**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**

| Class                                                     | Outstanding                  at May 11, 2007 |
|-----------------------------------------------------------|----------------------------------------------|
| Common                  Stock, $0.005 par value per share | 60,370,582                  shares           |

----

**NUTRITION      21, INC.**

|                       |                                                                                                                                                                                  |   | PAGE                         |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|
| PART                    I  | FINANCIAL                    INFORMATION                                                                                                                                              |   |                              |
|                       |                                                                                                                                                                                  |   |                         |
| ITEM                    1  | Financial                    Statements                                                                                                                                               |   |                              |
|                       |                                                                                                                                                                                  |   |                         |
|                       | (a)                     Condensed Consolidated Balance Sheets at March 31, 2007 and June                    30,                    2006                                          |   | 3                    & 4 |
|                       |                                                                                                                                                                                  |   |                         |
|                       | (b)                     Condensed Consolidated Statements of Operations for the three                    and nine                    month periods ended March 31, 2007 and 2006 |   | 5                            |
|                       |                                                                                                                                                                                  |   |                         |
|                       | (c)                     Condensed Consolidated Statement of Stockholders’ Equity for the nine                    month period ended March 31, 2007                         |   | 6                            |
|                       |                                                                                                                                                                                  |   |                         |
|                       | (d)                     Condensed Consolidated Statements of Cash Flows for the nine                    month periods                    ended March 31, 2007 and 2006           |   | 7                            |
|                       |                                                                                                                                                                                  |   |                         |
|                       | (e)                     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                                                                                                         |   | 16                           |
|                       |                                                                                                                                                                                  |   |                         |
| ITEM                    4  | Controls                    and Procedures                                                                                                                                            |   | 16                           |
|                       |                                                                                                                                                                                  |   |                         |
| PART                    II | OTHER                    INFORMATION                                                                                                                                                  |   |                         |
|                       |                                                                                                                                                                                  |   |                         |
| ITEM                    6  | Exhibits                                                                                                                                                                              |   | 17                           |

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**NUTRITION      21, INC.**

|                                                                                                                                                                                           |   | March                31,2007 |   | June                30,2006 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|-----------------------------|--------|
| **ASSETS**                                                                                                                                                                                     |   | (unaudited)                  |   | (Note                1)     |   |
|                                                                                                                                                                                           |   |                         |   |                        |   |
| Current                assets:                                                                                                                                                                 |   |                         |   |                        |   |
| Cash                and cash equivalents                                                                                                                                                       |   | $                            | 3,398  |                        | $      | 2,414 |   |
| Short-term                investments                                                                                                                                                          |   |                         | 4,000  |                        |   | 11,500 |   |
| Accounts                receivable (less allowances for doubtful accounts and returns of                $522 at                March 31, 2007 and $9 at June 30, 2006)                         |   |                         | 4,712  |                        |   | 2,600 |   |
| Other                receivables                                                                                                                                                               |   |                         | 327    |                        |   | 205 |   |
| Inventories                                                                                                                                                                                    |   |                         | 3,205  |                        |   | 963 |   |
| Prepaid                expenses and other current assets                                                                                                                                       |   |                         | 2,057  |                        |   | 392 |   |
| Total                current assets                                                                                                                                                            |   |                         | 17,699 |                        |   | 18,074 |   |
| Property                and equipment, net                                                                                                                                                     |   |                         | 74     |                        |   | 116 |   |
| Patents,                trademarks and other amortizable intangibles (net of accumulated                amortization of $22,056 at March 31, 2007 and $19,511 at June 30,                2006) |   |                         | 4,420  |                        |   | 5,375 |   |
|                                                                                                                                                                                           |   |                         |   |                        |   |   |   |
| Goodwill                                                                                                                                                                                       |   |                         | 12,136 |                        |   | — |   |
| Other                intangibles with indefinite lives                                                                                                                                         |   |                         | 5,379  |                        |   | — |   |
| Other                assets                                                                                                                                                                    |   |                         | 300    |                        |   | 291 |   |
| TOTAL                ASSETS                                                                                                                                                                    |   | $                            | 40,008 |                        | $      | 23,856 |   |

