**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**FORM      10-Q**

**0-14983**

**NUTRITION      21, INC**

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

**(914)      701-4500**

**None**

| Large                  accelerated filer  ̈ | Accelerated filer  ̈ | Non-accelerated filer x | Smaller Reporting Company  ̈ |
|-----------------------------------------------------------|------------------------------------|-----------------------------------|-------------------------------------------------|

| Class                                              |   | Outstanding                at November 12, 2008 |
|---------------------------------------------------------|--------|-------------------------------------------------|
| Common                Stock, $0.005 par value per share |   | 65,666,035                shares                |

----

**NUTRITION      21, INC.**

|                     |                                                                                                                      |                                                                                                                                                       | PAGE   |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                     |                                                                                                                      |                                                                                                                                                       |   |
| PART                I    | FINANCIAL                INFORMATION                                                                                      |                                                                                                                                                       |   |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| ITEM                1    | Financial                Statements                                                                                       |                                                                                                                                                       |   |
|                     |                                                                                                                      |                                                                                                                                                       |   |
|                     | (a)                                                                                                                       | Condensed                Consolidated Balance Sheets at September 30, 2008 and June 30,                2008                                                |   | 3                & 4 |
|                     |                                                                                                                      |                                                                                                                                                       |   |   |
|                     | (b)                                                                                                                       | Condensed                Consolidated Statements of Operations for the three month periods                ended                September 30, 2008 and 2007 |   | 5 |
|                     |                                                                                                                      |                                                                                                                                                       |   |   |
|                     | (c)                                                                                                                       | Condensed                Consolidated Statement of Stockholders’ Equity for the three-month period                ended September 30, 2008           |   | 6 |
|                     |                                                                                                                      |                                                                                                                                                       |   |   |
|                     | (d)                                                                                                                       | Condensed                Consolidated Statements of Cash Flows for the three month periods                ended                September 30, 2008 and 2007 |   | 7 |
|                     |                                                                                                                      |                                                                                                                                                       |   |   |
|                     | (e)                                                                                                                       | Notes                to Condensed Consolidated Financial Statements                                                                                        |   | 8 |
|                     |                                                                                                                      |                                                                                                                                                       |   |   |
| ITEM                2    | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations |                                                                                                                                                       | 15     |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| ITEM                3    | Quantitative                and Qualitative Disclosures About Market Risk                                                 |                                                                                                                                                       | 17     |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| ITEM                4(T) | Controls                and Procedures                                                                                    |                                                                                                                                                       | 17     |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| PART                II   | OTHER                INFORMATION                                                                                          |                                                                                                                                                       |   |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| ITEM                1A   | Risk                Factors                                                                                               |                                                                                                                                                       | 18     |
|                     |                                                                                                                      |                                                                                                                                                       |   |
| ITEM                6    | Exhibits                                                                                                                  |                                                                                                                                                       | 19     |

----

**NUTRITION      21, INC.**

|                                                                                                                                                                                                                             |   | September 30,2008  |    | June 30,2008  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|-------------------------|--------|
|                                                                                                                                                                                                                             |   |  (unaudited)            |    |  (Note 1)     |   |
| **ASSETS**                                                                                                                                                                                                                       |   |                         |    |                    |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |
| Current                assets:                                                                                                                                                                                                   |   |                         |    |                    |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |
| Cash                and cash equivalents                                                                                                                                                                                         |   | $                            | 2,678   |                    | $      | 4,817 |   |
| Short-term                investments                                                                                                                                                                                            |   |                         | 4,000   |                    |   | — |   |
| Accounts                receivable (less allowances for doubtful accounts and returns of                $1,071and                $1,148 at September 30, 2008 and June 30, 2008, respectively)                                   |   |                         | 5,607   |                    |   | 2,922 |   |
| Other                receivables                                                                                                                                                                                                 |   |                         | 79      |                    |   | 286 |   |
| Inventories                                                                                                                                                                                                                      |   |                         | 1,564   |                    |   | 1,014 |   |
| Prepaid                expenses and other current assets                                                                                                                                                                         |   |                         | 1,026   |                    |   | 1,483 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Total                current assets                                                                                                                                                                                              |   |                         | 14,954  |                    |   | 10,522 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Property                and equipment, net                                                                                                                                                                                       |   |                         | 62      |                    |   | 69 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Patents,                trademarks and other amortizable intangibles (net of accumulated                amortization of $25,921 and $25,568 at September 30, 2008 and June                30,                2008, respectively) |   |                         | 1,250   |                    |   | 1,540 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Goodwill                                                                                                                                                                                                                         |   |                         | 15,540  |                    |   | 15,395 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Other                intangibles with indefinite lives                                                                                                                                                                           |   |                         | 5,379   |                    |   | 5,379 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Other                assets                                                                                                                                                                                                      |   |                         | 2,890   |                    |   | 2,981 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| Investments                                                                                                                                                                                                                      |   |                         | — |                    |   | 3,740 |   |
|                                                                                                                                                                                                                             |   |                         |    |                    |   |   |   |
| TOTAL                ASSETS                                                                                                                                                                                                      |   | $                            | 40,075  |                    | $      | 39,626 |   |

