**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 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 o |  Non-accelerated                filer x  |
|------------------------------------------------|------------------------------------------|----------------------------------------------------|

| Class                                                   | Outstanding                at November 10, 2006 |
|---------------------------------------------------------|-------------------------------------------------|
| Common                Stock, $0.005 par value per share | 58,014,431                shares                |

----

**NUTRITION      21, INC.**

| PART                I  |   | FINANCIAL                INFORMATION                                                                                                            |   | PAGE                           |
|------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|
|                   |   |                                                                                                                                            |   |                           |
| ITEM                1  |   | Condensed                Consolidated Financial Statements (unaudited)                                                                          |   |                           |
|                   |   |                                                                                                                                            |   |                           |
|                   |   | Condensed                Consolidated Balance Sheets at September 30, 2006and                June 30, 2006                                      |   |  3                & 4 |
|                   |   |                                                                                                                                            |   |                           |
|                   |   | Condensed                Consolidated Statements of Operations for the three                month periods ended September 30, 2006 and 2005     |   |  5                        |
|                   |   |                                                                                                                                            |   |                           |
|                   |   | Condensed                Consolidated Statement of Stockholders’ Equity forthe                three month period ended September 30, 2006 |   |  6                        |
|                   |   |                                                                                                                                            |   |                           |
|                   |   | Condensed                Consolidated Statements of Cash Flows for the three                month periods ended September 30, 2006 and 2005     |   |  7                        |
|                   |   |                                                                                                                                            |   |                           |
|                   |   | Notes                to Condensed Consolidated Financial Statements                                                                             |   | 8                              |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                2  |   | Management’s                Discussion and Analysis of Financial                Condition and Results of Operations                       |   |  14                       |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                3  |   | Quantitative                and Qualitative Disclosures About                Market Risk                                                        |   | 15                             |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                4  |   | Controls                and Procedures                                                                                                          |   | 16                             |
|                   |   |                                                                                                                                            |   |                           |
| PART                II |   | OTHER                INFORMATION                                                                                                                |   |                           |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                1  |   | Legal                Proceedings                                                                                                                |   | 17                             |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                5  |   | Other                Information                                                                                                                |   | 17                             |
|                   |   |                                                                                                                                            |   |                           |
| ITEM                6  |   | Exhibits                                                                                                                                        |   | 17                & 18     |

----

**NUTRITION      21, INC.**

|                                                                                                                                                                                               |   |   | September                30, 2006  |   |   | June                30, 2006 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------------------|--------|
|                                                                                                                                                                                               |   |   | (unaudited)                        |   |   | (Note                1)      |   |
| **ASSETS**                                                                                                                                                                                         |   |   |                                    |   |   |                         |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Current                assets:                                                                                                                                                                     |   |   |                                    |   |   |                         |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Cash                and cash equivalents                                                                                                                                                           |   | $      | 1,881                                   |   | $      | 2,414                        |   |
| Short-term                investments                                                                                                                                                              |   |   | 9,000                                   |   |   | 11,500                       |   |
| Accounts                receivable (less allowance for doubtful accounts and returns                of $9)                                                                                         |   |   | 1,967                                   |   |   | 2,600                        |   |
| Other                receivables                                                                                                                                                                   |   |   | 232                                     |   |   | 205                          |   |
| Inventories                                                                                                                                                                                        |   |   | 1,732                                   |   |   | 963                          |   |
| Prepaid                expenses and other current assets                                                                                                                                           |   |   | 1,310                                   |   |   | 392                          |   |
| Total                current assets                                                                                                                                                                |   |   | 16,122                                  |   |   | 18,074                       |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Property                and equipment, net                                                                                                                                                         |   |   | 100                                     |   |   | 116                          |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Patents,                trademarks and other amortizable intangibles (net of accumulated                amortization of $20,174 at September 30, 2006 and $19,511                at June 30, 2006) |   |   | 6,066                                   |   |   | 5,375                        |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Goodwill                                                                                                                                                                                           |   |   | 12,095                                  |   |   | ---                          |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Other                intangibles with indefinite lives                                                                                                                                             |   |   | 5,379                                   |   |   | ---                          |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Other                assets                                                                                                                                                                        |   |   | 412                                     |   |   | 291                          |   |
|                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| TOTAL                ASSETS                                                                                                                                                                        |   | $      | 40,174                                  |   | $      | 23,856                       |   |

