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

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _________)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12

MEDICAL NUTRITION USA, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined)

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

MEDICAL NUTRITION USA, INC.

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NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 6, 2007

To the Shareholders of Medical Nutrition USA, Inc.:

You are cordially invited to attend the 2007 Annual Meeting of
Shareholders (the "2007 Annual Meeting") of Medical Nutrition USA, Inc. (the
"Company"), which will be held at the Company's executive offices, 10 West
Forest Avenue, Englewood, New Jersey 07631, at 10:00 a.m. local time on
Wednesday, June 6, 2007 for the purposes of considering and voting upon:

1. A proposal to elect four directors to the Board of Directors of the
Company (the "Board").

This matter is described more fully in the Proxy Statement accompanying
this notice.

2. Such other business as may properly come before the meeting or any
adjournment or postponement thereof. The Board is not aware of any
other business to be presented to a vote of the shareholders at the
2007 Annual Meeting.

The Board has fixed the close of business on May 2, 2007 as the record
date (the "Record Date") for determining those shareholders who will be entitled
to notice of and to vote at the 2007 Annual Meeting. The stock transfer books
will remain open between the Record Date and the date of the 2007 Annual
Meeting.

Representation of at least a majority in voting interest of the common
stock of the Company either in person or by proxy is required to constitute a
quorum for purposes of voting on the proposal set forth above. Accordingly, it
is important that your shares be represented at the 2007 Annual Meeting. WHETHER
OR NOT YOU PLAN TO ATTEND THE 2007 ANNUAL MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. You may revoke
your proxy at any time prior to the time it is voted at the 2007 Annual Meeting.

Please read the accompanying proxy material carefully. Your vote is
important and the Company appreciates your cooperation in considering and acting
on the matters presented.

By Order of the Board of Directors,

/s/ Francis A. Newman
-----------------------------------
Francis A. Newman
Chairman
May 16, 2007
Englewood, New Jersey

Shareholders Should Read the Entire Proxy Statement
Carefully Prior to Returning Their Proxies

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PROXY STATEMENT
FOR
2007 ANNUAL MEETING OF SHAREHOLDERS
OF
MEDICAL NUTRITION USA, INC.

To Be Held on June 6, 2007

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Medical Nutrition USA, Inc. ("MNI" or
the "Company") of proxies to be voted at the 2007 Annual Meeting of Shareholders
(the "2007 Annual Meeting"), which will be held at 10:00 a.m. local time on June
6, 2007 at the Company's executive offices, 10 West Forest Avenue, Englewood,
New Jersey 07631, or at any adjournments or postponements thereof, for the
purposes set forth in the accompanying Notice of 2007 Annual Meeting of
Shareholders (the "Notice"). This Proxy Statement and the proxy are first being
mailed to shareholders on or about May 16, 2007. The Company's 2007 Annual
Report to Shareholders, which includes the Company's Annual Report on Form
10-KSB for the year ended January 31, 2007, is being mailed to shareholders
concurrently with this Proxy Statement. The 2007 Annual Report to Shareholders
is not to be regarded as proxy soliciting material or as a communication by
means of which any solicitation of proxies is to be made.

VOTING RIGHTS AND SOLICITATION

The close of business on May 2, 2007 was the record date (the "Record
Date") for shareholders entitled to notice of and to vote at the 2006 Annual
Meeting. As of the Record Date, the Company had 14,068,145 shares of common
stock issued and outstanding. All of the shares of the Company's common stock
outstanding on the Record Date are entitled to vote at the 2007 Annual Meeting.
Holders of the common stock of record entitled to vote at the 2007 Annual
Meeting will have one vote for each share of common stock so held with regard to
each matter to be voted upon by such shareholders.

All votes will be tabulated by the inspector of elections appointed for
the 2007 Annual Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes.

The holders of a majority in voting interest of the common stock
outstanding and entitled to vote at the 2007 Annual Meeting will constitute a
quorum for the transaction of business at the 2007 Annual Meeting.

The voting interest of shares of the common stock represented in person
or by proxy will be counted for purposes of determining whether a quorum is
present at the 2007 Annual Meeting. Shares which abstain from voting as to a
particular matter will be treated as shares that are present and entitled to
vote for purposes of determining the voting interest present and entitled to
vote at the 2007 Annual Meeting, but will not be counted as votes cast on such
matter. If a broker or nominee holding stock in "street name" indicates on a
proxy that it does not have discretionary authority to vote as to a particular
matter, those shares will be considered as present and entitled to vote with
respect to such matter, but will not be counted as a vote cast on such matter.

In voting with regard to the proposal to elect directors (Proposal 1),
shareholders may vote in favor of all the nominees, withhold their votes as to
all nominees or withhold their votes as to a specific nominee. The vote required
by Proposal 1 is governed by Delaware law and is a plurality of the votes cast
by the holders of shares entitled to vote, provided a quorum is present. As a
result, in accordance with Delaware law, votes that are withheld and broker
non-votes will not be counted and will have no effect on the voting for election
of directors.

Shares of the Company's common stock represented by proxies in the
accompanying form which are properly executed and returned to the Company will
be voted at the 2007 Annual Meeting in accordance with the shareholders'
instructions contained therein. In the absence of contrary instructions, shares
represented by such proxies will be voted FOR all nominees for director listed
in Proposal 1. Management does not know of any matters to be presented at the
2007 Annual Meeting other than those set forth in this Proxy Statement and in
the Notice accompanying this Proxy Statement. If other matters should properly
come before the 2007 Annual Meeting, the proxy holders will vote on such matters
in accordance with their best judgment.

Any shareholder has the right to revoke his, her or its proxy at any
time before it is voted at the 2007 Annual Meeting by giving written notice to
the Secretary of the Company, by executing and delivering to the Secretary a
duly executed proxy bearing a later date, or by appearing at the 2007 Annual
Meeting and voting in person.

The entire cost of soliciting proxies will be borne by the Company.
Proxies will be solicited principally through the use of the mail, but, if
deemed desirable, may be solicited personally or by telephone, telegraph or
special letter by officers and regular Company employees for no additional
compensation. In addition, the Company has retained American Stock Transfer &
Trust Co., its transfer agent, to assist in the solicitation of proxies. The
Company will bear all reasonable solicitation fees and expenses of American
Stock Transfer & Trust Co. Arrangements may be made with brokerage houses and
other custodians, nominees and fiduciaries to send proxies and proxy material to
the beneficial owners of the Company's common stock, and such persons may be
reimbursed for their expenses.

PROPOSAL 1

ELECTION OF DIRECTORS

COMPOSITION OF BOARD

The Company's Bylaws provide that the Board will consist of not fewer
than four nor more than seven directors. The Board currently consists of four
members, all of whom were elected by the holders of the common stock at the 2006
Annual Meeting of Shareholders. The Board has no current plans to change its
size, after the 2007 Annual Meeting, the Board will consist of four members, of
whom Messrs. Horowitz, Korman and Rosenberg are independent under the
independence standards of the Nasdaq stock market.

The Company's directors are elected by the shareholders at each annual
meeting of shareholders and will serve until their successors are elected and
qualified, or until their earlier resignation or removal. There are no family
relationships among any of the current directors, the nominees for directors and
executive officers of the Company.

The proxy holders named on the proxy intend to vote all proxies
received by them in the accompanying form FOR the election of the nominees
listed below, unless instructions to the contrary are marked on the proxy. These
nominees have been selected by the Board. All of the nominees are currently
members of the Board. If elected, each nominee will serve until the annual
meeting of shareholders to be held in 2008 or until his or her successor has
been duly elected and qualified.

In the event that a nominee is unable or declines to serve as a
director at the time of the 2007 Annual Meeting, the proxies will be voted for
any nominee who will be designated by the present Board to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them for the nominees
listed below, unless instructions are given to the contrary. As of the date of
this Proxy Statement, the Board is not aware of any nominee who is unable or
will decline to serve as a director.

The following is certain information as of April 30, 2007 regarding the
nominees for election as directors.

NOMINEES FOR ELECTION AS DIRECTORS

NAME POSITION AGE
---------------- ------------------------------------------- ---
Francis Newman Chairman, Chief Executive Officer, Director 57
Andrew Horowitz Director 44
Mark Rosenberg Director 44
Bernard Korman Director 74

BIOGRAPHICAL INFORMATION REGARDING DIRECTORS

Francis Newman. Mr. Newman has been a director since November 2002 and
Chief Executive Officer of the Company since March 2003, and Chairman since July
2003. From 2001 to 2003 Mr. Newman was a private investor and advisor to health
care and pharmaceutical companies. From 2000 to 2001 he was President and CEO of
more.com, an internet pharmacy company. From 1993 to 2000 he was President and
CEO, and from 1997 until 2000 Chairman, President and CEO of Eckerd Corporation,
one of the largest drug store chains in the United States. From 1986 until 1993,
he was President and CEO of F&M Distributors, Inc., a drug store chain. Mr.
Newman is a director of Jabil Circuit, Inc. and JoAnn Stores, Inc. He has served
on the board of the National Association of Chain Drug Stores since 1993,
including as its Chairman (1999-2000). Mr. Newman is a member of the University
of Michigan School of Pharmacy Board of Advisors and a Trustee of Sidwell
Friends School, Washington DC.

