**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        DC 20549**

**FORM        10-Q**

**0-14983**

**NUTRITION        21, INC**

| **New                  York**                                                   | **11-2653613**                                        |
|---------------------------------------------------------------------------------|-------------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization) | (I.R.S.                  Employer Identification No.) |
|                                                                            |                                                  |
| **4                  Manhattanville Road**                                      |                                                  |
| **Purchase,                  New York**                                         | **10577-2197**                                        |
| (Address                  of Principal Executive Offices)                       | (Zip                  Code)                           |

**(914)        701-4500**

**None**

| Large                  accelerated filer  o | Accelerated                  filer  x | Non-accelerated                  filer  o |
|--------------------------------------------------|--------------------------------------------|------------------------------------------------|

| Class                                                     | Outstanding                  at February 7, 2008 |
|-----------------------------------------------------------|--------------------------------------------------|
| Common                  Stock, $0.005 par value per share | 62,631,602                  shares               |

----

**NUTRITION        21, INC.**

|         |                                                                                                                                                       | PAGE                                                                                                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PART I  | FINANCIAL                      INFORMATION                                                                                                                 |                                                                                                                                                                                            |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 1  | Financial                      Statements                                                                                                                  |                                                                                                                                                                                            |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
|         | (a)                                                                                                                                                        | Condensed                      Consolidated Balance Sheets at December 31, 2007 (unaudited) and June                      30, 2007                                                         | 3                      & 4 |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
|         | (b)                                                                                                                                                        | Condensed                      Consolidated Statements of Operations for the three and six                      month periods                      ended December 31, 2007 and 2006 (unaudited) | 5 |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
|         | (c)                                                                                                                                                        | Condensed                      Consolidated Statement of Stockholders’ Equity for the six month period                      ended December 31, 2007 (unaudited)                           | 6 |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
|         | (d)                                                                                                                                                        | Condensed                      Consolidated Statements of Cash Flows for the six month periods                      ended                      December 31, 2007 and 2006 (unaudited)           | 7 |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
|         | (e)                                                                                                                                                        | Notes                      to Condensed Consolidated Financial Statements (unaudited)                                                                                                           | 8 |
|         |                                                                                                                                                       |                                                                                                                                                                                            |   |
| ITEM 2  | Management’s                      Discussion and Analysis of Financial Condition and Results                      of                      Operations | 16                                                                                                                                                                                              |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 3  | Quantitative                      and Qualitative Disclosures About Market Risk                                                                            | 18                                                                                                                                                                                              |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 4  | Controls                      and Procedures                                                                                                               | 19                                                                                                                                                                                              |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| PART II | OTHER                      INFORMATION                                                                                                                     |                                                                                                                                                                                            |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 1A | Risk                      Factors                                                                                                                          | 20                                                                                                                                                                                              |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 4  | Submission                      of Matters to a Vote of Security Holders                                                                                   | 20                                                                                                                                                                                              |
|         |                                                                                                                                                       |                                                                                                                                                                                            |
| ITEM 6  | Exhibits                                                                                                                                                   | 21                                                                                                                                                                                              |

----

**NUTRITION        21, INC.**

|                                                                                                                                                                                                                                     |   | December                  31,2007 |   | June                  30, 2007                    |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                                                                                                                                                                     |   | (unaudited)                       |   | (Note                  1)                              |   |
| **ASSETS**                                                                                                                                                                                                                               |   |                              |   |                                                   |   |   |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Current                  assets:                                                                                                                                                                                                         |   |                              |   |                                                   |   |   |   |
| Cash                  and cash equivalents                                                                                                                                                                                               |   | $                                 | 8,496  |                                                   | $      | 2,417 |   |
| Short-term                  investments                                                                                                                                                                                                  |   |                              | 1,000  |                                                   |   | 1,000 |   |
| Accounts                  receivable (less allowances for doubtful accounts and returns of                  $632 and                  $827 at December 31, 2007 and June 30, 2007, respectively)                                         |   |                              | 5,476  |                                                   |   | 1,918 |   |
| Other                  receivables                                                                                                                                                                                                       |   |                              | 449    |                                                   |   | 344 |   |
| Inventories                                                                                                                                                                                                                              |   |                              | 4,153  |                                                   |   | 3,945 |   |
| Prepaid                  expenses and other current assets                                                                                                                                                                               |   |                              | 1,684  |                                                   |   | 1,369 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Total                  current assets                                                                                                                                                                                                    |   |                              | 21,258 |                                                   |   | 10,993 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Property                  and equipment, net                                                                                                                                                                                             |   |                              | 88     |                                                   |   | 64 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Patents,                  trademarks and other amortizable intangibles (net of accumulated                  amortization of $24,473 and $23,387 at December 31, 2007, and June                  30,                  2007, respectively) |   |                              | 2,370  |                                                   |   | 3,271 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Goodwill                                                                                                                                                                                                                                 |   |                              | 14,827 |                                                   |   | 14,715 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Other                  intangibles with indefinite lives                                                                                                                                                                                 |   |                              | 5,379  |                                                   |   | 5,379 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| Other                  assets                                                                                                                                                                                                            |   |                              | 1,402  |                                                   |   | 272 |   |
|                                                                                                                                                                                                                                     |   |                              |   |                                                   |   |   |   |
| TOTAL                  ASSETS                                                                                                                                                                                                            |   | $                                 | 45,324 |                                                   | $      | 34,694 |   |

