UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                                    FORM 10-Q

For Quarter Ended:                                    March 31, 2001



Commission File Number 0-14983

                               NUTRITION 21, INC.

--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


New York                                                       11-2653613
--------------------------------------------------------------------------------
(State or other jurisdiction of            (IRS Employer Identification Number)
incorporation of organization)


4 Manhattanville Road, Purchase, NY                                    10577
--------------------------------------------------------------------------------
 (Address of principal executive offices)                          (Zip Code)


                                 (914) 701-4500
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                             YES ___X___ NO _______



Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

COMMON STOCK, PAR VALUE $.005            32,286,573 SHARES AS OF MARCH 31, 2001
-----------------------------            --------------------------------------


<PAGE>

                               NUTRITION 21, INC.

                                      INDEX


    PART I    FINANCIAL INFORMATION                                         PAGE
    ------    ---------------------                                         ----

    ITEM 1    Consolidated Financial Statements (unaudited)

              Consolidated Balance Sheets at March 31, 2001
                   and June 30, 2000                                          3

              Consolidated Statements of Operations for the three
                   and nine months ended March 31, 2001 and 2000              5

              Consolidated Statement of Stockholders' Equity for
                   the nine months ended March 31, 2001                       6

              Consolidated Statements of Cash Flows for the nine
                   months ended March 31, 2001 and 2000                       7


              Notes to Unaudited Consolidated Financial Statements            8


    ITEM 2    Management's Discussion and Analysis of
              Financial Condition and Results of Operations                  12

    ITEM 3    Quantitative and Qualitative Disclosures
              About Market Risk                                              16

    PART II   OTHER INFORMATION

    ITEM 1    Legal Proceedings                                              17

    ITEM 6    Reports on Form 8-K                                            17


                                       2
<PAGE>

                               NUTRITION 21, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                            March 31,         June 30,
                                                                                              2001              2000
                                                                                             -------          -------
                                                                                           (unaudited)        (Note 1)
<S>                                                                                           <C>              <C>
ASSETS

Current assets:

    Cash and cash equivalents                                                                 $4,442           $8,488

    Accounts receivable (less allowance for doubtful accounts of $45                           3,966            4,587
    at March 31, 2001 and $134 at June 30, 2000)

    Other receivable                                                                           1,934              464

    Inventories                                                                                1,162            1,382

    Prepaid expenses and other current assets                                                    283              717
                                                                                             -------          -------
         Total current assets                                                                 11,787           15,638

Property and equipment, net                                                                      664              734

Patents and trademarks (net of accumulated amortization of $9,848
at March 31, 2001 and $7,843 at June 30, 2000)                                                18,661           21,711

Goodwill (net of accumulated amortization of $754 at March 31,
2001 and $449 at June 30, 2000)                                                                6,325            2,640

Other assets                                                                                     327              362
                                                                                             -------          -------
TOTAL ASSETS                                                                                 $37,764          $41,085
                                                                                             =======          =======

See accompanying notes to consolidated financial statements.
</TABLE>


                                       3

<PAGE>

                                NUTRITION 21 INC.

                           CONSOLIDATED BALANCE SHEETS

                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                            March 31,         June 30,
                                                                                              2001              2000
                                                                                             -------          -------
LIABILITIES, REDEEMABLE PREFERRED STOCK AND                                                (unaudited)        (Note 1)
 STOCKHOLDERS' EQUITY
<S>                                                                                           <C>             <C>
Current liabilities;
      Current portion of long-term debt                                                        $1,500          $1,500
      Accounts payable and accrued expenses                                                     3,257           4,039
      Contingent payments payable                                                               1,046           3,584
      Preferred dividends payable                                                                  21              29
                                                                                             --------        --------
             Total current liabilities                                                          5,824           9,152

Long-term debt                                                                                     --           1,125

Other long-term obligations                                                                       129             153
                                                                                             --------        --------
TOTAL LIABILITIES                                                                               5,953          10,430
                                                                                             --------        --------
COMMITMENTS AND CONTINGENT LIABILITIES

REDEEMABLE PREFERRED STOCK:

Series E convertible preferred, 1,500 shares issued:
    261 and 476 shares outstanding at March 31, 2001 and June 30, 2000,
    respectively (aggregate liquidation value - $267)                                             214             389

Series F convertible preferred, 575 shares issued:
    285 and 343 shares outstanding at March 31, 2001 and June 30, 2000,
    respectively (aggregate liquidation value - $292)                                             254             287

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, authorized 5,000,000 shares

Series G convertible preferred, 1,604 shares issued:
    941 and 663 shares outstanding at March 31, 2001 and June 30, 2000,
    respectively (aggregate liquidation value - $953)                                             941             663

