================================================================================

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

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1998

                                       OR

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

             For the transition period from __________ to __________


                           COMMISSION FILE NO. 0-21963


                              THE JUDGE GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         PENNSYLVANIA                                   23-1726661
-------------------------------             ---------------------------------
(State or other jurisdiction of             (IRS Employer Identification No.)
 Incorporation or Organization)


                            TWO BALA PLAZA, SUITE 800
                         BALA CYNWYD, PENNSYLVANIA 19004
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)


                                 (610) 667-7700
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [  ]

         As of August 3, 1998, 13,487,576 shares of the Registrant's Common
Stock, $0.01 par value, were outstanding.

================================================================================

<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington. D.C. 20549

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

NUMBER                                                                                    PAGE(S)
------                                                                                    -------

                                     PART I - FINANCIAL INFORMATION
                                     ------------------------------
<S>                                                                                         <C>  
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1998 AND DECEMBER 31, 1997                 3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,
     1998 AND 1997                                                                              4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30,
     1998 AND 1997                                                                              5

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED
     JUNE 30, 1998 AND 1997                                                                     6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30,
     1998 AND 1997                                                                              7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                         8-12

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS                                                                         13-19

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            19

                                       PART II - OTHER INFORMATION
                                       ---------------------------

ITEM 6.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                   20-22

</TABLE>
                                       2
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1998 AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                  June 30, 1998    December 31, 1997
<S>                                                                                 <C>                  <C>        
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                           $ 2,566,360          $ 1,684,482
Short-term investments                                                                       --            5,500,000
Accounts receivable, net                                                             18,301,552           14,415,926
Inventories                                                                           1,554,896            1,468,902
Prepaid income taxes and deferred taxes                                                 286,000              286,000
Other                                                                                 1,740,527              712,416
                                                                                    -----------          -----------
TOTAL CURRENT ASSETS                                                                 24,449,335           24,067,726
                                                                                    -----------          -----------
PROPERTY AND EQUIPMENT
Property and Equipment                                                                7,007,387            5,007,416
Less: accumulated depreciation and amortization                                       2,562,578            2,121,034
                                                                                    -----------          -----------
NET PROPERTY AND EQUIPMENT                                                            4,444,809            2,886,382
                                                                                    -----------          -----------
OTHER ASSETS
Deposits and other                                                                      703,033              275,608
Covenant not to compete, net of accumulated amortization of $14,996, 1998                74,980                   --
Goodwill, net of accumulated amortization of $681,901, 1998 and $405,944, 1997       15,175,338            4,703,855
                                                                                    -----------          -----------
TOTAL OTHER ASSETS                                                                   15,953,351            4,979,463
                                                                                    -----------          -----------
TOTAL ASSETS                                                                        $44,847,495          $31,933,571
                                                                                    ===========          ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt                                                   $   395,000          $   237,721
Accounts payable and accrued expenses                                                 9,558,361            3,647,048
Payroll and sales taxes                                                                 999,486              437,788
Other liabilities                                                                     1,882,288                   --
Income taxes payable                                                                     21,937              291,515
Deferred revenue                                                                      1,129,711              928,324
                                                                                    -----------          -----------
TOTAL CURRENT LIABILITIES                                                            13,986,783            5,542,396
                                                                                    -----------          -----------
LONG-TERM LIABILITIES
Note Payable, Bank                                                                    2,500,000                   --
Deferred rent obligation                                                                115,601              116,879
Debt obligations, net of current portion                                                450,462                   --
                                                                                    -----------          -----------
TOTAL LONG-TERM LIABILITIES                                                           3,066,063              116,879
                                                                                    -----------          -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 50,000,000 shares authorized; at June 30, 1998,
13,531,302 shares issued and outstanding; at December 31, 1997, 13,347,969 shares
issued and outstanding                                                                  135,312              133,479
Preferred stock, $.01 par value, 10,000,000 shares authorized                                --                   --
Additional paid-in capital                                                           23,624,391           22,758,517
Retained earnings                                                                     4,254,946            3,382,300
                                                                                    -----------          -----------
                                                                                     28,014,649           26,274,296
Less treasury stock, 40,000 shares at June 30, 1998; at cost                            220,000                   --
                                                                                    -----------          -----------
TOTAL SHAREHOLDERS' EQUITY                                                           27,794,649           26,274,296
                                                                                    -----------          -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                          $44,847,495          $31,933,571
                                                                                    ===========          ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                       1998                 1997
                                                                                       ----                 ----
<S>                                                                                 <C>                  <C>        
NET REVENUES                                                                        $52,865,997          $49,540,975
                                                                                    -----------         ------------
COSTS AND EXPENSES

Cost of sales (exclusive of items shown separately below)                            35,821,772           35,619,056

Selling and operating                                                                 9,811,536            8,503,773

General and administrative                                                            5,786,539            4,050,005
                                                                                    -----------          -----------

Total costs and expenses                                                             51,419,847           48,172,834
                                                                                    -----------          -----------

INCOME FROM OPERATIONS                                                                1,446,150            1,368,141

OTHER INCOME (EXPENSES), NET                                                             51,180             (52,644)
                                                                                    -----------         ------------

INCOME BEFORE INCOME TAX EXPENSE                                                      1,497,330            1,315,497

INCOME TAX EXPENSE                                                                      624,684              674,083
                                                                                    -----------          -----------

NET INCOME                                                                          $   872,646          $   641,414
                                                                                    ===========          ===========

NET INCOME PER SHARE:

   BASIC                                                                                 $ 0.07               $ 0.05
                                                                                         ======               ======

Weighted Average Shares Outstanding                                                  13,419,350           12,164,486
                                                                                     ==========           ==========

   DILUTED                                                                               $ 0.07               $ 0.05
                                                                                         ======               ======

Weighted Average Shares Outstanding                                                  13,420,390           12,295,260
                                                                                     ==========           ==========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    THREE MONTHS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                       1998                 1997
                                                                                       ----                 ----
<S>                                                                                 <C>                  <C>        
NET REVENUES                                                                        $27,776,181          $26,062,572
                                                                                    -----------          -----------

COSTS AND EXPENSES

Cost of sales (exclusive of items shown separately below)                            18,401,828           18,472,409

Selling and operating                                                                 5,334,084            4,078,228

General and administrative                                                            3,188,461            2,024,793
                                                                                    -----------          -----------

Total costs and expenses                                                             26,924,373           24,575,430
                                                                                    -----------          -----------

INCOME FROM OPERATIONS                                                                  851,808            1,487,142

OTHER INCOME (EXPENSES), NET                                                           (10,277)               75,257
                                                                                    -----------          -----------

INCOME BEFORE INCOME TAX EXPENSE                                                        841,531            1,562,399

INCOME TAX EXPENSE                                                                      332,019              654,532
                                                                                    -----------          -----------

NET INCOME                                                                          $   509,512          $   907,867
                                                                                    ===========          ===========

NET INCOME PER SHARE:

   BASIC                                                                                 $ 0.04               $ 0.07
                                                                                         ======               ======

Weighted Average Shares Outstanding                                                  13,468,958           13,347,969
                                                                                     ==========           ==========

   DILUTED                                                                               $ 0.04               $ 0.07
                                                                                         ======               ======

Weighted Average Shares Outstanding                                                  13,491,998           13,347,969
                                                                                     ==========           ==========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
                                          Common Stock
                                     -----------------------      Additional       Retained      Treasury
                                     Shares           Amount   Paid-In Capital     Earnings        Stock          Total
                                     ------           ------   ---------------     --------      --------         -----
<S>                                <C>               <C>         <C>              <C>            <C>           <C>
Balance, December 31, 1997         13,347,969        $133,479    $22,758,517      $3,382,300      $     --     $26,274,296