----

**NUTRITION      21, INC. **

|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | September                30, 2006  |   |   | June                30, 2006 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (unaudited)                             |   |   | (Note                1)      |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                    |   |   |                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |                                    |   |   |                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Current                liabilities - accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                         |   | $      | 6,671                                   |   | $      | 4,906                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Long                term debt                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 2,298                                   |   |   | ---                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| 6%                Series I convertible preferred stock subject to mandatory redemption                (redemption value $6,022 and $6,586 at September 30, 2006 and June                30,                2006, respectively)                                                                                                                                                                                                     |   |   | 4,214                                   |   |   | 4,410                        |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 13,183                                  |   |   | 9,316                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| 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 6,022 and 6,586 shares outstanding at September 30, 2006 and                June 30,                2006, respectively |   |   | ---                                     |   |   | ---                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                                    |   |   |                         |   |
| Common                stock, $0.005 par value, authorized 100,000,000 shares; 57,451,823                shares issued and outstanding at September 30, 2006 and 48,783,220                issued and outstanding at June 30, 2006                                                                                                                                                                                                  |   |   | 287                                     |   |   | 243                          |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 103,101                                 |   |   | 86,582                       |   |
| Accumulated                deficit                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (76,397                                 | )      |   | (72,285                      | )      |
| Total                stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 26,991                                  |   |   | 14,540                       |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                    |   | $      | 40,174                                  |   | $      | 23,856                       |   |

----

**NUTRITION      21, INC.**

|                                                                        |   | Three                Months Ended  |
|-----------------------------------------------------------------------------|--------|-----------------------------------------|
|                                                                        |   | September                30,       |
|                                                                        |   |                                    | 2006 |   |   | 2005 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| Net                Sales                                                    |   | $                                       | 4,548 |   | $ | 3,550 |   |
| Other                revenues                                               |   |                                    | 136 |   |   | 51 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| TOTAL                REVENUES                                               |   |                                    | 4,684 |   |   | 3,601 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| COSTS                AND EXPENSES                                           |   |                                    |   |   |   |   |   |
|                                                                        |   |                                    |   |   |   |   |   |
| Cost                of revenues                                             |   |                                    | 1,381 |   |   | 601 |   |
| Selling,                general and administrative expenses                 |   |                                    | 5,942 |   |   | 2,796 |   |
| Research                and development expenses                            |   |                                    | 388 |   |   | 408 |   |
| Depreciation                and amortization                                |   |                                    | 681 |   |   | 561 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| TOTAL                COSTS AND EXPENSES                                     |   |                                    | 8,392 |   |   | 4,366 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| OPERATING                LOSS                                               |   |                                    | (3,708 | ) |   | (765 | ) |
|                                                                        |   |                                    |   |   |   |   |   |
| Interest                income                                              |   |                                    | 138 |   |   | 54 |   |
| Interest                expense                                             |   |                                    | 539 |   |   | 427 |   |
|                                                                        |   |                                    |   |   |   |   |   |
| LOSS                BEFORE INCOME TAXES                                     |   | $                                       | (4,109 | ) | $ | (1,138 | ) |
|                                                                        |   |                                    |   |   |   |   |   |
| Income                taxes                                                 |   |                                    | 3 |   |   | --- |   |
|                                                                        |   |                                    |   |   |   |   |   |
| NET                LOSS                                                     |   | $                                       | (4,112 | ) | $ | (1,138 | ) |
|                                                                        |   |                                    |   |   |   |   |   |
| Basic                and diluted loss per common share                      |   | $                                       | (0.08 | ) | $ | (0.03 | ) |
|                                                                        |   |                                    |   |   |   |   |   |
| Weighted                average number of common shares - basic and diluted |   |                                    | 52,352,632 |   |   | 38,230,086 |   |

| See                accompanying notes to condensed consolidated financial                statements |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|