Common stock, $0.005 par value, authorized 65,000,000 shares;
    32,286,573 and 31,581,427 shares issued and outstanding at March 31,
    2001 and June 30, 2000, respectively                                                          161             158

Additional paid-in capital                                                                     63,162          62,291

Accumulated deficit                                                                           (32,921)        (33,133)
                                                                                             --------        --------
TOTAL STOCKHOLDERS' EQUITY                                                                     31,343          29,979
                                                                                             --------        --------
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK
  AND STOCKHOLDERS' EQUITY                                                                    $37,764         $41,085
                                                                                             ========        ========

See accompanying notes to consolidated financial statements.
</TABLE>

                                       4

<PAGE>

                               NUTRITION 21, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                   Three Months Ended                  Nine Months Ended
                                                                        March 31,                          March 31,

                                                                 2001              2000             2001              2000
                                                                 ----              ----             ----              ----
<S>                                                            <C>               <C>             <C>               <C>
Net sales                                                      $6,034            $7,646          $15,700           $25,642
Other revenues                                                    375               125            2,222               378
                                                               ------            ------          -------           -------

                                                                6,409             7,771           17,922            26,020
REVENUES

Cost of goods sold                                              1,830             1,371            4,219             4,386
                                                               ------            ------          -------           -------
GROSS PROFIT                                                    4,579             6,400           13,703            21,634

    Research and development expenses                             317               486            2,278             1,455

    Selling, general & administrative expenses                  2,752             3,165            8,299            10,335

    Depreciation and amortization                                 799             1,028            2,639             2,944

    Restructuring and other charges                                --                --            2,448                --
                                                               ------            ------          -------           -------

OPERATING INCOME (LOSS)                                           711             1,721           (1,961)            6,900

Interest income (expense), net                                      3               (21)              60              (150)

Other income                                                    2,106                 6            2,337                58
                                                               ------            ------          -------           -------

INCOME BEFORE INCOME TAXES                                      2,820             1,706              436             6,808


Income taxes                                                      562               128               87               513
                                                               ------            ------          -------           -------

NET INCOME                                                     $2,258            $1,578             $349            $6,295
                                                               ======            ======          =======           =======


    Basic earnings per share                                    $0.07             $0.05            $0.01             $0.20
                                                               ======            ======          =======           =======

    Diluted earnings per share                                  $0.07             $0.05            $0.01             $0.20
                                                               ======            ======          =======           =======

    Weighted average number of common shares -
    basic                                                      31,956            30,664           31,601            30,548
                                                               ======            ======          =======           =======

    Weighted average number of common shares and
    equivalents - diluted                                      33,358            33,238           31,704            32,285
                                                               ======            ======          =======           =======


See accompanying notes to consolidated financial statements.
</TABLE>

                                       5

<PAGE>

                               NUTRITION 21, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                             Preferred Stock                                  Additional
                                                 Series G               Common Stock           Paid-In       Accumulated
                                                                                               Capital         Deficit        Total
                                           SHARES          $          SHARES         $            $               $             $
                                           ------          -          ------         -            -               -             -

<S>                                          <C>         <C>         <C>            <C>        <C>            <C>           <C>
Balance at June 30, 2000                     663         $663        31,581,427     $158       $62,291        $(33,133)     $29,979

Preferred stock dividends                     --           --                --       --            --             (82)         (82)

Conversion of Series E preferred stock
                                              --           --           174,891        1           178              --          179
Conversion of Series G preferred stock
                                            (663)        (663)          845,663        4           659              --           --
Preferred stock issued for Optimum
Lifestyle, Inc. contingent payment           941          941                --       --            --              --          941

Compensation related to issuance of
warrants to non-employees                     --           --                --       --            32              --           32

Premium on redemption of Series F
preferred stock                               --           --                --       --            --             (55)         (55)

Cancellation of stock exercise                --           --          (315,408)      (2)            2              --           --

Net income for the period                     --           --                --       --            --             349          349
                                              --           --                --       --            --             ---          ---
                                             ---         ----        ----------     ----       -------        --------      -------
Balance at March 31, 2001                    941         $941        32,286,573     $161       $63,162        $(32,921)     $31,343
                                             ===         ====        ==========     ====       =======        =========     =======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6

