense paid with common stock                        --          1,500
      Interest expense from debt discount amortization          526,300         81,800
  Changes in operating assets and liabilities
      Accounts receivable                                      (232,600)      (343,700)
      Inventory                                                (200,400)        22,600
      Prepaid expenses                                           (6,600)         9,900
      Accounts payable                                          402,100        400,300
      Customer deposits                                              --         (1,000)
                                                           ------------   ------------
Net cash provided by (used for) operating activities            358,600       (137,200)
                                                           ------------   ------------
Investing Activities:
  Acquisition of property and equipment                         (35,100)       (54,900)
  Website development costs                                          --         (5,400)
  Trademark costs                                                (3,400)       (17,500)
  Capitalized patent costs                                      (53,700)      (119,500)
                                                           ------------   ------------
Net cash (used for) investing activities                        (92,200)      (197,300)
                                                           ------------   ------------
Financing Activities:
  Proceeds from exercise of warrants                             83,100             --
  Proceeds from exercise of options                               9,000             --
                                                           ------------   ------------
Net cash provided by financing activities                        92,100             --
                                                           ------------   ------------

Net increase (decrease) in cash                                 358,500       (334,500)
Cash - beginning of period                                    2,002,700      2,337,200
                                                           ------------   ------------

Cash - end of period                                       $  2,361,200   $  2,002,700
                                                           ============   ============
Supplemental information:
  Taxes paid during the period                             $     14,088   $     15,619
                                                           ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                           MEDICAL NUTRITION USA, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                      YEARS ENDED JANUARY 31, 2006 AND 2005


                                                  Common Stock            Additional
                                           ---------------------------     Paid-in-      Accumulated       Treasury        Total
                                              Shares         Amount        capital         Deficit          Stock          Equity
                                           ------------   ------------   ------------   ------------    ------------   ------------
<S>                                          <C>         <C>            <C>            <C>             <C>            <C>
Balance at January 31, 2004, as restated      2,783,759   $      2,800   $ 14,661,900   $(12,071,500)   $    (10,400)  $  2,582,800

Conversion of convertible notes
and accrued interest                            109,206            100         81,800                                        81,900

Net (loss), as restated                                                                     (332,200)                      (332,200)
                                           ------------   ------------   ------------   ------------    ------------   ------------

Balance at January 31, 2005, as restated      2,892,965          2,900     14,743,700    (12,403,700)        (10,400)     2,332,500

Exercise of options                              12,000                         9,000                                         9,000

Exercise of warrants                            110,816            100         83,000                                        83,100

Net (loss)                                                                                  (176,900)             --       (176,900)
                                           ------------   ------------   ------------   ------------    ------------   ------------

Balance at January 31, 2006                   3,015,781   $      3,000   $ 14,835,700   $(12,580,600)   $    (10,400)  $  2,247,700
                                           ============   ============   ============   ============    ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                      F-6
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 1. Organization and Business:
        -------------------------

         Medical Nutrition USA, Inc. (Medical Nutrition or the Company) is
primarily engaged in the development and distribution of nutritional and health
products. The Company develops nutrition-medicine products for sale to
physicians, dispensing medical clinics, nursing homes and network marketing
companies. The Company's products are sold under its own brands and/or under
private labels.

Re-incorporation - On April 22, 2003, the Company held its annual shareholder
meeting, at which the shareholders approved the re-incorporation of the Company.
To implement this, the Company formed a new Delaware corporation, Medical
Nutrition USA, Inc., a wholly owned subsidiary of the Company, which was then
named Gender Sciences, Inc. The Company merged into Medical Nutrition USA, Inc.
pursuant to an Agreement and Plan of Merger. As a result of the merger, Medical
Nutrition USA, Inc. was the surviving entity. Pursuant to the merger agreement,
each outstanding share of the Company's common stock automatically converted
into one share of common stock of Medical Nutrition USA, Inc. upon the effective
date of the merger. Each of the Company's shareholders owns shares in Medical
Nutrition USA, Inc. in the same amount and percentage as they held in the
Company immediately before the re-incorporation.

Recapitalization - Effective as of the close of business on February 7, 2003,
the Company implemented a one-for-twenty-five reverse split of the Company's
outstanding shares of common stock. The effect of the reverse stock split was to
reduce the outstanding shares from 39,109,680 to 1,564,387. The reverse stock
split also affected options, warrants and other securities convertible into or
exchangeable for shares of the Company's common stock that were issued and
outstanding immediately prior to the effective time of the stock combination.
All amounts reflected in the January 31, 2006 financial statements give effect
to the reverse stock split.

Note 2. Significant Accounting Policies:
        -------------------------------

Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries after elimination of
inter-company accounts and transactions for ongoing activities.

Concentration of credit risk - The Company maintains its cash in several bank
accounts at one high credit quality financial institution. The balances, at
times, may exceed federally insured limits. At January 31, 2006, the Company had
approximately $2.2 million in excess of FDIC insured limits.

         The financial component, which principally subjects the Company to
significant concentrations of credit risk, is trade accounts receivable.

Accounts Receivable - The Company provides an allowance for doubtful accounts
equal to the estimated uncollectible amounts in trade accounts receivable. The
Company's estimate is based on a review of the current status of these accounts.
It is reasonably possible that the Company's estimate of the allowance for
doubtful accounts will change. Accounts receivable are presented net of an
allowance for doubtful accounts of $29,600 and $9,600 at January 31, 2006 and
2005, respectively.

Inventories - Inventories, which consist primarily of purchased finished foods,
are stated at the lower of cost or market using the "first-in, first-out" (FIFO)
cost method.

Fixed Assets - Furniture, fixtures and equipment, and leasehold improvements are
stated at cost and depreciated and amortized over their estimated useful lives,
which range from 3 to 7 years. Depreciation is calculated using the
straight-line method for financial reporting purposes. Expenditures for repairs
and maintenance, which do not extend the useful life of the property, are
expensed as incurred.

                                       F-7
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 2. Significant Accounting Policies (continued):
        -------------------------------------------

Patent Application Costs - Patent application costs relate to the Company's U.S.
patent applications and consist primarily of legal fees, the underlying clinical
studies and other direct fees. The recoverability of the patent application
costs is dependent upon, among other factors, the success of the underlying
clinical studies used to support the patent.