Acquisition transactions              183,333           1,833        865,874              --            --         867,707

Purchase treasury stock                    --              --             --              --      (220,000)       (220,000)

Net Income                                 --              --             --         872,646            --         872,646
                                   ----------        --------    -----------      ----------     ---------     -----------

Balance, June 30, 1998             13,531,302        $135,312    $23,624,391      $4,254,946     ($220,000)    $27,794,649
                                   ==========        ========    ===========      ==========     =========     ===========
</TABLE>


            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
                                          Common Stock
                                     -----------------------      Additional       Retained
                                     Shares           Amount   Paid-In Capital     Earnings         Total
                                     ------           ------   ---------------     --------         -----
<S>                                <C>               <C>         <C>              <C>            <C>
Balance, December 31, 1996          8,587,739        $ 85,877    $   365,877      $  670,360     $ 1,122,114

Merger transactions                 1,194,230          11,942      2,416,498              --       2,428,440

Initial Public Offering             3,000,000          30,000     19,209,991              --      19,239,991

Conversion of debentures              526,000           5,260        494,740              --         500,000

Conversion of note payable             40,000             400        299,600              --         300,000

Net income                                 --              --             --         641,414         641,414
                                   ----------        --------    -----------      ----------     -----------

Balance, June 30, 1997             13,347,969        $133,479    $22,786,706      $1,311,774     $24,231,959
                                   ==========        ========    ===========      ==========     ===========

</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       6
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                       1998                 1997
                                                                                       ----                 ----
<S>                                                                                 <C>                  <C>
OPERATING ACTIVITIES
Net income for the period                                                           $   872,646          $   641,414
Adjustments to reconcile net income to net cash provided by (used in)
    operating activities:
  Depreciation                                                                          452,121              299,677
  Amortization                                                                          290,953              182,612
  Deferred rent                                                                          (1,278)             (10,017)
  Provision for losses on accounts receivable                                            47,890              204,936
  Stock compensation                                                                         --               29,250
Changes in operating assets and liabilities:
(Increase) decrease in:
  Short term investments                                                              5,500,000                   --
  Accounts receivable                                                                (2,202,153)          (3,092,456)
  Inventories                                                                           386,026              353,089
  Deposits and other                                                                   (374,133)             (76,930)
  Prepaid income taxes                                                                       --               11,102
  Other current assets                                                                 (965,312)             518,196
Increase (decrease) in:
  Accounts payable and accrued expenses                                               4,099,543            3,762,620
  Payroll and sales taxes                                                               483,879            (204,410)
  Deferred revenue                                                                      (68,522)             322,736
  Income taxes payable                                                                 (263,945)             (89,978)
                                                                                    -----------          -----------
    Net cash provided by operating activities                                         8,257,715            2,851,841
                                                                                    -----------          -----------
INVESTING ACTIVITIES
Purchases of property and equipment                                                  (1,721,903)            (701,343)
(Increase) decrease in notes receivable, officers and employees, net                         --              577,287
Purchase/acquisition of companies                                                    (6,869,109)                  --
Covenant not to compete                                                                 (89,976)                  --
                                                                                    -----------          -----------
Net cash used in investing activities                                                (8,680,988)            (124,056)
                                                                                    -----------          -----------
FINANCING ACTIVITIES
Cash acquired in business combination                                                   159,068                   --
Proceeds from (repayments of) notes payable, bank, net                                2,500,000           (9,960,795)
Proceeds (repayments) of bank overdrafts                                                     --           (1,858,000)
Principal payments on long-term debt                                                   (337,721)          (2,113,544)
Repayment of bank note payable related to ISI purchase                                 (476,576)                  --
Advances receivable related to On-Site purchase                                        (319,620)                  --
Purchase of Treasury Stock                                                             (220,000)                  --
Proceeds from issuance of stock and exercise of warrants, net                                --           19,239,991
Repayments from shareholders                                                                 --              (95,862)
                                                                                    -----------          -----------
    Net cash provided by financing activities                                         1,305,151            5,211,790
                                                                                    -----------          -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        881,878            7,939,575
CASH AND CASH EQUIVALENTS, BEGINNING                                                  1,684,482              105,069
                                                                                    -----------          -----------
CASH AND CASH EQUIVALENTS, ENDING                                                   $ 2,566,360          $ 8,044,644
                                                                                    ===========          ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for Interest                                              $    25,000          $   284,000
                                                                                    ===========          ===========
Cash paid during the year for Income taxes                                          $   876,000          $   721,000
                                                                                    ===========          ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       7
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 1.  DESCRIPTION OF BUSINESS

The Judge Group, Inc. (the "Company") (formerly Judge, Inc.), a Pennsylvania
corporation founded in 1970, provides (i) information technology ("IT") and
engineering professionals to its clients on both a temporary basis (through its
"Contract Placement" business) and a permanent basis (through its "Permanent
Placement" business), (ii) computer network and document management system
integration, implementation, maintenance and training (through its "Information
Management Services" business) and (iii) IT training (through its "IT Training"
business) on a range of software and network applications to corporate,
governmental and individual clients. At June 30, 1998, the Company,
headquartered in Bala Cynwyd, Pennsylvania, operated regional offices in
thirteen states throughout the United States. A substantial portion of the
Company's revenues are derived from customers located in the Mid-Atlantic
corridor of the United States.

The Contract Placement business includes the operations of two of the Company's
wholly-owned subsidiaries, Judge Technical Services, Inc. ("JTS"), and Judge
Technical Services of N.J., Inc. ("JTNJ").

The Permanent Placement business includes the operations of three of the
Company's wholly-owned subsidiaries, Judge, Inc., Judge Electronic Services of
Florida, Inc. ("JESF") and Judge Inc. of New Jersey ("JINJ").

The IT Training business is comprised of the operations of The Berkeley
Associates Corp. ("Berkeley").

The Information Management Services business includes the operations of Judge
Imaging Systems, Inc. ("JIS") which became a wholly owned subsidiary of the
Company at the closing of the Company's initial public offering in 1997. Prior
to that time, JIS was a public company, a majority of whose shares was owned by
the Company and certain officers and directors of the Company, and which was
consolidated for financial reporting purposes.

During 1996, the Company engaged an investment banking firm to assist it in an
initial public offering of its common stock. On September 30, 1996, the Company
filed a Registration Statement on Form S-1 with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. The Company
successfully completed its initial public offering of common shares on February
20, 1997. The Company sold 3,000,000 common shares at a price of $7.50 per
share, realizing approximately $20,906,000 in proceeds net of underwriting
discounts and commissions. Immediately prior to the initial public offering, the
holders of $500,000 of convertible notes exchanged them for 526,000 Company
common shares. The Company issued 40,000 common shares in lieu of $300,000 of
notes payable to Berkeley, in accordance with the purchase agreement with
Berkeley. In connection with the initial public offering, the Company incurred
approximately $1,694,000 of accounting, legal, printing and other costs as of
December 31, 1997 and such costs have been charged to additional paid-in capital
as a reduction of the proceeds from the initial public offering.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company, and the Company's wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.

The financial statements as of June 30, 1998 and for the three and six months
ended June 30, 1998 and 1997 are unaudited; however, in the opinion of
management, such statements include all adjustments, consisting solely of normal
recurring adjustments, necessary for a fair presentation of the results for the
periods presented.

The interim financial statements should be read in conjunction with the
financial statements for the fiscal year ended December 31, 1997 and the notes
thereto.

The results of operations for the interim periods are not necessarily indicative
of the results that might be expected for future interim periods or for the full
year ended December 31, 1998.