----

**NUTRITION        21, INC. **

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | December 31,                  2007 |    | June 30, 2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|-------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (unaudited)                             |    | (Note 1)           |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    |    |                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    |    |                    |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                    |    |                    |   |   |   |
|  Short-term                  borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                                       | 1,747   |                    | $      | — |   |
| Accounts                  payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    | 4,752   |                    |   | 7,085 |   |
| Accrued                  expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    | 1,528   |                    |   | 1,411 |   |
| Deferred                  income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    | 2,945   |                    |   | 2,929 |   |
| Total                  current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                    | 10,972  |                    |   | 11,425 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Long-term                  debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                    | 2,378   |                    |   | 2,342 |   |
| Deferred                  income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | 2,152   |                    |   | 2,152 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| 6%                  Series I convertible preferred stock subject to mandatory redemption                  (redemption value $3,594 at December 31, 2007 and June 30,                  2007)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    | 3,054   |                    |   | 2,838 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| 8%                  Series J convertible preferred stock subject to mandatory redemption                  (redemption value $17,750 at December 31, 2007)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    | 10,859  |                    |   | **—** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Total                  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                    | 29,415  |                    |   | 18,757 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Commitments                  and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                    |    |                    |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| STOCKHOLDERS’                  EQUITY:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                    |    |                    |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Preferred                  stock, $0.01 par value, authorized 5,000,000 shares, 100,000 shares                  designated as Series H, none issued and outstanding, 9,600 shares                  designated as Series I convertible preferred stock, 9,600 shares                  issued                  and 3,594 shares outstanding at December 31, 2007 and June 30,                  2007                  (see                  liabilities above); 17,750 shares designated as Series J convertible                  preferred stock, 17,750 issued and outstanding at December 31,                  2007(see                  liabilities above) |   |                                    | — |                    |   | **—** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Common                  stock, $0.005 par value, authorized 150,000,000 and 100,000,000                  shares;                  62,631,602 shares and 60,946,443 issued and outstanding at December                  31,                  2007 and June 30, 2007, respectively                                                                                                                                                                                                                                                                                                                                                                            |   |                                    | 310     |                    |   | 301 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Additional                  paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    | 114,904 |                    |   | 107,069 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Accumulated                  deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    | (99,305 | )                       |   | (91,433 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| Total                  stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    | 15,909  |                    |   | 15,937 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |    |                    |   |   |   |
| TOTAL                  LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                                       | 45,324  |                    | $      | 34,694 |   |

