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



                                    FORM 10-Q

(Mark one)
[X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
       THE SECURITIES EXCHANGE ACT OF 1934
       For the quarterly period ended March 31, 2004
                                      --------------

                                       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 Number 0-19824
                                                -------

                      Nutrition Management Services Company
                      -------------------------------------
             (Exact name of registrant as specified in its charter)

  Pennsylvania                                                  23-2095332
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

   Box 725, Kimberton Road, Kimberton, PA                           19442
--------------------------------------------------------------------------------
  (Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code (610) 935-2050
                                                   -----------------------------
                                       N/A
--------------------------------------------------------------------------------
 Former name, former address and former fiscal year, if change since last report.

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

2,747,000  Shares of Registrant's  Class A Common Stock,  with no par value, and
100,000  shares of  Registrant's  Class B Common Stock,  with no par value,  are
outstanding as of May 17, 2004.





                                TABLE OF CONTENTS


Part I.       Financial Information                                    Page No.
              ---------------------                                    -------

              Consolidated Balance Sheets as of
              March 31, 2004 (unaudited) and June 30, 2003               2-3

              Consolidated Statements of Operations for the
              Three and Nine Months Ended March 31, 2004 and 2003
              (unaudited)                                                4

              Consolidated Statements of Cash Flows for the
              Nine Months Ended March 31, 2004
              and 2003 (unaudited)                                       5

              Notes to Consolidated Financial Statements                 6-10

              Management's Discussion and Analysis of Financial
              Condition and Results of Operations                        11-15

              Item 4 - Controls and Procedures                           16

Part II.      Other Information                                          17

              Signatures                                                 18


                                       1




                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                             March 31,        June 30,
                                                               2004             2003
                                                            -----------     -----------
                                                            (unaudited)

Current assets:
   Cash and cash equivalents                                $ 1,240,680     $ 1,360,512
   Accounts receivable, net of allowance for doubtful
   accounts of $2,472,326  and $2,292,326, respectively       2,676,731       2,843,764
   Accrued income                                               124,311          51,147
   Deferred income taxes                                      1,209,454       1,209,454
   Inventory                                                    151,995         155,945
   Prepaid and other                                            390,544         365,558
   Income tax refund                                             63,348          63,348
                                                            -----------     -----------
Total current assets                                          5,857,063       6,049,728
                                                            -----------     -----------
Property and equipment, net                                   7,690,325       8,103,456
                                                            -----------     -----------

Other assets:
   Notes Receivable                                             124,833         136,110
   Advances to employees                                        435,283         435,283
   Deferred income taxes                                        212,687         212,687
   Bond issue costs                                             187,849         195,430
   Deferred costs and other assets                               11,322          10,020
                                                            -----------     -----------
Total other assets                                              971,974         989,530
                                                            -----------     -----------

                                                            $14,519,362     $15,142,714
                                                            ===========     ===========


            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                        2




                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                                   March 31,          June 30,
                                                                                     2004               2003
                                                                                 ------------      ------------
                                                                                 (unaudited)
Current liabilities:
     Current portion of long-term debt                                           $    147,174      $    196,813
     Current portion of note payable                                                  238,700           575,687
     Accounts payable                                                               2,969,983         2,883,496
     Accrued expenses                                                                 172,929           303,756
     Accrued payroll and related expenses                                             221,170           246,622
     Other                                                                            180,344           116,880
                                                                                 ------------      ------------

Total current liabilities                                                           3,930,300         4,323,254
                                                                                 ------------      ------------

Long-Term liabilities:
    Long-term debt, net of current portion                                          5,471,922         5,184,891
    Long Term Note Payable                                                              - 0 -           154,452
                                                                                 ------------      ------------

Total long-term liabilities                                                         5,471,922         5,339,343

Stockholders' equity:
    Undesignated preferred stock - no par, 2,000,000 shares authorized, none
            issued or outstanding                                                          --                --

     Common stock:
     Class A - no par, 10,000,000 shares authorized; 3,000,000 issued and
               2,747,000 outstanding, respectively                                  3,801,926         3,801,926
     Class B - no par, 100,000 shares authorized, issued and outstanding                   48                48
     Retained earnings                                                              1,814,729         2,177,706
                                                                                 ------------      ------------
                                                                                    5,616,703         5,979,680

     Less:  treasury stock (Class A common: 253,000 shares) - at cost                (499,563)         (499,563)
                                                                                 ------------      ------------

Total stockholders' equity                                                          5,117,140         5,480,117
                                                                                 ------------      ------------
                                                                                 $ 14,519,362      $ 15,142,714
                                                                                 ============      ============

            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                        3




                      NUTRITION MANAGEMENT SERVICES COMPANY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                  Three months ended                      Nine months ended
                                                       March 31,                               March 31,

                                                  2004              2003             2004                2003
                                             ------------      ------------      ------------      ------------
Food Service Revenue                         $  7,141,972      $  6,358,301      $ 21,024,382      $ 20,781,354