----

**NUTRITION      21, INC. **

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | September 30,2008 |     | June 30,2008 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |  (unaudited)      |     | (Note 1)     |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                   |     |              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   |     |              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   |     |              |   |
| Short-term                borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                      | 3,000    |              | $      | 3,000 |   |
| Accounts                payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | 3,741    |              |   | 4,221 |   |
| Accrued                expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | 2,622    |              |   | 2,575 |   |
| Deferred                income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   | 1,011    |              |   | 1,228 |   |
| 6%                Series I convertible preferred stock subject to mandatory redemption                (redemption value $3,594 at September 30, 2008 and June 30,                2008)                                                                                                                                                                                                                                                                                                                                                                                             |   |                   | 3,378    |              |   | 3,270 |   |
| Current                portion of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 2,433    |              |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                   | 16,185   |              |   | 14,294 |   |
| Long-term                debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                   | 1,346    |              |   | 4,185 |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   | 2,152    |              |   | 2,152 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| 8%                Series J convertible preferred stock subject to mandatory redemption                (redemption value $17,750 at September 30, 2008 and June 30,                2008)                                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 11,980   |              |   | 11,594 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                   | 31,663   |              |   | 32,225 |   |
| Commitments                and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   |     |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| STOCKHOLDERS’                EQUITY:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                   |     |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| Preferred                stock, $0.01 par value, authorized 5,000,000 shares, 100,000 shares                designated as Series H, none issued and outstanding; 9,600 shares                designated as Series I convertible preferred stock, 9,600 shares                issued                and 3,594 shares outstanding at September 30, 2008 and June 30, 2008                (see                liabilities above); 17,750 shares designated as Series J convertible                preferred stock, 17,750 issued and outstanding at September 30,                2008 |   |                   | —  |              |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| Common                stock, $0.005 par value, authorized 100,000,000 shares; 64,555,861                shares                and 63,583,205 issued and outstanding at September 30, 2008 and June                30,                2008, respectively                                                                                                                                                                                                                                                                                                                            |   |                   | 320      |              |   | 315 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                   |     |              |   |   |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                   | 116,253  |              |   | 115,721 |   |
| Accumulated                deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                   | (108,161 | )                 |   | (108,375 | ) |
| Accumulated                other comprehensive loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                   | —  |              |   | (260 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                   | 8,412    |              |   | 7,401 |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                      | 40,075   |              | $      | 39,626 |   |