Andrew Horowitz J.D. Mr. Horowitz has been a Director since September,
2002. His most recent ventures were Partners Healthcare, a leading institutional
pharmacy company that he started in 1998, and Care Alternatives, a hospice
service provider, that he acquired in 2000. Upon graduation from Emory Law
School, Mr. Horowitz joined the New Jersey law firm of Norris, McLaughlin &
Marcus in the practice of business and tax law. Mr. Horowitz has been in
healthcare since succeeding his father in the management of Scotchwood Pharmacy,
a successful pharmacy business his dad started 35 years earlier. In 1995,
Scotchwood was acquired by The Multicare Companies, a nursing home company
traded on the NYSE. Pursuant to that acquisition, Mr. Horowitz became Director
of Multicare's pharmacy operations and in 1996 became a senior officer in the
Company, responsible for all ancillary businesses, including homecare, portable
diagnostics and medical supply. Upon Multicare's acquisition by Genesis Health
Ventures in 1997, he left to develop Partners. In 2003, Partners, Care
Alternatives and Solutions Healthcare, a JCAHO accredited infusion-therapy
business also owned by Mr. Horowitz, were sold to investors as part of a
like-kind roll-up, and he left the Company in May, 2005. He currently serves as
Founder and Chairman of Enclara Health, an End of Life Healthcare services
company, headquartered in San Mateo, California.

Mark Rosenberg. Mr. Rosenberg has been a director since March 2004. He
is one of eight investment professionals at MHR Fund Management LLC, a $2
billion fund focused on middle market distressed businesses. He previously was
Vice President with CRT Capital Group LLC in Greenwich, CT, where he was a
Research Analyst of distressed high yield and convertible debt covering the
healthcare industry, among others. He is the former president of Rosemark
Management, Inc. He serves on the Board of Ben Arnold Sunbelt Beverage Company
of South Carolina, L.P., Columbia, SC. Mr. Rosenberg graduated from the Wharton
School, University of Pennsylvania and holds a Bachelors of Science in
Economics, 1984.

Bernard Korman. Mr. Korman has been a director since September 2004.
Mr. Korman is Chairman of Philadelphia Health Care Trust, a Foundation dedicated
to supporting healthcare delivery, research and education. After practicing law
in Philadelphia for 13 years, in 1968 he founded and was Chairman, President and
CEO of American Medicorp, Inc. (NYSE), one of the first public hospital
management companies in the United States. From 1977 until 1995, he served as
President and CEO of MEDIQ Incorporated (AMEX), a healthcare services company,
and Chairman of PCI Services, Inc. (NASDAQ), a pharmaceutical packaging services
company (1983-1996). Mr. Korman presently serves as a Director of The New
America High Income Fund, Inc. (NYSE); Omega Healthcare Investors, Inc. (NYSE);
and NutraMax Products, Inc.

BOARD MEETINGS AND COMMITTEES

The Board held a total of five meetings during the fiscal year ended
January 31, 2007 (the "2007 Fiscal Year"). The Board has an Audit Committee, a
Compensation Committee, and a Nominating and Governance Committee.

The Audit Committee operates under a written charter adopted by the
Board on January 14, 2003. A copy of the Audit Committee Charter is located at
the Company's web site www.mdnu.com under the "Investor Relations" heading. The
Audit Committee's duties include responsibility for reviewing the Company's
accounting practices and audit procedures. The Audit Committee, which consists
of Bernard Korman (Chairman), Andrew Horowitz, and Mark Rosenberg, held four
meetings during the fiscal year ended January 31, 2007 (the "Fiscal Year"). Each
member of the Audit Committee meets the independence requirements of the NASDAQ
Stock Market listing standards (the "Nasdaq standards"). (See the "Report of
Audit Committee" later in this Proxy Statement, which details the duties and
performance of the Audit Committee.) The Company's Board of Directors has
determined that Mr. Korman is qualified to serve as an audit committee financial
expert as defined in the applicable regulations of the Securities and Exchange
Commission.

The Compensation Committee recommends to the Board the compensation and
benefits of the Company's executive officers, and has established and reviews
general policies relating to compensation of the Company's employees. The
Compensation Committee, which consists of Andrew Horowitz (Chairman), Bernard
Korman, and Mark Rosenberg, held three meetings during the 2007 Fiscal Year.

The Nominating & Governance Committee operates under a written charter
adopted by the board on February 25, 2004. A copy of the Nominating & Governance
Committee Charter is available on the Company's website www.mdnu.com under the
"Investor Relations" heading. The Nominating & Governance Committee's duties
include developing and maintaining a current list of the functional needs and
qualifications of members of the Board, evaluating and recommending whether a
member of the Board meets the criteria to qualify as an "independent" director
under the Nasdaq standards, to interview, evaluate, nominate and recommend
individuals for membership on the Board as required and to evaluate the
effectiveness of the meetings of the Board, including agendas, meeting
materials, meeting structure and organization, schedule of meetings and minutes.
The committee also prepares, recommends and establishes Board policies for
corporate governance and planning. The Nominating & Governance Committee, which
consists of Mark Rosenberg (Chairman), Andrew Horowitz and Bernard Korman, had
two meetings during the 2007 Fiscal Year. Each member of the Nominating &
Governance Committee meets the independence requirements of the Nasdaq
standards.

The Nominating & Governance Committee's purpose is to periodically
report to the Board of Directors regarding corporate governance matters,
including making recommendations of qualified nominees for election to the Board
of Directors. The Committee identifies director candidates through
recommendations made by members of the Board of Directors, management,
shareholders and others, or an executive search firm. At a minimum, a Director
nominee should have significant management or leadership experience which is
relevant to the Company's business, as well as professional and personal
integrity. Recommendations are developed based on the nominee's own knowledge
and experience in a variety of fields, and research conducted by the Company's
staff at the Nominating and Governance Committee's direction.

Nomination of Director Candidates. Nominations for the election of
directors may be made by the Board or a proxy committee appointed by the Board
or by stockholders of the company. Any stockholder nominating Director
candidate(s) for election at a meeting of the shareholders must:

(1) Be a stockholder of record of the Company at the time of
the giving of the notice of meeting and at the time of the
meeting.

(2) Be entitled to vote at the meeting in the election of
Directors.

(3) Give timely written notice of the nomination to the
Secretary.

Stockholder's notice must be received by the Secretary at the principal
offices of the Company not later than the close of business on the fifteenth
calendar day, and not earlier than the opening of business on the thirtieth
calendar day, prior to the meeting; A shareholder's notice must set forth all of
the information about each candidate required to be disclosed in a proxy
statement complying with the rules of the Securities and Exchange Commission
used in connection with the solicitation of proxies for the election of the
candidate as a Director. If the officer presiding at the meeting determines that
one or more of the candidates has not been nominated in accordance with these
procedures, he or she will so declare at the meeting, and the candidates will
not be considered or voted upon at the meeting.

Shareholders who wish to communicate with members of the Board may send
correspondence to them in care of Corporate Secretary, Medical Nutrition USA,
Inc., 10 West Forest Avenue, Englewood, New Jersey 07631. The Corporate
Secretary will forward all communications received to the Board not later than
the next regularly scheduled Board meeting.

The Company has adopted a code of ethics that applies to our directors,
executive officers, including our principal executive officer, principal
financial officer, and controller. This code of ethics can be found on the
Company's website www.mdnu.com under the "Investor Relations" heading.

DIRECTOR COMPENSATION

Directors of the Company who are not officers or employees receive, as
compensation for their services as directors, including the committees on which
they serve: (a) a grant, at the time of their election or appointment, of an
option to purchase 15,000 shares of our common stock, and (b) an annual grant of
an option to purchase 15,000 shares of our common stock. Chairman of the
committees receive an additional 5,000 options to purchase shares of our common
stock. The exercise price of these options is equal to the last reported sale
price for our common stock on the trading day preceding the grant of the
options.

CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS

On April 26, 2006, the "Company" was notified by Goldstein & Ganz, P.C.
("Goldstein & Ganz") that they were declining to stand for re-election as the
Company's independent accountant.

The audit reports of Goldstein & Ganz on the consolidated financial
statements of the Company as of and for the fiscal year ended January 31, 2006
and 2005 did not contain an adverse opinion or disclaimer of opinion and were
not qualified as to uncertainty, audit scope or accounting principals, except
that the audit report for the fiscal year ended January 31, 2005 stated that the
Company's consolidated financial statements for its fiscal years ended January
31, 2005 and 2004 had been restated.

During the two most recent fiscal years ended January 31, 2006 and
subsequent interim period through April 26, 2006, there were no disagreements
between the Company and Goldstein & Ganz on any matter of accounting principals
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Goldstein & Ganz,
would have caused Goldstein & Ganz to make reference to the subject matter of
the disagreement in their audit reports.

AUDIT FEES

During the last two fiscal years, Goldstein & Ganz and Amper,
Politziner & Mattia billed the Company the following fees for its services:

Fiscal Year Ending
-----------------------------------
January 31, 2006 January 31, 2007
---------------- ----------------

Audit Fees $ 40,000 $ 90,000
Audit-Related Fees $ 6,325 $ 0
Tax Fees (1) $ 0 $ 10,700
All Other Fees (2) $ 26,375 $ 17,781

(1) Represents $5,700 paid to Dischino & Associates and $5,000 to Amper,
Politziner & Mattia, P.C. for tax return preparation.
(2) All other fees includes additional SEC filings and miscellaneous items. For
fiscal year ended January 31, 2007, $17,134 was paid to Goldstein & Ganz and
$647 to Amper, Politziner & Mattia, P.C. For fiscal year ended January 31, 2006,
all monies were paid to Goldstein & Ganz.

It has historically been the practice of the Company that all audit
fees are approved by the Audit Committee. However, other fees paid to our
independent auditors have historically not been pre-approved by the Audit
Committee, and such fees were not pre-approved by the Audit Committee during the
2006 Fiscal Year. In compliance with the rules adopted by SEC in order to
implement the requirements of the Sarbanes-Oxley Act of 2002, our Audit
Committee has adopted pre-approval policies and procedures, which policies and
procedures are discussed below.