Research and Development - The Company and its subsidiaries utilize independent
third parties to design and test certain products. These expenditures are
accounted for as research and development costs and are expensed as incurred.

Income Taxes - The Company provides for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for
Income Taxes". SFAS 109 requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the financial statement carrying amounts and the tax basis of assets and
liabilities.

Revenue Recognition - Revenue is recognized when all four of the following
conditions exist: persuasive evidence of an arrangement exists; services have
been rendered or delivery occurred; the price is fixed or determinable; and
collectibility is reasonably assured. Revenue from product sales is recognized
upon shipment of products to customers.

Stock-Based Compensation - The Company accounts for employee stock options in
accordance with Accounting Principles Board Opinion No. 25 (APB 25), "Accounting
for Stock Issued to Employees." The Company recognized no compensation expense
related to employee stock options, as no options were granted at a price below
the market price on the day of grant.

         Statement of Financial Accounting Standards No. 123 "Accounting for
Stock Based Compensation" (SFAS 123) which prescribes the recognition of
compensation expense based on the fair value of options on the grant date,
allows companies to continue applying APB 25 if certain pro forma disclosures
are made assuming hypothetical fair value method application. See Note 9 -
Stockholders' Equity for pro forma disclosures required by SFAS 123 plus
additional information on the Company's stock options.

         In December 2004, the Financial Accounting Standards Board issued a
revision of SFAS 123, Accounting for Stock-Based Compensation, Statement No.
123R. Statement No. 123R supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees, and its related implementation guidance and it establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity's equity instruments or that may be
settled by the issuance of those equity instruments. Statement No. 123R requires
a public entity to measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date fair value of the
award. That cost will be recognized over the period during which an employee is
required to provide service in exchange for the award (usually the vesting
period). No compensation cost is recognized for equity instruments for which
employees do not render the requisite service. The Company will be required to
apply the provisions of Statement No. 123R beginning with its fiscal quarter
commencing on February 1, 2006, and therefore the Statement had no impact to the
consolidated financial statements for the year ended January 31, 2006.

Earnings Per Share - The consolidated financial statement are presented in
accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128),
"earnings Per Share". Basic earnings per common share are computed using the
weighted average number of common shares outstanding during the period.

                                      F-8
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 2. Significant Accounting Policies (continued):
        -------------------------------------------

         Diluted earnings per common share incorporate the incremental shares
issuable upon the assumed exercise of stock options and warrants. In accordance
with SFAS 128, diluted earnings per share are not presented in periods during
which the Company incurred a loss from operations.

Amortization of Intangibles - Goodwill and intangible assets with indefinite
lives are not amortized but are reviewed annually, or more frequently if
impairment indicators arise, for impairment. Separable intangible assets that
are not deemed to have an indefinite life are amortized over their useful lives.

Carrying Values of Long-lived Assets - The Company evaluates the carrying values
of its long-lived assets to be held and used in the business by reviewing
undiscounted cash flows. Such evaluations are performed whenever events and
circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the projected undiscounted cash flows over the
remaining lives of the related assets does not exceed the carrying values of the
assets, the carrying values are adjusted for the differences between the fair
values and the carrying values.

Use of Estimates - In preparing financial statements in conformity with
accounting principles generally accepted in the United State of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and the disclosures of contingent assets and
liabilities at the date of the financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates.

Reclassification - Certain amounts in the January 31, 2005 financial statements
maybe reclassified to conform to the January 31, 2006 presentation.

New accounting pronouncements - In January 2003, the FASB issued FASB
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities,
an interpretation of ARB No. 51," as revised in December 2003. A Variable
Interest Entity ("VIE") is an entity with insufficient equity investment or in
which the equity investors lack some of the characteristics of a controlling
financial interest. Pursuant to FIN 46, an enterprise that absorbs a majority of
the expected losses of the VIE must consolidate the VIE. The provisions of this
statement are not applicable to the Company and therefore have not been adopted.

         In December 2004, the FASB issued SFAS No. 123(R), "Accounting for
Stock-Based Compensation" ("SFAS No. 123(R)"). SFAS No. 123(R) establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. This statement focuses primarily on
accounting for transactions in which an entity obtains employee services in
share-based payment transactions. SFAS No. 123(R) requires that the fair value
of such equity instruments be recognized as an expense in the historical
financial statements as services are performed. Prior to SFAS No. 123(R), only
certain pro forma disclosures of fair value were required. The provisions of
this statement are effective for small business filers the first interim
reporting period that begins after December 15, 2005.

         In November 2004, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 151 "Inventory Costs." This statement amends Accounting
Research Bulletin No. 43, Chapter 4, "Inventory Pricing" and removes the "so
abnormal" criterion that under certain circumstances could have led to the
capitalization of these items. SFAS No. 151 requires that idle facility expense,
excess spoilage, double freight and re-handling costs be recognized as
current-period charges regardless of whether they meet the criterion of "so
abnormal." SFAS 151 also requires that allocation of fixed production overhead
expenses to the costs of conversion be based on the normal capacity of the
production facilities. The provisions of this statement are effective for all
fiscal years beginning after June 15, 2005.

         On December 16, 2004, the FASB issued SFAS No. 153, "Exchange of
Non-monetary Assets", an amendment of Accounting Principles Board ("APB")
Opinion No. 29, which differed from the International Accounting Standards
Board's ("IASB") method of accounting for exchanges of similar productive
assets.

                                      F-9
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 2. Significant Accounting Policies (continued):
        -------------------------------------------

Statement No. 153 replaces the exception from fair value measurement in APB No.
29, with a general exception from fair value measurement for exchanges of
non-monetary assets that do not have commercial substance. A non-monetary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. The statement is
to be applied prospectively and became effective for non-monetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005.

         In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections," which changes the requirements for the accounting and
reporting of a change in accounting principle. SFAS No. 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. This Statement does not change the transition
provisions of any existing accounting pronouncements, including those that are
in a transition phase as of the effective date of the Statement.