----

**NUTRITION        21, INC.**

|                                                                                     |   | Three                  Months Ended |       | Six                  MonthsEnded |   |
|------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|----------------------------------|--------|
|                                                                                     |   | December                  31,       |       | December                  31,    |   |
|                                                                                     |   | 2007                                |       | 2006                             |   | 2007 |   | 2006 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |
| Net                  sales                                                               |   | $                                   | 12,734     |                             | $      | 8,968 |   | $ | 24,566 |   | $ | 13,514 |   |
| Other                  revenues                                                          |   |                                | 275        |                             |   | 137 |   |   | 640 |   |   | 273 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| TOTAL                  REVENUES                                                          |   |                                | 13,009     |                             |   | 9,105 |   |   | 25,206 |   |   | 13,787 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| COSTS                  AND EXPENSES                                                      |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| Cost                  of revenues                                                        |   |                                | 3,977      |                             |   | 2,858 |   |   | 7,992 |   |   | 4,404 |   |
| Advertising                  and promotion expenses                                      |   |                                | 9,705      |                             |   | 7,316 |   |   | 19,709 |   |   | 11,684 |   |
| General                  and administrative expenses                                     |   |                                | 1,324      |                             |   | 2,010 |   |   | 2,409 |   |   | 3,416 |   |
| Research                  and development expenses                                       |   |                                | 205        |                             |   | 302 |   |   | 514 |   |   | 690 |   |
| Depreciation                  and amortization                                           |   |                                | 563        |                             |   | 950 |   |   | 1,104 |   |   | 1,631 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| TOTAL                  COSTS AND EXPENSES                                                |   |                                | 15,774     |                             |   | 13,436 |   |   | 31,728 |   |   | 21,825 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| OPERATING                  LOSS                                                          |   |                                | (2,765     | )                                |   | (4,331 | ) |   | (6,522 | ) |   | (8,038 | ) |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| Interest                  income                                                         |   |                                | 113        |                             |   | 122 |   |   | 146 |   |   | 260 |   |
| Interest                  expense                                                        |   |                                | (1,164     | )                                |   | (467 | ) |   | (1,490 | ) |   | (1,007 | ) |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| LOSS                  BEFORE INCOME TAXES                                                |   |                                | (3,816     | )                                |   | (4,676 | ) |   | (7,866 | ) |   | (8,785 | ) |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| Income                  taxes                                                            |   |                                | 1          |                             |   | 3 |   |   | 6 |   |   | 6 |   |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| NET                  LOSS                                                                |   | $                                   | (3,817     | )                                | $      | (4,679 | ) | $ | (7,872 | ) | $ | (8,791 | ) |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| Basic                  and diluted loss per common share                                 |   | $                                   | (0.06      | )                                | $      | (0.08 | ) | $ | (0.13 | ) | $ | (0.16 | ) |
|                                                                                     |   |                                |       |                             |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of common shares – basic and diluted |   |                                | 62,061,943 |                             |   | 58,037,158 |   |   | 61,758,216 |   |   | 55,194,895 |   |

----

**NUTRITION        21, INC.**

|                                                                                                                                                                    |   | Common                  Stock |       | AdditionalPaid-InCapital |   |  AccumulatedDeficit |   |   Total |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------------------------|--------|--------------------------|--------|-------------------|---------|
|                                                                                                                                                                    |   | Shares                        |       | $                        |   | $                        |   | $                 |    | $ |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Balance                  at June 30, 2007                                                                                                                               |   |                          | 60,946,443 |                     | $      | 301                      |   | $                 | 107,069 |   | $ | (91,433 | ) | $ | 15,937 |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Issuance                  of warrants and beneficial conversion features                  related to 8% Series J convertible preferred                  stock |   |                          | —    |                     |   | —                  |   |              | 7,330   |   |   | — |   |   | 7,330 |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Issuance                  of common stock for dividends on Series I preferred stock                                                                                     |   |                          | 120,279    |                     |   | 1                        |   |              | 107     |   |   | — |   |   | 108 |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Issuance                  of common stock for the purchase of Iceland                  Health, Inc.                                                                |   |                          | 1,500,000  |                     |   | 8                        |   |              | (8      | ) |   | — |   |   | — |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Stock-based                  compensation expense                                                                                                                       |   |                          | —    |                     |   | —                  |   |              | 365     |   |   | — |   |   | 365 |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Exercise                  of stock options and warrants                                                                                                                 |   |                          | 72,755     |                     |   | —                  |   |              | 41      |   |   | — |   |   | 41 |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Forfeitures                  of restricted stock                                                                                                                        |   |                          | (7,875     | )                        |   | —                  |   |              | — |   |   | — |   |   | — |   |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Net                  loss for the period                                                                                                                                |   |                          | —    |                     |   | —                  |   |              | — |   |   | (7,872 | ) |   | (7,872 | ) |
|                                                                                                                                                                    |   |                          |       |                     |   |                     |   |              |    |   |   |   |   |   |   |   |
| Balance                  at December 31, 2007                                                                                                                           |   |                          | 62,631,602 |                     | $      | 310                      |   | $                 | 114,904 |   | $ | (99,305 | ) | $ | 15,909 |   |