Our Audit Committee has considered whether the provision of services
other than those described above under the heading "Audit Fees" are compatible
with maintaining the independence of our principal accountants, and concluded
that they are compatible.

AUDIT COMMITTEE PRE-APPROVAL POLICIES

Our Audit Committee has adopted pre-approval policies and procedures
pursuant to which audit and permissible non-audit services may be pre-approved
by category of service. The fees are budgeted, and actual fees versus the budget
are monitored throughout the year. During the year, circumstances may arise when
it may become necessary to engage the independent auditor for additional
services not contemplated in the original pre-approval. In those instances, for
any fees for services above $5,000, we will obtain the specific pre-approval of
the Audit Committee before engaging the independent auditor for such services.
The policies require the Audit Committee to be informed of each service, and the
policies do not include any delegation of the Audit Committee's responsibilities
to management. The Audit Committee may delegate pre-approval authority to one or
more of its members. The member to whom such authority is delegated will report
any pre-approval decisions to the Audit Committee at its next scheduled meeting.

MANAGEMENT

The following sets forth the names, ages and positions of the Company's
executive officers as of May 10, 2007:

NAME POSITION AGE
- -------------- ------------------------------------------------------------ ---

Francis Newman Chairman, Chief Executive Officer and Director 57
Alan Levy Vice President, Finance, Chief Financial Officer, Treasurer,
Secretary, Principal Financial and Accounting Officer 45
Jeffrey Janco Senior Vice President/Operations, Chief Operations Officer 50
Arnold Gans Chief Scientific Officer 72
Myra Gans Executive Vice President 69
David Shapiro Vice President, Sales 45

BACKGROUND

Francis Newman. Mr. Newman has been Chairman of the Company since July
2003, Chief Executive Officer since March 2003 and a Director of the Company
since November 2002. See, "Proposal 1--Election of Directors" for additional
biographical information on Mr. Newman.

Alan Levy. Mr. Levy has been Vice President, Finance and Chief
Financial Officer, Treasurer and Principal Financial and Accounting Officer
since October 2006 and Secretary since December 2006. From 2004 to 2006 he was a
consultant to public and private companies in a variety of industries. From 2000
to 2004 he was Senior Vice President, Finance, Chief Financial Officer of ATC
Healthcare, Inc. (AMEX), a company providing medical staffing personnel to
hospitals, nursing homes, clinics and other health care facilities. From 1997 -
1999, Mr. Levy was the Corporate Controller and Chief Accounting Officer of
Globix Corp (NASDAQ), an internet service provider and computer hardware
reseller. His prior experience also includes management positions at Del
Laboratories Inc.(AMEX), the American Institute of Certified Public Accountants
and Ernst & Young. Mr. Levy is a Certified Public Accountant and received his
Bachelor of Science in Accounting from Long Island University.

Jeffrey Janco. Mr. Janco has been the Senior Vice President and Chief
Operations Officer since February, 2007. Mr. Janco previously served as the
Company's Senior Vice President of Operations since 2006 and Vice President of
Operations since 1992. His responsibilities include office administration,
supply chain management, inside sales/customer service, human resources,
information technology and logistics. He earned his Bachelor of Business
Administration degree from the University of Miami.

Arnold Gans. Mr. Gans has been Chief Scientific Officer since February,
2007. Mr. Gans previously served as President from the founding of the Company's
predecessor in 1981 until 2007. He was previously President of Control Drug,
Inc. a manufacturer of nutritional protein supplements. Mr. Gans has served on
the Board of Holy Name Hospital in Teaneck, New Jersey. He serves on the Alumni
Board of Columbia University's School of Public Health and was Chairman of the
Alumni Federation Scholarship Aid Committee. Mr. Gans is married to Myra Gans,
the Company's Executive Vice President.

Myra Gans. Ms. Gans has been Executive Vice President since 1982 and
was Secretary from 1990 to December 2006. Ms. Gans has over 25 years of
experience working with clinicians and hospitals to integrate the Company's
products and programs. Ms. Gans initiates and manages customer agreements and
distribution contracts for branded products as well as federal, state and county
bids. She is responsible for marketingand advertising for branded products. Ms.
Gans also develops the marketing and business plans for all new products. She
attended Cornell University and Finch College and holds a Bachelor of Arts
degree in English Literature. Ms. Gans is married to Arnold Gans, the Company's
Chief Scientific Officer.

David Shapiro. Mr. Shapiro has been Vice President of Sales since
December 2006. Mr. Shapiro was Regional Vice President - Sales, for Novartis
Medical Nutrition from 2004 to 2006 and has over 20 years of international sales
and general management experience with Mead Johnson Nutritionals, Bristol Myers
Squibb and Philip Morris International, including responsibility for
establishing new business units and managing market expansions in Vietnam,
Australia, South Korea and the Philippines. Mr. Shapiro holds a Bachelor Degree
from Monash University in Melbourne, Australia.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of May10, 2007 by: (i)
each person (or group of affiliated persons) known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of the Company's
common stock; (ii) each of the Company's directors; (iii) the Chief Executive
Officer of the Company and each of the three other most highly-compensated
executive officers of the Company serving as such as of the end of the last
fiscal year whose total annual salary and bonus exceeded $100,000, for services
rendered in all capacities to the Company (such individuals are hereafter
referred to as the "Named Executive Officers"); and (iv) all of the Company's
directors and Named Executive Officers as a group:

SHARES OF
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT(2)
----------------------------------------------------- -------------- --------------

Francis Newman (3) .................................. 2,345,929 16.1%

Alan Levy ........................................... - -

Jeffrey Janco (4) ................................... 267,101 1.9%

Arnold Gans (5) ..................................... 1,088,551 7.4%

Myra Gans (6) ....................................... 1,088,551 7.4%

David Shapiro ....................................... - -

Andrew Horowitz (7) ................................. 268,348 1.9%

Mark Rosenberg (8) .................................. 51,933 0.4%

Bernard Korman (9) .................................. 284,278 2.0%

Richard Ullman (10) ................................. 2,322,001 16.5%

Mark Rachesky (11) .................................. 3,786,799 26.9%

All directors and Named Executive Officers
as a group (9 persons) .......................... 4,306,140 27.6%

(1) Unless otherwise noted, the address for each person is c/o Medical Nutrition
USA, Inc., 10 West Forest Avenue, Englewood, New Jersey 07631.

(2) Percentage ownership is based on 14,068,145 shares of common stock
outstanding on May 2, 2007. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options, warrants and
convertible notes currently exercisable or convertible, or exercisable or
convertible within 60 days, are deemed outstanding for determining the number of
shares beneficially owned and for computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing the
percentage ownership of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in the
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.

(3) Consists of (a) 1,883,929 shares of common stock, (b) 462,000 shares of
common stock issuable upon the exercise of options that are immediately
exercisable.

(4) Consists of (a) 34,101 shares of common stock, (b) 233,000 shares of common
stock issuable upon the exercise of options that are immediately exercisable.

(5) Consists of (a) 372,556 shares of common stock jointly owned with Myra Gans,
(b) 395,499 shares of common stock issuable upon the exercise of options owned
directly and immediately exercisable, and 320,499 shares of common stock
issuable upon the exercise of options beneficially owned by Ms. Gans and
immediately exercisable.

(6) Consists of (a) 372,556 shares of common stock jointly owned with Arnold
Gans, (b) 320,499 shares of common stock issuable upon the exercise of options
owned directly and immediately exercisable, and 395,499 shares of common stock
issuable upon the exercise of options beneficially owned by Mr. Gans and
immediately exercisable.

(7) Consists of (a) 224,348 shares of common stock owned directly and (b) 44,000
shares of common stock issuable upon the exercise of options owned directly that
are immediately exercisable.

(8) Consists of (a) 14,933 shares of common stock, (b) 37,000 shares of common
stock issuable upon the exercise of options that are immediately exercisable.

(9) Consists of (a) 258,278 shares of common stock, (b) 26,000 shares of common
stock issuable upon the exercise of options that are immediately exercisable.

(10) Mr. Ullman is a limited partner of the Ullman Family Partnership LP.
Ownership consists of (a) 2,322,001 shares of common stock beneficially owned on
behalf of the Ullman Family Partnership LP. Their address is 1200 Route 46 West,
Clifton, New Jersey 07013.

(11) Consists of (a) 1,296,100 shares of common stock owned directly and 496,000
beneficially owned MHR Capital Partners LP, and 1,994,699 beneficially owned MHR
Capital Partners Master Account LP. Mr. Rachesky is the brother-in-law of
Francis A. Newman. (See "Certain Relationships and Related Transactions" later
in this Proxy Statement for further information regarding the convertible
promissory note). Their address is 40 West 57th Street, New York, New York
10019.

COMPENSATION DISCUSSION AND ANALYSIS

OUR COMPENSATION PHILOSOPHY AND PROGRAM OBJECTIVES.

The underlying philosophy of our compensation program is pay for
performance. Our goal is to design and maintain a performance-oriented
compensation program that will support our long-term objectives. We believe we
can achieve that goal by providing competitive salaries, short-term and
long-term incentive compensation and benefit programs that support our strategy.
Specifically, our compensation program seeks to:

o Establish compensation performance objectives that are aligned with
corporate goals;
o Provide a high degree of correlation between compensation and
performance;
o Create long-term incentives directly linked to shareholder returns;
o Attract, retain and motivate our employees; and
o Value our employees contributions to our success.

HOW WE SET COMPENSATION LEVELS.