                                       8
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Risks and Uncertainties

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Intangible Assets

Goodwill represents the excess of the cost of companies acquired over the fair
value of their net assets at the date of acquisition and is being amortized on
the straight-line method over terms ranging from ten years to twenty five years.
Amortization of goodwill is based upon management's estimates for which it is
reasonably possible that such estimates may change in the near term.
Amortization of goodwill for the six months ended June 30, 1998 and 1997 was
approximately $276,000 and $183,000, respectively, and is included in general
and administrative expense in the consolidated statements of operations.

Interim Financial Reporting

For interim financial reporting purposes, costs and expenses are accounted for
in accordance with Accounting Principles Board Opinion No. 28 ("APB 28").

Recently Issued Accounting Standards

In June 1997, the FASB issued Statement No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This Statement establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. However, this Statement need not be applied to
interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second year
of application. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This Statement is
required to be adopted for fiscal years beginning after December 15, 1997.

Earnings Per Share

The Company adopted Statement of Financial Accounting Standards No. 128 ("FAS
128"), Earnings Per Share, beginning in the fourth quarter of 1997. Prior period
earnings per common share were recomputed to conform to the provisions of FAS
128. The recomputations did not result in any restatement in earnings per share
previously reported.

Basic earnings per share amounts are computed based on net income, reduced by
dividends earned on preferred stock outstanding on JIS through February 1997
($6,700), and divided by the weighted average number of shares actually
outstanding reduced by Treasury Shares. The number of shares used in the
computation for the six months ended June 30, 1998 and 1997 were approximately
13,419,000, and 12,164,000, respectively. The number of shares used in the
computation for the three months ended June 30, 1998 and 1997 were approximately
13,469,000 and 13,348,000, respectively.

Diluted earnings per share amounts for the three and six months ended June 30,
1998 and 1997 are based on the weighted average number of shares calculated for
basic earnings per share purposes increased by the number of shares that would
be outstanding assuming exercise of outstanding stock options. The number of
shares used in the computation for the six months ended June 30, 1998 and 1997
were approximately 13,420,000 and 12,295,000, respectively. The number of shares
used in the computation for the three months ended June 30, 1998 and 1997 were
approximately 13,492,000 and 13,348,000, respectively. Options to purchase
1,190,750 common shares in 1998 and 561,500 common shares in 1997 were not
included in the computation of diluted earnings per share because the option
exercise price was greater than the average market price of common stock.


                                       9
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)

Earnings Per Share  -- (Continued)

On February 26, 1998 the Company repurchased 40,000 shares of its common stock
at a price of $5.50 per share, which shares are held as treasury stock.

Reclassifications

Certain items in the consolidated statement of operations for the three and six
months ended June 30, 1997 have been reclassified to conform to the 1998
presentation.

NOTE 3.  BUSINESS COMBINATIONS

In the six months ended June 30, 1998 the Company, through its subsidiaries,
consummated several acquisitions which were accounted for as purchase
transactions, with the results of their operations only included in the
accompanying financial statements since the respective purchase dates. In each
acquisition the excess cost over the fair value of net assets, assumed to equal
their carrying value, is considered goodwill and is being amortized over terms
ranging from fifteen years to twenty-five years beginning with the month
following the acquisition. In some instances a portion of the acquisition cost
is included in other liabilities on the accompanying condensed consolidated
financial statements, the payment terms of which are dependent on the Company's
common stock price on future dates. Following is a list of the acquisitions:

Effective March 5, 1998, JTS purchased substantially all of the assets of
Information Systems, Inc. and ISI Systems, Inc. (together "ISI"), a company
engaged in the IT placement business in the Detroit, Michigan area, for total
original acquisition cost of $6,290,000, payable in cash, notes and Company
stock. An additional amount of up to $500,000 is contingent on ISI attaining
certain pre-tax income amounts in calendar year 1998.

Effective March 31, 1998, Judge, Inc. purchased substantially all of the assets
of Cella Associates of Atlanta, Inc. ("Cella"), a company engaged in the
placement of personnel with offices in Connecticut, Georgia, Texas and Illinois,
for total acquisition cost of $1,529,000, payable in cash and Company stock.

Effective May 11, 1998, JIS purchased all of the outstanding common stock of
On-Site Solutions, Inc. ("On-Site"), a company engaged in the systems
integration business in the Irvine, California area, for total original
acquisition cost of the assumption of approximately $663,000 in liabilities.
Additional amounts are contingent on On-Site attaining certain pre-tax income
amounts in the periods April 1, 1998 through December 31, 1998 and January 1,
1999 through December 31, 1999.

Effective May 29, 1998, JIS purchased substantially all of the assets of AOP
Solutions ("AOP"), a company engaged in the Information Management Solutions
business in the Buffalo, New York area, for total acquisition cost of
$3,240,000, payable in cash and Company stock. Additional amounts are contingent
on AOP attaining certain pre-tax income amounts in the periods January 1, 1998
through December 31, 1998 and January 1, 1999 through December 31, 1999.

Effective June 8, 1998, JIS purchased all of the outstanding common stock of
Systems Solutions, Inc. d/b/a Corebridge Technologies, Inc. ("Corebridge"), a
company engaged in document management, imaging and workflow solutions in the
Seattle, Washington area, for total acquisition cost of $155,000, payable in
cash. Additional amounts are contingent on Corebridge attaining certain pre-tax
income amounts in the periods May 1, 1998 through December 31, 1998 and January
1, 1999 through December 31, 1999.

NOTE 4.  NOTE PAYABLE, BANK

Note payable, Bank consists of advances to the Company under a $25,000,000 line
of credit facility. The line of credit bears interest at the prime rate. Maximum
permitted borrowings thereunder is the lesser of $25,000,000 or 85% of qualified
accounts receivable, as defined in the line of credit agreement.


                                       10
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 5.  INCOME TAXES

The Company files a consolidated Federal income tax return with its wholly-owned
subsidiaries. In prior years, JIS was not included in the Company's consolidated
Federal income tax return, as the Company owned less than 80% of JIS'
outstanding common shares. Under Internal Revenue regulations, JIS was not part
of the consolidated group for tax purposes and filed their own Federal income
tax return. Effective February 20, 1997, JIS began filing as part of the
consolidated group. State income taxes are determined on the basis of filing
separate returns for each company as required by the applicable state
regulations.

In accordance with APB 28 (Interim Financial Reporting), income taxes are
calculated at the estimated effective annual (federal and state) tax rate.

The effective tax rate for 1998 and 1997 is higher than the applicable federal
statutory tax rate of 34% due to the Company's state tax liabilities, certain
expenses that were not deductible for tax purposes, and net operating losses for
JIS, which is consolidated for financial reporting but not tax reporting
purposes (prior to the merger of the Company and JIS in February 1997).

As a result of operating losses, no provision for income taxes was required for
the period prior to February 20, 1997 for JIS. JIS operating losses subsequent
to February 20, 1997 have been used in the consolidated tax accrual. For income
tax reporting purposes, as of December 31, 1997, JIS had an unused operating
loss carryforward of approximately $4,200,000, which may be applied against
future taxable income of JIS, subject to certain Federal income tax limitations.
These carryforwards expire between 2002 and 2012.

NOTE 6.  COMMITMENTS AND CONTINGENCIES

The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "Year 2000" problem
is pervasive and complex, as many computer systems will be affected in some way
by the rollover of the two-digit year value to 00. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The "Year 2000" issue creates risk for the Company from unforeseen
problems in its own computer systems and from third parties for whom the Company
implements "Year 2000" solutions on their computer systems.