Note 3. Fixed Assets:
        ------------

         Fixed assets consisted of the following at January 31, 2006 and 2005,
respectively:

                                                        January 31,
                                                 -------------------------
                                                    2006           2005
                                                 ----------     ----------
         Furniture, fixtures and equipment       $  193,300     $  173,800
         Leasehold improvements                      47,100         31,500
                                                 ----------     ----------
                                                    240,400        205,300
         Less: Accumulated depreciation
                    and amortization                157,400        133,400
                                                 ----------     ----------
                                                 $   83,000     $   71,900
                                                 ==========     ==========

Note 4. Intangible Assets:
        -----------------

         Intangible assets consisted of the following at January 31, 2006 and
2005, respectively:

                                                        January 31,
                                                 -------------------------
                                                    2006           2005
                                                 ----------     ----------
         Patent application costs                $  217,000     $  163,300
         Trademarks                                  44,200         40,800
         Website development costs                    6,300          6,300
                                                 ----------     ----------
                                                    267,500        210,400

         Less: Accumulated amortization               7,400          4,700
                                                 ----------     ----------
                                                 $  260,100     $  205,700
                                                 ==========     ==========


Note 5. Investment in Organics Corporation of America:
        ---------------------------------------------

         On July 31, 2003, the Company entered into an agreement with Organics
Corporation of America to purchase 5% of their issued and outstanding capital
stock for aggregate consideration of $125,000. In turn Organics Corporation of
America agreed to purchase 166,666 shares of the Company's common stock at a
purchase price of $0.75 per share for aggregate consideration of $125,000. In
addition, Organics Corporation of America agreed to assist the Company to (a)
continue to develop and improve products of the Company that have been developed
or were in the process of being developed and improved as of July 31, 2003; (b)
design, develop, implement, and provide merchantable and marketable products;
and (c) maintain the confidentiality of all proprietary product technology (see
Note 11 - "Commitments and Contingencies").

                                      F-10
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 6.  Notes Payable:
         -------------

2002 8% Convertible Promissory Notes (see Note 12)
--------------------------------------------------

         In November 2002, the Company borrowed $450,000 from two individuals
and issued its 8% Convertible Promissory Notes (the "2002 Notes"). Subsequent to
the loan transaction, one individual became a director of the Company and the
other became a director and CEO of the Company. Each of the 2002 Notes
evidencing the loans is substantially the same other than the principal amount
thereof. The 2002 Notes were for a term of three years. The 2002 Notes,
including accrued and unpaid interest, were convertible at any time prior to
maturity at the option of the noteholder into shares of the Company's common
stock at a conversion price of $1.25 per share. The 2002 Notes, including
accrued and unpaid interest, were convertible at any time prior to maturity
automatically if the Company completed an equity financing in which the Company
obtained net proceeds of $2,000,000 or more, at a price that is the lower of
$1.25 per share or the price per share sold in the equity financing. In
connection with this transaction, the Company also issued to the investors
common stock purchase warrants at a ratio of one warrant for each share to be
converted. The warrants can be exercised for a three-year period at a price of
$1.25 per share. In connection with the issuance by the Company of its 2003 8%
Convertible Promissory Notes and common stock purchase warrants (see below), the
conversion rate of the 2002 Notes and the exercise price of the related common
stock purchase warrants was changed to $0.75 per share. On July 31, 2003, the
outstanding balance of $450,000 and the accrued interest of $26,400 were
converted into 635,239 shares of common stock of the Company (see Note 9 -
"Stockholders' Equity"). See Note 12 concerning the debt discount and related
amortization for the value of the warrants and conversion feature of the notes.

2003 8% Convertible Promissory Notes
------------------------------------

         From April 29, 2003 to August 31, 2003, the Company borrowed an
additional $3,127,500 from various individuals and issued the 2003 Notes. Each
of the 2003 Notes evidencing the loans is substantially the same, other than the
principal amount thereof. The 2003 Notes are for a term of three years. The 2003
Notes, including accrued and unpaid interest, if any, are convertible at any
time prior to maturity at the option of the note-holder into shares of the
Company's common stock at a conversion price of $0.75 per share. The 2003 Notes,
including accrued and unpaid interest, if any, automatically convert at any time
prior to maturity if the Company completes an equity financing in which the
Company obtains net proceeds of $2,000,000 or more, at a rate that is the lower
of $0.75 per share or the price per share sold in the equity financing. If the
price per share in such equity financing is equal to or less than $0.75, the
2003 Notes will be converted into shares of either the Company's preferred stock
or common stock, depending upon the class of equity securities sold by the
Company in such financing. If the price per share in such equity financing is
more than $0.75, the 2003 Notes will be converted into shares of the Company's
common stock. In connection with this transaction, the Company also issued to
the investors common stock purchase warrants. On August 5, 2004, $37,500 of the
2003 Notes and accrued interest of $3,000 was converted into 54,066 shares of
common stock. On November 18, 2004, $37,500 of the 2003 Notes and accrued
interest of $3,900 was converted into 55,140 shares of common stock. At January
31, 2006, the outstanding balance of the 2003 Notes was $3,052,500 ($527,700 net
of unamortized discount), and the accrued and unpaid interest was approximately
$633,200. See Note 12 concerning the debt discount and related amortization for
the value of the warrants and conversion feature of the notes.

December 2003 Convertible Promissory Notes
------------------------------------------

In December 2003, the Company entered into a Clinical Trial Agreement wherein
the Company agreed to implement a clinical development program and pursue a
patent for one of its products in exchange for two loans aggregating $250,000
from two private investors. Subsequent to the loan transaction one individual
became a director of the Company. As additional consideration, the Company
issued warrants to the investors to purchase up to 111,111 shares of the
Company's common stock (See Note 8 - Stockholders' Equity). The warrants have a
three-year term and are exercisable at $3.00 per share. In addition, the

                                      F-11
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 6.  Notes Payable (continued):
         -------------------------

investors have agreed to assist the Company in the completion of the clinical
trials and the dissemination and publication of the clinical trial results. The
loans are evidenced by convertible promissory notes that are payable in a single
installment on their third anniversary. The interest rate was to be determined
by calculating one-half percent for each one percent increase in actual sales
over projected sales (as set forth in the convertible promissory notes) during
the period July 1, 2004 through June 30, 2005. Since actual sales did not exceed
projected sales as set forth in the notes, no interest will be accrued. The
interest previously accrued through April 30, 2005, was reversed. The notes are
convertible at any time at a conversion price per share of $2.25. The notes are
unsecured and may be prepaid without penalty. At January 31, 2006, the
outstanding balance of the loans was $250,000 ($5,500 net of unamortized debt
discount). See Note 12 concerning the debt discount and related amortization for
the value of the warrants and conversion feature of the notes.