----

**NUTRITION      21, INC. **

|                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March                31, 2007 |    | June                30, 2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|-----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (unaudited)                   |    | (Note                1)           |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                   |   |                          |    |                              |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                               |   |                          |    |                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                                                                                                                       |   |                          |    |                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |
| Accounts                payable                                                                                                                                                                                                                                                                                                                                                                                           |   | $                             | 6,807   |                              | $      | 2,282 |   |
| Accrued                expenses                                                                                                                                                                                                                                                                                                                                                                                           |   |                          | 1,094   |                              |   | 914 |   |
| Deferred                income                                                                                                                                                                                                                                                                                                                                                                                            |   |                          | 3,473   |                              |   | 1,710 |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                                                                                                                  |   |                          | 11,374  |                              |   | 4,906 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |   |   |
| Long                term debt                                                                                                                                                                                                                                                                                                                                                                                             |   |                          | 2,397   |                              |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |   |   |
| 6%                Series I convertible preferred stock subject to mandatory redemption                (redemption value $4,044 and $6,586 at March 31, 2007 and June 30,                2006,                respectively)                                                                                                                                                                                                |   |                          | 3,073   |                              |   | 4,410 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |   |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                                                                                          |   |                          | 16,844  |                              |   | 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 4,044 and 6,586 shares outstanding at March 31, 2007 and June                30,                2006, respectively |   |                          | — |                              |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                          |    |                              |   |   |   |
| Common                stock, $0.005 par value, authorized 100,000,000 shares; 60,348,767                shares                issued and outstanding at March 31, 2007 and 48,783,220 issued and                outstanding at June 30, 2006                                                                                                                                                                              |   |                          | 302     |                              |   | 243 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                                                                                                 |   |                          | 106,133 |                              |   | 86,582 |   |
| Accumulated                deficit                                                                                                                                                                                                                                                                                                                                                                                        |   |                          | (83,271 | )                                 |   | (72,285 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                           |   |                          | 23,164  |                              |   | 14,540 |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                           |   | $                             | 40,008  |                              | $      | 23,856 |   |

----

**NUTRITION      21, INC.**

|                                                                        |   | Three                Months Ended |       | Nine                MonthsEnded |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------|--------|
|                                                                        |   | March                31,          |       | March                31,        |   |
|                                                                        |   | 2007                              |       | 2006                            |   | 2007 |   | 2006 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |
| Net                sales                                                    |   | $                                 | 15,948     |                            | $      | 2,379 |   | $ | 29,793 |   | $ | 7,908 |   |
| Other                revenues                                               |   |                              | 107        |                            |   | 82 |   |   | 380 |   |   | 253 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| TOTAL                REVENUES                                               |   |                              | 16,055     |                            |   | 2,461 |   |   | 30,173 |   |   | 8,161 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| COSTS                AND EXPENSES                                           |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Cost                of revenues                                             |   |                              | 4,790      |                            |   | 584 |   |   | 9,194 |   |   | 1,861 |   |
| Selling,                general and administrative expenses                 |   |                              | 11,591     |                            |   | 2,605 |   |   | 27,022 |   |   | 8,529 |   |
| Research                and development expenses                            |   |                              | 259        |                            |   | 305 |   |   | 949 |   |   | 1,134 |   |
| Depreciation                and amortization                                |   |                              | 962        |                            |   | 559 |   |   | 2,593 |   |   | 1,694 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| TOTAL                COSTS AND EXPENSES                                     |   |                              | 17,602     |                            |   | 4,053 |   |   | 39,758 |   |   | 13,218 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| OPERATING                LOSS                                               |   |                              | (1,547     | )                               |   | (1,592 | ) |   | (9,585 | ) |   | (5,057 | ) |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Interest                income                                              |   |                              | 115        |                            |   | 48 |   |   | 375 |   |   | 177 |   |
| Interest                expense                                             |   |                              | 760        |                            |   | 784 |   |   | 1,766 |   |   | 1,684 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| LOSS                BEFORE INCOME TAXES                                     |   |                              | (2,192     | )                               |   | (2,328 | ) |   | (10,976 | ) |   | (6,564 | ) |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Income                taxes                                                 |   |                              | 4          |                            |   | 2 |   |   | 10 |   |   | 7 |   |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| NET                LOSS                                                     |   | $                                 | (2,196     | )                               | $      | (2,330 | ) | $ | (10,986 | ) | $ | (6,571 | ) |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Basic                and diluted loss per common share                      |   | $                                 | (0.04      | )                               | $      | (0.06 | ) | $ | (0.19 | ) | $ | (0.17 | ) |
|                                                                        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Weighted                average number of common shares - basic and diluted |   |                              | 59,524,369 |                            |   | 39,328,637 |   |   | 56,616,985 |   |   | 38,678,346 |   |

