UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2004

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

 For the transition period from _________________ to ________________________.

                         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           (I.R.S. Employer Identification No.)
incorporation or organization)

         4 Manhattanville Road
         Purchase, New York                          10577-2197
----------------------------------------             ----------
(Address of Principal Executive Offices)             (Zip Code)

Registrant's telephone number, including Area Code: (914) 701-4500

          Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock (par value $.005 per share)
                    ----------------------------------------
                                 Title of Class

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 twelve (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 ninety (90) days.

      Yes |X| No |_|

The number of shares outstanding of Registrant's Common Stock as of February 10,
2005: 38,052,963.
<PAGE>

                               NUTRITION 21, INC.

                                      INDEX

PART I   FINANCIAL INFORMATION                                              PAGE

ITEM 1   Condensed Consolidated Financial Statements (unaudited)

         Condensed Consolidated Balance Sheets at December 31, 2004
                   and June 30, 2004                                           3

         Condensed Consolidated Statements of Operations for the three
                   months and six months  ended December 31, 2004 and 2003     5

         Condensed Consolidated Statement of Stockholders' Equity for
                   the six months ended December 31, 2004                      6

         Condensed Consolidated Statements of Cash Flows for the six
                   months ended December 31, 2004 and 2003                     7

         Notes to Condensed Consolidated Financial Statements                  8

ITEM 2   Management's Discussion and Analysis of
         Financial Condition and Results of Operations                        11

ITEM 3   Quantitative and Qualitative Disclosures
         About Market Risk                                                    13

ITEM 4   Controls and Procedures                                              13

PART II  OTHER INFORMATION

ITEM 1   Legal Proceedings                                                    14

ITEM 6   Exhibits                                                             14


                                       2
<PAGE>

                               NUTRITION 21, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                        December 31,    June 30,
                                                                            2004         2004
                                                                           -------      -------
                                                                         (unaudited)    (Note 1)
<S>                                                                        <C>          <C>
ASSETS

Current assets:
    Cash and cash equivalents                                              $   715      $ 2,164

    Short-term investments                                                   2,000        2,000

    Restricted cash                                                          1,225           --

    Accounts receivable (less allowance for doubtful accounts of $10)        1,247        1,342

    Other receivables                                                          128          257

    Inventories                                                                849        1,163

    Prepaid expenses and other current assets                                  356          221
                                                                           -------      -------

         Total current assets                                                6,520        7,147

Property and equipment, net                                                    226          314

Patents, trademarks and other intangibles (net of                            7,878        8,719
accumulated amortization of $16,439 at
December 31, 2004 and $15,444 at June 30, 2004)

Other assets                                                                   187          187
                                                                           -------      -------
TOTAL ASSETS                                                               $14,811      $16,367
                                                                           =======      =======
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                               NUTRITION 21, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                 December 31,      June 30,
                                                                     2004           2004
                                                                   --------       --------
                                                                 (unaudited)      (Note 1)
<S>                                                                <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accrued expenses                              $  3,577       $  3,687
Contingent payments payable                                              45             47
                                                                   --------       --------
TOTAL LIABILITIES                                                     3,622          3,734
                                                                   --------       --------

Commitments and contingencies


STOCKHOLDERS' EQUITY:

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

Common stock, $0.005 par value, authorized 65,000,000 shares;
    37,991,988 shares issued and outstanding at December 31,
    2004 and at June 30, 2004                                           190            190

Additional paid-in capital                                           67,437         67,367

Accumulated deficit                                                 (56,438)       (54,924)
                                                                   --------       --------

TOTAL STOCKHOLDERS' EQUITY                                           11,189         12,633
                                                                   --------       --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 14,811       $ 16,367
                                                                   ========       ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

                               NUTRITION 21, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended               Six Months Ended
                                                                       December 31,                    December 31,
                                                                   2004            2003            2004            2003
                                                               ------------    ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>             <C>
Net sales                                                      $      2,642    $      2,345    $      5,312    $      4,653
Other revenues                                                        1,011              50           1,082             100
                                                               ------------    ------------    ------------    ------------