We strive to deliver total compensation that is commensurate with each
employee's role and relative impact on our overall business, and comparable to
that offered by the companies with which we compete for talent.

Our Chief Executive Officer makes recommendations to the Compensation
Committee regarding the compensation of all officers, within guidelines
established by the Compensation Committee. The Compensation Committee approves
the compensation of each officer, including our Chief Executive Officer.

ELEMENTS OF OUR COMPENSATION PROGRAM.

Our compensation program for executives and managers consists of three
elements:

o A base salary;
o A performance-based annual bonus; and
o Long-term incentive compensation in the form of grants of stock
option awards and time-based restricted shares.

The following table sets forth each element of compensation, and the
role and purpose of that element in our compensation program.

- --------------------------------------------------------------------------------
ELEMENT ROLE & PURPOSE
- --------------------------------------------------------------------------------
Base Salary o Reflect the market value of the position
and provide a stable source of income for
the individual.

o Attract, retain and motivate qualified
individuals.

- --------------------------------------------------------------------------------

Short-Term Incentive o Focus efforts on the attainment of the
Compensation company's annual performance objectives.

o Reward exceptional performance.

- --------------------------------------------------------------------------------

Long-Term Incentive o Align employee interests with those of
Compensation our shareholders.

o Provide a balance between the achievement
of short-term results and long-term value
creation.

o Promote a culture of share ownership.

o Provide an incentive for employees to
remain with the Company over time.

- --------------------------------------------------------------------------------

Base Salary. In general, base salary and other components of
compensation are determined by job responsibility, market data, internal equity
and the individual's performance, experience and skills. Individual performance
is considered by the Compensation Committee when determining future base salary
and may have an impact on an officer's opportunity to receive short-term or
long-term incentive compensation. Because of the addition of two officers in
late fiscal 2007, and the resulting realignment of responsibilities, we granted
no base salary increases to our officers for fiscal 2008.

Short-Term Incentive Compensation. We provide our officers with the
opportunity to earn annual bonuses through our Executive Bonus Plan. We believe
that this aligns their interests with our business plan, encourages teamwork in
achieving common goals and rewards individuals for achieving financial
performance goals. Bonuses are based on a percentage of each person's base
salary, which percentage generally is set at the same level for all officers of
a similar rank. Personal performance goals are established for each officer in
order to align his or her activities with Company goals. The Compensation
Committee established Mr. Newman's individual performance goals. All individual
performance goals for the officers were established with and approved by Mr.
Newman and reviewed by the Compensation Committee. Our fiscal 2007 and 2008
performance goals are discussed in more detail below.

Fiscal Year 2007. In June 2005, the Compensation Committee approved a
bonus plan for officers whereby 50% was based on sales and 50% on EBITDA, with
annual targets to be set at a level approved by the Board. The percentage
combination of cash and common stock of the Company used to pay the bonuses each
year was to be at the discretion of the Board of Directors, but in no case would
the cash portion be less than 25% of the bonuses awarded. For Fiscal 2007, the
Company achieved 82% of the sales target and 79 % of the EBITDA target, and paid
total bonuses of $30,400.

Fiscal Year 2008. During fiscal 2008, the objective performance
measures established by the Compensation Committee will be based on our earnings
before interest, taxes, depreciation, amortization and stock-based compensation
expense ("EBITDAS") and sales, each established as a range (Threshold, Target,
Maximum). The achievement of target performance is based on the achievement of
our business plan for fiscal 2008. We believe that our business plan is
challenging, but achievable. Therefore, we believe that there is a reasonable
possibility that our actual performance will approach, if not meet, the target
levels of performance under the plan. Our threshold performance level for
EBITDAS is approximately 80% of our target performance level, and our Maximum
performance level for EBITDAS is approximately 120% of our target performance
level. Bonuses will not be payable under the plan if the Threshold performance
level set by the Compensation Committee for EBITDAS and sales is not achieved.
Under the plan, each executive officer's bonus opportunity for fiscal 2008 will
be based on our level of achievement of our EBITDAS and sales goals. The bonus
opportunity for Mr. Newman and Mr. Gans, will be up to 100% of their base
salary. The bonus opportunity for Mr. Levy, Mr. Janco, Ms. Gans and Mr. Shapiro
will be up to 50% of their base salary.

Long-Term Incentive Compensation. The Compensation Committee believes
that long-term incentive compensation is best achieved through equity-based
incentives, thereby ensuring that our employees not only have a continuing stake
in our long-term success but also that their interests are aligned with the
interests of our shareholders. We also believe that this ownership interest
helps provide our officers and other members of management with an incentive to
consider both the short-term results of their actions as well as the longer-term
impact on overall Company performance.

Performance shares, stock option awards and time-based restricted
shares are available for grant to officers and other management team members
under the 2003 Omnibus Equity Incentive Plan ("OEIP"). The Compensation
Committee oversees the OEIP, specifically approves all awards to officers and
other members of management team, and approves, on a program basis, grants to
other employees. We believe that each vehicle serves a specific purpose and
employ each vehicle, as necessary, to meet our compensation objectives. The
Compensation Committee's approach with respect to long-term incentive
compensation has evolved over time; the present approach can be summarized as
follows:

- ---------------------------------------------------------------------------------------------------------
VEHICLE ROLE FREQUENCY OF USE
- ---------------------------------------------------------------------------------------------------------

Stock Options o Align employee's interests with Considered annually for current
those of our shareholders. officers and other employees, upon
the hiring of new employees and
o Provide employees with an incentive promotion of current employees.
for increasing shareholder value.

o Provide a balance between the
achievement of short-term results and
long-term value creation

- ---------------------------------------------------------------------------------------------------------

Restricted Shares o Align employee's interests with Considered annually for current
those of our shareholders. officers and other employees and
promotion of current employees.
o Promote a culture of share ownership

o Minimize dilutive effect of
equity-based incentives.

o Provide incentive for key employees
to remain with the Company over time.

- ---------------------------------------------------------------------------------------------------------

The Compensation Committee grants long-term incentive compensation
awards based on a targeted dollar value that is determined in relation to an
employee's level and base salary. In addition, the Compensation Committee bases
its decisions on such considerations as the potential for dilution to our
shareholders, the expense associated with the awards, the relative proportion of
long-term incentives within the total compensation mix, and, the importance of
the individual to us. As a result, a significant portion of our executives'
total compensation is dependent upon the achievement of our performance
objectives and increases in the price of our common shares. We believe that our
compensation program rewards our officers for achieving performance goals over
which they have control.

Fiscal Year 2007. During fiscal 2007, we granted time-based restricted
shares to our executive team, a stock option award to Mr. Levy who joined the
Company in October 2006 and a stock option award to Mr. Shapiro who joined the
Company in December 2006.

Equity-based incentives made during fiscal 2007 to the Chief Executive
Officer represented 9% percent of all equity-based incentives granted during the
year. Grants of equity-based incentives to the Chief Executive Officer and all
other executive officers during fiscal 2007 represented 59% of all equity-based
incentives granted during the year.

Fiscal Year 2008. In fiscal 2008, we expect to grant stock options and
time-based restricted shares to our executive officers. The stock options and
time-based restricted share awards will vest in equal installments over a
three-year period following the date of grant and will expire in ten years.

Other Officer Benefits and Perquisites. Our executive officers receive
health insurance coverage on the same basis as all of our employees. Officers
are also eligible to receive an automobile allowance.

TAX AND ACCOUNTING CONSIDERATIONS.

Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer or one of the four
other most highly compensated executive officers, unless such compensation is
performance-based. Qualifying performance-based compensation will not be subject
to the deduction limit if certain requirements are met. Cash payments under the
Plan, as well as stock option awards are intended to qualify as
performance-based compensation under Section 162(m).

OFFICER COMPENSATION

In April 2006, the Company entered into an employment agreement with
Mr. Newman pursuant to which he serves as the Company's Chief Executive Officer.
The agreement provides for an initial base salary of $185,000 per year. In
addition, the base salary may be increased annually, at the discretion of the
Board. Mr. Newman is eligible to receive an annual bonus in an amount up to 100%
of his then-current base salary (payable 50% in cash and 50% in restricted stock
or stock options) if the Company achieves certain agreed upon targets. The
agreement automatically renews each year, unless earlier terminated in
accordance with its terms .

If Mr. Newman's employment is terminated by the Company without cause,
by Mr. Newman for good reason or in connection with a change in control, he will
be entitled to receive (i) any amounts earned, accrued or owing under the
agreement, but not yet paid; (ii) a lump sum severance payment in an aggregate
amount equal to the sum of one (1) times his then-current annual Base Salary;
and (iii) a continuation of all benefits for which he is eligible to participate
as of the termination date in a fashion which is similar to those which he is
receiving immediately prior to the termination date for a period of one year
after such termination. Additionally, in such circumstances all unvested stock
options or restricted stock held by Mr. Newman will become immediately 100%
vested , and any restrictions on restricted stock held by Mr. Newman will lapse.

In October 2006, the Company entered into an employment agreement with
Mr. Levy pursuant to which he serves as the Company's Vice President/Finance and
Chief Financial Officer. The agreement provides for an initial base salary of
$130,000 per year. In addition, the base salary may be increased annually, at
the discretion of the Board. Mr. Levy is eligible to receive a bonus in an
amount up to 50% of his then-current base salary (payable 50% in cash and 50% in
restricted stock or stock options) if the Company achieves certain agreed upon
targets. The agreement automatically renews each year unless earlier terminated
in accordance with its terms.