----

**NUTRITION        21, INC.**

|                                                                                                                                                             |   | **Six                  Months Ended****December                  31,** |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|---------|
|                                                                                                                                                             |   | ** ****2007**                                                     |    | ** ****2006** |   |
| Cash                  flows from operating activities:                                                                                                           |   |                                                                   |    |   |   |   |   |
| Net                  loss                                                                                                                                        |   | $                                                                      | (7,872  | ) | $ | (8,791 | ) |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities:                                                    |   |                                                                   |    |   |   |   |   |
| Depreciation                  of property and equipment                                                                                                          |   |                                                                   | 19      |   |   | 35 |   |
| Amortization                  of intangibles                                                                                                                     |   |                                                                   | 1,085   |   |   | 1,596 |   |
| Accretion                  of preferred stock and amortization of deferred financing                  costs                                                      |   |                                                                   | 595     |   |   | 761 |   |
| Non-cash                  interest expense and accretion on note payable to Iceland                  Health                                                      |   |                                                                   | 36      |   |   | 50 |   |
| Convertible                  preferred stock dividend paid in common stock charged asinterest                  expense                                           |   |                                                                   | 108     |   |   | 178 |   |
| Stock-based                  compensation expense                                                                                                                |   |                                                                   | 365     |   |   | 308 |   |
| Non-cash                  income recognized in the period, net                                                                                                   |   |                                                                   | — |   |   | (161 | ) |
| Proceeds                  from cash portion of settlement of patent infringement                  lawsuit                                                        |   |                                                                   | — |   |   | 2,600 |   |
| Changes                  in operating assets and liabilities, net of effects from acquisition                  of                  Iceland Health, Inc. in 2006: |   |                                                                   |    |   |   |   |   |
| Accounts                  receivable                                                                                                                             |   |                                                                   | (3,558  | ) |   | 143 |   |
| Other                  receivables                                                                                                                               |   |                                                                   | (105    | ) |   | (20 | ) |
| Inventories                                                                                                                                                      |   |                                                                   | (208    | ) |   | (412 | ) |
| Prepaid                  expenses and other current assets                                                                                                       |   |                                                                   | (315    | ) |   | (967 | ) |
| Accounts                  payable                                                                                                                                |   |                                                                   | (2,331  | ) |   | 1,565 |   |
| Accrued                  expenses                                                                                                                                |   |                                                                   | 117     |   |   | (203 | ) |
| Deferred                  income                                                                                                                                 |   |                                                                   | 16      |   |   | — |   |
| Net                  cash used in operating activities                                                                                                           |   |                                                                   | (12,048 | ) |   | (3,318 | ) |
|                                                                                                                                                             |   |                                                                   |    |   |   |   |   |
| Cash                  flows from investing activities:                                                                                                           |   |                                                                   |    |   |   |   |   |
| Contingent                  payments for acquisitions, allocated to goodwill and patents and                  trademarks                                         |   |                                                                   | (112    | ) |   | (113 | ) |
| Purchases                  of property and equipment                                                                                                             |   |                                                                   | (43     | ) |   | (6 | ) |
| Payments                  for patents and trademarks                                                                                                             |   |                                                                   | (186)   |  |   | (112 | ) |
| Redemption                  of investments available for sale                                                                                                    |   |                                                                   | — |   |   | 5,500 |   |
| Cash                  portion of purchase price for Iceland Health, Inc., net of cash                  acquired                                                  |   |                                                                   |    |   |   | (446 | )  |
| Net                  cash (used in) provided by investing activities                                                                                             |   |                                                                   | (341    | ) |   | 4,823 |   |
|                                                                                                                                                             |   |                                                                   |    |   |   |   |   |
| Cash                  flows from financing activities:                                                                                                           |   |                                                                   |    |   |   |   |   |
| Proceeds                  from stock option and warrant exercises                                                                                                |   |                                                                   | 41      |   |   | 881 |   |
| Proceeds                  from private placement of 8% Series J convertible preferred stock,                  net of                  issuance costs        |   |                                                                   | 16,680  |   |   | — |   |
| Proceeds                  from short-term borrowings, net                                                                                                        |   |                                                                   | 1,747   |   |   | — |   |
| Net                  cash provided by financing activities                                                                                                       |   |                                                                   | 18,468  |   |   | 881 |   |
|                                                                                                                                                             |   |                                                                   |    |   |   |   |   |
| Net                  increase in cash and cash equivalents                                                                                                       |   |                                                                   | 6,079   |   |   | 2,386 |   |
| Cash                  and cash equivalents at beginning of period                                                                                                |   |                                                                   | 2,417   |   |   | 2,414 |   |
| Cash                  and cash equivalents at end of period                                                                                                      |   | $                                                                      | 8,496   |   | $ | 4,800 |   |