TOTAL REVENUES                                                        3,653           2,395           6,394           4,753
Cost of goods sold                                                      672             582           1,282           1,145
                                                               ------------    ------------    ------------    ------------

GROSS PROFIT                                                          2,981           1,813           5,112           3,608

Selling, general and administrative expenses                          2,228           1,912           4,387           3,753
Research and development expenses                                       504             613           1,114           1,041
Depreciation and amortization                                           548             540           1,131           1,079
                                                               ------------    ------------    ------------    ------------
OPERATING (LOSS)                                                       (299)         (1,252)         (1,520)         (2,265)

Interest income                                                          23              11              27              17
Interest expense                                                          6               7              12              13
                                                               ------------    ------------    ------------    ------------
LOSS BEFORE INCOME TAXES                                               (282)         (1,248)         (1,505)         (2,261)
Income taxes                                                              5              --               9              --
                                                               ------------    ------------    ------------    ------------
NET (LOSS)                                                     $       (287)   $     (1,248)   $     (1,514)   $     (2,261)
                                                               ============    ============    ============    ============
Basic and diluted (loss) per share                             $      (0.01)   $      (0.03)   $      (0.04)   $      (0.06)
                                                               ============    ============    ============    ============
Weighted average number of common shares
 - basic and diluted                                             37,991,988      37,414,189      37,991,988      35,556,970
                                                               ============    ============    ============    ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                               NUTRITION 21, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                       Additional
                                                                                        Paid-In    Accumulated
                                                              Common Stock               Capital      Deficit         Total
                                                              ------------               -------      -------         -----
                                                           Shares
                                                           ------
<S>                                                        <C>           <C>           <C>           <C>            <C>
      Balance at June 30, 2004                             37,991,988    $      190    $   67,367    $  (54,924)    $   12,633
      Charge for stock appreciation rights                         --            --            63            --             63
      Issuance of warrants to purchase 20,000 shares of            --            --             7            --              7
      common stock for services
      Net loss for the period                                      --            --            --        (1,514)        (1,514)
                                                           ----------    ----------    ----------    ----------     ----------
      Balance at December 31, 2004                         37,991,988    $      190    $   67,437    $  (56,438)    $   11,189
                                                           ==========    ==========    ==========    ==========     ==========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

                               NUTRITION 21, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                              December 31,
                                                                                          2004          2003
                                                                                         -------       -------
<S>                                                                                      <C>           <C>
Cash flows from operating activities:
    Net (loss)                                                                           $(1,514)      $(2,261)
    Adjustments to reconcile net (loss) to net cash (used in) operating activities:
        Depreciation and amortization                                                      1,131         1,079
        Issuance of warrants for services                                                      7            16
        Other non-cash items                                                                  63            35
        Changes in operating assets and liabilities:
           Accounts receivable                                                                95            18
           Other receivables                                                                 129           161
           Inventories                                                                       314           (89)
           Prepaid expenses and other current assets                                        (135)         (118)
           Other assets                                                                       --            11
           Accounts payable and accrued expenses                                            (110)          (39)
                                                                                         -------       -------
               Net cash (used in) operating activities                                       (20)       (1,187)
                                                                                         -------       -------
Cash flows from investing activities:
    Contingent payments for acquisitions                                                     (92)          (59)
    Purchases of property and equipment                                                       (3)           (8)
    Payments for patents and trademarks                                                     (109)         (136)
    Increase in restricted cash                                                           (1,225)           --
    Purchase of investments available for sale                                                --        (2,350)
                                                                                         -------       -------
        Net cash (used in) investing activities                                           (1,429)       (2,553)
                                                                                         -------       -------
Cash flows from financing activities:
    Preferred stock dividends paid                                                            --            (2)
    Proceeds from stock option exercises                                                      --             6
    Net proceeds from private placement                                                       --         3,004
                                                                                         -------       -------
        Net cash provided by financing activities                                             --         3,008
                                                                                         -------       -------

Net (decrease) in cash and cash equivalents                                               (1,449)         (732)
Cash and cash equivalents at beginning of period                                           2,164         4,059
                                                                                         -------       -------
Cash and cash equivalents at end of period                                               $   715       $ 3,327
                                                                                         =======       =======
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>

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

Note 1 BASIS OF PRESENTATION

      The accompanying  unaudited condensed  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  adjustments)  considered
      necessary for a fair  presentation  have been included.  Operating results
      for the  three and six  month  periods  ended  December  31,  2004 are not
      necessarily  indicative  of the results  that may be expected for the year
      ending  June 30,  2005.  Beginning  in fiscal  year  2004,  the  Company's
      reporting segments were combined into one - Nutritional Products.