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**NUTRITION      21, INC.**

|                                                                                                                                                  |   | Common                    Stock  |       | AdditionalPaid-InCapital |   | AccumulatedDeficit |   | Total  |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|--------------------------|--------|--------------------|--------|--------|---------|
|                                                                                                                                                  |   | Shares                                |       | $                        |   | $                  |   | $      |    | $ |   |
| Balance                    at June 30, 2006                                                                                                           |   |                                  | 48,783,220 |                     | $      | 243                |   | $      | 86,582  |   | $ | (72,285 | ) | $ | 14,540 |   |
| Conversion                    of 2,542 shares of Series I convertible preferred stock to shares                    of                    common stock |   |                                  | 2,041,963  |                     |   | 10                 |   |   | 2,554   |   |   | — |   |   | 2,564 |   |
|                                                                                                                                                  |   |                                  |       |                     |   |               |   |   |    |   |   |   |   |   |   |   |
| Issuance                    of common stock for dividends on Series I preferred stock                                                                 |   |                                  | 147,793    |                     |   | 1                  |   |   | 237     |   |   | — |   |   | 238 |   |
|                                                                                                                                                  |   |                                  |       |                     |   |               |   |   |    |   |   |   |   |   |   |   |
| Issuance                    of common stock for the purchase of Iceland                    Health, Inc.                                               |   |                                  | 8,000,000  |                     |   | 40                 |   |   | 15,432  |   |   | — |   |   | 15,472 |   |
| Issuance                    of restricted shares                                                                                                      |   |                                  | 515,000    |                     |   | 4                  |   |   | (4      | ) |   | — |   |   | — |   |
| Stock-based                    compensation expense                                                                                                   |   |                                  | —    |                     |   | —            |   |   | 421     |   |   | — |   |   | 421 |   |
| Exercise                    of stock options and warrants                                                                                             |   |                                  | 860,791    |                     |   | 4                  |   |   | 911     |   |   | — |   |   | 915 |   |
| Net                    loss for the period                                                                                                            |   |                                  | —    |                     |   | —            |   |   | — |   |   | (10,986 | ) |   | (10,986 | ) |
| Balance                    at March 31, 2007                                                                                                          |   |                                  | 60,348,767 |                     | $      | 302                |   | $      | 106,133 |   | $ | (83,271 | ) | $ | 23,164 |   |