Notes Payable at January 31, 2006 and 2005 consisted of the following:

                                                         January 31,
                                                 -------------------------
                                                    2006           2005
                                                 ----------     ----------
2003 Convertible promissory notes, bearing
interest at 8% maturing at varying dates
from April 29, through August 1, 2006            $3,052,500     $3,052,500

December 2003 Convertible promissory notes,
maturing in December 2006                           250,000        250,000
                                                 ----------     ----------
                                                  3,302,500      3,302,500
Less: Unamortized debt discount                   2,769,300      3,295,600
                                                 ----------     ----------
                                                    533,200          6,900
Less: current portion                               533,200             --
                                                 ----------     ----------
Long term portion                                        --     $    6,900
                                                 ==========     ==========

Note 7. Major Customers:
        ---------------

         For the year ended January 31, 2006 two customers were responsible for
approximately $2,511,900 of sales, representing 34% of the Company's sales. For
the year ended January 31, 2005 one customer was responsible for approximately
$1,475,100 of sales, representing 31% of the Company's sales.

 Note 8. Lease Commitments:
         -----------------

         The Company leases an office and warehouse facility in New Jersey under
a lease, which expires in December 2009. Total gross rental expense, which
includes escalations for common area maintenance and real estate taxes, for the
years ended January 31, 2006 and 2005 was approximately $114,300 and $96,300,
respectively.

The future minimum lease payments inclusive of escalations are as follows:

                  Years Ended January 31,

                          2007                   $  112,600
                          2008                      115,000
                          2009                      117,400
                          2010                      109,800
                                                 ----------
                                                 $  454,800
                                                 ==========


                                      F-12
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 8. Lease Commitments (continued):
        -----------------------------

         The Company sublet (on a month-to-month basis) a portion of its
facility to various entities for which it received rental income of
approximately $8,400 and $43,000 for the years ended January 31, 2006 and 2005,
respectively. Since the third quarter of the fiscal year ended January 31, 2006,
the Company no longer sublets any portion of its facility.

         The Company leases vehicles and equipment under various operating
leases. During the years ended January 31, 2006 and 2005, the total payments
under such leases were $10,500 and $8,400, respectively.

         The future minimum lease payments are as follows:

                  Years Ended January 31,

                          2007                   $    9,800
                          2008                        6,300
                          2009                          900
                          2010                          600
                                                 ----------
                                                 $   17,600
                                                 ==========

Note 9. Stockholders' Equity:
        --------------------

Preferred Stock
---------------

         On April 22, 2003, at the annual shareholder meeting, the shareholders
approved the authorization of 5,000,000 shares of preferred stock with $0.001
par value per share. The Board of Directors has the power to determine the
powers, preferences and rights, and the qualifications, limitations or
restrictions, of the authorized and un-issued preferred stock. As of January 31,
2006, no preferred stock was issued.

Common Stock
------------

         During the year ended January 31, 2004, the Company issued 291,000
shares of its common stock valued at $205,900 for the payment of incentive
compensation to three of its officers. As further consideration for their
efforts, four officers of the Company were issued, in the aggregate, options to
purchase 500,000 shares of the Company's common stock at $2.00 per share and two
employees were issued, in the aggregate, options to purchase 80,000 shares of
the Company's common stock at $1.20 per share. As of January 31, 2006, none of
the options were exercised.

         Additionally, during the year ended January 31, 2004, the Company
issued 126,500 shares of its common stock in satisfaction of $248,000 of
liabilities to certain related parties, which were reflected on the balance
sheet at January 31, 2003. In connection with the satisfaction of $245,000 of
such liabilities, the Company also issued warrants to purchase 11,625 shares of
common stock at an exercise price of $2.50 per share as consideration for
accrued interest of $29,100. As of January 31, 2006, none of the warrants were
exercised.

Options
-------

         During the year ended January 31, 2006, the Company issued options to
purchase 604,400 shares of its common stock with a three-year vesting schedule,
at exercise prices ranging from $2.30 to $3.15 per share to its four officers
and sixteen other employees as consideration for their efforts. The two members
of the Medical Advisory Board were each issued options to purchase 5,000 shares
of the Company's common stock, which are immediately exercisable, at an exercise
price of $3.15 per share as an annual award. The four members of the Board of
Directors were each issued options to purchase 15,000 shares of the Company's
commons stock to be vested over one year, at an exercise price of $3.00 per
share as an annual award. In addition, three of the four board members who are

                                      F-13
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 9. Stockholders' Equity (continued):
        --------------------------------

also committee chairpersons were each issued additional options to purchase
5,000 shares of the Company's common stock also to be vested over one year, at
an exercise price of $3.00 per share as consideration for their efforts.