<PAGE>

                               NUTRITION 21, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                       Nine months Ended
                                                                                                            March 31
                                                                                                      2001           2000
                                                                                                      ----           ----
<S>                                                                                                <C>             <C>
Cash flows from operating activities:
    Net income                                                                                        $349          $6,295
    Adjustments to reconcile net income to net cash provided by operating activities:
        Depreciation and amortization                                                                2,639           2,944
        Nutrition 21 consulting expense                                                                 --             149
        Loss (gain) on disposal of equipment and product line                                            6              (8)
        Other non-cash items                                                                            35              45
        Changes in operating assets and liabilities:
           Accounts receivable                                                                         621            (931)
           Other receivables                                                                        (1,470)            135
           Inventories                                                                                 220            (463)
           Prepaid and other current assets                                                            434             100
           Other assets                                                                                 35             139
           Accounts payable and accrued expenses                                                      (637)           (440)
                                                                                                   -------         -------
               Net cash provided by operating activities                                             2,232           7,965
                                                                                                   -------         -------
Cash flows from investing activities:
    Contingent payments for acquisitions                                                            (4,658)         (4,006)
    Purchases of property and equipment                                                               (133)           (187)
    Payments for patents and trademarks                                                               (190)           (381)
    Proceeds from sale of assets                                                                         3             467
                                                                                                   -------         -------
        Net cash used in investing activities                                                       (4,978)         (4,107)
                                                                                                   -------         -------
Cash flows from financing activities:
    Capital lease obligation repayments                                                                 --             (63)
    Debt repayments                                                                                 (1,125)         (1,875)
    Proceeds from exercise of options and warrants                                                      --             673
    Preferred stock dividends paid                                                                     (85)            (41)
    Redemption of redeemable preferred stock                                                           (90)             --
                                                                                                   -------         -------
        Net cash used in financing activities                                                       (1,300)         (1,306)
                                                                                                   -------         -------
Net (decrease) increase in cash and cash equivalents                                                (4,046)          2,552
Cash and cash equivalents at beginning of period                                                     8,488           4,458
                                                                                                   -------         -------
Cash and cash equivalents at end of period                                                          $4,442          $7,010
                                                                                                   =======         =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       7

<PAGE>

                               NUTRITION 21, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       ($ in thousands, except share data)
                                   (unaudited)


     Note 1   BASIS OF PRESENTATION

              The accompanying  unaudited consolidated financial statements have
              been prepared in accordance with accounting  principles  generally
              accepted in the United  States for interim  financial  information
              and  with  the  instructions  to  Form  10-Q  and  Article  10  of
              Regulation  S-X.  Accordingly,  they  do  not  include  all of the
              information  and  footnotes  required  by  accounting   principles
              generally  accepted in the United  States for  complete  financial
              statements.   In  the  opinion  of  management,   all  adjustments
              (consisting of normal recurring accruals) considered necessary for
              a fair presentation have been included.  Operating results for the
              three  and  nine  month  periods  ended  March  31,  2001  are not
              necessarily indicative of the results that may be expected for the
              year ending June 30, 2001.

              The  balance  sheet at June 30,  2000  has been  derived  from the
              audited financial statements at that date but does not include all
              of the  information and footnotes  required by generally  accepted
              accounting principles for complete financial statements.

              For  further  information,  refer  to the  consolidated  financial
              statements and footnotes  thereto included in the Company's annual
              report on Form 10-K/A for the year ended June 30, 2000.

              Certain  reclassifications  have  been  made to the  prior  period
              amounts in order to conform to the current period presentation.

  Note 2      SIGNIFICANT ACCOUNTING PRONOUNCEMENTS

              The  Securities  and  Exchange  Commission  (SEC)  released  Staff
              Accounting  Bulletin  (SAB)  No.  101,  "Revenue   Recognition  in
              Financial  Statements"  on December 3, 1999, SAB No. 101A on March
              24, 2000,  SAB No. 101B on June 26, 2000 and a document  issued on
              October 12, 2000  responding to frequently  asked  questions (FAQ)
              regarding  accounting standards related to revenue recognition and
              SAB No.  101.  SAB No.  101 sets  forth the views of the issues as
              well as certain  industry-specific  guidance.  We are  required to
              report the impact of SAB No.  101,  as amended by SAB No. 101A and
              SAB No. 101B no later than the fourth fiscal quarter of the fiscal
              year 2001.  We do not  believe  that the  impact on our  financial
              position or results of operations will be material.

Note 3        INVENTORIES

              The  components of inventories at March 31, 2001 and June 30, 2000
              were:

                                                 March 31           June 30
                                                   2001               2000
                                                   ----               ----

                         Raw materials             $252                $493
                         Finished goods             910                 889
                                                 ------              ------
                         Total inventories       $1,162              $1,382
                                                 ======              ======

                                       8

<PAGE>

                               NUTRITION 21, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       ($ in thousands, except share data)
                                   (unaudited)

Note 4   REDEEMABLE PREFERRED STOCK

             During the three month period  ended March 31, 2001,  215 shares of
             the Company's Series E preferred and accrued dividends thereon were
             converted into 174,891 shares of Common Stock.