----

**NUTRITION      21, INC.**

|                                                                                                                                               |   | Nine                Months EndedMarch                31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                                                                                                               |   |  2007                                               |    |  2006 |   |
| Cash                flows from operating activities:                                                                                               |   |                                                     |    |   |   |
| Net                loss                                                                                                                            |   | $                                                        | (10,986 | ) | $ | (6,571 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:                                          |   |                                                     |    |   |   |   |   |
| Depreciation                of property and equipment                                                                                              |   |                                                     | 49      |   |   | 128 |   |
| Amortization                of intangibles                                                                                                         |   |                                                     | 2,544   |   |   | 1,566 |   |
| Accretion                of preferred stock and amortization of deferred financing                costs                                            |   |                                                     | 1,366   |   |   | 1,198 |   |
| Non-cash                interest expense on note payable to Iceland Health                                                                         |   |                                                     | 73      |   |   | — |   |
| Series                I convertible preferred stock dividend charged as interest                expense                                            |   |                                                     | 260     |   |   | 427 |   |
| Stock-based                compensation expense                                                                                                    |   |                                                     | 421     |   |   | 271 |   |
| Charge                for stock appreciation rights                                                                                                |   |                                                     | — |   |   | 97 |   |
| Changes                in operating assets and liabilities, net of effects from acquisition                of                Iceland Health, Inc.: |   |                                                     |    |   |   |   |   |
| Accounts                receivable                                                                                                                 |   |                                                     | (2,092  | ) |   | (310 | ) |
| Other                receivables                                                                                                                   |   |                                                     | (122    | ) |   | 123 |   |
| Inventories                                                                                                                                        |   |                                                     | (1,775  | ) |   | (216 | ) |
| Prepaid                expenses and other assets                                                                                                   |   |                                                     | (1,404  | ) |   | (273 | ) |
| Accounts                payable                                                                                                                    |   |                                                     | 3,067   |   |   | 312 |   |
| Accrued                expenses                                                                                                                    |   |                                                     | 180     |   |   | (1,526 | ) |
| Deferred                income                                                                                                                     |   |                                                     | 1,763   |   |   | — |   |
| Net                cash used in operating activities                                                                                               |   |                                                     | (6,656  | ) |   | (4,774 | ) |
| Cash                flows from investing activities:                                                                                               |   |                                                     |    |   |   |   |   |
| Contingent                payments for acquisitions                                                                                                |   |                                                     | (170    | ) |   | (134 | ) |
| Purchases                of property and equipment                                                                                                 |   |                                                     | (7      | ) |   | (12 | ) |
| Payments                for patents and trademarks                                                                                                 |   |                                                     | (152    | )  |   | (123 | ) |
| Redemption                of investments available for sale                                                                                        |   |                                                     | 7,500   |   |   | 3,000 |   |
| Increase                in restricted cash                                                                                                         |   |                                                     | — |   |   | 1,225 |   |
| Cash                portion of purchase price for Iceland Health, Inc., net of cash                acquired                                        |   |                                                     | (446    | ) |   | — |   |
| Net                cash provided by investing activities                                                                                           |   |                                                     | 6,725   |   |   | 3,956 |   |
| Cash                flows from financing activities:                                                                                               |   |                                                     |    |   |   |   |   |
| Proceeds                from stock option and warrant exercises                                                                                    |   |                                                     | 915     |   |   | 474 |   |
| Additional                issuance costs related to Series I convertible preferred                stock                                            |   |                                                     | — |   |   | (45 | ) |
| Net                cash provided by financing activities                                                                                           |   |                                                     | 915     |   |   | 429 |   |
| Net                increase (decrease) in cash and cash equivalents                                                                                |   |                                                     | 984     |   |   | (389 | ) |
| Cash                and cash equivalents at beginning of period                                                                                    |   |                                                     | 2,414   |   |   | 675 |   |
| Cash                and cash equivalents at end of period                                                                                          |   | $                                                        | 3,398   |   | $ | 286 |   |

----

**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 of                Regulation S-X 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, 2006 included in the Company’s Annual                Report on Form 10-K and the Form 8-K/A relating to the acquisition                of                Iceland Health, Inc. (“IH”) (see Note 5) filed on November 8, 2006. 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, 2006 balance sheet has been                derived                from the audited financial statements included in the Company’s Annual                Report on Form 10-K. Operating results for the three and nine month                periods ended March 31, 2007 are not necessarily indicative of the                results                that may be expected for the fiscal year ending June 30,                2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | 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”. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   |   | Investments                in marketable debt securities with maturities of less than 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 market 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): |
|--------|--------|-----------------------------------------------------------------------------------------------|

|                                                   |   | March                31,2007 |    | June                30,2006 |   |
|--------------------------------------------------------|--------|------------------------------|---------|-----------------------------|--------|
| 3.87%                corporate bond, maturing 12/15/06 |   | $                            | — |                        | $      | 1,000 |   |
| Auction                rate securities (1)             |   |                         | 4,000   |                        |   | 10,500 |   |
|                                                   |   | $                            | 4,000   |                        | $      | 11,500 |   |

|   | (1)Included                in short term investments at March 31, 2007 and June 30, 2006 are                auction                rate securities with 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 guaranty 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 |
|-----------------------|-----------------------------------------|

|   |   | Share-based                employee compensation cost is 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 (“FASB 123R”) “Share                Based Payments” on July 1, 2005, the first day of the Company’s fiscal                year using modified prospective application. The valuation provisions                of                FAS123R 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). The Company has used the Block-Scholes option                pricing model to calculate the fair value of stock                options. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   |   | Share-Based                Compensation Information under FAS                123R |
|--------|--------|-----------------------------------------------------------------------------------|