----

**NUTRITION      21, INC.**

|                                                                              |   | Three Months Ended |       |
|-----------------------------------------------------------------------------------|--------|------------------------------|------------|
|                                                                              |   | September 30,           |       |
|                                                                              |   | 2008                         |       | 2007 |   |
|                                                                              |   |                         |       |   |   |
| Net                sales                                                          |   | $                            | 12,609     |   | $ | 11,832 |   |
| Other                revenues                                                     |   |                         | 51         |   |   | 365 |   |
|                                                                              |   |                         |       |   |   |   |   |
| TOTAL                REVENUES                                                     |   |                         | 12,660     |   |   | 12,197 |   |
|                                                                              |   |                         |       |   |   |   |   |
| COSTS                AND EXPENSES                                                 |   |                         |       |   |   |   |   |
|                                                                              |   |                         |       |   |   |   |   |
| Cost                of revenues                                                   |   |                         | 4,745      |   |   | 4,047 |   |
| Advertising                and promotion expenses                                 |   |                         | 5,362      |   |   | 9,970 |   |
| General                and administrative expenses                                |   |                         | 798        |   |   | 1,090 |   |
| Research                and development expenses                                  |   |                         | 80         |   |   | 309 |   |
| Depreciation                and amortization                                      |   |                         | 363        |   |   | 542 |   |
|                                                                              |   |                         |       |   |   |   |   |
| TOTAL                COSTS AND EXPENSES                                           |   |                         | 11,348     |   |   | 15,958 |   |
|                                                                              |   |                         |       |   |   |   |   |
| OPERATING                PROFIT (LOSS)                                            |   |                         | 1,312      |   |   | (3,761 | ) |
|                                                                              |   |                         |       |   |   |   |   |
| Interest                income                                                    |   |                         | 44         |   |   | 33 |   |
| Interest                expense                                                   |   |                         | (1,142     | ) |   | (327 | ) |
|                                                                              |   |                         |       |   |   |   |   |
| INCOME                (LOSS) BEFORE INCOME TAXES                                  |   |                         | 214        |   |   | (4,055 | ) |
|                                                                              |   |                         |       |   |   |   |   |
| Income                taxes                                                       |   |                         | —    |   |   | — |   |
|                                                                              |   |                         |       |   |   |   |   |
| NET                INCOME (LOSS)                                                  |   | $                            | 214        |   | $ | (4,055 | ) |
|                                                                              |   |                         |       |   |   |   |   |
| Basic                and diluted income (loss) per common share                   |   | $                            | 0.00       |   | $ | (0.07 | ) |
|                                                                              |   |                         |       |   |   |   |   |
| Weighted                average number of common shares – basic and diluted |   |                         | 64,134,052 |   |   | 61,202,490 |   |

----

**NUTRITION      21, INC.**

|                                                                                                     |   |    Common Stock |       |  AdditionalPaid-InCapital |   |   AccumulatedDeficit |   | AccumulatedOtherComprehensiveLoss |    |    Total |   |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------------------------------|--------|--------------------------------|--------|-----------------------------------|---------|-------------------------|--------|
|                                                                                                          |   | Shares                              |       | Amount                         |   | Amount                         |   | Amount                            |    | Amount                  |   | Amount |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |
| Balance                at June 30, 2008                                                                  |   |                                | 63,583,205 |                           | $      | 315                            |   | $                                 | 115,721 |                    | $      | (108,375 | ) | $ | (260 | ) | $ | 7,401 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Issuance                of common stock for dividends on Series I preferred stock                        |   |                                | 131,722    |                           |   | 1                              |   |                              | 53      |                    |   | — |   |   | — |   |   | 54 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Issuance                of common stock for dividends on Series J preferred stock                        |   |                                | 830,934    |                           |   | 4                              |   |                              | 351     |                    |   | — |   |   | — |   |   | 355 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Stock-based                compensation expense                                                          |   |                                | —    |                           |   | —                        |   |                              | 124     |                    |   | — |   |   | — |   |   | 124 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Exercise                of stock options                                                                 |   |                                | 10,000     |                           |   | —                        |   |                              | 4       |                    |   | — |   |   | — |   |   | 4 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Reversal                of temporary impairment on investments in auction rate                securities |   |                                | —    |                           |   | —                        |   |                              | — |                    |   | — |   |   | 260 |   |   | 260 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Net                income for the period                                                                 |   |                                | —    |                           |   | —                        |   |                              | — |                    |   | 214 |   |   | — |   |   | 214 |   |
|                                                                                                     |   |                                |       |                           |   |                           |   |                              |    |                    |   |   |   |   |   |   |   |   |   |
| Balance                at September 30, 2008                                                             |   |                                | 64,555,861 |                           | $      | 320                            |   | $                                 | 116,253 |                    | $      | (108,161 | ) | $ | — |   | $ | 8,412 |   |