The Company believes its recently implemented financial information system is
"Year 2000" compliant. Further, the Company is currently in the process of
replacing its candidate and client databases utilized in its Contract Placement
and Permanent Placement business with software systems that are represented to
be "Year 2000" compliant. The Company is analyzing its remaining computer
systems to identify any potential "Year 2000" issues and will take appropriate
corrective action based on the results of such analysis. Management has not yet
determined the cost related to achieving "Year 2000" compliance. Management
believes, based on its available information, that it will be able to manage its
total "Year 2000" transition without any material adverse effects on its
business operations or financial condition.

NOTE 7.  SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE

Stock Option Plan

On September 4, 1996 the Company adopted the 1996 Incentive Stock Option and
Non-Qualified Stock Option Plan (the "Incentive Plan") for key employees and
non-employee directors. Options may be granted under the Incentive Plan to
purchase up to a maximum of 1,500,000 of the Company's common shares, subject to
certain adjustments and restrictions. The price of each option shall be the fair
market value of the shares on the date of the grant. The options granted are
generally subject to a four year vesting schedule in equal increments annually,
and are exercisable any time after vesting up to 10 years from grant date.

During the six months ended June 30, 1998, the Company granted options to
purchase 818,650 shares at a weighted average exercise price of $5.10. No
options were exercised during the period ended June 30, 1998.

The Company accounts for its Incentive Plan in accordance with Accounting
Principles Board Opinion No. 25 and related interpretations. Accordingly, no
compensation expense has been recognized for the Incentive Plan.


                                       11
<PAGE>

                     THE JUDGE GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

NOTE 8.  STATEMENT OF CASH FLOWS

Supplemental disclosure of non-cash investing and financing transactions:

During the six months ended June 30, 1998, the Company entered into the
following non-cash transactions:

     o   incurred long-term debt ($890,000) for certain business combinations
         (see Note 3);
     o   incurred goodwill of $2,390,000 in the business combination with ISI
         (see Note 3); and
     o   incurred goodwill of $750,000 in the business combination with Cella
         (see Note 3).
     o   incurred goodwill of $710,000 in the business combination with On-Site.
     o   incurred goodwill of $998,000 in the business combination with AOP.

During the six months ended June 30, 1997, the Company entered into the
following non-cash transactions:
     o   incurred goodwill of $2,399,190 in the business combination with JIS;
     o   converted $300,000 of long-term debt to equity in accordance with the
         Berkeley agreement;
     o   converted $500,000 of convertible debentures into 526,000 shares of
         common stock;


                                       12
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998
        COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 1997


The following discussion should be read in conjunction with the condensed
consolidated financial statements of The Judge Group, Inc. (the "Company") and
related notes thereto appearing elsewhere in this Report.

OVERVIEW

The Company achieved overall revenue growth rates of 6.7% for the six months
ended June 30, 1998, compared to the prior year period, with all four of the
Company's businesses experiencing revenue growth. In the Company's Contract
Placement business, revenues increased by 4.6% in the six months ended June 30,
1998 compared to the prior year period. This growth rate was below Company
expectations due to the effect of sales and recruiting personnel turnover
experienced in the second half of 1997. To date, the Company has increased its
sales and marketing staffs to its 1997 levels and believes it has addressed its
turnover problem, although new hires historically have taken approximately two
quarters to become productive. As a result of the addition of sales and
recruiting staff during the first six months of 1998, operating income in the
Contract Placement business decreased by 12.2% in the six months ended June 30,
1998 compared to the prior year period. During the six months ended June 30,
1998, the Contract Placement business relocated part of its staff from
Foxborough, Massachusetts to Needham, Massachusetts to better serve the
Metropolitan Boston area and incurred certain expenses related to this office
opening. The Company anticipates that this will help it to continue to attract
and retain experienced staff and to better service its clients. The Company also
opened offices in Raleigh, North Carolina, and Tampa and Jacksonville, Florida.
The Contract Placement business is also seeking to leverage the resources of the
current office in Tampa, Florida by the Permanent Placement business unit.
However, due to the addition of new sales and recruiting staff to replace those
that left in the National and Boston offices and the opening of new offices, the
trend of reduced operating income margin will continue for the balance of 1998.
As a result of the reduced operating margin for the Contract Placement business,
management is re-evaluating its current operating expenses with a goal of
reducing overhead.

On March 5, 1998, the Company's Contract Placement business purchased
substantially all of the assets of Information Solutions, Inc. and ISI Systems,
Inc. (together "ISI"), a company engaged in the IT placement business in the
Detroit, Michigan area. Revenues for ISI are included in the accompanying
condensed consolidated financial statements from March 1, 1998 through June 30,
1998. The Company's Permanent Placement business acquired, effective March 31,
1998, substantially all of the assets of Cella Associates of Atlanta, Inc.
("Cella"), a company engaged in the placement of professional and executive
personnel to certain segments of the food industry. Revenues generated from
Cella have been included in the Company's consolidated financial statements
since April 1, 1998. During the first six months of 1998, the Company's
Information Management Services business acquired substantially all of the
assets of three companies. The revenues associated with these acquisitions were
included in the six months ended June 30, 1998 results only from the dates of
their acquisitions. On May 11, 1998, On-Site Solutions of Irvine, California, a
west coast systems integration company specializing in imaging, document
management and workflow solutions, was acquired. As of May 31, 1998, AOP
Solutions, a New York based office and information management solutions company
was acquired. On June 19, 1998, Corebridge Technologies, a west coast FileNet
systems integration company specializing in document management, imaging and
workflow solutions was acquired.

During the first six months of 1998, the Company's Information Management
Services business incurred an operating loss of $860,000 compared to a loss of
$1,283,000 in the prior year period. This decrease in operating loss was
primarily attributable to increased gross profit margins which is a result of
emphasizing service revenue. The Company will continue to adjust its pricing and
cost structure in its Information Management Services business in order to
attempt to achieve profitability. While the Company believes that the
Information Management Services business will ultimately achieve sustained
profitability, it cannot predict the timing of such profitability. Due to the
unpredictability of when this business unit will achieve profitability and the
losses sustained to date, the Company has decided to dispose of this business
unit. This unit will continue to operate as an on-going concern until the
Company adopts a plan of disposition.


                                       13
<PAGE>

The following table presents the net revenue (net of intercompany eliminations)
and the income (loss) from operations attributable to each of the Company's
businesses, in dollars and as a percentage of net revenues, for the periods
indicated:

<TABLE>
<CAPTION>
                                              SIX MONTHS ENDED JUNE 30,                 THREE MONTHS ENDED JUNE 30,
                                      -----------------------------------------    ----------------------------------------
(Dollars in thousands)                       1998                    1997                  1998                  1997
                                      --------------------    -----------------    ------------------    ------------------
<S>                                     <C>         <C>       <C>        <C>       <C>         <C>       <C>         <C>
 Net Revenues:
   Permanent Placement                  $ 5,394      10.2%    $ 4,083      8.3%    $ 3,159      11.4%    $ 2,153       8.3%
   Contract Placement                    37,715      71.3%     36,068     72.8%     19,680      70.8%     18,232      70.0%
   Imaging and Network Services           8,291      15.7%      8,062     16.2%      4,246      15.3%      4,958      19.0%
   IT Training                            1,466       2.8%      1,328      2.7%        691       2.5%        720       2.7%
                                        -------     ------    -------    ------    -------     ------    -------     ------
 Consolidated Net Revenues              $52,866     100.0%    $49,541    100.0%    $27,776     100.0%    $26,063     100.0%
                                        =======     ======    =======    ======    =======     ======    =======     ======
 Income (loss) From Operations:
   Permanent Placement                  $ 1,167      21.6%    $   630     15.4%    $   822      26.0%    $   332      15.4%
   Contract Placement                     2,735       7.3%      3,116      8.6%      1,381       7.0%      1,957      10.7%
   Imaging and Network Services            (860)    (10.4%)    (1,283)   (15.9%)      (492)    (11.6%)      (332)     (6.7%)
   IT Training                             (348)    (23.7%)      (111)    (8.4%)      (182)    (26.3%)        30       4.2%
   Corporate Overhead Expense            (1,248)       N/A       (984)      N/A       (677)       N/A       (500)       N/A
                                        -------               -------              -------               -------           
 Consolidated Income From Operations    $ 1,446       2.7%    $ 1,368      2.8%    $   852       3.1%    $ 1,487       5.7%
                                        =======     ======    =======    ======    =======     ======    =======     ======
</TABLE>