|   |   | The                assumptions used in the Company’s Black-Scholes option pricing model                related to stock option grants during the nine months ended March                31, 2007                were expected option life of 3.0 years, volatility factor of 95.5%                and                risk-free interest rate 5.2%. The Company has not paid, nor does                it                contemplate paying a dividend 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 nine month periods                ended                March 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 5%, based on historical                experience. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                Company recorded $0.1 million and $46 thousand in share-based compensation                expense in the three month periods ended March 31, 2007 and 2006,                respectively, and $0.4 million and $0.3 million in the nine month                periods                ended March 31, 2007 and 2006, respectively. Share-based compensation                expense is recorded in selling, general and administrative                expenses. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | At                March 31, 2007, total unrecognized compensation cost related to non-vested                awards was $0.3 million, which is expected to be recognized over                a                weighted average period of 1.1                years. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                following is a summary of option activity for the nine month period                ended                March 31, 2007. During the nine month period ended March 31, 2007,                the                Company granted 665,000 stock options with an exercise price equal                to the                market price at the date of grant with a fair value of $1.0 million                based                on the market price at the date of                grant. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     **Options**          |   |    **Shares****(000)** |   |   **Weighted-Average****Exercise Price** |   | **Weighted-Average                Remaining**** ****Contractual****Term (Yrs.)** |   |   **Aggregate****Intrinsic                Value****($000)** |   |
|----------------------------------------------|--------|---------------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
| Outstanding                at July 1, 2006   |   |                                  | 4,623  |                                               | $      | 0.91                                                                                  |   |                                                                  |   |   |   |   |   |
| Granted                                      |   |                                  | 665    |                                               | $      | 1.56                                                                                  |   |                                                                  |   |   |   |   |   |
| Exercised                                    |   |                                  | (742   | )                                                  | $      | 1.14                                                                                  |   |                                                                  |   |   |   |   |   |
| Forfeited                or expired          |   |                                  | (312   | )                                                  | $      | 1.93                                                                                  |   |                                                                  |   |   |   |   |   |
| Outstanding                at March 31, 2007 |   |                                  | 4,234  |                                               | $      | 0.90                                                                                  |   |                                                                  | 6.3    |   | $ | 2,995 |   |
| Exercisable                at March 31, 2007 |   |                                  | 3,325  |                                               | $      | 0.82                                                                                  |   |                                                                  | 6.3    |   | $ | 2,633 |   |

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**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, 2006   |   |                      | -0-     |                                   |   | —                                                                  |   |                                                      |    |   |   |   |   |
| Granted                                      |   |                      | 515     |                                   | $      | 1.56                                                                     |   |                                                      |    |   |   |   |   |
| Exercised                                    |   |                      | — |                                   |   | —                                                                  |   |                                                      |    |   |   |   |   |
| Forfeited                or expired          |   |                      | — |                                   |   | —                                                                  |   |                                                      |    |   |   |   |   |
| Outstanding                at March 31, 2007 |   |                      | 515     |                                   | $      | 1.56                                                                     |   |                                                      | 3.0     |   | $ | 22 |   |
| Exercisable                at March 31, 2007 |   |                      | — |                                   |   | —                                                                  |   |                                                      | — |   |   | — |   |

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

* *

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**NUTRITION      21, INC.**

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

| Net                  identifiable tangible assets        |   | $      | 181    |   |
|----------------------------------------------------------|--------|--------|--------|--------|
| Other                  intangibles with indefinite lives |   |   | 5,379  |   |
| Customer                  relationships                  |   |   | 924    |   |
| Non-compete                  agreements                  |   |   | 375    |   |
| Goodwill                                                 |   |   | 12,136 |   |
|                                                     |   |   |   |   |
| Purchase                  Price                          |   | $      | 18,995 |   |

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**NUTRITION      21, INC.**

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

|                                                   |   | Consolidated                Pro-forma |    |
|--------------------------------------------------------|--------|---------------------------------------|---------|
|                                                   |   | Nine                months Ended      |    |
|                                                   |   | March                31,              |    | March                31, |   |
|                                                   |   | 2007                                  |    | 2006 |   |
|                                                   |   |                                  |    |   |   |
| Total                revenues                          |   | $                                     | 33,993  |   | $ | 27,669 |   |
|                                                   |   |                                  |    |   |   |   |   |
| Net                loss                                |   | $                                     | (10,718 | ) | $ | (6,906 | ) |
|                                                   |   |                                  |    |   |   |   |   |
| Basic                and diluted loss per common share |   | $                                     | (0.19   | ) | $ | (0.18 | ) |