             During the three month period  ended March 31,  2001,  58 shares of
             the Company's Series F preferred and accrued dividends thereon were
             redeemed for $90  thousand.  As a result of this  transaction,  the
             Company   recorded  a  premium  on   redemption  of  $55  thousand,
             representing  the excess of the  consideration  exchanged  over the
             carrying value of the then outstanding F preferred.

             During the three month period  ended March 31, 2001,  663 shares of
             the Company's  Series G preferred and accrued dividend thereon were
             converted into 845,663 shares of the Company's  Common Stock.  Also
             the Company  issued 941 shares of Series G  preferred  stock to the
             former owners of Optimum  Lifestyles,  Inc. as a contingent payment
             in  accordance  with an  Agreement  of Purchase  and Sale of Assets
             dated January 19, 1999 with Optimum Lifestyles, Inc.

Note 5   EARNINGS PER SHARE

         Basic and diluted (loss) earnings per share:

<TABLE>
<CAPTION>
                                                                       Three months ended                    Nine months ended
                                                                           March 31,                             March 31,
                                                                    2001               2000               2001              2000
                                                                    ----               ----               ----              ----
<S>                                                           <C>                <C>                <C>              <C>
        Net income                                                $2,258             $1,578               $349            $6,295
        Preferred stock dividends                                    (82)               (28)              (137)              (69)
                                                                  ------             ------             ------            ------
        Net income attributable to common stockholders            $2,176             $1,550               $212            $6,226
                                                                  ======             ======               ====            ======
        Basic earnings per share                                   $0.07              $0.05              $0.01             $0.20
                                                                   =====              =====              =====             =====
        Weighted average number of common shares              31,956,121         30,663,712         31,600,900        30,548,055
                                                              ==========         ==========         ==========        ==========
        Net income attributable to common shareholders            $2,176             $1,550               $212            $6,226
        Preferred stock dividends                                     82                 28                 --                69
                                                                  ------             ------             ------            ------
        Net income available to common shareholders
        after giving effect to dilution                           $2,258             $1.578               $212            $6,295
                                                                  ======             ======               ====            ======
        Diluted earnings per share                                 $0.07              $0.05              $0.01             $0.20
                                                                   =====              =====              =====             =====
        Weighted average number of common shares
        and equivalents                                       33,357,605         33,237,996         31,704.447        32,285,218
                                                              ==========         ==========         ==========        ==========

</TABLE>

         Diluted  earnings  per share for the nine month  period ended March 31,
         2001,  does  not  reflect  the  incremental  shares  from  the  assumed
         conversion of the preferred stock (1,284,581  shares), as the effect of
         such inclusion would be anti-dilutive.

                                       9

<PAGE>

                               NUTRITION 21, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (in thousands, except share data)
                                   (unaudited)

  Note 6 RESTRUCTURING AND OTHER CHARGES

         The  Company  recorded  $2.4  million  for   restructuring   and  other
         non-recurring charges, relating to its Nutritional Products segment, in
         the second quarter of fiscal 2001. A $1.6 million  restructuring charge
         was recorded as part of the Company's initiative to reduce costs and to
         create a more  flexible  and  efficient  organization.  Included in the
         restructuring  charge  was $0.7  million of cash  termination  benefits
         associated with the separation of twenty  employees.  Approximately 98%
         of the affected  employees left their  positions with the Company as of
         March 31, 2001,  and the remaining  employees are scheduled to leave by
         June 30, 2001.  Substantially all of the termination benefits were paid
         in the nine month  period  ended March 31,  2001.  This cash outlay was
         funded through cash from operations.  Approximately $0.9 million of the
         restructuring  charge relates to the Company's  decision to discontinue
         its efforts to launch NO YO, a consumer  weight loss  product  intended
         for the retail  channel  and to  consolidate  certain of the  Company's
         facilities.  Approximately  $0.4 million of these  restructuring  costs
         remain to be paid by June 30, 2001.

         Other  charges  of $0.7  million  include a  non-cash  write off of the
         carrying   value  of  the   website   development   costs   related  to
         NutritionU.com,  the  Company's  online  nutrition  education  internet
         company.  The  Company  believes  that  since  sufficient   uncertainty
         surrounds  the ability of the Company to find  strategic  partners  for
         NutritionU.com,  there  will be no  substantive  future  benefit  to be
         derived from the website development costs. In addition,  other charges
         include $0.1 million for the write off of the remaining  carrying value
         of a license fee for one of its products.

  Note 7 OTHER INCOME

         In the three  months  ended March 31,  2001,  the company  successfully
         settled  several  patent   infringement   claims  related  to  chromium
         picolinate.  The Company  recorded  $2.1  million as other  income as a
         result of the  settlements.  At March 31, 2001,  cash  proceeds of $1.2
         million  from the  settlements  remain to be  collected.  In  addition,
         certain  of the  settlements  include  agreements  to  purchase  future
         chromium picolinate needs from the Company.