         The following table summarizes the outstanding and exercisable options
at January 31, 2006 (contractual life in years):
<TABLE>
<CAPTION>

                                      Options Outstanding               Options exercisable
                                      -------------------               -------------------
                                           Weighted        Weighted                Weighted
                                           average          average                 average
                                          remaining        exercise                exercise
     Range of prices         Number          life            price        Number     price
     ---------------       ---------         -----          ------      ---------   ------
<S>                        <C>                 <C>          <C>         <C>         <C>
         $0.50-$3.00       3,199,000           7            $ 1.92      1,815,692   $ 1.53
         $3.01-$7.50          52,500          10              3.12         10,000     3.15
        $7.51-$21.88           4,000           4             21.88          4,000    21.88
     -------------------------------------------------------------------------------------
        $0.50-$21.88       3,255,500           7            $ 1.97      1,829,692   $ 1.58
     -------------------------------------------------------------------------------------
<CAPTION>


         A summary of option transactions for the two years ended January 31,
2006, follows:

                                                                               Weighted
                                                                               Average
                                                          Options          exercise price
     -------------------------------------------------------------------------------------
<S>                            <C> <C>                   <C>                          <C>
        Outstanding at January 31, 2004                  1,598,310                    3.59
     -------------------------------------------------------------------------------------
        Granted                                          1,221,500                    2.22
        Exercised                                                -                      --
        Expired or Surrendered                              45,770                    4.78
     -------------------------------------------------------------------------------------
        Outstanding at January 31, 2005                  2,774,040                   $2.96
     -------------------------------------------------------------------------------------
        Granted                                            689,400                    2.76
        Exercised                                           12,000                     .75
        Expired or Surrendered                             195,940                   18.94
     -------------------------------------------------------------------------------------
        Outstanding at January 31, 2006                  3,255,500                   $1.97
     -------------------------------------------------------------------------------------

<CAPTION>

Pro Forma Fair Value Disclosures

         Had compensation expense for the Company's stock options been
recognized based on the fair value on the grant date under the methodology
prescribed by SFAS 123(R), the Company's income from continuing operations and
earnings per share for the years ended January 31, 2006 and 2005, would have
been impacted as shown in the following table:

                                                  January 31, 2006        January 31, 2005
------------------------------------------------------------------------------------------
<S>                                                     <C>                     <C>
Net Income (loss)
        As reported                                     $ (176,900)             $ (332,200)
        Pro forma                                       $ (626,200)             $ (592,100)
Basic and diluted earnings per share
        As reported                                     $    (0.06)             $    (0.12)
        Pro forma                                       $    (0.22)             $    (0.21)
------------------------------------------------------------------------------------------
</TABLE>

                                      F-14
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 9. Stockholders' Equity (continued):
        --------------------------------

Class A and Class B Warrants
----------------------------

         In November 2002, in connection with the issuance of its 2002 8%
Convertible Promissory Notes, the Company also issued, to the investors of the
Notes, Class B common stock purchase warrants exercisable for an aggregate
600,000 shares of the Company's common stock, at $0.75 per share (see Note 6).
The Warrants were accelerated to April 14, 2006, and have therefore expired (see
Note 14).

         In July 2003, in connection with the issuance of the Company's 2003 8%
convertible promissory notes, the Company also issued, to certain shareholders
who purchased 390,000 shares of the Company's common stock with specific
anti-dilution provisions in April 2002, Class A common stock purchase warrants
exercisable for an aggregate 730,000 shares of the Company's common stock, at
$0.50 per share in exchange for foregoing any future rights to additional shares
under the anti-dilution provisions (see Note 6). The Warrants were accelerated
to April 14, 2006, and have therefore expired (see Note 14).

         In July 2003, in connection with the issuance of the Company's 2003 8%
convertible promissory notes, the Company also issued, to the investors of the
Notes, Class B common stock purchase warrants exercisable for an aggregate of
approximately 4,170,000 shares of the Company's common stock, at $0.75 per share
(see Note 6). The Warrants were accelerated to April 14, 2006, and have
therefore expired (see Note 14).

         In June 2005, the Class A and Class B Warrants were registered and
began trading on the OTC Bulletin Board. The selling securityholders may sell
these Warrants from time to time in various types of transactions, including in
the principal market on which our warrants are traded or listed or in privately
negotiated transactions. At January 31, 2006, approximately 110,800 of the Class
B Warrants were exercised. At January 31, 2006, 730,000 of the Class A Warrants
and approximately 4,659,200 of the Class B Warrants were outstanding.

Other Warrants
--------------

         In April 2003, in connection with the conversion of the principal
amount of various loans from an affiliate, the Company issued to the affiliate,
common stock purchase warrants exercisable for an aggregate 11,625 shares of the
Company's common stock, at $2.50 per share (see Note 12). The Warrants may be
exercised at any time, and from time to time, for a period of three years from
issuance (see Note 6). At January 31, 2006, none of the warrants were exercised.

         In April 2003, in connection with the issuance of a fair market value
opinion, the Company issued common stock purchase warrants exercisable for an
aggregate 50,000 shares of the Company's common stock, at $3.00 per share (see
Note 12). The Warrants may be exercised at any time, and from time to time, for
a period of three years from issuance (see Note 6). At January 31, 2006, none of
the warrants were exercised.

         In December 2003, in connection with the issuance of the Company's 2003
convertible promissory notes, the Company also issued, to the private investors
of the Notes, common stock purchase warrants exercisable for an aggregate
111,111 shares of the Company's common stock, at $3.00 per share (see Note 12).
The Warrants may be exercised at any time, and from time to time, for a period
of three years from issuance (see Note 6). At January 31, 2006, none of the
warrants were exercised.

                                      F-15
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 9. Stockholders' Equity (continued):
        --------------------------------

2000 Long-Term Incentive Stock Plan
-----------------------------------

         On October 19, 2000, the stockholders approved the 2000 Long-Term
Incentive Stock Plan (the Plan). Under the 2000 Plan, the Company may grant
stock options, stock appreciation rights (SAR's) or stock awards. All employees
of the Company are eligible to participate in the 2000 Plan. The 2000 Plan
authorizes the issuance, in the aggregate, of up to 240,000 shares of common
stock. No stock option, SAR or other award, may be granted under the 2000 Plan
after October 27, 2009. The maximum number of shares for which awards may be
granted to any person in any fiscal year is 12,000. The purchase price per share
for each stock option may not be less than 100% of the fair market value on the
date of grant and may not be for more than ten years. In the case of incentive
stock options granted to an optionee who, at the time of grant, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company, the exercise price per share may not be less than 110% of
the fair market value on the date of grant and the option may not be exercisable
for more than five years. At January 31, 2006, 240,000 option grants were
outstanding under the Plan.