----

**NUTRITION      21, INC.**

|                                                                                                                     |   | Common                Stock |       | Additional                Paid-In Capital |   | Accumulated                Deficit |   | Total  |    |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|-------------------------------------------|--------|------------------------------------|--------|--------|---------|
|                                                                                                                     |   |                        | Shares     |                                      |   | $                                  |   |   | $       |   |   | $ |   |   | $ |   |
| Balance                at June 30, 2006                                                                                  |   |                        | 48,783,220 |                                      | $      | 243                                |   | $      | 86,582  |   | $ | (72,285 | ) | $ | 14,540 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Conversion                of 564 shares of Series I convertible preferred stock to shares of                common stock |   |                        | 453,883    |                                      |   | 2                                  |   |   | 568     |   |   | ---- |   |   | 570 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Issuance                of common stock for dividends on Series I preferred stock                                        |   |                        | 50,994     |                                      |   | ----                               |   |   | 90      |   |   | ---- |   |   | 90 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Issuance                of common stock for the purchase of Iceland Health, Inc.                                         |   |                        | 8,000,000  |                                      |   | 40                                 |   |   | 15,432  |   |   | ---- |   |   | 15,472 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Stock-based                compensation expense                                                                          |   |                        | ----       |                                      |   | ----                               |   |   | 38      |   |   | ---- |   |   | 38 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Exercise                of stock options and warrants                                                                    |   |                        | 163,726    |                                      |   | 2                                  |   |   | 391     |   |   | ---- |   |   | 393 |   |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Net                loss for the period                                                                                   |   |                        | ----       |                                      |   | ----                               |   |   | ----    |   |   | (4,112 | ) |   | (4,112 | ) |
|                                                                                                                     |   |                        |       |                                      |   |                               |   |   |    |   |   |   |   |   |   |   |
| Balance                at September 30, 2006                                                                             |   |                        | 57,451,823 |                                      | $      | 287                                |   | $      | 103,101 |   | $ | (76,397 | ) | $ | 26,991 |   |

----

**NUTRITION      21, INC.**

|                                                                                                                                            |   | Three                Months EndedSeptember                30, |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                                                                                                            |   |                                                          | 2006 |   |   | 2005 |   |
| Cash                flows from operating activities:                                                                                            |   |                                                          |   |   |   |   |   |
| Net                loss                                                                                                                         |   | $                                                             | (4,112 | ) | $ | (1,138 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:                                       |   |                                                          |   |   |   |   |   |
| Depreciation                of property and equipment                                                                                           |   |                                                          | 18 |   |   | 51 |   |
| Amortization                of intangibles                                                                                                      |   |                                                          | 663 |   |   | 510 |   |
| Accretion                of preferred stock and amortization of deferred financing                costs                                         |   |                                                          | 423 |   |   | 275 |   |
| Non-cash                interest expense on note payable to Iceland Health                                                                      |   |                                                          | 16 |   |   | -- |   |
| Series                I convertible preferred stock dividend charged as interest                expense                                         |   |                                                          | 90 |   |   | 144 |   |
| Stock-based                compensation expense                                                                                                 |   |                                                          | 38 |   |   | 49 |   |
| Charge                for stock appreciation rights                                                                                             |   |                                                          | -- |   |   | 24 |   |
| Changes                in operating assets and liabilities, net of effects of acquisition                of                Iceland Health, Inc. |   |                                                          |   |   |   |   |   |
| Accounts                receivable                                                                                                              |   |                                                          | 491 |   |   | (594 | ) |
| Other                receivables                                                                                                                |   |                                                          | 135 |   |   | 190 |   |
| Inventories                                                                                                                                     |   |                                                          | (302 | ) |   | (160 | ) |
| Prepaid                expenses and other assets                                                                                                |   |                                                          | (657 | ) |   | (247 | ) |
| Accounts                payable and accrued expenses                                                                                            |   |                                                          | 295 |   |   | 188 |   |
| Net                cash used in operating activities                                                                                            |   |                                                          | (2,902 | ) |   | (708 | ) |
| Cash                flows from investing activities:                                                                                            |   |                                                          |   |   |   |   |   |
| Contingent                payments for acquisitions                                                                                             |   |                                                          | (68 | ) |   | (31 | ) |
| Purchases                of property and equipment                                                                                              |   |                                                          | (2 | ) |   | (10 | ) |
| Payments                for patents and trademarks                                                                                              |   |                                                          | (24 | ) |   | (31 | ) |
| Redemption                of investments available for sale                                                                                     |   |                                                          | 2,500 |   |   | 2,000 |   |
| Increase                in restricted cash                                                                                                      |   |                                                          | -- |   |   | (18 | ) |
| Cash                portion of purchase price for Iceland Health, Inc., net of cash                acquired                                     |   |                                                          | (430 | ) |   | -- |   |
| Net                cash provided by (used in) investing activities                                                                              |   |                                                          | 1,976 |   |   | 1,910 |   |
| Cash                flows from financing activities:                                                                                            |   |                                                          |   |   |   |   |   |
| Proceeds                from stock option and warrant                exercises                                                                  |   |                                                          | 393 |   |   | 14 |   |
| Additional                issuance costs related to Series I convertible preferred                stock                                         |   |                                                          | -- |   |   | (83 | ) |
| Net                cash provided by (used in) financing activities                                                                              |   |                                                          | 393 |   |   | (69 | ) |
| Net                increase (decrease) in cash and cash equivalents                                                                             |   |                                                          | (533 | ) |   | 1,133 |   |
| Cash                and cash equivalents at beginning of period                                                                                 |   |                                                          | 2,414 |   |   | 675 |   |
| Cash                and cash equivalents at end of period                                                                                       |   | $                                                             | 1,881 |   | $ | 1,808 |   |