  Note 8 INCOME TAXES

         The  effective  tax rates for the three and nine  month  periods  ended
         March  31,  2001  and 2000  were  20.0%  and  7.5%,  respectively.  The
         difference between the effective tax rate and the federal statutory tax
         rate  of 34% is due  primarily  to  the  estimated  utilization  of net
         operating losses and tax credit carryforwards.


                                       10

<PAGE>

                               NUTRITION 21, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       ($ in thousands, except share data)
                                   (unaudited)

Note 9   SEGMENT REPORTING

         A summary of business data for the Company's  reportable segments is as
         follows:

         Information by business segment (in thousands):

<TABLE>
<CAPTION>
                                                                  Three months ended       Nine months ended
                                                                       March 31,               March 31,
                                                                 2001           2000         2001         2000
                                                                 ----           ----         ----         ----
<S>                                                             <C>           <C>         <C>          <C>
               REVENUES
               Nutritional Products                             $6,385        $7,709      $16,154      $25,513
               Pharmaceutical Products                              24            62        1,768          507
                                                                ------        ------      -------      -------
                                                                $6,409        $7,771      $17,922      $26,020
                                                                ======        ======      =======      =======
               OPERATING (LOSS) INCOME
               Nutritional Products                               $729        $1,677      $(3,594)      $6,756
               Pharmaceutical Products                             (18)           44        1,663          144
                                                                  ----        ------      -------       ------
                                                                  $711        $1,721      $(1,961)      $6,900
                                                                  ====        ======      =======       ======
</TABLE>

         Nutritional  Products  segment  assets  decreased   approximately  $1.2
         million in the nine months ended March 31, 2001,  due to  restructuring
         and other charges. The operations of the Company are principally in the
         United States.

Note 10  SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                          Nine months Ended
                                                                                              March 31,
                                                                                           2001         2000
                                                                                           ----         ----
<S>                                                                                        <C>          <C>
         Supplemental disclosure of cash flow information:
               Cash paid for interest                                                      $180         $376
               Cash paid for income taxes                                                  $229         $372

         Supplemental schedule of non-cash financing activities:
               Obligation for purchase of property & equipment                             $129         $188
               Obligation for N21 contingent payment                                       $884       $2,424
               Obligation for Lite Bites contingent payment                                $162         $164
               Issuance of common stock for Series E conversions                             --         $250
               Issuance of common stock for Series G conversions                             --         $121
               Issuance of Series G preferred stock for Optimum Lifestyle, Inc.
               contingent payment                                                          $941         $610
</TABLE>

                                       11

<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

           The  following  discussion  should  be read in  conjunction  with the
           consolidated  financial  statements  and related notes thereto of the
           Company included elsewhere herein.

           GENERAL

           The Company's  revenues have been primarily  derived from the sale of
           nutrition   products   to   manufacturers   of  vitamin  and  mineral
           supplements  and sales of nutrition  bars and other  related  dietary
           supplement  products  marketed under the trademark  "Lite Bites" (the
           "Lite Bites  Business").  The  Company  has,  in  addition,  received
           royalty and license income from users of its patented technology.

           Cost of goods sold  includes  both direct and indirect  manufacturing
           costs.  Research  expenses include  internal  expenditures as well as
           expenses associated with third party collaborators.  Selling, general
           and  administrative  expenses include  salaries and overheads,  third
           party  fees  and   expenses,   royalty   expenses  for  licenses  and
           trademarks,  and costs  associated  with the selling of the Company's
           products.     The    Company    capitalizes    patent    costs    and
           acquisition-related  goodwill and  intangible  assets,  and amortizes
           them over periods of one to twenty years.

           RESULTS OF OPERATIONS

           REVENUES

           Net sales for the three and nine month  periods  ended March 31, 2001
           of $6.0  million  and $15.7  million,  respectively,  decreased  $1.6
           million and $9.9 million, respectively, when compared to $7.6 million
           and $25.6 million, respectively, for the same periods a year ago. The
           decrease in net sales is primarily  due to  reductions in the selling
           price  of  chromium  picolinate  subsequent  to the  expiration  of a
           composition-of-matter patent in August 2000.

           Other  revenues of $0.4  million  and $2.2  million for the three and
           nine month  periods ended March 31, 2001,  were  comprised of license
           and  royalty  revenues  earned from the  Whitehall-Robins  Healthcare
           division of American Home Products  Corporation in accordance  with a
           License,  Option and Marketing  Agreement  entered into on October 8,
           l999, as well as $1.5 million of license fees earned from  Biosynexus
           Incorporated  in accordance with License  Agreements  entered into on
           August 2, 2000.