----

**NUTRITION      21, INC.**

|                                                                                                                                           |   | Three Months EndedSeptember 30, |    |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                           |   |  2008                                     |    |  2007 |   |
| Cash                flows from operating activities:                                                                                           |   |                                           |    |   |   |
| Net                income (loss)                                                                                                               |   | $                                              | 214     |   | $ | (4,055 | ) |
| Adjustments                to reconcile net income (loss) to net cash used in operating                activities:                             |   |                                           |    |   |   |   |   |
|                                                                                                                                           |   |                                           |    |   |   |   |   |
| Depreciation                of property and equipment                                                                                          |   |                                           | 7       |   |   | 9 |   |
| Amortization                of intangibles                                                                                                     |   |                                           | 355     |   |   | 533 |   |
| Accretion                of preferred stock and amortization of deferred financing                costs                                        |   |                                           | 585     |   |   | 123 |   |
| Non-cash                interest expense and accretion on note payable to Iceland                Health                                        |   |                                           | 18      |   |   | 18 |   |
| Convertible                preferred stock dividend paid in common stock charged as interest                expense                            |   |                                           | 409     |   |   | 54 |   |
| Stock-based                compensation expense                                                                                                |   |                                           | 124     |   |   | 128 |   |
| Changes                in operating assets and liabilities:                                                                                    |   |                                           |    |   |   |   |   |
| Accounts                receivable                                                                                                             |   |                                           | (2,685  | ) |   | (2,469 | ) |
| Other                receivables                                                                                                               |   |                                           | 207     |   |   | 125 |   |
| Inventories                                                                                                                                    |   |                                           | (550    | ) |   | 306 |   |
| Prepaid                expenses and other current assets                                                                                       |   |                                           | 457     |   |   | (1,148 | ) |
| Accounts                payable                                                                                                                |   |                                           | (474    | ) |   | 213 |   |
| Accrued                expenses                                                                                                                |   |                                           | 47      |   |   | 227 |   |
| Deferred                income                                                                                                                 |   |                                           | (217    | ) |   | 810 |   |
| Net                cash used in operating activities                                                                                           |   |                                           | (1,503  | ) |   | (5,126 | ) |
|                                                                                                                                           |   |                                           |    |   |   |   |   |
| Cash                flows from investing activities:                                                                                           |   |                                           |    |   |   |   |   |
| Contingent                payments for acquisitions, allocated to goodwill and patents and                trademarks                           |   |                                           | (165    | ) |   | (195 | ) |
| Purchases                of property and equipment                                                                                             |   |                                           | — |   |   | (1 | ) |
| Payments                for patents and trademarks                                                                                             |   |                                           | (51     | ) |   | (63 | ) |
| Net                cash used in investing activities                                                                                           |   |                                           | (216    | ) |   | (259 | ) |
| Cash                flows from financing activities:                                                                                           |   |                                           |    |   |   |   |   |
| Proceeds                from stock option exercises                                                                                            |   |                                           | 4       |   |   | 27 |   |
| Proceeds                from private placement of 8% Series J convertible preferred stock,                net of                issuance costs |   |                                           | — |   |   | 16,605 |   |
| (Repayments)                proceeds from short-term borrowings and long-term debt                                                             |   |                                           | (424    | ) |   | 1,525 |   |
| Net                cash (used in) provided by financing activities                                                                             |   |                                           | (420    | ) |   | 18,157 |   |
| Net                (decrease) increase in cash and cash equivalents                                                                            |   |                                           | (2,139  | ) |   | 12,772 |   |
| Cash                and cash equivalents at beginning of period                                                                                |   |                                           | 4,817   |   |   | 2,417 |   |
| Cash                and cash equivalents at end of period                                                                                      |   | $                                              | 2,678   |   | $ | 15,189 |   |