If Mr. Levy's employment is terminated by the Company in connection
with a change in control, he will be entitled to receive (i) any amounts earned,
accrued or owing but not yet paid; (ii) a lump sum severance payment in an
aggregate amount equal the sum of one (1) times his then-current Base Salary;
and (iii) a continuation of all benefits for which he is eligible to participate
as of the termination date in a fashion which is similar to those which he is
receiving immediately prior to the termination date for a period of one year
after such termination without cause. Additionally, in such circumstances all
unvested stock options or restricted stock held by Mr. Levy will become
immediately 100% vested, and any restrictions on restricted stock held by Mr.
Levy will lapse.

In January 2003, the Company entered into an employment agreement with
Mr. Janco pursuant to which he would serve as the Company's Vice
President/Operations. The agreement originally provided for an initial base
salary of $78,500 per year. In October 2006, the agreement was revised, to
provide for Mr. Janco service as Senior Vice President/Operations with a base
salary of $130,000. In addition, the base salary may be increased annually, at
the discretion of the Board. Mr. Janco is eligible to receive a bonus in an
amount up to 50% of his then-current base salary (payable 50% in cash and 50% in
restricted stock or stock options) if the Company achieves certain agreed upon
targets. The agreement automatically renews each year unless earlier terminated
in accordance with its terms.

If Mr. Janco's employment is terminated by the Company without cause or
in connection with a change in control, he will be entitled to receive (i) any
amounts earned, accrued or owing but not yet paid; (ii) a lump sum severance
payment in an aggregate amount equal the sum of one (1) times his then-current
Base Salary; and (iii) a continuation of all benefits for which he is eligible
to participate as of the termination date in a fashion which is similar to those
which he is receiving immediately prior to the termination date for a period of
one year after such termination without cause. Additionally, in such
circumstances all unvested stock options or restricted stock held by Mr. Janco
will become immediately 100% vested, and any restrictions on restricted stock
held by Mr. Janco will lapse.

In May 2006, the Company entered into an employment agreement with Mr.
Gans, its Chief Scientific Officer. The agreement provides for an initial base
salary of $169,600 per year. In addition, the base salary may be increased
annually at the discretion of the Board. Mr. Gans is eligible to receive a bonus
in an amount up to 100% of his then-current base salary (payable 50% in cash and
50% in restricted stock or stock options) if the Company achieves certain agreed
upon targets. The agreement automatically renews each year unless earlier
terminated in accordance with its terms.

If Mr. Gans' employment is terminated by the Company without cause or
in connection with a change in control, he will be entitled to receive (i) any
amounts earned, accrued or owing under the agreement but not yet paid; (ii) a
lump sum severance payment in an aggregate amount equal to the sum of one (1)
times his then-current annual Base Salary; and (iii) a continuation of all
benefits for which he is eligible to participate as of the termination date in a
fashion which is similar to those which he is receiving immediately prior to the
Termination Date for a period of one year after such termination without cause.
Additionally, in such circumstances all unvested stock options or restricted
stock held by Mr. Gans will become immediately 100% vested, and any restrictions
on restricted stock held by Mr. Gans will lapse.

In May 2006, the Company entered into an employment agreement with Ms.
Gans, its Executive Vice President and Secretary. The agreement provides for an
initial base salary of $130,000 per year. In addition, the base salary may be
increased per year at the discretion of the Board. Ms. Gans is eligible to
receive a bonus in an amount up to 50% of her then-current base salary (payable
50% in cash and 50% in restricted stock or stock options) if the Company
achieves certain agreed upon targets. The agreement automatically renews each
year unless earlier terminated in accordance with Section its terms.

If Ms. Gans' employment is terminated by the Company without cause or
in connection with a change in control, she will be entitled to receive (i) any
amounts earned, accrued or owing but not yet paid; (ii) a lump sum severance
payment in an aggregate amount equal to the sum of one (1) times her
then-current annual Base Salary; and (iii) a continuation of all benefits for
which she is eligible to participate as of the termination date in a fashion
which is similar to those which she is receiving immediately prior to the
termination date for a period of one year after such termination without cause.
Additionally, in such circumstances all unvested stock options or restricted
stock held by Ms. Gans will become immediately 100% vested , and any
restrictions on restricted stock held by Ms. Gans will lapse.

In December 2006, the Company entered into an employment agreement with
Mr. Shapiro pursuant to which he serves as the Company's Vice President, Sales.
The agreement provides for an initial base salary of $155,000 per year. In
addition, the base salary may be increased annually, at the discretion of the
Board. Mr. Shapiro is eligible to receive a bonus in an amount up to 50% of his
then-current base salary (payable 50% in cash and 50% in restricted stock or
stock options) if the Company achieves certain agreed upon targets. The
agreement automatically renews each year unless earlier terminated in accordance
with its terms.

If Mr. Shapiro's employment is terminated by the Company in connection
with a change in control, he will be entitled to receive (i) any amounts earned,
accrued or owing but not yet paid; (ii) a lump sum severance payment in an
aggregate amount equal the sum of one (1) times Employee's then-current Base
Salary; and (iii) a continuation of all benefits for which he is eligible to
participate as of the termination date in a fashion which is similar to those
which he is receiving immediately prior to the termination date for a period of
one year after such termination without cause. Additionally, in such
circumstances all unvested stock options or restricted stock held by Mr. Shapiro
will become immediately 100% vested, and any restrictions on restricted stock
held by Mr. Shapiro will lapse.

COMPENSATION OF OUR OFFICERS.

EXECUTIVE COMPENSATION

The following table sets forth information relating to compensation for
the fiscal year ended January 31, 2007 for our Chief Executive Officer, our
Chief Financial Officer, and other executive officers employed by us as of the
end of fiscal 2007. The individuals listed in the Summary Compensation Table are
referred to collectively in this proxy statement as the "named officers."

SUMMARY COMPENSATION TABLE

Option All Other
Stock Awards Awards Compensation
Name and Principal Position Year Salary ($) Bonus ($)(1) ($)(2)(4) ($)(3)(4) ($)(5) Total ($)
- ---------------------------- ---- ------------ ------------ ------------ ------------ ------------ ------------

Francis A Newman 2007 $ 185,500 $ 11,644 $ 8,181 $ 127,363 $ 18,000 $ 350,688
Chairman of the Board,
Chief Executive Officer

Alan Levy 2007 $ 46,500 $ 1,360 $ 5,727 $ 15,009 $ 10,000 $ 78,596
Vice President, Finance
Chief Financial Officer

Jeffrey Janco 2007 $ 120,365 $ 1,883 $ 5,727 $ 65,533 $ - $ 193,508
Senior Vice President,
Chief Operations Officer

Arnold Gans 2007 $ 169,600 $ 10,646 $ 6,545 $ 106,136 $ 13,200 $ 306,127
Chief Scientific Officer

Myra Gans 2007 $ 130,000 $ 4,080 $ 5,727 $ 84,909 $ 12,000 $ 236,716
Executive Vice President

David Shapiro 2007 $ 23,846 $ 811 $ 2,864 $ 3,037 $ 8,049 $ 38,607
Vice President, Sales

- ----------

(1) Represents performance based bonuses.

(2) Restricted stock awards granted include all compensation cost recognized in
the financial statements in accordance with Statement of Financial
Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("FAS
No. 123R"). For fiscal year 2007, each of these executive officers received
the following grants on December 18, 2006: Mr. Newman -- 50,000 shares,
Mr. Levy -- 35,000 shares, Mr. Janco -- 35,000 shares, Mr. Gans -- 40,000
shares, Ms. Gans -- 35,000 shares and Mr. Shapiro --- 17,500 shares

(3) Stock option awards granted include all compensation cost recognized in the
financial statements in accordance with FAS No. 123R. For fiscal year 2007,
Mr. Levy received on October 6, 2006 a stock option grant of 75,000 shares
and Mr. Shapiro received on December 18, 2006 a stock option grant for
37,500 shares.

(4) For a discussion of the assumptions we made in valuing the stock and option
awards, see "Note 1 - Significant Accounting Policies - Stock-Based
Compensation" and "Note 9- Stock-Based Compensation" in the notes to our
consolidated financial statements contained in the accompanying 2007 Annual
Report.

(5) For fiscal 2007, "All Other Compensation" consists of the following:

Mr. Newman received $18,000 in a travel allowance which was paid in monthly
installments

Mr. Levy received a relocation allowance of $10,000

Mr. Gans received $13,200 in a travel allowance which was paid in monthly
installments

Ms. Gans received $12,000 in a travel allowance which was paid in monthly
installments

Mr. Shapiro was reimbursed for relocation expenses of $8,049.

The following table provides information relating to stock and option
awards granted during fiscal 2007 to the named executive officers.

FISCAL 2007 GRANTS OF PLAN-BASED AWARDS

All Other All Other
Stock Options Grant Date
Awards: Awards: Fair
Number of Number of Exercise or Value of
Shares Securities Base Price Stock and
Approval of Stock Underlying of Option Option
Name Grant Date Date or Units (#) Options (#) Awards($/Sh) Awards
- -------------------- ------------ ------------ ------------ ------------ ------------ ------------

Francis A. Newman 12/18/2006 12/18/2006 50,000 - $ 207,500
Alan Levy 10/6/2006 10/6/2006 - 75,000 $ 4.05 $ 140,467
Alan Levy 12/18/2006 12/18/2006 35,000 - - $ 145,250
Jeffrey Janco 12/18/2006 12/18/2006 35,000 - - $ 145,250
Arnold Gans 12/18/2006 12/18/2006 40,000 - - $ 166,000
Myra Gans 12/18/2006 12/18/2006 35,000 - - $ 145,250
David Shapiro 12/18/2006 12/18/2006 17,500 - - $ 72,625
David Shapiro 12/18/2006 12/18/2006 - 37,500 $ 4.15 $ 75,587

The grants set forth in the Fiscal 2007 Grants of Plan-Based Awards
Table are not subject to any performance criteria other than time-based vesting.