2003 Omnibus Equity Incentive Plan
----------------------------------

         Effective as of April 22, 2003, the board adopted the 2003 Omnibus
Equity Incentive Plan (the 2003 Plan). The purpose of the 2003 Plan is to
promote the long-term success of the company and the creation of stockholder
value by (a) encouraging employees, outside directors and consultants to focus
on critical long-range objectives, (b) encouraging the attraction and retention
of employees, outside directors and consultants with exceptional qualifications
and (c) linking employees, outside directors and consultants directly to
stockholder interests through increased stock ownership. The 2003 Plan seeks to
achieve this purpose by providing for awards in the form of restricted shares,
stock units, options (which may constitute incentive stock options or
non-statutory stock options) or stock appreciation rights.

         Initially, the 2003 Plan authorized the issuance, in the aggregate, of
up to 1,000,000 shares of common stock. Additionally, the 2003 Plan was
increased by 250,000 Common Shares as of January 1, 2004. At the 2004 Annual
Meeting the 2003 Plan was amended to provide that as of January 31, of each
year, commencing with January 31, 2005, there shall be an automatic increase in
the aggregate number of Common Shares reserved for issuance under the 2003 Plan
in an amount equal to the number of Common Shares issued by reason of awards
being granted, exercised or settled, as applicable, during the immediately
preceding fiscal year. At January 31, 2006, 2,556,900 options are issued and
outstanding.

Note 10. Income Taxes:
         ------------

         The Company uses the liability method of accounting for income taxes.
No recognition has been made of the possible benefits of available net operating
loss carry-forwards due to the uncertainty that future years will provide income
to be offset by such available benefits. The Company and its subsidiary have net
operating loss carry-forwards of approximately $9,489,600, which could be
available to reduce income otherwise subject to income tax. The possible
deferred income tax benefits of such available net operating losses are
estimated to be approximately $3,324,500 as of January 31, 2006, with a
valuation allowance of an equal amount. The losses expire through 2026.

Note 11. Commitments and Contingencies:
         -----------------------------

Government Regulations
----------------------

         The Company's nutritional and health products are produced by third
parties in various plants under applicable government regulations. The Company
depends upon its vendors to comply with such regulations. Failure by such
vendors to comply with the applicable regulations could result in fines and/or
seizure of the food products. Presently, the Company is not a party to any such
lawsuits.

                                      F-16
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 11. Commitments and Contingencies (continued):
         -----------------------------------------

Product Development and Supply Agreement
----------------------------------------

         On July 31, 2003, the Company entered into a ten-year product
development and supply agreement with Organics Corporation of America. Organics
Corporation of America has agreed to assist the Company to continue to develop
and improve products that have been developed or are in the process of being
developed and improved; design, develop, implement, and provide merchantable and
marketable products; and maintain the confidentiality of all proprietary product
technology. Under the agreement, in consideration for Organics Corporation of
America's performance, the Company shall make payment to them for all invoices
submitted for products and services performed, at costs to which both parties
have agreed upon. In connection with this transaction, the Company and Organics
Corporation of America purchased shares of each other's common stock. (See Note
5 - "Investment in Organics Corporation of America").

Employment Contract
-------------------

         Effective April 17, 2006, the Company entered into an employment
agreement with Mr. Francis A. Newman, Chief Executive Officer. This agreement
renews automatically on April 17 of each succeeding year unless terminated as
provided within the terms of the agreement. Under the agreement, Mr. Newman is
entitled to a minimum base salary of $185,500 with annual salary increases at
the discretion of the Board of Directors, and an annual incentive bonus in an
amount up to 100% of base salary if the Company achieves agreed-upon targets.
Additionally, Mr. Newman is entitled to various other benefits (such as travel
allowance and participation in employee benefit plans).

Bonus Plan
----------

         On June 7, 2005, the Company approved a bonus plan for officers based
50% on sales and 50% on EBITDA, with annual targets to be set at the level of
the annual operating plan approved by the Board of Directors. The percentage
combination of cash and common stock of the Company used to pay the bonuses will
be at the discretion of the Board of Directors, but in no case will the cash
portion be less than 25% of the bonuses awarded.

Note 12. Restatement:
         -----------

         As discussed in Note 6 - Notes Payable, the Company received $3,377,500
and $450,000 from the issuance of convertible promissory notes during the years
ended January 31, 2004 and 2003, respectively. In connection with these notes,
the Company issued common stock purchase warrants. The Company has determined a
debt discount and additional paid-in capital of $2,258,500 should be recorded
for the portion of the proceeds allocated to the fair value of the warrants.
This discount is amortized over the three-year term of the notes and charged to
interest expense. The financial statements have been restated to reflect this
debt discount, the related amortization expense and additional paid-in capital.
The additional amortization increased the net loss by $4,000 and $100 for the
years ended January 31, 2005 and 2004, respectively.

         Further, in accordance with FASB Emerging Issues Task Force (EITF)
Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratio, as amended by EITF Issue
No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, the
Company has determined that at the time of issuance of the notes a beneficial
conversion feature existed. The conversion price per share was lower than the
last sale price of the Company's stock on the OTC Bulletin Board on the relevant
commitment date. Accordingly, the difference of $1,569,000 should have been
accounted for as a discount to the debt issue. This discount is amortized over
the three-year term of the notes and charged to interest expense. The financial
statements have been restated to reflect this debt discount, the related
amortization expense and additional paid-in capital. The additional amortization
increased the net loss by $2,900 for the year ended January 31, 2005. The
additional amortization had no effect upon the net loss for the year ended
January 31, 2004.

                                      F-17
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 12. Restatement (continued):
         -----------------------

         The effect of the restatement on the opening balances at February 1,
2003 is to increase paid-in capital by $450,000 and to record on the balance
sheet a debt discount of $450,000.

         During the years ended January 31, 2005 and 2004, certain of the notes
were converted in accordance with their terms into the Company's common stock.
The unamortized debt discount of the converted notes was $74,900 and $450,000,
in each year respectively. The financial statements have been restated to
reflect a charge to interest expense for the unamortized debt discount of these
converted notes.