----

**NUTRITION        21, INC.**

| Note 1 | BASIS                      OF PRESENTATION |
|-------------|--------------------------------------------|

|   |   | The                  accompanying unaudited condensed consolidated financial statements                  have                  been prepared pursuant to the rules and regulations of the Securities                  and                  Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not                  include all of the information and note disclosures required by                  accounting                  principles generally accepted in the United States of America.                  Accordingly, the unaudited condensed consolidated financial statements                  should be read in conjunction with the Company’s audited consolidated                  financial statements and notes thereto for the fiscal year ended                  June 30,                  2007 included in the Company’s Annual Report on Form 10-K/A filed on                  October 24, 2007 (the “Form 10-K/A”). The accompanying unaudited condensed                  consolidated financial statements reflect all adjustments (consisting                  of                  normal recurring adjustments) which are, in the opinion of the                  management,                  considered necessary for a fair presentation of financial position,                  results of operations and cash flows for the interim periods. The                  June 30,                  2007 balance sheet has been derived from the audited consolidated                  financial statements included in the Form 10-K/A. Operating results                  for                  the three and six month periods ended December 31, 2007 are not                  necessarily indicative of the results that may be expected for                  the fiscal                  year ending June 30, 2008. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                  accompanying unaudited condensed consolidated financial statements                  include                  the accounts of Nutrition 21, Inc. and its subsidiaries, including                  Iceland                  Health, LLC from August 26, 2006 date of acquisition, collectively                  the                  “Company”. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Certain                  reclassifications have been made to prior year’s financial statement                  amounts to conform to the current                  year. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 2 | SHORT-TERM INVESTMENTS |
|-------------|-----------------------------|

|   |   | Investments                  in marketable debt securities with maturities beyond three months                  are                  classified as current assets because of their highly-liquid nature.                  All                  short-term investments are classified as available for sale and                  are                  recorded at fair value. Realized gains and losses are determined                  using the                  specific identification method. Unrealized gains and losses would                  be                  reflected in Accumulated Other Comprehensive Income, if                  material. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Short-term                  investments are comprised as follows (in                  thousands): |
|--------|--------|---------------------------------------------------------------------------------------------------|

|                                         |   | December 31,2007 |   | June 30,2007 |   |
|----------------------------------------------|--------|-----------------------|--------|-------------------|--------|
| Auction                  rate securities (1) |   | $                     | 1,000  |              | $      | 1,000 |   |

|   |   | (1)Auction                  rate securities have short-term interest rates that generally can                  be reset                  every 28 days. The auction rate securities have long-term maturity                  dates                  and provide the Company with enhanced yields. However, we believe                  we have                  the ability to quickly liquidate them at their original cost, although                  there is no guarantee and, accordingly, they are carried at cost                  which                  approximates fair value, and classified as current assets. All                  income                  generated from these investments is recorded as interest                  income. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 3 | STOCK-BASED                      COMPENSATION |
|-------------|-----------------------------------------------|

|   |   | Since                  July 1, 2005, share-based employee compensation cost has been measured                  at                  the grant date, based on the estimated fair value of the award,                  and is                  recognized as expense over the requisite service period. The Company                  has                  no awards with market or performance conditions. The Company adopted                  the                  provisions of revised Statement of Financial Accounting Standards                  No. 123                  (“FAS 123R”) “Share Based Payments” on July 1, 2005. The valuation                  provisions of FAS 123R apply to new awards and to awards that were                  outstanding on the effective date and subsequently modified or                  cancelled.                  Estimated compensation expense for awards outstanding on the effective                  date are being recognized over the remaining service period using                  the                  compensation cost as of the grant date originally calculated for                  pro forma                  disclosure purposes under FAS Statement No. 123, “Accounting for                  Stock-Based Compensation” (“FAS 123”). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NUTRITION        21, INC.**

| Note 3 | STOCK-BASED                      COMPENSATION                      (continued) |
|-------------|--------------------------------------------------------------------------------|