The following table sets forth information relating to all of our named
officers' outstanding equity-based awards as of the end of fiscal 2007.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (2007)

Option Awards Stock Awards
------------------------------------------------------- -----------------------
Market
Number of Number of Number of Value of
Securities Securities Shares or Shares or
Underlying Underlying Units of Units of
Unexercised Unexercised Option Option Stock That Stock That
Options (#) Options (#) Exercise Expiration Have Not Have Not
Name Exercisable Unexercisable Price ($) Date Vested (#) Vested ($)
- -------------------- ------------- ------------- ---------- ---------- ---------- ----------

Francis Newman(1) 12,000 - $ 0.75 11/04/2007 50,000 205,000
Francis Newman(1) 150,000 - $ 2.00 03/06/2013
Francis Newman(1) 100,000 50,000 $ 1.90 03/17/2014
Francis Newman(1) 100,000 50,000 $ 2.52 12/08/2014
Francis Newman(1) 50,000 100,000 $ 2.70 12/07/2015
Alan Levy(2) - 75,000 $ 4.05 10/06/2016 35,000 143,500
Jeffrey Janco(3) 8,000 - $ 0.50 04/02/2007 35,000 143,500
Jeffrey Janco(3) 75,000 - $ 1.20 07/08/2013
Jeffrey Janco(3) 50,000 25,000 $ 1.90 03/17/2014
Jeffrey Janco(3) 50,000 25,000 $ 2.52 12/08/2014
Jeffrey Janco(3) 25,000 50,000 $ 2.70 12/07/2015
Arnold Gans(4) 20,500 - $ 1.25 01/02/2008 40,000 164,000
Arnold Gans(4) 125,000 - $ 2.00 03/06/2013
Arnold Gans(4) 83,333 41,667 $ 1.90 03/17/2014
Arnold Gans(4) 83,333 41,667 $ 2.52 12/08/2014
Arnold Gans(4) 41,666 83,334 $ 2.70 12/07/2015
Myra Gans(5) 20,500 - $ 1.25 01/02/2008 35,000 143,500
Myra Gans(5) 100,000 - $ 2.00 03/06/2013
Myra Gans(5) 66,666 33,334 $ 1.90 03/17/2014
Myra Gans(5) 66,666 33,334 $ 2.52 12/08/2014
Myra Gans(5) 33,333 66,667 $ 2.70 12/07/2015
David Shapiro(6) - 37,500 $ 4.15 12/18/2016 17,500 71,750

(1) During fiscal 2007, Mr. Newman was granted 50,000 shares of restricted
stock, which will vest in three equal installments commencing one year
after the date of the grant. Mr. Newman also has the following unvested
option awards: 50,000 shares will vest on 3/17/07; 50,000 shares will vest
on 12/7/2007, 50,000 shares will vest on 12/8/07, and 50,000 shares will
vest 12/7/08.

(2) During fiscal 2007, Mr. Levy was granted 35,000 shares of restricted stock,
which will vest in three equal installments commencing one year after the
date of the grant. Mr. Levy also has the following unvested option awards:
25,000 shares will vest on 10/6/07; 25,000 shares will vest on 10/6/08 and
25,000 shares will vest on 10/6/09.

(3) During fiscal 2007, Mr. Janco was granted 35,000 shares of restricted
stock, which will vest in three equal installments commencing one year
after the date of the grant. Mr. Janco also has the following unvested
option awards: 25,000 shares will vest on 3/17/07; 25,000 shares will vest
on 12/7/2007, 25,000 shares will vest on 12/8/07, and 25,000 shares will
vest 12/7/08.

(4) During fiscal 2007, Mr. Gans was granted 40,000 shares of restricted stock,
which will vest in three equal installments commencing one year after the
date of the grant. Mr. Gans also has the following unvested option awards:
41,667 shares will vest on 3/17/07; 41,667 shares will vest on 12/7/2007,
41,667 shares will vest on 12/8/07, and 41,667 shares will vest 12/7/08.

(5) During fiscal 2007, Ms. Gans was granted 35,000 shares of restricted stock,
which will vest in three equal installments commencing one year after the
date of the grant. Mr. Gans also has the following unvested option awards:
33,334 shares will vest on 3/17/07; 33,334 shares will vest on 12/7/2007,
33,334 shares will vest on 12/8/07, and 33,334 shares will vest 12/7/08.

(6) During fiscal 2007, Mr. Shapiro was granted 17,500 shares of restricted
stock, which will vest in three equal installments commencing one year
after the date of the grant. Mr. Shapiro also has the following unvested
option awards: 12,500 shares will vest on 12/18/07; 12,500 shares will vest
on 12/18/08 and 12,500 shares will vest on 12/18/09.

The following table provides information relating to aggregate stock
option exercises and aggregate stock awards vested, including in each case the
value realized upon exercise or vesting, during fiscal 2007 for the named
executive officers.

FISCAL 2007 OPTION EXERCISES AND STOCK VESTED

Option Awards Stock Awards
------------------------------- -------------------------------
Number of Number of
Shares Value Realized Shares Value Realized
Acquired on on Acquired on on
Name Exercise (#) Exercise ($) Vesting (#) Vesting ($)
- -------------------- -------------- -------------- -------------- --------------

Francis Newman - $ - - $ -
Alan Levy - $ - - $ -
Jeffrey Janco 20,000 $ 65,000 - $ -
Arnold Gans(1) 280,803 $ 1,021,951 - $ -
Myra Gans(1) 280,803 $ 1,021,951 - $ -
David Shapiro - $ - - $ -

(1) Mr. and Ms. Gans are spouses. Therefore, we are reporting their holdings
together. The total options they together exercised were for 280,803
shares.

DIRECTOR COMPENSATION

Our fiscal 2007 compensation program for each non-employee director
consisted solely of grants of stock options as described below. No cash payments
were made to any director in fiscal 2007 for compensation of their service as a
director.

STOCK OPTIONS

o Upon election 15,000 shares

Subsequent yearly award 15,000 shares
o Additional award for committee chairmen 5,000 shares

Stock options. Non-employee directors are granted stock option awards.
Each non-employee director receives a stock option for 15,000 common shares upon
commencement of service as a director and an additional stock option of 5,000
common shares for serving as chairman of a committee . Generally, stock option
awards are fully exercisable after one year following the date of grant and
expire in ten years. Upon termination of a director from the Board for any
reason, he or she has the right to exercise the vested portion of an outstanding
stock option during the three-month period immediately following the termination
date.

FISCAL 2007 DIRECTOR COMPENSATION

Fees Earned Option
or Paid Stock Awards
Name in Cash ($) Awards ($) ($)(1)(2) Total ($)
- -------------------- ------------ ------------ ------------ ------------
Andrew Horowitz $ - $ - $ 13,158 $ 13,158
Bernard Korman $ - $ - $ 17,756 $ 17,756
Mark Rosenberg $ - $ - $ 16,006 $ 16,006

(1) 20,000 options were granted to Messrs. Horowitz, Korman and Rosenberg in
September 2006. Including this grant, Mr. Horowitz has options to acquire
64,000 shares of common stock, Mr. Korman has options to acquire 52,000
shares of common stock and Mr. Rosenberg has options to acquire 57,000
shares of common stock.

(2) For a discussion of the assumptions we made in valuing the stock and option
awards, see "Note 1 - Significant Accounting Policies - Stock-Based
Compensation" and "Note 9 - Stock-Based Compensation" in the notes to our
consolidated financial statements contained in the accompanying 2007 Annual
Report.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company's Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis included herein
with management and, based on such review and discussions, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Proxy Statement.

COMPENSATION COMMITTEE

Andrew Horowitz (Chairperson)
Bernard Korman
Mark Rosenberg

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The July 2003 transactions referenced in the discussion below were a
part of the Company's private placement of $3,127,500 of debt that was marketed
to a group of individuals and institutions as part of the Company's strategy to
obtain capital to enable it to implement its business plan.

Transactions with Francis Newman. In April 2003, Francis Newman loaned
the Company $50,000 and in July 2003 Francis Newman loaned the Company $500,000.
Such loans were evidenced by convertible promissory notes (the "Newman Notes").
Interest accrued on the Newman Notes at the rate of 8% per annum, and all
principal and interest under the Newman Notes was due and payable in three years
(the "Maturity Date"), provided that the principal amount and all accrued
interest of the Newman Note was prepayable by the Company, in whole or in part,
at any time upon 15 days' prior written notice. The Newman Notes was voluntarily
convertible, in whole or in part, at any time prior to the Maturity Date, at the
option of Mr. Newman, into shares of our common stock at a conversion price per
share equal to $0.75. At the closing of a Qualifying Equity Financing (as
defined below) on or before the Maturity Date, the entire outstanding principal
balance of, and all accrued and unpaid interest on, the Newman Notes would
automatically convert into the number of shares of common stock as is obtained
by dividing (a) the outstanding principal balance of, and all accrued and unpaid
interest on, the Newman Note as of the closing date of the Qualifying Equity
Financing by (b) the lower of (i) $0.75 or (ii) the price per share of equity
securities sold in the Qualifying Equity Financing. Notwithstanding the
foregoing, Mr. Newman would receive shares of preferred stock (the number of
which will be determined as set forth above) if the Newman Note was converted in
connection with a Qualifying Equity Financing in which the Company sells
preferred stock at a price per share that was less than or equal to $0.75. A
"Qualifying Equity Financing" meant an equity financing in which the Company
sold shares of equity securities and obtained net proceeds (including conversion
of the Newman Note) in an amount not less than $2,000,000. The Company also
granted Mr. Newman certain registration rights with respect to the shares of
common stock issuable directly or indirectly upon conversion of the Newman
Notes. Mr. Newman converted the $50,000 principal amount of the April 2003
Newman Note plus all the accrued interest thereon into 82,681 shares of common
stock on April 23, 2006. Mr. Newman converted the $500,000 principal amount of
the July 2003 Newman Note plus all the accrued interest thereon into 826,666
shares of common stock on July 28, 2006.