           COST OF GOODS SOLD

           Cost of goods sold for the three  months ended March 31, 2001 of $1.8
           million increased $0.4 million when compared to $1.4 million the same
           period  a year  ago.  The  increase  in  cost  of  goods  sold is due
           primarily to the mix of products  sold with a greater  proportion  of
           lower margin  nutritional  products sold in the current  quarter when
           compared to last year.  Cost of goods sold for the nine months  ended
           March 31, 2001 of $4.2 million  decreased  $0.2 million when compared
           to $4.4  million in the same period a year ago.  The decrease in cost
           of goods sold is primarily due to the lack of sales and cost of sales
           from the  Company's low margin Wipe Out Dairy Wipes  business,  which
           was sold in fiscal 2000.  The gross  margin on product  sales for the
           three and nine  months  periods  ended  March  31,  2001 of 69.7% and
           73.1%,  respectively,   declined  12.4  and  9.8  percentage  points,
           respectively,  when  compared  to the same  periods a year  ago.  The
           decrease  in the gross  margin  percentage  is due  primarily  to the
           reduction in the selling price of chromium  picolinate  subsequent to
           the expiration of a  composition-of-matter  patent in August 2000, as
           well as the mix of products sold.

                                       12

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A)

         SG&A expense for the three and nine month periods ended March 31, 2001,
         of $2.8 and $8.3 million, respectively, decreased $0.4 million and $2.0
         million,  respectively,  when  compared  to  $3.2  million,  and  $10.3
         million, respectively, for the same periods a year ago. The decrease is
         primarily  due  to  a  reduction  in  the  use  of  outside   marketing
         consultants;  a reduction in royalty  expense due to the  expiration of
         the composition-of-matter patent in August 2000 as well as cost savings
         resulting  from a  restructuring  undertaken by the Company  during the
         quarter ended December 31, 2000.  Partially offsetting these reductions
         was a non-recurring  charge of $0.5 million related to the departure of
         the Company's previous CEO.

         RESTRUCTURING AND OTHER CHARGES

         The  Company  recorded  $2.4  million  for   restructuring   and  other
         non-recurring charges, relating to its Nutritional Products segment, in
         the second quarter of fiscal 2001. A $1.6 million  restructuring charge
         was recorded as part of the Company's initiative to reduce costs and to
         create a more  flexible  and  efficient  organization.  Included in the
         restructuring  charge  was $0.7  million of cash  termination  benefits
         associated with the separation of twenty  employees.  Approximately 98%
         of the affected  employees left their  positions with the Company as of
         March 31, 2001,  and the remaining  employees are scheduled to leave by
         June 30, 2001.  Substantially all of the termination benefits were paid
         in the nine month  period  ended March 31,  2001.  This cash outlay was
         funded through cash from operations.  Approximately $0.9 million of the
         restructuring  charge relates to the Company's  decision to discontinue
         its efforts to launch NO YO, a consumer  weight loss  product  intended
         for the retail  channel  and to  consolidate  certain of the  Company's
         facilities.  Approximately  $0.4 million of these  restructuring  costs
         remain to be paid by June 30, 2001.

         Other  charges  of $0.7  million  include a  non-cash  write off of the
         carrying   value  of  the   website   development   costs   related  to
         NutritionU.com,  the  Company's  online  nutrition  education  internet
         company.  The  Company  believes  that  since  sufficient   uncertainty
         surrounds  the ability of the Company to find  strategic  partners  for
         NutritionU.com,  there  will be no  substantive  future  benefit  to be
         derived from the website development costs. In addition,  other charges
         include $0.1 million for the write off of the remaining  carrying value
         of a license fee for one of its products.

         RESEARCH AND DEVELOPMENT EXPENSES

         Research  costs of $0.3  million for the three  months  ended March 31,
         2001, decreased $0.2 million when compared to $0.5 million for the same
         period a year  ago.  The  decrease  is  primarily  due to cost  savings
         resulting  from a  restructuring  undertaken  by the Company.  Research
         costs  of $2.3  million  for the  nine  months  ended  March  31,  2001
         increased  $0.8  million  when  compared  to $1.5  million for the same
         period a year ago. The increase is primarily  attributable  to expenses
         incurred for NutritionU.com.

         OPERATING INCOME (LOSS)

         The  Company's  operating  income of $0.7  million for the three months
         ended March 31,  2001  decreased  $1.0  million  when  compared to $1.7
         million for the same period a year ago. The price reductions offered to
         the  Company's  chromium  picolinate  customers  was  the  contributing
         factor.  Partially  offsetting  the price  reduction  were cost savings
         resulting  from a  restructuring  undertaken by the Company  during the
         quarter ended December 31, 2000.  The Company's  operating loss of $2.0
         million for the nine months  ended March 31, 2001 was $8.9 million less
         than the  operating  income of $6.9  million for the same period a year
         ago. The price reductions offered to the Company's chromium  picolinate
         customers, the funding of NutritionU.com, and the non-recurring charges
         recorded in the quarter ended  December 31, 2000 were the  contributing
         factors.  Partially  offsetting these factors were license fees of $1.5
         million earned from  Biosysnexus  Incorporated  in accordance  with the
         License Agreements entered into on August 2, 2000.