      The condensed consolidated balance sheet at June 30, 2004 has been derived
      from the audited consolidated  financial statements at that date, but does
      not include all of the  information  and footnotes  required by accounting
      principles  generally accepted in the United States 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
      for the year ended June 30, 2004.

Note 2 SHORT-TERM INVESTMENTS

      Short-term investments consist of debt securities acquired with maturities
      exceeding  three  months  but less  than  three  years.  The  Company,  in
      compliance with SFAS No. 115,  "Accounting for Certain Investments in Debt
      and Equity  Securities,"  has  classified  all debt  securities  that have
      readily  determinable  fair values as  available-for-sale,  as the sale of
      such  securities  may be required prior to maturity.  Such  securities are
      reported at cost, which  approximates  market. The cost of securities sold
      is based on the specific identification method.

Note 3 STOCK-BASED COMPENSATION

      The Company  continues  to account for employee  stock-based  compensation
      using the intrinsic value method prescribed in Accounting Principles Board
      Opinion No. 25,  "Accounting for Stock Issued to Employees".  Compensation
      cost for stock  options,  if any,  is measured as the excess of the quoted
      market price of the  Company's  stock at the date of grant over the amount
      an employee must pay to acquire the stock.

      Statement of Financial  Accounting Standards ("SFAS") No. 123, "Accounting
      for  Stock-Based  Compensation,"  established  accounting  and  disclosure
      requirements  using a  fair-value  method of  accounting  for  stock-based
      employee  compensation  plans.  The  Company  has elected to remain on its
      current  method of  accounting  as  described  above,  and has adopted the
      disclosure  requirements of SFAS No. 123 and SFAS No. 148, "Accounting for
      Stock-Based Compensation-Transition and Disclosure".


                                       8
<PAGE>

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

Note 3 STOCK-BASED COMPENSATION(cont'd)

      The Company applies the intrinsic value method pursuant to APB Opinion No.
      25 in accounting for its employee stock option plans and, accordingly,  no
      compensation  cost  has  been  recognized  in the  condensed  consolidated
      financial  statements  for  its  employee  stock  options,  which  have an
      exercise  price  equal to the fair  value of the  stock on the date of the
      grant.  Had the  Company  determined  compensation  cost based on the fair
      value at the grant  date for its stock  options  under SFAS No.  123,  and
      amortized such costs over the vesting period, the Company's net loss would
      have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                           Three months ended        Six months ended
                                                            December 31,               December 31,
                                                        2004          2003          2004          2003
                                                      -------       -------       -------       -------
<S>                                                   <C>           <C>           <C>           <C>
      Net (loss) as reported                          $  (287)      $(1,248)      $(1,514)      $(2,261)
      Deduct:  Total stock-based employee
      compensation expense determined under fair
      value based method for all awards                   (61)          (25)         (122)         (192)
                                                      -------       -------       -------       -------

      Pro forma net (loss)                            $  (348)      $(1,273)      $(1,636)      $(2,453)
                                                      =======       =======       =======       =======

       (Loss) per share:
         Basic and diluted  - as reported             $ (0.01)      $ (0.03)      $ (0.04)      $ (0.06)

         Basic and diluted - pro forma                $ (0.01)      $ (0.03)      $ (0.04)      $ (0.07)
</TABLE>

Note 4 INVENTORIES

      Inventories  at December 31, 2004 and June 30, 2004  consisted of finished
      goods.

Note 5 (LOSS) PER SHARE

      Diluted  (loss)  per  share for the  three  and six  month  periods  ended
      December 31, 2004 and 2003, does not reflect the  incremental  shares from
      the assumed  conversion  of stock  options  and  warrants  (2,004,628  and
      1,547,603, and 1,432,538 and 1,765,306 shares, respectively) as the effect
      of such inclusion would be antidilutive.