|   |   | On                  November 10, 2005, the FASB issued FASB Staff Position No. FAS                  123R-3,                  “Transition Election Related to Accounting for Tax Effects of Share-Based                  Payment Awards.” The Company has elected to adopt the alternative                  transition method provided in this FASB Staff Position for calculating                  the                  tax effects of share-based compensation pursuant to FAS 123R. The                  alternative transition method includes a simplified method to establish                  the beginning balance of the additional paid-in capital pool (“APIC pool”)                  related to the tax effects of employee share-based compensation,                  which is                  available to absorb tax deficiencies recognized subsequent to the                  adoption                  of FAS 123R. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                  assumptions used in the Company’s Black-Scholes option pricing model                  related to stock option grants during the six months ended December                  31,                  2007 were expected option life of 3.9 years, volatility factor                  of 91.4%                  and risk-free interest rate of 6.2%. The Company has not paid,                  nor does it                  contemplate paying a dividend on its common shares in the near                  future. As                  such a 0% dividend yield was used. The pre-vesting forfeiture rate                  and the                  years of expected life are based on the Company’s historical option                  pre-vesting cancellation and employee exercise information,                  respectively. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | As                  share-based compensation expense recognized in the condensed consolidated                  statement of operations for the three month and six month periods                  ended                  December 31, 2007 is based on awards ultimately expected to vest,                  it                  should be reduced for estimated forfeitures. FAS 123R requires                  forfeitures                  to be estimated at the time of grant and revised, if necessary,                  in                  subsequent periods if actual forfeitures differ from those estimates.                  Pre-vesting forfeitures are estimated to be approximately 6.6%,                  based on                  historical experience. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                  Company granted 1,250,000 stock options during the six month period                  ended                  December 31, 2007 with an exercise price equal to the market price                  at the                  date of grant with a fair value of $0.6 million based on the market                  price                  at the date of grant. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                  Company recorded $0.2 million and $0.3 million in share-based compensation                  expense for stock options and restricted stock in the three month                  periods                  ended December 31, 2007 and 2006, respectively, and $0.4 million                  and $0.3                  million in the six month periods ended December 31, 2007 and 2006,                  respectively. Share-based compensation expense is recorded in general                  and                  administrative expenses. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                  following is a summary of option activity for the six month period                  ended                  December 31, 2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|     **Options**               |   |    **Shares****(000)** |   |   **Weighted-****Average****Exercise Price** |   | **Weighted–****Average                  Remaining****Contractual****Term (Yrs.)** |   |   **Aggregate****Intrinsic Value****($000)** |   |
|---------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
| Outstanding                  at July 1, 2007      |   |                                  | 4,112  |                                                        | $      | 0.91                                                                                         |   |                                                        |   |   |   |   |   |
| Granted                                           |   |                                  | 1,250  |                                                        | $      | 0.73                                                                                         |   |                                                        |   |   |   |   |   |
| Exercised                                         |   |                                  | (73    | )                                                           | $      | 0.57                                                                                         |   |                                                        |   |   |   |   |   |
| Forfeited                  or expired             |   |                                  | (113   | )                                                           | $      | 1.86                                                                                         |   |                                                        |   |   |   |   |   |
| Outstanding                  at December 31, 2007 |   |                                  | 5,176  |                                                        | $      | 0.85                                                                                         |   |                                                        | 6.7    |   | $ | 588 |   |
| Exercisable                  at December 31, 2007 |   |                                  | 3,621  |                                                        | $      | 0.82                                                                                         |   |                                                        | 6.7    |   | $ | 494 |   |

----

**NUTRITION        21, INC.**

| Note 3 | STOCK-BASED                    COMPENSATION (continued) |
|-------------|---------------------------------------------------------|

|     **Restricted                  Stock** |   |    **Shares****(000)** |    |   **Weighted-****Average****Exercise ****Price** |   | **Weighted–****Average****Remaining                  Contractual****Term (Yrs.)** |   |   **Aggregate****Intrinsic Value****($000)** |    |
|---------------------------------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|
| Outstanding                  at July 1, 2007                  |   |                                  | 501     |                                                            | $      | 1.57                                                                                         |   |                                                        |    |   |   |   |   |
| Granted                                                       |   |                                  | — |                                                            |   | —                                                                                      |   |                                                        |    |   |   |   |   |
| Exercised                                                     |   |                                  | — |                                                            |   | —                                                                                      |   |                                                        |    |   |   |   |   |
| Forfeited                  or expired                         |   |                                  | (8      | )                                                               | $      | 1.44                                                                                         |   |                                                        |    |   |   |   |   |
| Outstanding                  at December 31, 2007             |   |                                  | 493     |                                                            | $      | 1.44                                                                                         |   |                                                        | 2.4     |   | $ | — |   |
| Exercisable                  at December 31, 2007             |   |                                  | — |                                                            |   | —                                                                                      |   |                                                        | — |   |   | — |   |

| Note 4 | RECENTLY                    ISSUED ACCOUNTING                    PRONOUNCEMENTS |
|-------------|---------------------------------------------------------------------------------|

| Note 5 | ACQUISITION                  OF ICELAND HEALTH, INC. |
|-------------|------------------------------------------------------|