         The restatement for the fair value of the warrants and the beneficial
conversion feature of the notes has no effect on the Company's actual or
reported cash flow. The restatement does, however, affect the Company's stated
net income and loss per share for the years ended January 31, 2005 and 2004. The
impact of this correction through January 31, 2005 is to increase additional
paid in capital by $3,827,500 and to increase accumulated deficit by $531,900.
The interest expense is not deductible for tax purposes. As a result, this
adjustment has no effect on the Company's net operating loss carryforward or
deferred tax asset. Additionally, the unamortized debt discount at January 31,
2005 is $3,295,600 and is reported as a reduction to the balance of convertible
notes payable.

         The restatements for the interim periods ended April 30, 2004, July 31,
2004 and October 31, 2004 and the year ended January 31, 2005 are summarized as
follows:
<TABLE>
<CAPTION>

Balance
Sheets:
-------
                       April 30, 2004                July 31, 2004               October 31, 2004             January 31, 2005
                ---------------------------   ---------------------------  ---------------------------  --------------------------
                  Previously        As          Previously        As         Previously        As         Previously       As
                   reported      restated        reported      restated       reported      restated       reported     restated
                ---------------------------   ---------------------------  ---------------------------  --------------------------
<S>             <C>            <C>            <C>            <C>           <C>            <C>           <C>           <C>
Total assets    $  2,970,300   $  2,970,300   $  3,021,100   $  3,021,100  $  2,992,700   $  2,992,700  $  3,056,600  $  3,056,600

 Convertible
       notes
     payable       3,377,500            300      3,377,500            900     3,340,000          2,500     3,302,500         6,900

       Total
 liabilities       3,830,200        453,000      3,905,200        528,600     3,937,600        600,100     4,019,700       724,100

  Additional
     paid-in
     capital      10,834,400     14,661,900     10,834,400     14,661,900    10,874,900     14,702,400    10,916,200    14,743,700

 Accumulated
     deficit     (11,686,700)   (12,137,000)   (11,710,900)   (12,161,800)  (11,812,200)   (12,302,200)  (11,871,800)  (12,403,700)

       Total
stockholders
      equity        (859,900)     2,517,300       (884,100)     2,492,500      (944,900)     2,392,600      (963,100)    2,332,500

       Total
 liabilities
         and
stockholders
      equity'      2,970,300      2,970,300      3,021,100      3,021,100     2,992,700      2,992,700     3,056,600     3,056,600
</TABLE>

                                      F-18
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 12. Restatement (continued):
         -----------------------
<TABLE>
<CAPTION>

Statements of Operations:
------------------------
                                  Three months ended            Three months ended            Three months ended
                                    April 30, 2004                July 31, 2004                October 31, 2004
                             ---------------------------   ---------------------------   ---------------------------
                              Previously         As         Previously         As         Previously         As
                               Reported       Restated       Reported       Restated       Reported       Restated
                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>            <C>
Interest expense, net        $    (66,600)  $    (66,800)  $    (67,700)  $    (68,300)  $    (67,200)  $   (106,300)
Net loss                          (65,300)       (65,500)       (24,200)       (24,800)      (101,300)      (140,400)
Loss per share, basic and
diluted                             (0.02)         (0.02)         (0.01)         (0.01)         (0.04)         (0.05)

<CAPTION>

                                   Six months ended               Nine months ended              Year ended
                                    July 31, 2004                 October 31, 2004            January 31, 2005
                             ---------------------------   ---------------------------   ---------------------------
                              Previously         As         Previously         As         Previously         As
                               Reported       Restated       Reported       Restated       Reported       Restated
                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>            <C>
Interest expense, net        $   (134,400)  $   (135,100)  $   (201,600)  $   (241,400)  $   (268,700)  $   (350,500)
Net loss                          (89,500)       (90,300)      (190,800)      (230,700)      (250,400)      (332,200)
Loss per share, basic and
diluted                             (0.03)         (0.03)         (0.07)         (0.08)         (0.09)         (0.12)
</TABLE>

         In accordance with the accounting pronouncements as discussed above the
Company has calculated discounts to the convertible notes for the value of the
warrants (as determined using the Black-Scholes pricing model) and for the
intrinsic value of the conversion features (using the most recent quoted market
price of the Company's common stock prior to the issuance of each note). As a
result, the discounts recorded by the Company are equal to the face value of the
notes on the date of issuance. Accordingly, the net carrying value of the notes
on the date of issuance is zero. Further, in accordance with the accounting
pronouncements and based upon the terms of the notes, the Company is required to
accrete the discounts over the term of the notes using the effective interest
rate method. This results in accreting the discounts in a manner that increases
the net carrying value of the notes from zero to their face value over the
three-year term of the notes at a constant calculated interest rate. The rates
calculated to achieve this accretion range from 367.4% to 567.3%. Additionally,
upon the conversion of a note, the Company is required to record a charge to
interest expense for the remaining unamortized discount corresponding to the
converted note.

         As a result, if no notes are converted between the balance sheet date
and the maturity date of the notes, the Company will record non-cash charges to
interest expense as follows:

                                                     Non-cash Interest
               Accounting Period                      Interest Charge
               -----------------                      ---------------
         Quarter Ended April 30, 2006                 $     1,096,900
         Quarter Ended July 31, 2006                        1,529,200
         Quarter Ended October 31, 2006                        80,800
         Quarter Ended January 31, 2007                       124,700
                                                      ---------------
         Total Future Non-cash Interest Charges       $     2,831,600
                                                      ===============


                                      F-19
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2006

Note 13. Quarterly Results of Operations (unaudited):
         -------------------------------------------

         Below is a summary of the quarterly results of operations (as restated
- See Note 12) for each quarter of the years ended January 31, 2006 and 2005:

2006                       First          Second         Third         Fourth
----                   -----------    -----------    -----------    -----------
Sales                  $ 1,547,500    $ 1,925,700    $ 1,937,300    $ 1,900,000
Gross profit               815,000        991,900        991,000        988,700
Net income (loss)           (3,600)        55,600        (25,900)      (203,000)

Net income (loss)
per common share             (0.00)          0.02          (0.01)         (0.07)

2005
----
Sales                  $ 1,240,700    $ 1,116,800    $ 1,091,100    $ 1,278,800
Gross profit               605,100        552,000        584,700        677,800
Net income (loss)          (65,500)       (24,800)      (140,400)      (101,500)

Net income (loss)
per common share             (0.02)         (0.01)         (0.05)         (0.04)

Note 14. Subsequent Events:
         -----------------

         On February 13, 2006, the Company announced that pursuant to Section
3.10 of the Class A and Class B Warrant Agreements, dated as of June 28, 2005,
between Medical Nutrition USA, Inc. (the "Company") and the holders of the
Company's Class A and Class B Warrants (the "Warrant Holders"), the Company had
the option to require that the Warrant Holders exercise their Class A and Class
B Warrants if the reported sales price of the Company's common stock had been at
or above $4.00 per share for any ten (10) consecutive trading days during the
thirty day period immediately preceding the date of the Warrant Call Notice (the
"Notice"). The common stock of the Company traded at or above $4.00 per share
from January 23, 2006 through February 10, 2006, satisfying such condition.