Included in corporate overhead expense are salaries, benefits and related costs
for the Company's founder and chief executive officer, Martin E. Judge, Jr., and
for corporate level financial, legal, human resources, management information
systems and marketing personnel.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data as a
percentage of consolidated net revenues for each of the periods indicated:

<TABLE>
<CAPTION>

                                                                THREE MONTHS                        SIX MONTHS
                                                                ENDED JUNE 30,                     ENDED JUNE 30,
                                                             1998             1997             1998             1997
                                                             ----             ----             ----             ----
<S>                                                        <C>               <C>              <C>              <C>
Net Revenues                                                100.0%           100.0%           100.0%           100.0%
Cost of Sales  (exclusive of items shown separately          66.2             71.9             67.8             72.9
below)
Selling and Operating                                        19.2             15.0             18.6             16.4
General and Administrative                                   11.5              7.4             10.9              7.9
                                                           ------            -----            -----            -----
Total Costs and Expenses                                     96.9             94.3             97.3             97.2
Income (Loss) From Operations                                 3.1              5.7              2.7              2.8
Interest Income (Expense) and Other, Net                     (0.1)             0.3              0.1             (0.1)
                                                           ------            -----            -----            -----
Income (Loss) Before Income Taxes                             3.0%             6.0%             2.8%             2.7%
                                                           ======            =====            =====            =====
</TABLE>

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997

Net Revenues. Consolidated net revenues increased by 6.6%, or $1.7 million, for
the three months ended June 30, 1998 compared to the prior year period. Revenue
for the Contract Placement business increased by 7.9%, or $1.4 million, for the
three months ended June 30, 1998 compared to the prior year period. Contributing
to the increase in revenues for the Contract Placement business was an increase
in revenue for the Bala Cynwyd, Pennsylvania and Edison, New Jersey offices of
7.6% and 39.3% respectively. Also contributing to the revenue increase was
revenue from the three new offices in Alexandria, Virginia; New York City, New
York; and Detroit, Michigan (acquired in March of 1998) of $2.2 million. These
revenue increases were offset by a decrease in revenues from the New England and
National offices of 28.5% and 9.1% respectively. This decrease was a direct
result of sales and recruiting staffing turnover and to a reduction in
engineering placements. The Company is seeking to emphasize higher margin IT
placement business to supplant the shortfall. The Contract Placement business
has increased its sales and recruiting staffs to 1997 levels and believes it has
addressed this

                                       14
<PAGE>

issue. Turnover during the first half of 1998 has been reduced substantially,
returning to the levels normally experienced prior to 1997. Revenue for the
Permanent Placement business increased by 46.7%, or approximately $1.0 million,
for the three months ended June 30, 1998 compared to the prior year period, due
primarily to an increase in the number of sales recruiters. Also contributing to
the increase in revenues was revenue related to two new locations: Boston,
Massachusetts and New York City, New York; and additional increases in revenue
of approximately $668,000 for its acquisition of Cella Associates on March 31,
1998. Revenue for the Information Management Services business decreased by
14.4%, or approximately $712,000 for the three months ended June 30, 1998
compared to the prior year period. Three acquisitions made during the quarter
contributed revenues of $1.7 million. This decline in revenues was due to lower
sales in existing offices. The IT Training business generated net revenues of
$691,000 for the three months ended June 30, 1998, a slight decrease of
approximately $29,000, or 4.0%, over the prior year period.

Cost of Sales. Consolidated cost of sales decreased by 0.4%, or approximately
$70,000, for the three months ended June 30, 1998 compared to the prior year
period. Cost of sales as a percentage of consolidated net revenues decreased to
66.2% from 71.9%. In the Company's Contract Placement business, cost of sales as
a percentage of its revenue decreased to 76.8% from 78.3% primarily as a result
of the Contract Placement business focusing its sales efforts on higher margin
services. The decline in cost of sales as a percentage of consolidated net
revenues was also attributable to an increase in revenue for the Permanent
Placement business, which has no cost of sales. In the Company's Information
Management Services business, cost of sales as a percentage of its revenue
decreased to 70.3% from 77.6% in the prior year period. The IT Training business
also contributed an additional $400,000 in cost of sales, representing 57.9% of
that business' revenues in the period ended June 30, 1998 compared to $369,000,
or 47.4% of revenues, in the comparable period in 1997. This increase was due
primarily to an increase in IT training laboratories from eight in the first
quarter of 1997 to eleven in the first quarter of 1998, as well as to increased
salary costs for existing trainers and additional trainers to staff the new
laboratories.

Selling and Operating. Consolidated selling and operating expenses increased by
30.8%, or $1.3 million, for the three months ended June 30, 1998 compared to the
prior year period. Of the $1.3 million increase in selling and operating
expense, approximately $729,000, or 52%, represents cost associated with the
acquisition of new offices that did not exist during the three months ending
June 30, 1997. Selling and operating expenses as a percentage of consolidated
net revenues increased to 19.2% from 15.0% for the three months ended June 30,
1998 compared to the prior year period. Selling and operating expenses as a
percentage of revenues for the Contract Placement business increased to 10.6%
from 8.1% for the three months ended June 30, 1998 compared to the prior year
period. This increase was attributable to increased sales and recruiting
personnel expense during the three months ended June 30, 1998 compared to the
three months ended June 30, 1997 as discussed above. The unusually large
turnover in sales and recruiting staff occurred during the second quarter of
1997 in the Boston and National offices and the increase in sales and recruiting
staff of approximately 22.6 %, therefore primarily reflects the restaffing of
those locations. Additional staffing personnel represents the opening of the New
York and Virginia offices as well as the purchase of ISI. Selling and operating
expenses as a percentage of revenues for the Permanent Placement business
decreased to 60.6% from 73.6% for the three months ended June 30, 1998 compared
to the prior year period, which was attributable to management's efforts to
control selling costs. Selling and operating expenses as a percentage of
revenues for the Information Management Services business increased to 23.7%
from 16.3% for the three months ended June 30, 1998 compared to the prior year
period. This is directly related to an increase in sales staff while revenues
decreased by 14.4% from the three months ended June 30, 1998 as compared to the
prior year period. In the IT Training business, selling and operating expenses
increased $31,000, or 17.4%, in the three months ended June 30, 1998 compared to
the prior year period.