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**NUTRITION      21, INC.**

| Note              5 | ACQUISITION                OF ICELAND HEALTH, INC.                (continued) |
|---------------------|-------------------------------------------------------------------------------|

| Assets                purchased:                       |   |   |   |   |
|--------------------------------------------------------|--------|--------|--------|--------|
|                                                   |   |   |   |   |
| Net                identifiable tangible assets        |   | $      | 181    |   |
| Other                intangibles with indefinite lives |   |   | 5,379  |   |
| Customer                relationships                  |   |   | 924    |   |
| Non-compete                agreements                  |   |   | 375    |   |
| Goodwill                                               |   |   | 14,827 |   |
| Deferred                tax liability                  |   |   | (2,152 | )      |
|                                                   |   |   |   |   |
| Purchase                Price                          |   | $      | 19,534 |   |

|                                                   |   | Consolidated Pro-forma |   |
|--------------------------------------------------------|--------|-----------------------------|--------|
|                                                   |   | Six Months Ended  |   |
|                                                   |   | December 31,           |   |
|                                                   |   |  2006                  |   |
|                                                   |   |                        |   |
| Total                revenues                          |   | $                           | 17,938 |   |
|                                                   |   |                        |   |   |
| Net                loss                                |   | $                           | (8,516 | ) |
|                                                   |   |                        |   |   |
| Basic                and diluted loss per common share |   | $                           | (0.15  | ) |
|                                                   |   |                        |   |   |

----

**NUTRITION      21, INC.**

| Note              6 | INVENTORIES |
|---------------------|-------------|

| Note              7 | LOSS                PER COMMON SHARE |
|---------------------|--------------------------------------|

| Note              8 | SUPPLEMENTAL                CASH FLOW INFORMATION |
|---------------------|---------------------------------------------------|

|                                                                                                                                          |   | Six                months endedDecember                31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                                                                                                          |   |                  2007                                 |    | 2006 |   |
| Supplemental                disclosure of cash flow information:                                                                              |   |                                                       |    |   |   |   |   |
|                                                                                                                                          |   |                                                       |    |   |   |   |   |
| Cash                paid for income taxes                                                                                                     |   | $                                                          | — |   | $ | 7 |   |
|  Supplemental                schedule of non-cash financing activities:                                                                  |   |                                                       |    |   |   |   |   |
| Increase                in obligation for Nutrition 21 contingent payments                                                                    |   | $                                                          | 81      |   | $ | 85 |   |
| Issuance                of common shares on conversion of 939 shares of Series                convertible preferred                stock |   |                                                       | — |   | $ | 948 |   |
| Issuance                of common stock for purchase of Iceland Health, Inc.                                                                  |   |                                                       | — |   | $ | 17,754 |   |
| Issuance                of note payable for purchase of Iceland Health, Inc.                                                                  |   |                                                       | — |   | $ | 2,282 |   |

| Note              9 | 6%                SERIES I CONVERTIBLE PREFERRED                STOCK |
|---------------------|-----------------------------------------------------------------------|

----

**NUTRITION      21, INC.**

| Note              10 | 8%                SERIES J CONVERTIBLE PREFERRED                STOCK |
|----------------------|-----------------------------------------------------------------------|

| Note              11 | SHORT-TERM                BORROWINGS |
|----------------------|--------------------------------------|

** **

----

**NUTRITION      21, INC.**

| Note              11 | SHORT-TERM                BORROWINGS (continued) |
|----------------------|--------------------------------------------------|