----

**NUTRITION      21, INC.**

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

|   |   | The                accompanying unaudited condensed consolidated financial statements                have                been prepared pursuant to the rules and regulations of the Securities                and                Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and do not                include all of the information and note disclosures required by accounting                principles generally accepted in the United States of America.                Accordingly, the unaudited condensed consolidated financial statements                should be read in conjunction with the Company’s audited consolidated                financial statements and notes thereto for the fiscal year ended                June 30,                2008 included in the Company’s Annual Report on Form 10-K/A filed on                October 3, 2008 (the “Form 10-K/A”). The accompanying unaudited condensed                consolidated financial statements reflect all adjustments (consisting                of                normal recurring adjustments) which are, in the opinion of the management,                considered necessary for a fair presentation of financial position,                results of operations and cash flows for the interim periods. The                June 30,                2008 balance sheet has been derived from the audited financial statements                included in the Form 10-K/A. Operating results for the three-month                period                ended September 30, 2008 are not necessarily indicative of the results                that may be expected for the fiscal year ending June 30,                2009. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | We                have used significant cash in our operations and we may need to raise                additional funds. During the fiscal year ended June 30, 2008 cash                used in                operations was $14.8 million, and during the three-month period from                July                1, 2008 through September 30, 2008 cash used in operations was $1.5                million. To fund our cash flows and to support the marketing and                other                expenses we envision, we may need to raise funds. There is no assurance                that additional funds will be available on terms favorable to the                Company                and its stockholders, or at all. The Series J preferred stock limits                our                ability to incur indebtedness and to issue additional preferred                stock. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Certain                reclassifications (approximately $0.5 million in sales related expenses                have been netted against revenues) have been made to prior year’s                financial statement amounts to conform to the current                year. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|

| Note              2 | INVESTMENTS |
|---------------------|-------------|

|   |   | At                September 30, 2008 and at June 30, 2008, the Company reported its                auction                rate securities (“ARS”) at fair value. All of the Company’s ARSs are                collateralized by student loan portfolios (substantially all of which                are                guaranteed by the United States Government). Beginning in February                2008,                the auctions for all of the ARSs then held by us were unsuccessful,                resulting in our continuing to hold them beyond their typical auction                reset dates. As a result of the lack of liquidity in the ARS market                and                not as a result of the quality of the underlying collateral, for                the year                ended June 30, 2008, we recorded a temporary impairment on our ARSs                of                $0.3 million, which was reflected in accumulated other comprehensive                loss                in our condensed consolidated balance sheet. On October 1, 2008,                the                Company received an offer to repurchase its ARS at the purchase price                of                face or par value plus accrued and unpaid interest or dividends.                As a                result, the Company believes that it no longer needs to record a                temporary                impairment and has included the ARS as a short-term investment at                their                face value of $4.0 million in the accompanying condensed consolidated                balance sheet at September 30,                2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   |   | The                Company accounts for its stock-based compensation arrangements in                accordance with the provisions of revised Statement of Financial                Accounting Standards No. 123 (“SFAS 123R”) “Share Based Payments”.                Stock-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 valuation provisions of SFAS                123R                apply to new awards and to awards that were outstanding on the effective                date and subsequently modified or cancelled. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                Company granted 1.0 million stock options during the three-month                period                ended September 30, 2008 with an exercise price equal to the market                price                at the date of grant with a fair value of $0.3 million based on the                Black-Scholes option pricing                model. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NUTRITION      21, INC.**