                                       13

<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

         INTEREST INCOME, NET AND OTHER INCOME

         Interest  income,  net of three  thousand and sixty  thousand  dollars,
         respectively,  for the three and nine  month  periods  ended  March 31,
         2001, was greater than the comparable periods a year earlier.  Interest
         income was derived primarily from the investment of funds received from
         the successful settlement of patent infringement claims.

         Other income of $2.1 million and $2.2  million,  respectively,  for the
         three  and nine  months  period  ended  March  31,  2001,  include  the
         successful  settlements  of patent  infringement  claims brought by the
         Company.

         INCOME TAXES

         The effective tax rate for the three and nine month periods ended March
         31,  2001 and 2000 was  20.0% and 7.5%,  respectively.  The  difference
         between the  effective  tax rate and the federal  statutory tax rate of
         34% is due  primarily to the  estimated  utilization  of net  operating
         losses and tax credit carryforwards.

         BUSINESS SEGMENTS

         The Company  operates in two business  segments - Nutritional  Products
         and Pharmaceutical Products.

         NUTRITIONAL PRODUCTS

         Nutritional  product  revenues  of  $6.4  million  and  $16.2  million,
         respectively,  for the  three and nine  months  ended  March 31,  2001,
         respectively,  decreased  $1.3 million and $9.4 million,  respectively,
         when  compared to the same periods a year ago. The decrease in revenues
         is  primarily  due to  reductions  in the  selling  price  of  chromium
         picolinate offered to our ingredient product customers.

         Nutritional  products operating income for the three months ended March
         31, 2001 was $0.7 million, compared to operating income of $1.7 million
         for the same period a year ago. The  decrease in  operating  income was
         due  to  reductions  in  the  selling  price  of  chromium  picolinate.
         Nutritional products operating loss for the nine months ended March 31,
         2001 of $3.6 million was $10.2 million less then the  operating  income
         of $6.8  million  for the same period a year ago.  The  decrease is due
         primarily to the reduction in the selling price of chromium picolinate,
         the  funding  of  NutritionU.com,  and  the  restructuring  charges  as
         previously discussed.

         PHARMACEUTICAL PRODUCTS

         Pharmaceutical  products  revenues for the three and nine month periods
         ended March 31, 2001 were $24 thousand and $1.8 million,  respectively,
         compared to $62 thousand and $0.5  million,  respectively,  for the the
         same  periods a year ago. The decrease for the three months ended March
         31, 2001, is primarily  attributable  to reduced  animal health related
         sales  resulting  from the sale of the Wipe Out(R) Dairy Wipes business
         in December 1999 to Immucell  Corporation.  The nine month  increase is
         due to  license  fees  earned  from  users  of the  Company's  patented
         technologies.

         Pharmaceutical  products  operating loss was $18 thousand for the three
         months  ended  March 31,  2001,  compared  to  operating  income of $44
         thousand  for the same  period a year ago.  For the nine  months  ended
         March 31,  2001,  the  Company  had  operating  income of $1.7  million
         compared to $144  thousand  for the  comparable  period a year ago. The
         increase  is due  primarily  to license  fees  earned  from  Biosynexus
         Incorporated in accordance with the License  Agreements entered into on
         August 2, 2000.

                                       14

<PAGE>

         LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash  equivalents at March 31, 2001 were $4.4 million compared
         to $8.5 million at June 30, 2000. As of March 31, 2001, the Company had
         a working  capital  surplus of $6.0 million  compared to a $6.5 million
         surplus as of June 30, 2000.

         During the nine month  period ended March 31,  2001,  cash  provided by
         operations  was $2.2  million,  compared  to $8.0  million for the nine
         month period ended March 31, 2000. The decrease is due primarily to the
         lower profitability incurred in the period.

         Cash used in investing  activities  for the nine months ended March 31,
         2001 was $5.0  million  compared  to $4.1  million  for the  comparable
         period a year ago.  Contingent  payments  made in  accordance  with the
         Company's acquisition agreements substantially accounted for the use of
         funds.

         Cash used in  financing  activities  for each nine month  period  ended
         March 31, 2001 and March 31, 2000 was $1.3 million. Debt repayments and
         preferred stock dividends paid were the primary uses of cash.