| Note              12 | SEGMENT                REPORTING |
|----------------------|----------------------------------|

|                                             |   | Three                MonthsEnded |   | Six                MonthsEnded |   |
|--------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
|                                             |   | December                31,      |   | December                31,    |   | December                31, |   | December                31, |   |
|                                             |   | 2007                             |   | 2006                           |   | 2007 |   | 2006 |   |
| Net                sales                         |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Ingredients                Group                 |   | $                                | 1,737  |                           | $      | 1,662 |   | $ | 3,626 |   | $ | 3,221 |   |
| Branded                Products Group            |   |                             | 10,997 |                           |   | 7,306 |   |   | 20,940 |   |   | 10,293 |   |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Sales                to external customers       |   |                             | 12,734 |                           |   | 8,968 |   |   | 24,566 |   |   | 13,514 |   |
| Other                revenues                    |   |                             | 275    |                           |   | 137 |   |   | 640 |   |   | 273 |   |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Total                revenues                    |   | $                                | 13,009 |                           | $      | 9,105 |   | $ | 25,206 |   | $ | 13,787 |   |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income taxes |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Ingredients                Group                 |   | $                                | 999    |                           | $      | 946 |   | $ | 2,072 |   | $ | 1,698 |   |
| Branded                Products Group            |   |                             | (1,948 | )                              |   | (2,152 | ) |   | (5,205 | ) |   | (4,272 | ) |
| Unallocated                corporate expenses    |   |                             | (2,867 | )                              |   | (3,470 | ) |   | (4,733 | ) |   | (6,211 | ) |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes          |   | $                                | (3,816 | )                              | $      | (4,676 | ) | $ | (7,866 | ) | $ | (8,785 | ) |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |
| Unallocated                corporate assets      |   | $                                | 45,324 |                           | $      | 40,190 |   |   |   |   |   |   |   |
|                                             |   |                             |   |                           |   |   |   |   |   |   |   |   |   |

----

**NUTRITION      21, INC.**

| Note              13 | INCOME                TAXES |
|----------------------|-----------------------------|

| Note              14 | STOCKHOLDER'S                EQUITY |
|----------------------|-------------------------------------|

----

**Item      2 – Management’s Discussion and Analysis of Financial Condition and Results      of Operations**

**Forward-Looking      Statements and Risk Factors**

**General**

**Results        of Operations**

----

**Item      2 – Management’s Discussion and Analysis of Financial Condition and Results      of Operations (continued)**

----

**Item      2 – Management’s Discussion and Analysis of Financial Condition and Results      of Operations (continued)**

**Item      3 – Quantitative and Qualitative Disclosures about Market      Risk**

----

**Item      4 – Controls and Procedures**

----

**PART      II - OTHER INFORMATION**

**Items      1, 2, 3 and 5 and are not applicable and have been omitted**

**Item      1A – Risk Factors**

**Item      4. Submission of Matters to a Vote of Security Holders**

----

**Item      4. Submission of Matters to a Vote of Security Holders      (continued)**

|                                 | **Votes                For** | **Withheld** |
|--------------------------------------|------------------------------|--------------|
|                                 |                         |         |
| P.                George Benson, PhD | 49,231,443                   | 1,659,229    |
| John                L. Cassis        | 49,260,527                   | 1,630,145    |
| Warren                D. Cooper      | 49,259,602                   | 1,631,070    |
| John                H. Gutfreund     | 49,095,952                   | 1,794,720    |
| Paul                Intlekofer       | 49,147,447                   | 1,743,225    |
| Peter                C. Mann         | 49,261,882                   | 1,628,790    |
| Marvin                Moser, MD      | 49,250,007                   | 1,640,665    |

**Item      6 - Exhibits**

| **(a)** | **Exhibits** |
|---------|--------------|
|    |         |   |   |
|    | 10.01        |   | Form                of Amendment dated February 8, 2008 to the Loan and Security Agreement                dated June 30, 2007. |
|    | 10.02        |   | Form                of Pledge and Security Agreement dated February 8,                2008. |
|    | 10.03        |   | Form                of Deposit Account Control Agreement dated February 8,                2008 |
|    | 31.1         |   | Certifications                of the President and Chief Executive Officer pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002. |
|    | 31.2         |   | Certifications                of the Chief Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|    | 32.1         |   | Certifications                of the President and Chief Executive Officer pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. |
|    | 32.2         |   | Certification                of the Chief Financial Officer pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002. |

----

|   | NUTRITION                21, INC. |
|--------|-----------------------------------|
|   | Registrant                        |

| Date:                February 11, 2008 | By:                                          | /s/                Paul Intlekofer     |   |
|----------------------------------------|----------------------------------------------|----------------------------------------|--------|
|                                   |                                         | Paul                Intlekofer         |   |
|                                   |                                         | President                and           |   |
|                                   |                                         | Chief                Executive Officer |   |
|                                   | (Principal                Executive Officer) |                                   |

----