As further consideration for the Newman Notes, the Company granted Mr.
Newman a warrants to purchase 799,999 shares of common stock at a price per
share equal to $0.75, provided that if, pursuant to a Qualifying Equity
Financing the Company sold (a) common stock at a price per share less than
$0.75, then the Company would exchange the warrant for a warrant to purchase the
same number of shares of common stock at a price per share equal to the price
per share offered in the Qualifying Equity Financing; or (b) preferred stock at
a price equal to or less than $0.75, then the Company would exchange the warrant
for a warrant to purchase the same number of shares of preferred stock at the
price per share offered in the Qualifying Equity Financing. Mr. Newman exercised
the warrants for 799,999 shares of common stock at $0.75 per share on April 23,
2006.

In March 2003, Mr. Newman was appointed as Chief Executive Officer. In
July 2003, Mr. Newman was appointed Chairman.

Transactions with Arnold and Myra Gans. In July 2003 Arnold and Myra
Gans loaned the Company $30,000, and such loan was evidenced by a convertible
promissory note (the "Gans Note"). Interest accrued on the Gans Note at the rate
of 8% per annum, and all principal and interest under the Gans Note was due and
payable in a single installment on July 31, 2006 (the "Gans Note Maturity
Date"), provided that the principal amount and all accrued interest of the Gans
Note was prepayable by the Company, in whole or in part, at any time upon 15
days' prior written notice. The Gans Note was voluntarily convertible, in whole
or in part, at any time prior to the Gans Note Maturity Date, at the option of
Mr. and Mrs. Gans, into shares of our common stock at a conversion price per
share equal to $0.75. At the closing of a Qualifying Equity Financing (as
defined below) on or before the Gans Note Maturity Date, the entire outstanding
principal balance of, and all accrued and unpaid interest on, the Gans Note
would automatically convert into the number of shares of common stock as was
obtained by dividing (a) the outstanding principal balance of, and all accrued
and unpaid interest on, the Gans Note as of the closing date of the Qualifying
Equity Financing by (b) the lower of (i) $0.75 or (ii) the price per share of
equity securities sold in the Qualifying Equity Financing. Notwithstanding the
foregoing, Mr. Gans would receive shares of preferred stock (the number of which
will be determined as set forth above) if the Gans Note was converted in
connection with a Qualifying Equity Financing in which the Company sold
preferred stock at a price per share that was less than or equal to $0.75. A
"Qualifying Equity Financing" meant an equity financing in which the Company
sells sold of equity securities and obtains net proceeds (including conversion
of the Gans Note) in an amount not less than $2,000,000). The Company also
granted Mr. and Mrs. Gans certain registration rights with respect to the shares
of common stock issuable directly or indirectly upon conversion of the Gans
Note. Mr. and Mrs. Gans converted all of the Gans' notes plus all accrued but
unpaid interest into 49,608 shares of common stock on April 23, 2006.

As further consideration for the Gans Note, the Company granted Mr. and
Mrs. Gans a warrant to purchase 40,000 shares of common stock at a price per
share equal to $0.75, provided that if, pursuant to a Qualifying Equity
Financing the Company sold (a) common stock at a price per share less than
$0.75, then the Company would exchange the warrant for a warrant to purchase the
same number of shares of common stock at a price per share equal to the price
per share offered in the Qualifying Equity Financing; or (b) preferred stock at
a price equal to or less than $0.75, then the Company would exchange the warrant
for a warrant to purchase the same number of shares of preferred stock at the
price per share offered in the Qualifying Equity Financing. Mr. and Mrs. Gans
exercised the warrants for 40,000 shares of common stock at $0.75 per share on
March 13, 2006.

Transactions with Grand Slam, LLC and Andrew Horowitz. Mr. Horowitz,
one of our directors, is the managing member of Grand Slam, LLC ("Grand Slam").
In July 2003 Grand Slam loaned the Company $100,000, and such loan was evidenced
by a convertible promissory note (the "Grand Slam Note"). Interest accrued on
the Grand Slam Note at the rate of 8% per annum, and all principal and interest
under the Grand Slam Note was due and payable in a single installment on July
31, 2006 (the "Grand Slam Note Maturity Date"), provided that the principal
amount and all accrued interest of the Grand Slam Note was prepayable by the
Company, in whole or in part, at any time upon 15 days' prior written notice.
The Grand Slam Note was voluntarily convertible, in whole or in part, at any
time prior to the Grand Slam Note Maturity Date, at the option of Grand Slam,
LLC, into shares of our common stock at a conversion price per share equal to
$0.75.

At the closing of a Qualifying Equity Financing (as defined below) on or before
the Grand Slam Note Maturity Date, the entire outstanding principal balance of,
and all accrued and unpaid interest on, the Grand Slam Note would be
automatically converted into the number of shares of our common stock as was
obtained by dividing (a) the outstanding principal balance of, and all accrued
and unpaid interest on, the Grand Slam Note as of the closing date of the
Qualifying Equity Financing by (b) the lower of (i) $0.75 or (ii) the price per
share of equity securities sold in the Qualifying Equity Financing.
Notwithstanding the foregoing, Grand Slam LLC would receive shares of preferred
stock (the number of which would be determined as set forth above) if the Grand
Slam Note was converted in connection with a Qualifying Equity Financing in
which the Company sold preferred stock at a price per share that was less than
or equal to $0.75. A "Qualifying Equity Financing" meant an equity financing in
which the Company sold shares of equity securities and obtains net proceeds
(including conversion of the Grand Slam Note) in an amount not less than
$2,000,000. The Company also granted Grand Slam LLC certain registration rights
with respect to the shares of common stock issuable directly or indirectly upon
conversion of the Grand Slam Note. Mr. Horowitz converted all of the Grand Slam
LLC note plus all accrued but unpaid interest into 165,363 shares of common
stock on April 23, 2006.

As further consideration for the Grand Slam Note, the Company granted
Grand Slam LLC a warrant to purchase 133,333 shares of common stock at a price
per share equal to $0.75, provided that if, pursuant to a Qualifying Equity
Financing the Company sold (a) common stock at a price per share less than
$0.75, then the Company would exchange the warrant for a warrant to purchase the
same number of shares of common stock at a price per share equal to the price
per share offered in the Qualifying Equity Financing; or (b) preferred stock at
a price equal to or less than $0.75, then the Company would exchange the warrant
for a warrant to purchase the same number of shares of preferred stock at the
price per share offered in the Qualifying Equity Financing. Mr. Horowitz
exercised the warrants for 133,333 shares at $0.75 per share on April 4, 2006.
On July 31, 2003, as consideration for a Subscription Agreement for Purchase of
Shares dated June 19, 2002, the Company granted Mr. Horowitz a warrant to
purchase 100,000 shares of common stock at a price per share equal to $0.50,
which he converted into 100,000 shares of common stock on April 6, 2006.

Transactions with Mark Rosenberg. In July 2003 Mark Rosenberg, one of
our directors, loaned the Company $5,000, and such loan was evidenced by a
convertible promissory note (the "Rosenberg Note"). Interest accrued on the
Rosenberg Note at the rate of 8% per annum, and all principal and interest under
the Rosenberg Note was due and payable in a single installment on July 31, 2006
(the "Rosenberg Note Maturity Date"), provided that the principal amount and all
accrued interest of the Rosenberg Note was prepayable by the Company, in whole
or in part, at any time upon 15 days' prior written notice. The Rosenberg Note
was voluntarily convertible, in whole or in part, at any time prior to the
Rosenberg Note Maturity Date, at the option of Mr. Rosenberg, into shares of our
common stock at a conversion price per share equal to $0.75. At the closing of a
Qualifying Equity Financing (as defined below) on or before the Rosenberg Note
Maturity Date, the entire outstanding principal balance of, and all accrued and
unpaid interest on, the Rosenberg Note would be automatically converted into the
number of shares of common stock as was obtained by dividing (a) the outstanding
principal balance of, and all accrued and unpaid interest on, the Rosenberg Note
as of the closing date of the Qualifying Equity Financing by (b) the lower of
(i) $0.75 or (ii) the price per share of equity securities sold in the
Qualifying Equity Financing. Notwithstanding the foregoing, Mr. Rosenberg would
receive shares of preferred stock (the number of which would be determined as
set forth above) if the Rosenberg Note was converted in connection with a
Qualifying Equity Financing in which the Company sells preferred stock at a
price per share that is less than or equal to $0.75. A "Qualifying Equity
Financing" meant an equity financing in which the Company sold shares of equity
securities and obtained net proceeds (including conversion of the Rosenberg
Note) in an amount not less than $2,000,000. The Company also granted Mr.
Rosenberg certain registration rights with respect to the shares of common stock
issuable directly or indirectly upon conversion of the Rosenberg Note.