General and Administrative. Consolidated general and administrative expenses
increased 57.4%, or $1.2 million, for the three months ended June 30, 1998
compared to the prior year period. Of the $1.2 million increase, approximately
$260,000 relates to acquisitions and the addition of new offices. General and
administrative expenses as a percentage of consolidated net revenues, increased
to 11.5% from 7.4% for the three months ended June 30, 1998 compared to the
prior year period. Contributing to this increase was the expansion of the
Company's corporate staff, specifically management information systems, legal
and human resources personnel hired beginning in the second fiscal quarter of
1997 through the second quarter of 1998 which added to corporate overhead for
the three months ended June 30, 1998 compared to the prior year period. In
addition, the amortization of goodwill increased by $60,000 in the three months
ended June 30, 1998 compared to the prior year period due to a full quarter of
amortization of goodwill from the JIS merger in 1998 which was consummated half
way through 1997's first quarter, and to amortization of goodwill related to
acquisitions starting in March 1998 through the end of the second quarter of
1998. As a result of a new office in New York, the acquisition of ISI, and
additional office space in the Bala Cynwyd, Pennsylvania and Edison, New Jersey
offices, rent expense increased by approximately $167,000 for the three months
ended June 30, 1998 compared to the prior year period. The IT Training business
incurred general and administrative expenses for the three months ended June 30,
1998 of approximately $236,000, or 34.2% of its revenues, compared to $165,000,
or 21.2% of its revenues in the comparable period in 1997 primarily due to
higher administrative salaries during the management transition period from the
first quarter of 1998 as well as to increased rent and depreciation expenses
related to existence of additional training labs.

Interest. Interest expense was $22,000 and $12,000 for the three months ended
June 30, 1998 and 1997, respectively. Interest income was $11,600 and $87,500
for the three months ended June 30, 1998 and 1997, respectively. This lower
interest expense and higher

                                       15
<PAGE>

interest income for the three months ended June 30, 1997 was attributable to the
Company's repayment of its debt following the Offering and the interest earned
on the unused portion of the Offering proceeds. The decrease in interest income
and increase in interest expense for the three months ended June 30, 1998,
compared to the prior year period, reflects the use of the net proceeds from the
Offering to pay for the acquisitions.

Income Taxes. The effective tax rate for the three months ended June 30, 1998 is
higher than the applicable federal statutory tax rate of 34%, primarily due to
the Company's state tax liabilities and certain expenses not deductible for tax
purposes. If the Information Management Services business is able to achieve
profitability, it will be able to utilize approximately $4.2 million (as of
December 31, 1997) in federal tax operating loss carryforwards, which will
expire between 2002 and 2012.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

Net Revenues. Consolidated net revenues increased by 6.7%, or $3.3 million, for
the six months ended June 30, 1998 compared to the prior year period. Revenue
for the Contract Placement business increased by 4.6%, or $1.6 million, for the
six months ended June 30, 1998 compared to the prior year period. Contributing
to the increase in revenues for the Contract Placement business was an increase
in revenue for the Bala Cynwyd, Pennsylvania and Edison, New Jersey offices of
8.6% and 37.4%, respectively. Also contributing to the revenue increase was
revenue from the three new offices in Alexandria, Virginia; New York City, New
York; and Detroit, Michigan (acquired in March of 1998) of $3.1 million. These
revenue increases were offset by a decrease in revenues from the New England and
National offices of 23.8% and 15.4%, respectively. This decrease was a direct
result of sales and recruiting staffing turnover that occurred during the second
quarter of 1997. The Company is seeking to emphasize higher margin IT placement
business to supplant the shortfall. The Contract Placement business has
increased its sales and recruiting staffs to 1997 levels and believes it has
addressed this issue. Turnover during the first half of 1998 has been reduced
substantially, returning to the levels normally experienced prior to 1997.
Revenue for the Permanent Placement business increased by 32.1%, or
approximately $1.3 million, for the six months ended June 30, 1998 compared to
the prior year period due primarily to an increase in the number of sales
recruiters. Also contributing to the increase in revenues was revenue related to
two new locations: Boston, Massachusetts and New York City, New York; and
additional increases in revenue of approximately $668,000 for its acquisition of
Cella Associates on April 1, 1998. Revenue for the Information Management
Services business increased by 2.8%, or approximately $229,000 for the six
months ended June 30, 1998 compared to the prior year period. This increase in
revenues was primarily due to the revenue contributed by the three acquisitions
made during the second quarter of approximately $1.7 million and was
substantially offset by lower revenues in existing offices. The IT Training
business generated net revenues of $1,466,000 for the six months ended June 30,
1998, an increase of approximately $138,000, or 10.4%, over the prior year
period.

Cost of Sales. Consolidated cost of sales increased by 0.6%, or approximately
$200,000, for the six months ended June 30, 1998 compared to the prior year
period. Cost of sales as a percentage of consolidated net revenues decreased to
67.8% from 72.9%. In the Company's Contract Placement business, cost of sales as
a percentage of its revenue decreased to 77.3% from 79.2% primarily as a result
of the Contract Placement business focusing its sales efforts on higher margin
services. The decline in cost of sales as a percentage of consolidated net
revenues was also attributable to an increase in revenue for the Permanent
Placement business, which has no cost of sales. In the Company's Information
Management Services business, cost of sales as a percentage of its revenue
decreased to 71.5% from 78.9% in the prior year period. The IT Training business
also contributed an additional $872,000 in cost of sales, representing 59.4% of
that business' revenues in the period ended June 30, 1998 compared to $697,000,
or 50.0% of revenues, in the comparable period in 1997. This increase was due
primarily to an increase in IT training laboratories from eight in the first
quarter of 1997 to eleven in the first quarter of 1998, as well as to increased
salary costs for existing trainers and additional trainers to staff the new
laboratories.

Selling and Operating. Consolidated selling and operating expenses increased by
15.4%, or $1.3 million, for the six months ended June 30, 1998 compared to the
prior year period. Of the $1.3 million increase in consolidated selling and
operating expense, approximately $729,000, or 56.1%, represents cost associated
with the acquisition of new offices that did not exist during the six months
ending June 30, 1997. Selling and operating expenses as a percentage of
consolidated net revenues increased to 18.6% from 16.4% for the six months ended
June 30, 1998 compared to the prior year period. Selling and operating expenses
as a percentage of revenues for the Contract Placement business increased to
10.3% from 9.2% for the six months ended June 30, 1998 compared to the prior
year period. This increase was attributable to increased sales and recruiting
personnel expense during the six months ended June 30, 1998 compared to the six
months ended June 30, 1997 as discussed above. The unusually large turnover in
sales and recruiting staff occurred during the second quarter of 1997 in the
Boston and National offices and the increase in sales and recruiting staff of
approximately 22.6 % therefore primarily reflects the restaffing of those
locations. Additional staffing personnel represents the opening of the New York
and Virginia offices as well as the purchase of ISI. Selling and operating
expenses as a percentage of revenues for the Permanent Placement business
decreased to 64.3% from 73.8% for the six months ended June 30, 1998 compared to
the prior year period, which was attributable to management's efforts to control
selling costs. Selling and operating expenses as a percentage of revenues for
the Information Management Services business increased slightly to 22.5% from
21.5% for the six months ended June 30, 1998 compared to the prior year

                                       16
<PAGE>

period. This is directly related to an increase in revenues. In the IT Training
business, selling and operating expenses increased approximately $28,000, or
7.5%, in the six months ended June 30, 1998 compared to the prior year period.