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

|   |   |   |
|--------|--------|--------|

|   |   | The                assumptions used in the Black-Scholes option pricing model related                to                stock option grants during the three months ended September 30, 2008                were                expected option life of 5.0 years, volatility factor of 100% and                risk-free                interest rate of 2.6%. The Company has not paid, nor does it contemplate                paying a dividend on its common stock 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Stock-based                compensation expense recognized in the condensed consolidated statements                of operations for the three-month period ended September 30, 2008                is based                on awards ultimately expected to vest, and is reduced for estimated                forfeitures. SFAS 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 16%, based on historical                experience. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                Company recorded $0.1 million in stock-based compensation expense                for                stock options and restricted stock in each of the three-month periods                ended September 30, 2008 and 2007. Stock-based compensation expense                is                recorded in general and administrative                expenses. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                following is a summary of option activity for the three-month period                ended                September 30, 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   **Options**                                   |   | **Shares****(000)** |   | **Weighted-****Average****Exercise Price** |   | **Weighted–Average****Remaining****Contractual****Term (Yrs.)** |   | **Aggregate****Intrinsic Value****($000)** |   |
|-----------------------------------------------------------|--------|---------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
| Outstanding at July 1,                2008 |   |                | 3,511  |                                            | $      | 0.91                                                                       |   |                                            |   |   |   |   |   |
| Granted                                                   |   |                | 1,000  |                                            | $      | 0.36                                                                       |   |                                            |   |   |   |   |   |
| Exercised                                                 |   |                | (10    | )                                               | $      | 0.38                                                                       |   |                                            |   |   |   |   |   |
| Forfeited                or expired                       |   |                | (167   | )                                               | $      | 1.12                                                                       |   |                                            |   |   |   |   |   |
| Outstanding                at September 30, 2008          |   |                | 4,334  |                                            | $      | 0.77                                                                       |   |                                            | 6.4    |   | $ | 0 |   |
| Exercisable                at September 30, 2008          |   |                | 2,662  |                                            | $      | 0.91                                                                       |   |                                            | 4.6    |   | $ | 0 |   |

|    **Restricted Stock**          |   |    **Shares****(000)** |    |   **Weighted-****Average****Exercise Price** |   | **Weighted–Average****Remaining****Contractual****Term (Yrs.)** |   | **Aggregate****Intrinsic Value****($000’s)** |    |
|------------------------------------------------------|--------|---------------------------------------|---------|-------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|
| Outstanding at July                1, 2008 |   |                                  | 329     |                                                        | $      | 1.57                                                                       |   |                                                    |    |   |   |   |   |
| Granted                                              |   |                                  | — |                                                        |   | —                                                                    |   |                                                    |    |   |   |   |   |
| Exercised                                            |   |                                  | — |                                                        |   | —                                                                    |   |                                                    |    |   |   |   |   |
| Forfeited                / expired or cancelled      |   |                                  | — |                                                        |   | —                                                                    |   |                                                    |    |   |   |   |   |
| Outstanding                at September 30, 2008     |   |                                  | 329     |                                                        | $      | 1.57                                                                       |   |                                                    | 2.1     |   | $ | — |   |
| Exercisable                at September 30, 2008     |   |                                  | 159     |                                                        | $      | 0.77                                                                       |   |                                                    | — |   |   | — |   |

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**NUTRITION      21, INC.**

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

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

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**NUTRITION      21, INC.**

| Note5 | ACQUISITION                OF ICELAND HEALTH, INC.                (continued) |
|-------|-------------------------------------------------------------------------------|

| Assets                purchased:                       |   |   |   |
|--------------------------------------------------------|--------|--------|--------|
|                                                   |   |   |   |
| Net                identifiable tangible assets        |   | $      | 181    |   |
| Other                intangibles with indefinite lives |   |   | 5,379  |   |
| Customer                relationships                  |   |   | 924    |   |
| Non-compete                agreements                  |   |   | 375    |   |
| Goodwill                                               |   |   | 15,540 |   |
| Deferred                tax liability                  |   |   | (2,152 | ) |
|                                                   |   |   |   |   |
| Purchase                Price                          |   | $      | 20,247 |   |

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

| Note              7 | EARNINGS                PER COMMON SHARE |
|---------------------|------------------------------------------|

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

|                                                                         |   | Three months endedSeptember 30,  |    |
|------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                                         |   |
|                                                                         |   |                  2008                           |    | 2007 |   |
| Supplemental                disclosure of cash flow information:             |   |                                                 |    |   |   |
|                                                                         |   |                                                 |    |   |   |
| Cash                paid for income taxes                                    |   | $                                                    | — |   | $ | 10 |   |
|  Supplemental                schedule of non-cash financing activities: |   |                                                 |    |   |   |   |   |
| Increase                in obligation for Nutrition 21 contingent payments   |   | $                                                    | 45      |   | $ | 138 |   |