                                       9
<PAGE>

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

Note 6 SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                              Six months ended
                                                                               December 31 ,
                                                                               2004      2003
                                                                               ----      ----
<S>                                                                            <C>       <C>
      Supplemental disclosure of cash flow information:
            Cash paid for interest                                             $ --      $ --
            Cash paid for income taxes                                         $  5      $ --

      Supplemental schedule of non-cash financing activities:
            Obligation for N21 contingent payments                             $ 45      $ 36
            Issuance of common stock for conversion of Series G preferred      $ --      $188
</TABLE>

Note 7 LEGAL PROCEEDINGS

      On March 19, 2003, Andrew Wertheim (a former Executive  Officer) initiated
      arbitration with the American Arbitration  Association against the Company
      in connection  with his  termination of  employment.  On July 24, 2004, an
      arbitrator  awarded  Mr.  Wertheim  damages  of (1)  $269 for  salary  and
      benefits,  (2) $709 related to stock options,  and (3) interest of $92. On
      November  1,  2004,  the United  States  District  Court for the  Southern
      District  of New York denied a motion by the Company to vacate the part of
      the award that relates to the stock options,  i.e. $709 plus interest.  On
      December  10,  2004,  the Company  appealed  the  decision of the District
      Court. On December 13, 2004, the Company deposited $1,225 as security with
      the Clerk of the District Court, pending final resolution of the matter.

      On March 24, 2004,  the Federal Trade  Commission  ("FTC") sued QVC in the
      U.S.  District Court for the Eastern  District of Pennsylvania  for weight
      loss  advertising  claims  that  were made on QVC for the  Company's  Lite
      Bites(R)  products and for claims made on QVC for other products.  QVC has
      in the same lawsuit filed on April 14, 2004,  Third-Party  Complaints  for
      damages   against  six   parties   including   the  Company   (Third-Party
      Defendants).  The FTC and the Third-Party Defendants have filed Motions to
      Strike QVC's Third-Party  Complaints.  On February 9, 2005, the Motions to
      Strike were denied.  The Company is considering  appealing the denial. The
      Company  discontinued the Lite Bites product line in fiscal year 2003. QVC
      has not set forth an amount being  sought as damages,  nor can the Company
      estimate its exposure.


                                       10
<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 condensed
      consolidated financial statements and related notes thereto of the Company
      included elsewhere herein.

      FORWARD-LOOKING STATEMENTS AND RISK FACTORS

      This quarterly report and the documents  incorporated by reference contain
      forward-looking  statements  which are  intended  to fall within the "safe
      harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
      1995.  Words  such  as  "anticipates",   "expects",   "intends",  "plans",
      "believes",  "seeks",  and  "estimates" and similar  expressions  identify
      forward-looking   statements.   Statements   that   are   "forward-looking
      statements" are based on current  expectations  and  assumptions  that are
      subject to risks and  uncertainties.  Actual performance and results could
      differ  materially  because of factors such as those set forth under "Risk
      Factors" in Form S-3/A filed with the Securities  and Exchange  Commission
      on January 27, 2004.

      GENERAL

      The Company's  revenues are primarily derived from the sale of proprietary
      ingredients and the grant of patent licenses related to those  ingredients
      to  manufacturers  of vitamin  and mineral  supplements.  The fees for the
      licenses are bundled on an undifferentiated  basis with the price that the
      Company charges for its ingredients.

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

      RESULTS OF OPERATIONS

      Revenues

      Net sales for the three and six month periods  ended  December 31, 2004 of
      $2.6 million and $5.3 million,  respectively,  increased  $0.3 million and
      $0.7  million,  respectively,  when  compared  to $2.3  million  and  $4.6
      million, respectively, for the same periods a year ago. The improvement is
      due  primarily to increased  sales of the  Company's  Chromax(R)  chromium
      picolinate products.