         The Company exercised its option to require that all outstanding Class
A and Class B Warrants be exercised by the Warrant Holders by no later than
forty-five days after the date of the Warrant Call Notice in accordance with the
terms of Section 3.10 of the Class A and Class B Warrant Agreements.

         As a result, the expiration date was 5:00 P.M. EST March 30, 2006 to
exercise the Class A and Class B Warrants, in whole or in part. Any unexercised
Class A and Class B Warrants would expire, and any remaining rights under such
Class A and Class B Warrants would terminate and be of no further force or
effect.

         On March 17, 2006, the Company extended the date for its Class A and
Class B warrants from 5:00 PM EST on March 30, 2006 to 5:00 PM EST on April 14,
2006. All remaining terms and conditions of the warrant acceleration, except for
the revised date by which they must be exercised, remained as previously
announced on February 13th, 2006. All unexercised Class A and Class B warrants
expired on April 14, 2006.

         The number of warrants exercised was 5,476,192. As of April 18, 2006,
the company had received proceeds of $3,924,644 from the exercise of the Class A
and Class B warrants.

                                      F-20
<PAGE>

                                  Exhibit Index
                                  -------------

Exhibit      Description

  3.1        Certificate of Incorporation of Medical Nutrition USA, Inc., dated
             March 23, 2003 (1)

  3.2        Bylaws of Medical Nutrition USA, Inc., as adopted March 7, 2003 (2)

  4.1        Form of convertible 8% Notes dated July 31, 2003 between Medical
             Nutrition USA, Inc. and certain investors (3)

  4.2        Form of Convertible Promissory Note dated December 5, 2003 between
             Medical Nutrition USA, Inc. and certain investors (4)

  4.3        Form of Class A Warrant Agreement and related Warrant Certificate*

  4.4        Form of Class B Warrant Agreement and related Warrant Certificate*

  4.5        Warrant to Purchase Shares of Common Stock dated as of April 1,
             2003 between Medical Nutrition USA, Inc. (f/k/a Gender Sciences,
             Inc.) and Kirlin Securities, Inc.*

  4.6        Common Stock Purchase Warrant dated as of April 22, 2003 between
             Medical Nutrition USA, Inc. and Unity Venture Capital Associates,
             Ltd.*

  5.1        Opinion of Foley & Lardner LLP.*

 10.1        2000 Long term Incentive Plan (5) #

 10.2        2003 Omnibus Equity Incentive Plan (6) #

 10.3        Employment Agreement dated March 1, 2003 by and between Medical
             Nutrition USA, Inc. and Francis A. Newman (7) **, #

 10.4        Form of Subscription Agreement dated July 31, 2003 between Medical
             Nutrition USA, Inc. and Organics Corporation of America (8)

 10.5        Form of Subscription Agreement dated July 31, 2003 between Organics
             Corporation of America and Medical Nutrition USA, Inc. (9)

 10.6        Ofice Lease dated October 4, 1984 by and between Medical Nutrition,
             Inc., a predecessor of Medical Nutrition USA, Inc. and Van Brunt
             Associates, L.P. (10)

 10.7        First Amendment to Office Lease dated October 24, 1994 by and
             between Medical Nutrition, Inc., a predecessor of Medical Nutrition
             USA, Inc. and Van Brunt Associates, LP (11)

 10.8        Lease Extension Letter Agreement dated November 17, 1999 by and
             between Medical Nutrition, Inc., a predecessor of Medical Nutrition
             USA, Inc. and First Industrial Realty Trust, Inc. (12)

 10.9        Second Amendment to Office Lease dated September 9, 2004 by and
             between Medical Nutrition USA, Inc. and The Realty Associates Fund
             VI, L.P. (13)

 10.10       Executive Bonus Program effective January 1, 2005 (14) #

 21.1        Subsidiaries of Medical Nutrition USA, Inc. (15)

 23.1        Consent of Goldstein & Ganz, P.C., Independent Registered Public
             Accounting Firm.**

 23.2        Consent of Foley & Lardner LLP (included in Exhibit 5.1).

 24.1        Power of Attorney (included on the signature page of the
             Registration Statement).

 31.1        Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
             **

 31.2        Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting
             Officer. **

 32.1        Certificate of Chief Executive Officer pursuant to 18 U.S.C.
             Section 1350. **

 32.2        Certificate of Principal Accounting Officer pursuant to 18 U.S.C.
             Section 1350. **
<PAGE>

*  Previously filed.

** Filed herewith.

#  Indicates management contract or compensatory plan or arrangement.

(1)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2005.

(2)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2005.

(3)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the fiscal quarter ended July 31, 2003.

(4)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the fiscal quarter ended October 31, 2003

(5)  Incorporated by reference from the Company's definitive proxy statement for
     its 2000 Annual Meeting of Shareholders to be held October 19, 2000.

(6)  Incorporated by reference from the Company's definitive proxy statement for
     its 2004 Annual Meeting of Shareholders to be held June 8, 2004.

(7)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2004.

(8)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2004.

(9)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2004.

(10) Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2003.

(11) Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2003.

(12) Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2003.

(13) Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2005.

(14) Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the fiscal quarter ended July 31, 2005.

(15) Incorporated by reference from the Company's annual Report on Form 10-KSB
     for the fiscal year ended January 31, 2005.