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**NUTRITION      21, INC.**

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

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

| Note              11 | SHORT-TERM                BORROWINGS AND LONG-TERM DEBT |
|----------------------|---------------------------------------------------------|

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**NUTRITION      21, INC.**

| Note              11 | SHORT-TERM                BORROWINGS AND LONG-TERM DEBT                (continued) |
|----------------------|------------------------------------------------------------------------------------|

** **

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

|                                             |   | Three Months Ended |   |
|--------------------------------------------------|--------|------------------------------|--------|
|                                             |   | September 30,           |   | September 30, |   |
|                                             |   | 2008                         |   | 2007 |   |
| Net                sales                         |   |                         |   |   |   |
| Ingredients                Group                 |   | $                            | 1,849  |   | $ | 1,886 |   |
| Branded                Products Group            |   |                         | 10,760 |   |   | 9,946 |   |
|                                             |   |                         |   |   |   |   |   |
| Sales                to external customers       |   |                         | 12,609 |   |   | 11,832 |   |
| Other                revenues                    |   |                         | 51     |   |   | 365 |   |
|                                             |   |                         |   |   |   |   |   |
| Total                revenues                    |   | $                            | 12,660 |   | $ | 12,197 |   |
|                                             |   |                         |   |   |   |   |   |
| Income                (loss) before income taxes |   |                         |   |   |   |   |   |
| Ingredients                Group                 |   | $                            | 1,175  |   | $ | 993 |   |
| Branded                Products Group            |   |                         | 1,326  |   |   | (3,178 | ) |
| Unallocated                corporate expenses    |   |                         | (2,287 | ) |   | (1,870 | ) |
|                                             |   |                         |   |   |   |   |   |
| Income                (loss) before income taxes |   | $                            | 214    |   | $ | (4,055 | ) |
|                                             |   |                         |   |   |   |   |   |
| Unallocated                corporate assets      |   | $                            | 40,075 |   | $ | 39,626 |   |

----

**NUTRITION      21, INC.**

| Note              13 | COMPREHENSIVE                INCOME (LOSS) |
|----------------------|--------------------------------------------|

|   |   |   | Comprehensive                loss includes unrealized losses on our ARS that are classified as                available-for-sale securities. Comprehensive income (loss) for each                of                these periods are as follows (dollars are in                thousands): |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | **Three Months Ended** |   |
|-----------------------------------------------|--------|----------------------------------|--------|
|                                          |   | **September 30,**           |   |
|                                          |   | **2008**                         |   | **2007** |   |
| Net income                (loss)         |   | $                                | 214    |   | $ | (4,055 | ) |
| Other                comprehensive income:    |   |                             |   |   |   |   |   |
| Change                in unrealized losses on |   |                             |   |   |   |   |   |
| available-for-sale                securities  |   |                             | 260    |   |   | — |   |
|                                          |   |                             |   |   |   |   |   |
| Comprehensive                income (loss)    |   | $                                | 474    |   | $ | (4,055 | ) |

----

**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. Advertising and promotion                expenses include fees and expenses directly related to the selling                of the                Company’s products including the cost of advertising, promotional expenses                and third party fees. General and administrative expenses include                salaries                and overhead, third party fees and expenses, and costs associated                with the                operations of the Company. 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      3 – Quantitative and Qualitative Disclosures about Market      Risk**

**Item      4(T) – Controls and Procedures**

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**PART      II - OTHER INFORMATION**

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

**Item      1A – Risk Factors**

*The      limited liquidity for our common stock could affect an investor’s ability to      sell our shares at a satisfactory price.*

----

**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:                  November 14, 2008 | By:                                 | /s/                  Michael A. Zeher |
|                                     |                                | Michael                  A. Zeher |
|                                     |                                | President                  and |
|                                     |                                | Chief                  Executive Officer |
|                                     |                                | (Principal                  Executive Officer) |

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