      Other revenues were $1.0 million and $1.1 million,  respectively,  for the
      three and  six-month  periods  ended  December 31,  2004,  compared to $50
      thousand and $100  thousand  for the same  periods a year ago.  During the
      quarter ended  December 31, 2004,  the Company  received a  non-refundable
      $1.0 million  payment from ImmuCell  Corporation  for waiving its right to
      receive  potential  milestone  and royalty  payments for a majority of the
      animal  health  applications  covered  by  the  Company's  patented  nisin
      technology.

      Cost of goods sold

      Cost of goods sold for the three and six-month  periods ended December 31,
      2004 was $0.7  million and $1.3  million,  respectively.  Gross  profit on
      product sales for the three and six month periods ended  December 31, 2004
      was  74.6%  and  75.9%,   respectively,   compared  to  75.2%  and  75.4%,
      respectively,  for the same periods a year ago.  The mix of products  sold
      was the primary reason for the change.


                                       11
<PAGE>

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

      Research and development expenses

      Research and  development  expenses  were $0.5  million and $1.1  million,
      respectively, for the three and six month periods ended December 31, 2004,
      compared to $0.6  million  and $1.0  million,  respectively,  for the same
      period a year ago. The increase in the six month period ended December 31,
      2004,  compared to the  comparable  period a year ago, is due primarily to
      continued spending to validate new chromium applications.

      Selling, general and administrative expenses (SG&A)

      SG&A expenses for the three and six month periods ended  December 31, 2004
      was $2.2 million and $4.4 million, respectively,  compared to $1.9 million
      and  $3.8  million,  respectively,  for  the  same  periods  a  year  ago.
      Marketingexpenditures,  increased legal fees  associated with  outstanding
      lawsuits and personnel  related  expenditures were the primary reasons for
      the increase.

      Depreciation and amortization

      Depreciation  and  amortization  for the three and six month periods ended
      December 31, 2004 and December 31, 2003 was $0.5 million and $1.1 million,
      respectively.

      Operating Loss

      Operating loss for the three and six month periods ended December 31, 2004
      was $0.3  million  and $1.5  million,  respectively,  when  compared to an
      operating  loss of $1.3 million and $2.3  million,  respectively,  for the
      same periods a year ago. The $1.0 million the Company received for waiving
      its rights to receive  potential  milestone  and  royalty  payments  for a
      majority  of  animal  health   applications   covered  by  patented  nisin
      technology, as noted above, was the primary reason for the improvement.

      Interest expense and Interest income

      Interest  income,  net of  interest  expense  for the three and  six-month
      periods  ended  December  31,  2004  was $17  thousand  and $15  thousand,
      respectively,  compared  to $4 thousand  for the same  periods a year ago.
      Levels of cash  available for investment in the first three and six months
      of fiscal year 2005 were higher than the comparable periods in fiscal year
      2004.

      Liquidity and Capital Resources

      Unrestricted cash, cash equivalents and short-term investments at December
      31, 2004 were $2.7 million  compared to $4.2 million at June 30, 2004.  As
      of December  31,  2004,  the Company had working  capital of $2.9  million
      compared to $3.4 million as of June 30, 2004. Lower level of inventory was
      the primary reason for the change.

      During the six month  period  ended  December  31,  2004,  net cash of $20
      thousand  was used in  operating  activities  compared to net cash used of
      $1.2 million for the comparable period a year ago. A reduction in net loss
      of $0.7 million and a positive  change in inventories of $0.3 million were
      the primary reasons for the change.

      During the six-month periods ended December 31, 2004 and December 31, 2003
      net cash used for investing  activities was $1.4 million and $2.6 million,
      respectively.  While no short-term  investments were made in the six month
      period ended  December 31, 2004,  the Company used cash of $1.2 million as
      security pending resolution of an appeal.


                                       12
<PAGE>

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

      During the six month period ended  December 31, 2004, no cash was provided
      by financing  activities,  compared to net cash  provided of $3.0 million,
      principally from the proceeds from a private placement,  in the comparable
      period a year ago.

      The  Company's   primary  source  of  financing  is  cash  generated  from
      operations. The Company believes that cash on hand and cash generated from
      operations will provide sufficient  liquidity in the short term. Long-term
      liquidity is dependent  upon  achieving  future  profitability  or raising
      additional financing.