----

**NUTRITION      21, INC.**

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

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

|                                                   |   | September                30, 2006 |   | June                30, 2006 |   |
|--------------------------------------------------------|--------|-----------------------------------|--------|------------------------------|--------|
| 3.87%                corporate bond, maturing 12/15/06 |   |                              | 1,000  |                         |   | 1,000 |   |
| Auction                rate securities (1)             |   |                              | 8,000  |                         |   | 10,500 |   |
|                                                   |   | $                                 | 9,000  |                         | $      | 11,500 |   |

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

----

**NUTRITION      21, INC.**

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

----

**NUTRITION      21, INC.**

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

|    **Options**                    |   |   | **Shares****(000)** |   |   | **Weighted-Average****Exercise Price** |   |   | **Weighted-Average                Remaining****Contractual                Term** |   |   | **Aggregate****Intrinsic                Value****($000)** |   |
|--------------------------------------------------|--------|--------|---------------------|--------|--------|----------------------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
| Outstanding                at July 1, 2006       |   |   | 4,606               |   | $      | 0.91                                   |   |   |                                                                             |   |   |                                                      |   |
| Granted                                          |   |   | ---                 |   |   |                                   |   |   |                                                                             |   |   |                                                      |   |
| Exercised                                        |   |   | (134                | )      | $      | 1.01                                   |   |   |                                                                             |   |   |                                                      |   |
| Forfeited                or expired              |   |   | (68                 | )      | $      | 3.99                                   |   |   |                                                                             |   |   |                                                      |   |
| Outstanding                at September 30, 2006 |   |   | 4,404               |   | $      | 0.87                                   |   |   | 5.9                                                                              |   | $      | 4,873                                                     |   |
| Exercisable                at September 30, 2006 |   |   | 3,702               |   | $      | 0.89                                   |   |   | 5.4                                                                              |   | $      | 4,051                                                     |   |

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

*Accounting      for Uncertainty in Income Taxes - an interpretation of FAS No. 109*

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

----

**NUTRITION      21, INC.**

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

|  Net                identifiable tangible assets                          |   | $      | 181    |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|
|  Trade                names                                               |   |   | 5,379  |   |
|  Customer                relationships                                    |   |   | 924    |   |
|  Non-compete                agreements                                    |   |   | 375    |   |
|  Goodwill                and other intangible                assets  |   |   | 12,095 |   |
|                                                                           |   |   |   |   |
|  Purchase                Price                                            |   | $      | 18,954 |   |

|                                                   |   | Consolidated                Pro-forma |   |
|--------------------------------------------------------|--------|---------------------------------------|--------|
|                                                   |   | Three                Months Ended     |   |
|                                                   |   | September                30,          |   | September                30, |   |
|                                                   |   | 2006                                  |   | 2005 |   |
|                                                   |   |                                  |   |   |   |   |   |
| Total                revenues                          |   | $                                     | 9,911  |   | $ | 9,777 |   |
|                                                   |   |                                  |   |   |   |   |   |
| Net                loss                                |   |                                  | (3,971 | ) |   | (1,344 | ) |
|                                                   |   |                                  |   |   |   |   |   |
| Basic                and diluted loss per common share |   | $                                     | (0.08  | ) | $ | (0.04 | ) |