General and Administrative. Consolidated general and administrative expenses
increased 42.9%, or $1.7 million, for the six months ended June 30, 1998
compared to the prior year period. Of the $1.7 million increase, approximately
$260,000 relates to acquisitions and the addition of new offices. General and
administrative expenses as a percentage of consolidated net revenues, increased
to 10.9% from 7.9% for the six months ended June 30, 1998 compared to the prior
year period. Contributing to this increase was the expansion of the Company's
corporate staff, specifically management information systems, legal and human
resources personnel hired beginning in the second fiscal quarter of 1997 through
the second quarter of 1998 which added to corporate overhead for the six months
ended June 30, 1998 compared to the prior year period. In addition, the
amortization of goodwill increased by $93,000 in the six months ended June 30,
1998 compared to the prior year period due to a full quarter of amortization of
goodwill from the JIS merger in 1998 which was consummated half way through
1997's first quarter, and amortization of goodwill related to acquisitions
starting in March 1998 through the end of the second quarter of 1998. As a
result of new offices in New York, and additional office space in the Bala
Cynwyd, Pennsylvania and Edison, New Jersey offices, and the acquisition, rent
expense increased by approximately $267,000 for the six months ended June 30,
1998 compared to the prior year period. The IT Training business incurred
general and administrative expenses for the six months ended June 30, 1998 of
approximately $544,000, or 37.1% of its revenues, compared to $434,000, or 32.7%
of its revenues in the comparable period in 1997 primarily due to higher
administrative salaries during the management transition period from the first
quarter of 1998 as well as to increased rent and depreciation expenses related
to existence of additional training labs.

Interest. Interest expense was approximately $31,000 and $191,000 for the six
months ended June 30, 1998 and 1997, respectively. Interest income was
approximately $82,000 and $138,000 for the six months ended June 30, 1998 and
1997, respectively. This higher interest expense and interest income for the six
months ended June 30, 1997 was attributable to the Company's repayment of its
debt following the Offering and the interest earned on the unused portion of the
Offering proceeds. The lower interest income and interest expense for the six
months ended June 30, 1998 reflects the use of the net proceeds from the
Offering to pay for the acquisitions.

Income Taxes. The effective tax rate for the three months ended June 30, 1998 is
higher than the applicable federal statutory tax rate of 34%, primarily due to
the Company's state tax liabilities and certain expenses not deductible for tax
purposes. For the six months ended June 30, 1997 the effective tax rate was
higher than the federal statutory tax rate due to the net operating losses for
the Information Management Services business, which was consolidated for
financial but not for tax reporting purposes in the period January 1, 1997
through February 20, 1997, as well as the Company's state tax liabilities.
However, since the Company's merger with JIS (which includes the Information
Management Services business) on February 20, 1997, this business unit is now
consolidated for tax purposes and any losses generated by the Information
Management Services business are used in the calculation of the Company's income
tax expense or benefit. If the Information Management Services business is able
to achieve profitability, it will be able to utilize approximately $4.2 million
(as of December 31, 1997) in federal tax operating loss carryforwards, which
will expire between 2002 and 2012.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's need for working capital has increased as its
revenues have grown and it has used borrowings under its credit facility to fund
working capital. In February 1997, the Company's working capital increased
substantially as a result of the receipt of the proceeds from its initial public
offering. The Company has used the net proceeds from the Offering as well as its
cash flow from operations to fund its working capital needs. In June 1998, the
Company utilized $2,500,000 in borrowings under its line of credit to fund a
portion of the cost of its acquisitions. The Company typically maintains minimal
cash balances, however a portion of the borrowings remained in its account until
the first business day in July 1998 which resulted in cash and cash equivalents
of $2.6 million as of June 30, 1998. The Company redeemed its short term
investments of approximately $5.5 million held at December 31, 1997 and used the
proceeds to acquire substantially all of the assets of ISI and Cella.

The Company generated cash from operations of $8.3 million and $2.9 million for
the six months ended June 30, 1998 and 1997, respectively. This result is
attributable to several factors, including an increase in net income of $230,000
in the six months ended June 30, 1998 compared to the same period in 1997, the
redemption of the short term investments mentioned above, and an increase in
accounts payable and accrued expenses primarily related to the recent
acquisitions. As discussed in Note 3 in the accompanying condensed consolidated
financial statements, the Company has issued common stock as part of the
purchase price of some of its acquisitions with a guarantee that the market
price of such stock will equal or exceed specified prices per share at future
dates. If the determination dates were June 30, 1998, then based on the market
price of the stock at June 30, 1998, the Company would have to make a cash
payment approximately equal to the amount reflected as "Other Liabilities" on
its balance sheet to meet that condition.

Cash purchases of fixed assets for the six months ended June 30, 1998 were $1.7
million compared to purchases of $700,000 in the comparable period in the prior
year. These purchases were related primarily to the purchases of computers,
software, and imaging

                                       17
<PAGE>

equipment to upgrade the Company's technology infrastructure, as well as the
furnishing of new office facilities. The Company used $6.9 million to complete
all of its acquisitions and an additional $477,000 to repay the bank debts
assumed in two of its acquisition. In the first quarter of 1997 the Company
received repayment of its loans to officers and related parties in the aggregate
amount of $577,000.

In the six months ended June 30, 1998 the Company repaid the remaining $238,000
balance outstanding on the notes payable related to the Berkeley acquisition,
and repurchased as treasury stock 40,000 common shares, at a price of $5.50 per
share, which had been issued to the stockholders of Berkeley in lieu of $300,000
notes payable at the completion of the initial public offering.

The Company has available a $25.0 million revolving advance facility (the "Line
of Credit") with PNC Bank, N.A. The Line of Credit expires on May 31, 2003. This
facility allows the Company to borrow the lesser of 85% of eligible accounts
receivable or $25.0 million. As of June 30, 1998 the Company had $2.5 million
outstanding against the Line of Credit. The Line of Credit is secured by
substantially all of the Company's assets and contains customary restrictive
covenants, including limitations on loans the Company may extend to officers and
employees, the incurring of additional debt and the payment of dividends on the
Company's common shares. The Line of Credit bears interest, at the Company's
option, at either the bank's prime rate or 200 basis points over the London
Inter-Bank Offered Rate ("LIBOR").

The Company anticipates that its primary uses of capital in future periods will
be to finance additional acquisitions, fund increases in accounts receivable and
fund internal growth through new office locations. The Company believes that
borrowings under the Line of Credit, or other credit facilities which may be
available to the Company in the future, will be sufficient to meet the Company's
capital needs for at least the next twelve months.

FORWARD LOOKING INFORMATION

This report and other reports and statements filed by the Company from time to
time with the Securities and Exchange Commission (collectively, "SEC Filings")
contain or may contain certain forward-looking statements and information that
are based on beliefs of, and information currently available to, the Company's
management as well as estimates and assumptions made by the Company's
management. When used in SEC Filings, the words "anticipate," "believe,"
"estimate," "expect," "future," "intend," "plan" and similar expressions as they
relate to the Company or the Company's management, identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the Company's operations and results of operations,
competitive factors and pricing pressures, shifts in market demand, the
performance and needs of the industries served by the Company, and other risks
and uncertainties, including, in addition to any uncertainties specifically
identified in the text surrounding such statements and those identified below,
uncertainties with respect to changes or developments in social, economic,
business, industry, market, legal and regulatory circumstances and conditions
and actions taken or omitted to be taken by third parties, including the
Company's stockholders, customers, suppliers, business partners, competitors,
and legislative, regulatory, judicial and other governmental authorities and
officials. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may vary
significantly from those anticipated, believed, estimated, expected, intended or
planned.