         The  Company's  primary  sources of financing are cash  generated  from
         continuing operations and up to a $4.0 million revolving line of credit
         with  Citizens  Bank of  Massachusetts  (successor in interest to loans
         originally  issued  to the  Company  by State  Street  Bank  and  Trust
         Company) based on certain criteria. At March 31, 2001, the availability
         under the revolving line of credit was $3.4 million. At March 31, 2001,
         the Company had no borrowings under the revolving line of credit.

         The Company  believes  that cash  generated  from  operations  and cash
         available under the line of credit will provide sufficient liquidity to
         fund operations for the next twelve months.

         Future  acquisition  activities  and any  increases  in  marketing  and
         research and  development  expenses over the present levels may require
         additional  funds.  Also,  the  Company  intends to seek any  necessary
         additional funding through  arrangements with corporate  collaborators,
         through  public or private sales of its  securities,  including  equity
         securities,  or through bank financing  arrangements.  The Company does
         not currently have any specific  arrangements for additional  financing
         and there can be no assurance that additional funding will be available
         at all or on reasonable terms.

         RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the FASB issued SFAS No. 133  "Accounting  for Derivative
         Instruments and Hedging Activities." SFAS No. 133 requires companies to
         recognize all  derivatives as assets or  liabilities  measured at their
         fair value.  Gains or losses  resulting  from  changes in the values of
         those  derivatives  would be accounted  for depending on the use of the
         derivative and whether it qualified for hedge accounting.

         In June 2000, the FASB issued SFAS No. 137,  "Accounting for Derivative
         Instruments and Hedging  Activities - Deferral of the Effective Date of
         FASB Statement No. 133, an Amendment of FASB  Statement No. 133".  SFAS
         No. 137 defers the  effective  date of SFAS No.  133,  "Accounting  for
         Derivative  Instruments and Hedging  Activities" for one year. SFAS No.
         133, as amended, is now effective for all fiscal quarters of all fiscal
         years  beginning  after  June  15,  2000.  The  Company   believes  the
         implementation  will have no impact on financial position or results of
         operations.

                                       15

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

         The Securities and Exchange  Commission (SEC) released Staff Accounting
         Bulletin (SAB) No. 101, "Revenue  Recognition in Financial  Statements"
         on December 3, 1999,  SAB No. 101A on March 24,  2000,  SAB No. 101B on
         June 26, 2000 and a document  issued on October 12, 2000  responding to
         frequently asked questions (FAQ) regarding accounting standards related
         to revenue  recognition and SAB No. 101. SAB No. 101 sets forth the SEC
         views of the issues as well as certain  industry-specific  guidance. We
         are required to report the impact of SAB No. 101, as amended by SAB No.
         101A and SAB No.  101B no later than the fourth  fiscal  quarter of the
         fiscal year 2001.  We do not believe  that the impact on our  financial
         position or results from operations will be material.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market  risk  represents  the risk of changes  in value of a  financial
         instrument,  derivative or  non-derivative,  caused by  fluctuations in
         interest rates,  foreign exchange rates and equity prices.  The Company
         has no financial  instruments that give it exposure to foreign exchange
         rates or equity prices.  The Company's existing term loan with Citizens
         Bank of  Massachusetts  bears  interest  at a rate  equal to the  prime
         lending  rate plus one  percent.  As a result,  the  Company  does have
         exposure to changes in interest rates.  For example,  if interest rates
         increase by one percentage point from current levels, the Company would
         incur  incremental   interest  expense  of  $10  thousand  through  the
         scheduled maturity of the term loan on February 1, 2002.


                                       16

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

         The company in the ordinary  course of its business has brought  patent
         infringement  actions  against  companies  that it  believes  have sold
         chromium  picolinate in violation of the Company's patent rights. As of
         this  date,  one  action is  ongoing,  and the  Company  is  evaluating
         bringing additional actions.

ITEM 6 - REPORTS ON FORM 8-K

         (a) EXHIBITS

             None

         (b) REPORTS

             The Company filed a report on Form 8-K on January 25, 2001 relating
             to a change in the Company's certifying accountants.

             The Company filed a report on Form 8-K on March 13, 2001,  relating
             to a change of name approved by the  shareholders on March 8, 2001,
             from AMBI Inc. to Nutrition 21, Inc.

                                       17

<PAGE>



                        NUTRITION 21, INC.& SUBSIDIARIES

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

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





Date:  May 14, 2001          By:  /s/ GAIL MONTGOMERY
                                  -------------------
                                  Gail Montgomery
                                  President and Chief Executive Officer
                                  (Principal Executive Officer)

                                  /s/ ALAN J. KIRSCHBAUM
                                  ----------------------
                                  Alan J. Kirschbaum
                                  Sr. Vice President, Finance and Administration
                                  and Chief Financial Officer
                                  (Principal Financial Officer)