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

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

----

**NUTRITION      21, INC.**

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

|                                                                                                                       |   | Three                months endedSeptember                30,   |
|----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|
|                                                                                                                       |   |                                                                      | 2006 |   |   | 2005 |   |
| Supplemental                disclosure of cash flow information:                                                           |   |                                                                      |   |   |   |   |   |
|                                                                                                                       |   |                                                                      |   |   |   |   |   |
| Cash                paid for income taxes                                                                                  |   | $                                                                         | 7 |   | $ | 5 |   |
|                                                                                                                       |   |                                                                      |   |   |   |   |   |
| Supplemental                schedule of non-cash financing activities:                                                     |   |                                                                      |   |   |   |   |   |
| Obligation                for N21 contingent payments                                                                      |   | $                                                                         | 145 |   | $ | 67 |   |
| Issuance                of common shares on conversion of 564 shares of Series Iconvertible                preferred stock |   | $                                                                         | 570 |   | $ | 51 |   |
| Issuance                of common stock and notes payable for acquisition of Iceland                Health, Inc.           |   | $                                                                         | 17,754 |   |   | --- |   |

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

| Note              10 | SEGMENT                REPORTING |
|----------------------|----------------------------------|

----

**NUTRITION      21, INC.**

| Note              10 | SEGMENT                REPORTING (continued) |
|----------------------|----------------------------------------------|

|                                             |   | Three                MonthsEnded |   |
|--------------------------------------------------|--------|----------------------------------|--------|
|                                             |   |
|                                             |   | September                30,     |   | September                30, |   |
|                                             |   | 2006                             |   | 2005 |   |
| Net                sales                         |   |                             |   |   |   |   |   |
| Ingredients                Group                 |   | $                                | 1,559  |   | $ | 3,522 |   |
| Finished                Products Group           |   |                             | 2,989  |   |   | 20 |   |
|                                             |   |                             |   |   |   |   |   |
| Sales                to external customers       |   |                             | 4,548  |   |   | 3,542 |   |
| Other                revenues                    |   |                             | 136    |   |   | 59 |   |
|                                             |   |                             |   |   |   |   |   |
| Total                Revenues                    |   | $                                | 4,684  |   | $ | 3,601 |   |
|                                             |   |                             |   |   |   |   |   |
| Income                (loss) before income taxes |   |                             |   |   |   |   |   |
| Ingredients                Group                 |   |                             | 761    |   |   | 2,629 |   |
| Finished                Products Group           |   |                             | (2,129 | ) |   | (1,424 | ) |
| Unallocated                corporate expenses    |   |                             | (2,741 | ) |   | (2,343 | ) |
|                                             |   |                             |   |   |   |   |   |
| Loss                before income taxes          |   | $                                | (4,109 | ) | $ | (1,138 | ) |
|                                             |   |                             |   |   |   |   |   |
| Unallocated                corporate assets      |   | $                                | 40,103 |   | $ | 19,239 |   |

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| **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              3** | **Quantitative                and Qualitative Disclosures about Market                Risk** |
|-------------------------|----------------------------------------------------------------------------------------------|

----

| **Item              4** | **Controls                and Procedures** |
|-------------------------|--------------------------------------------|

----

**PART      II - OTHER INFORMATION**

| **Item              1** | **Legal                Proceedings** |
|-------------------------|--------------------------------------|

**Items      1A, 2, 3 and 4 and are not applicable and have been omitted**

| **Item              5** | **Other                Information** |
|-------------------------|--------------------------------------|

| **Item              6** | **Exhibits** |
|-------------------------|--------------|

|  | **(a)** | **Exhibits** |
|--|---------|--------------|

|  | 4.1 | Stock                Option Award Agreement granting stock options to Dean DiMaria dated                as of                December 1, 2005. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.1 | Form                of employment agreement by and between the Company and Mark Stenberg,                incorporated by reference from Exhibit 10.1 filed with Form 8-K on                August                29, 2006. |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.2 | Form                of confidentiality and non-compete agreement executed by Mark H.                Stenberg,                incorporated by reference from Exhibit 10.2 filed with Form 8-K on                August                29, 2006. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.3 | Employment                Agreement between the Company and Dean DiMaria dated as of December                1,                2005 |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------|

----

| **Item              6** | **Exhibits                (continued)** |
|-------------------------|-----------------------------------------|

|  | 10.4 | Invention                and Secrecy Agreement between the Company and Dean DiMaria dated                as of                December 1, 2005 |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 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. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                      |                                                                                            |                                           |
|-------------------------------------------|-------------------------------------------------------------------------------------------------|------------------------------------------------|
|                                      |     NUTRITION              21, INC.                                         |
|                                 |                                                                                       |      Registrant  |
| Date: November              14, 2006 | By:                                                                                   | /s/ Paul              Intlekofer          |
|                                      | Paul              Intlekofer                                                                    |
|                                      | President                andChief Executive Officer(Principal Executive                Officer) |

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