As further consideration for the Rosenberg Note, the Company granted
Mr. Rosenberg a warrant to purchase 6,666 shares of common stock at a price per
share equal to $0.75, provided that if, pursuant to a Qualifying Equity
Financing the Company sold (a) common stock at a price per share less than
$0.75, then the Company would exchange the warrant for a warrant to purchase the
same number of shares of common stock at a price per share equal to the price
per share offered in the Qualifying Equity Financing; or (b) preferred stock at
a price equal to or less than $0.75, then the Company would exchange the warrant
for a warrant to purchase the same number of shares of preferred stock at the
price per share offered in the Qualifying Equity Financing. Mr. Rosenberg
exercised the warrants for 6,666 shares of common stock at $0.75 per share on
March 23, 2006.

Transactions with Bernard Korman. In December 2003 Bernard Korman, one
of our directors, loaned the Company $200,000, and such loan was evidenced by a
convertible promissory note (the "Korman Note"). Interest accrued on the Korman
Note at the rate of 8% per annum, and all principal and interest under the
Korman Note was due and payable in a single installment on July 31, 2006 (the
"Korman Note Maturity Date"), provided that the principal amount and all accrued
interest of the Korman Note was prepayable by the Company, in whole or in part,
at any time upon 15 days' prior written notice. The Korman Note was voluntarily
convertible, in whole or in part, at any time prior to the Korman Note Maturity
Date, at the option of Mr. Korman, into shares of common stock at a conversion
price per share equal to $2.25. At the closing of a Qualifying Equity Financing
(as defined below) on or before the Korman Note Maturity Date, the entire
outstanding principal balance of, and all accrued and unpaid interest on, the
Korman Note would be automatically converted into the number of shares of common
stock as was obtained by dividing (a) the outstanding principal balance of, and
all accrued and unpaid interest on, the Korman Note as of the closing date of
the Qualifying Equity Financing by (b) the lower of (i) $2.25 or (ii) the price
per share of equity securities sold in the Qualifying Equity Financing.
Notwithstanding the foregoing, Mr. Korman would receive shares of preferred
stock (the number of which would be determined as set forth above) if the Korman
Note was converted in connection with a Qualifying Equity Financing in which the
Company sold preferred stock at a price per share that was less than or equal to
$2.25. A "Qualifying Equity Financing" meant an equity financing in which the
Company sold shares of equity securities and obtained net proceeds (including
conversion of the Terry Note) in an amount not less than $2,000,000. The Company
also granted Mr. Korman certain registration rights with respect to the shares
of our common stock issuable directly or indirectly upon conversion of the
Korman Note.

As further consideration for the Korman Note, the Company granted Mr.
Korman a warrant to purchase 88,889 shares of common stock at a price per share
equal to $3.00, provided that if, pursuant to a Qualifying Equity Financing the
Company sold (a) common stock at a price per share less than $2.25, then the
Company would exchange the warrant for a warrant to purchase the same number of
shares of common stock at a price per share equal to the price per share offered
in the Qualifying Equity Financing; or (b) preferred stock at a price equal to
or less than $2.25, then the Company would exchange the warrant for a warrant to
purchase the same number of shares of preferred stock at the price per share
offered in the Qualifying Equity Financing. Mr. Korman exercised the warrants
for 88,889 shares of common stock at $3.00 per share on December 6, 2006.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of a registered class of the
Company's equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Directors, executive officers and greater than 10% shareholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file. Based solely on its review of copies of such forms
received by it, or written representation from certain reporting persons that no
Form 5s were required for those persons, the Company believes that all reporting
requirements under Section 16(a) for the 2005 Fiscal Year were met in a timely
manner by its directors, executive officers and greater than 10% beneficial
owners. All such filings have been made as of the Record Date. Each of such
filings were filed to report one reportable transaction.

REPORT OF AUDIT COMMITTEE

The following report of the Audit Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act or the Exchange Act,
except to the extent the Company specifically incorporates this report by
reference therein.

The Audit Committee Charter was adopted by the Board and reflects the
standards set forth in SEC regulations and the rules of the Exchange.

The Audit Committee's primary duties and responsibilities are:

o Serve as an independent objective party to monitor the Company's
financial reporting process and internal control system.

o Review and appraise the audit efforts of the Company's
independent accountants.

o Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board.

The duties and responsibilities of a member of the Audit Committee are
in addition to his or her duties as a member of the Board.

The Audit Committee has implemented procedures to ensure that during
the course of each fiscal year it devotes the attention that it deems necessary
or appropriate to each of the matters assigned to it under its charter. The
Audit Committee met four times during the 2007 Fiscal Year.

In overseeing the preparation of the Company's financial statements,
the Audit Committee met with both management and the Company's outside auditors
to review and discuss all financial statements prior to their issuance and to
discuss significant accounting issues. Management advised the Audit Committee
that all financial statements were prepared in accordance with U.S. generally
accepted accounting principles, and the Audit Committee discussed the statements
with both management and the outside auditors. The Audit Committee's review
included discussion with the outside auditors of matters required to be
discussed pursuant to Statements on Auditing Standards No. 61 and 90
(Communication with Audit Committees).

With respect to the Company's outside auditors, the Audit Committee,
among other things, discussed with Amper, Politziner & Mattia, P.C., matters
relating to its independence, including the written disclosures made to the
Audit Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).

The Audit Committee of the Company's Board of Directors has reviewed
and discussed the report of the audit committee included herein with management
and, based on such review and discussions, the Audit Committee recommended to
the Board that the this report be included in this Proxy Statement.

AUDIT COMMITTEE

Bernard Korman, Chairman
Andrew Horowitz
Mark Rosenberg

SHAREHOLDER PROPOSALS

From time to time shareholders present proposals which may be proper
subjects for inclusion in a proxy statement and for consideration at an annual
meeting. To be timely, a proposal by a shareholder intended to be included in
our proxy statement and presented at the 2008 annual meeting must be received at
our principal executive offices no later than 120 days before the anniversary
date of our 2007 annual meeting, provided such annual meeting is held within 30
days before or after the anniversary date of the 2007 annual meeting. If the
2008 annual meeting is not held within 30 days before or after the anniversary
date of the 2007 annual meeting, then the shareholder's notice must be delivered
to, or mailed and received not later than a reasonable time before the Company
begins to print and mail its proxy materials for such meeting.

ANNUAL REPORT ON FORM 10-KSB

A complete copy of the Company's Annual Report on Form 10-KSB for the
year ended January 31, 2007 is included in the Company's 2007 Annual Report to
Shareholders. A copy of the Company's 2007 Annual Report to Shareholders has
been mailed to all shareholders along with this Proxy Statement. Shareholders
may obtain additional copies of the Company's Annual Report on Form 10-KSB and
the exhibits thereto, without charge, by writing to Alan Levy, Vice President,
Finance of the Company, at the Company's principal executive offices at the 10
West Forest Avenue, Englewood, NJ 07631.

OTHER MATTERS

Management does not know of any matters to be presented at the 2007
Annual Meeting other than those set forth herein and in the Notice accompanying
this Proxy Statement. If a shareholder vote is necessary to transact any other
business at the 2007 Annual Meeting, the proxy holders intend to vote their
proxies in accordance with their best judgment related to such business.

It is important that your shares be represented at the meeting,
regardless of the number of shares that you hold. YOU ARE, THEREFORE, URGED TO
EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE THAT HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Shareholders who are present at the 2007 Annual
Meeting may revoke their proxies and vote in person or, if they prefer, may
abstain from voting in person and allow their proxies to be voted.

By Order of the Board of Directors,

/s/ Francis A. Newman
-----------------------------------
Francis A. Newman
Chairman
May 16, 2007
Englewood, New Jersey

ANNUAL MEETING OF SHAREHOLDERS OF

MEDICAL NUTRITION USA, INC.

June 6, 2007

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

Please detach along perforated line and mail in the envelope provided.

- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- --------------------------------------------------------------------------------

1. To elect directors to serve for a term ending at the 2008 Annual Meeting of
Shareholders or until his or her successor is duly elected and qualified.

[ ] FOR ALL NOMINEES NOMINEES
[ ] Francis A. Newman
[ ] WITHHOLD AUTHORITY [ ] Andrew Horowitz
FOR ALL NOMINEES [ ] Bernard Korman
[ ] Mark H. Rosenberg
[ ] FOR ALL EXCEPT
(See instructions below)

INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: [X]

In their discretion, the proxies are authorized to vote upon such other business
that properly may come before the 2007 Annual Meeting and any adjournments
thereof.

The Company's Board of Directors recommends a vote FOR the election of the
directors listed above. If no instruction to the contrary is indicated, this
Proxy will be voted for the election of the directors listed above..

Please mark, sign, date and return this card in the enclosed postage-paid
envelope today.

To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this
method. [ ]

Signature of Shareholder _________________________ Date: ________________

Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.

MEDICAL NUTRITION USA, INC.
2006 ANNUAL MEETING OF SHAREHOLDERS
JUNE 6, 2007

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MEDICAL NUTRITION USA, INC.

The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of 2007 Annual Meeting of Shareholders and the Proxy Statement and
appoints Francis A. Newman and Alan Levy, and each of them, the attorneys and
proxies of the undersigned, each with full power of substitution, to vote all
the shares of common stock of Medical Nutrition USA Inc, Inc. (the "Company")
which the undersigned is entitled to vote, either on his or her own behalf or on
behalf of any entity or entities, at the 2007 Annual Meeting of Shareholders of
the Company (the "2007 Annual Meeting") to be held at the Company's executive
offices, 10 West Forest Avenue, Englewood, New Jersey 07631, at 10:00 a.m. on
June 6, 2007, and at any adjournments or postponements thereof, with the same
force and effect as the undersigned might or could do if personally present
thereat. The shares represented by this Proxy will be voted in the manner set
forth below:

(Continued and to be signed on the reverse side)