Dependence on Availability of Qualified Technical Consultants The Company is
dependent upon its ability to attract and retain technical consultants who
possess the skills and experience necessary to meet the staffing requirements of
its clients. To keep pace with rapidly evolving information technologies and
changing client needs, the Company must continually evaluate and upgrade its
database of available qualified technical consultants. Competition for
individuals with proven technical skills is intense, and, as is currently
customary in the industry, the Company does not have any exclusive contracts
with its consultants. The Company competes for such individuals with other
providers of technical staffing services, systems integrators, providers of
outsourcing services, computer systems consultants, clients and temporary
personnel agencies. Factors influencing such competition include compensation,
benefits, growth opportunities and pre-existing relationships with other
companies, particularly specialty staffing companies. As the Company expands
into new geographic areas, it may experience difficulty attracting qualified
technical consultants who have a prior relationship or familiarity with more
established specialty staffing companies in such areas. There can be no
assurance that qualified technical consultants will continue to be available to
the Company in sufficient numbers to meet the Company's current and anticipated
growth requirements.

Ability to Manage Growth Sustained or significant growth, if achieved, will
subject the Company to risks by placing a substantial strain on the Company's
available managerial, financial and other resources. Specifically, such growth
will require the Company to: (i) hire, integrate and retain qualified managers,
sales personnel and recruiters in existing markets as well as markets in which
the Company has no prior operating experience; (ii) develop and maintain
relationships with an increasingly large number of highly qualified technical
consultants; and (iii) apply its management practices to a significantly larger
organization. Expansion beyond the geographic areas where the Company's offices
are presently located will further increase demands on the Company's management.
The Company's ability to manage its staff and facilities growth effectively will
require it to continue to expand its operational, financial and other internal
systems. There can be no assurance that the Company's systems, procedures and
controls will be successfully implemented or adequate to support the Company's
expanded operations. Furthermore, an element of the Company's business strategy
is to cross-sell the existing services of its

                                       18
<PAGE>

four businesses to new and existing clients. Historically, these businesses have
operated independently, producing only occasional referrals, and there can be no
assurance that the Company will successfully market such services on an
integrated basis.

Acquisition Risks A principal component of the Company's growth strategy is the
acquisition of companies that will complement and expand the Company's existing
businesses, principally in new geographic markets. The successful implementation
of this strategy is dependent on the Company's ability to identify suitable
acquisition candidates, acquire such companies on suitable terms and integrate
their operations with those of the Company. There can be no assurance that the
Company will be able to identify suitable acquisition candidates or that, if
identified, the Company will be able to acquire such companies on suitable
terms. The specialty staffing industry is relatively mature. Acquisitions in
this industry are therefore likely to be at higher relative prices than for
other industries due to competition from other staffing companies for
acquisition candidates. Acquisitions also involve a number of special risks,
including: (i) adverse effects on the Company's reported operating results,
including increased goodwill amortization and interest expense; (ii) diversion
of management attention; (iii) risks associated with unanticipated problems,
liabilities or contingencies; and (iv) difficulties related to the integration
of the acquired business. The occurrence of some or all of the events described
in these risks could have a material adverse effect on the Company's business,
financial condition and results of operations.

History of Operating Losses in Information Management Services Business The
Company's Information Management Services business has had net operating losses
since its commencement in 1988, experienced a loss from operations of
approximately $860,000 for the six month period ended June 30, 1998, and at June
30, 1998 had an accumulated deficit of $5.7 million. The losses have resulted
from high marketing and general and administrative costs associated with
building the company's imaging and document management infrastructure and
capabilities, combined with historically low profit margins related to the
hardware component of the networking business and a slower emergence of the
imaging and document management market than anticipated by the Company.
Specifically, the costs associated with building this division's imaging and
document management capabilities have included the hiring of sales and technical
personnel, and the costs associated with the acquisition and integration of one
imaging and document management company. The Company is currently focusing on
achieving profitability in its Information Management Services business and
expanding it through internal growth, new service offerings and acquisitions,
but cannot provide any assurances as to when it will achieve sustained
profitability, if at all. Typically, the decision by a prospective customer to
install a network or to implement a document management system requires the
Company to engage in a lengthy and complex sales cycle and involves a
significant commitment of resources by the customer over an extended period of
time. For these and other reasons, the sales and implementation cycles are
subject to a number of significant delays over which the Company has little or
no control. Even if it increases sales, there can be no assurance that the
Information Management Services business will achieve a pricing and cost
structure that will generate sustained profits, or that the Company will be able
to identify and acquire appropriate acquisition candidates on favorable terms.
Failure of the Information Management Services business to grow through internal
expansion and favorable acquisitions or to achieve profitability would have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, if the Information Management Services
business is unable to achieve sustained profitability, it will not realize the
federal tax benefit of its $4.2 million operating loss carryforward at December
31, 1997 which will expire between 2002 and 2011. Moreover, the Company has
announced its intention to dispose of the Information Management Services
business. As a result, the Company might not be able to realize the benefit of
its net operating losses, or it may be forced to recognize a loss on the sale or
disposition. The Company has not yet determined the final effect this
disposition may have on its operations or financial condition.

Dependence on Contract Placement Business The Company's Contract Placement
business was responsible for 80.3%, 75.0% and 71.4% of total Company revenues
for the years ended December 31, 1995, 1996 and 1997, respectively. In addition,
for the years ended 1996 and 1997, one customer of the Contract Placement
business, Merck, accounted for approximately 10.0% and 9.8% of total Contract
Placement revenues, respectively, and 7.5% and 7.0% of total Company revenues,
respectively. There can be no assurance that the Company will be able to retain
this level of revenue from this client. The ability of the Company to sustain or
increase revenues in the Contract Placement business is subject to various
factors, including its ability to attract and retain qualified technical
consultants, to hire, integrate and retain qualified managers, recruiters and
sales personnel in existing and new markets and to apply its management
practices to a significantly larger organization. There can be no assurance that
the Company will be able to sustain or increase its Contract Placement revenues.
Furthermore, a decline in the level of Contract Placement revenues would have a
material adverse effect on the Company.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.


                                       19
<PAGE>

                                     PART II
                                     -------

       ITEM 6.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

       (a) The following exhibits are filed as a part of this Quarterly Report
           on Form 10-Q.

Exhibit No.    Description of Document

    2.1        Agreement and Plan of Merger, among the Company, Judge
               Acquisition, Inc. and Judge Imaging Systems, Inc. Incorporate by
               reference to Exhibit 2.1 to the Registrant's Form S-4 (File No.
               333-13753) originally filed on October 9, 1996, as amended.

    3.1        Amended and Restated Articles of Incorporation. Incorporated by
               reference to Exhibit 3.1 of the Registrant's Form S-1 (File No.
               333-13109) originally filed on September 30, 1996, as amended.

    3.2        Bylaws. Incorporated by reference to Exhibit 3.2 of the Form S-1.

    4.2        Form of common stock certificate for Company Common Shares.
               Incorporated by reference to Exhibit 4.2 of the Form S-1.

    4.3        First Modification to Fourth Amended and Restated Loan and
               Security Agreement, dated April 24, 1998, between the Company and
               PNC Bank.

   10.1        Employment Agreement between The Judge Group, Inc. and Frank
               Barrett

   10.2        Asset Purchase Agreement by and between Judge, Inc. and Cella
               Associates of Atlanta, Inc.

   10.3        Asset Purchase Agreement by and between Judge Imaging Systems,
               Inc., Automated Office Products of Western New York, Inc. D/B/A
               AOP Solutions, and Paul F. Eckert and Suzanne Eckert

   11.1        Statement re Computation of Earnings Per Share.

   27.1        Financial Data Schedule.


                                   SIGNATURES

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



Dated:  August 4, 1998

         THE JUDGE GROUP, INC.                 THE JUDGE GROUP, INC.


         By: /s/Frank Michael Barrett          By: /s/Martin E. Judge, Jr.
                -----------------------               -------------------------
                Frank Michael Barrett                 Martin E. Judge, Jr.
                Chief Financial Officer               Chairman of the Board and
                                                      Chief Executive Officer

                                       20