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

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

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

|                                                                                                                                                                       |   |  Nine                months ended March                31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                                                                                                                                                       |   |                  2007                                      |   | 2006 |   |
| Supplemental                disclosure of cash flow information:                                                                                                           |   |                                                            |   |   |   |
|                                                                                                                                                                       |   |                                                            |   |   |   |
| Cash                paid for income taxes                                                                                                                                  |   | $                                                               | 10     |   | $ | 7 |   |
| Supplemental                schedule of non-cash financing activities:                                                                                                     |   |                                                            |   |   |   |   |   |
| Obligation                for N21 contingent payments                                                                                                                      |   | $                                                               | 138    |   | $ | 145 |   |
| Issuance                of common shares on conversion of 2,542 shares and 852 shares,                respectively,                of Series I convertible preferred stock |   | $                                                               | 2,564  |   | $ | 817 |   |
| Issuance                of common stock and notes payable (net of discount) for acquisition                of                Iceland                Health, Inc.           |   | $                                                               | 17,786 |   | $ | — |   |

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

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**NUTRITION      21, INC.**

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

|                                             |   | Three                MonthsEnded |   | Nine                MonthsEnded |   |
|--------------------------------------------------|--------|----------------------------------|--------|---------------------------------|--------|
|                                             |   | March                31,         |   | March                31,        |   | March                31, |   | March                31, |   |
|                                             |   | 2007                             |   | 2006                            |   | 2007 |   | 2006 |   |
| Net                sales                         |   |                             |   |                            |   |   |   |   |   |
| Ingredients                Group                 |   | $                                | 2,374  |                            | $      | 2,345 |   | $ | 5,595 |   | $ | 7,827 |   |
| Branded                Products Group            |   |                             | 13,574 |                            |   | 34 |   |   | 24,198 |   |   | 81 |   |
| Sales                to external customers       |   |                             | 15,948 |                            |   | 2,379 |   |   | 29,793 |   |   | 7,908 |   |
|                                             |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Other                revenues                    |   |                             | 107    |                            |   | 82 |   |   | 380 |   |   | 253 |   |
|                                             |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Total                Revenues                    |   |                             | 16,055 |                            |   | 2,461 |   |   | 30,173 |   |   | 8,161 |   |
|                                             |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income taxes |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Ingredients                Group                 |   |                             | 1,670  |                            |   | 1,563 |   |   | 3,436 |   |   | 5,328 |   |
| Branded                Products Group            |   |                             | (1,051 | )                               |   | (788 | ) |   | (5,390 | ) |   | (3,263 | ) |
| Unallocated                corporate expenses    |   |                             | (2,811 | )                               |   | (3,103 | ) |   | (9,022 | ) |   | (8,629 | ) |
|                                             |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes          |   | $                                | (2,192 | )                               | $      | (2,328 | ) | $ | (10,976 | ) | $ | (6,564 | ) |
|                                             |   |                             |   |                            |   |   |   |   |   |   |   |   |   |
| Unallocated                corporate assets      |   | $                                | 40,008 |                            | $      | 14,261 |   |   |   |   |   |   |   |

| Note              11 | SETTLEMENT                OF PATENT LAWSUIT |
|----------------------|---------------------------------------------|

----

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

**Forward-Looking      Statements and Risk Factors**

**General**

|   |   | Cost                of revenues includes both direct and indirect manufacturing costs.                Research and development expenses include internal expenditures as                well as                expenses associated with third party providers. Selling, general                and                administrative expenses include salaries and overhead, third party                fees                and expenses, and costs associated with the selling of the Company’s                products. The Company capitalizes patent costs and intangible assets                with                finite lives, and amortizes them over periods not to exceed seventeen                years. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   | **Results                of Operations** |
|--------|--------|--------|------------------------------------------|

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

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**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**

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**P      ART II - OTHER INFORMATION**

**Items      1, 1A, 2, 3, 4 and 5 and are not applicable and have been      omitted**

**Item      6 - Exhibits **

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

|   | 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: May 14, 2007 | By:                                                                                                                                             | /s/              Paul              Intlekofer |
|               | Paul              Intlekofer President                and Chief                  Executive Officer (Principal                    Executive Officer)  |

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