      Future  increases in marketing and research and development  expenses over
      the present levels may require  additional  funds.  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.

      Significant Accounting Pronouncements

      In December 2004, the FASB issued SFAS No. 123(R),  "Share-Based Payment",
      which establishes  standards for transactions in which an entity exchanges
      its  equity  instruments  for goods or  services.  This  standard  focuses
      primarily  on  accounting  for  transactions  in which an  entity  obtains
      employee services in share-based payment transactions  including issuances
      of stock  options to  employees.  SFAS No.  123(R) will be  effective  for
      interim or annual reporting  periods  beginning on or after June 15, 2005.
      We believe SFAS No. 123(R) may reduce  profitability or increase losses in
      future periods.

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.

ITEM 4 - CONTROLS AND PROCEDURES

      The Company's  management,  with the  participation of the Company's Chief
      Executive and Chief Financial Officer,  has evaluated the effectiveness of
      the Company's  disclosure controls and procedures as of December 31, 2004.
      Based on this evaluation,  the Company's Chief Executive Officer and Chief
      Financial  Officer  concluded that the Company's  disclosure  controls and
      procedures  are effective for  gathering,  analyzing  and  disclosing  the
      information  the  Company is  required to disclose in the reports it files
      under  the  Securities  Exchange  Act of 1934,  within  the  time  periods
      specified in the SEC's rules and forms.

      During the quarter ended December 31, 2004, there have been no significant
      changes in our  internal  controls  over  financial  reporting or in other
      factors,  which have significantly  affected,  or are reasonably likely to
      significantly  affect,  our internal  controls  over  financial  reporting
      subsequent to such evaluation.


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<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,
      no action is pending.  The Company is  evaluating  bringing  other  patent
      infringement actions.

      On March 19, 2003, Andrew Wertheim (a former Executive  Officer) initiated
      arbitration with the American Arbitration  Association against the Company
      in connection  with his  termination of  employment.  On July 24, 2004, an
      arbitrator  awarded Mr.  Wertheim  damages of (1)  $268,477 for salary and
      benefits,  (2)  $708,750  related to stock  options,  and (3)  interest of
      $92,151.  On November 1, 2004,  the United States  District  Court for the
      Southern District of New York denied a motion by the Company to vacate the
      part of the award that relates to the stock  options,  i.e.  $708,750 plus
      interest.  The Company  appealed the decision of the  District  Court.  On
      December 13, 2004,  the Company  posted $1.2 million as security  with the
      Clerk of the District Court, pending final resolution of the matter.

      On March 24, 2004,  the Federal Trade  Commission  ("FTC") sued QVC in the
      U.S.  District Court for the Eastern  District of Pennsylvania  for weight
      loss  advertising  claims  that  were made on QVC for the  Company's  Lite
      Bites(R)  products and for claims made on QVC for other products.  QVC has
      in the same lawsuit filed on April 14, 2004,  Third-Party  Complaints  for
      damages   against  six   parties   including   the  Company   (Third-Party
      Defendants).  The FTC and the Third-Party Defendants have filed Motions to
      Strike QVC's Third-Party  Complaints.  On February 9, 2005, the Motions to
      Strike were denied.  The Company is considering  appealing the denial. The
      Company  discontinued the Lite Bites product line in fiscal year 2003. QVC
      has not set forth an amount being  sought as damages,  nor can the Company
      estimate its exposure.

ITEM 6 - EXHIBITS

      (A)   EXHIBITS

            31.1  Certifications   of  President  and  Chief  Executive  Officer
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

            31.2  Certifications  of Chief Financial Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

            32.1  Certifications  of the President and Chief  Executive  Officer
                  and the Chief Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.


                                       14
<PAGE>

                               NUTRITION 21, INC.

                                   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:  February 14, 2005        By: /s/ Gail Montgomery
                                    -------------------
                                    Gail Montgomery
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)


                                    /s/ Paul Intlekofer
                                    -------------------
                                    Paul Intlekofer
                                    Chief Financial Officer and
                                    Senior Vice President, Corporate Development
                                    (Principal Financial Officer)


                                       15