Cost of operations
     Payroll and related expenses               2,926,771         2,645,415         8,288,901         8,266,690
     Other costs of operations                  2,873,948         2,615,696         8,741,337         8,887,074
                                             ------------      ------------      ------------      ------------
          Cost of operations                    5,800,719         5,261,111        17,030,238        17,153,764

Gross profit                                    1,341,253         1,097,190         3,994,144         3,627,590
                                             ------------      ------------      ------------      ------------

Expenses
     General and administrative expenses        1,202,066         1,071,604         3,569,531         3,332,037
     Depreciation and amortization                152,398           201,808           462,343           615,614
     Provision for doubtful accounts               60,000            85,999           180,000           278,261
                                             ------------      ------------      ------------      ------------
          Expenses                              1,414,464         1,359,411         4,211,874         4,225,912
                                             ------------      ------------      ------------      ------------

(Loss) from operations                            (73,211)         (262,221)         (217,730)         (598,322)
                                             ------------      ------------      ------------      ------------

Other (expense) income
      Other                                        (4,624)           (4,508)          (13,642)          (25,137)
     Interest income                                3,067             3,832             6,623             7,859
     Interest expense                             (45,610)          (43,862)         (138,234)         (148,321)
                                             ------------      ------------      ------------      ------------
          Other (expense) income - net            (47,167)          (44,538)         (145,253)         (165,599)
                                             ------------      ------------      ------------      ------------

(Loss) before income taxes                       (120,378)         (306,759)         (362,983)         (763,921)

Provision for income taxes                              0                 0                 0                 0
                                             ------------      ------------      ------------      ------------

Net Loss                                     $   (120,378)         (306,759)     $   (362,983)     $   (763,921)
                                             ============      ============      ============      ============

Basic and diluted loss
      - basic and diluted                    $       (.04)     $       (.11)     $       (.13)     $       (.27)
                                             ============      ============      ============      ============


Weighted average number of shares               2,847,000         2,847,000         2,847,000         2,847,000
                                             ============      ============      ============      ============



            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                        4




                      NUTRITION MANAGEMENT SERVICES COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                              Nine Months Ended
                                                                                    March  31,
                                                                               2004           2003
                                                                          -----------      -----------

Operating activities:
Net (loss)                                                                ($  362,983)     ($  763,921)
Adjustments to reconcile net (loss) to net cash provided by/(used in)
operating activities:
     Depreciation and amortization                                            462,343          615,614
     Provision for bad debts                                                  180,000          278,261
     Amortization of bond costs                                                10,923           10,923

Changes in assets and liabilities:
     Accounts receivable                                                       (1,690)       1,107,890
     Accrued income                                                           (73,164)        (140,666)
     Inventory and other                                                      (22,338)          72,083
     Accounts payable                                                        (250,500)        (276,169)
     Accrued expenses                                                        (110,383)        (146,451)
     Accrued payroll and related expenses                                     (25,452)          37,622
     Accrued professional                                                     (20,444)         (26,083)
     Accrued incomes taxes                                                         (0)          (9,691)
     Other                                                                     60,129         (128,213)
                                                                          -----------      -----------
Net cash (used in) / provided by operating activities                        (153,558)         631,198
                                                                          -----------      -----------

Investing activities:
     Repayment (Advances) to employees                                              0           86,363
     Purchase of property and equipment                                       (49,212)         (70,587)
                                                                          -----------      -----------
     Net cash (used in) /provided by investing activities                     (49,212)          15,776
                                                                          -----------      -----------

Financing activities
     Repayments of long-term borrowing                                     (2,664,000)      (1,386,900)
     Repayments of long-term payable                                         (154,452)         (84,247)
     Repayments of term loan                                                  (53,609)         (49,768)
     Proceeds from long term borrowing                                      2,955,000        1,099,900
                                                                          -----------      -----------
Net cash (used in) / provided by financing activities                          82,939         (421,015)
                                                                          -----------      -----------
  Net (decrease)/increase in cash and cash equivalents                       (119,832)         225,959
                                                                          -----------      -----------
Cash and cash equivalents - beginning of period                             1,360,512          593,310
                                                                          -----------      -----------
Cash and cash equivalents - end of period                                 $ 1,240,680      $   819,269
                                                                          ===========      ===========


Supplemental disclosure of cash flow information:
Cash paid during the period for:
     Interest                                                             $   138,144      $   152,393
     Income taxes                                                         $     2,040      $   (15,644)



            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                        5




                      NUTRITION MANAGEMENT SERVICES COMPANY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2004


1.  BASIS OF PRESENTATION

    The accompanying  unaudited  consolidated financial statements were prepared
    in accordance  with  generally  accepted  accounting  principles for interim
    financial information for quarterly reports on Form 10-Q and, therefore,  do
    not include  all of the  information  and  footnotes  required by  generally
    accepted accounting principles for complete financial  statements.  However,
    all  adjustments  that, in the opinion of management  are necessary for fair
    presentation of the financial statements, have been included. The results of
    operations for the interim periods presented are not necessarily  indicative
    of the results that may be expected  for the entire  fiscal year ending June
    30, 2004. The financial  information presented should be read in conjunction
    with the  Company's  2003  financial  statements  that were filed under Form
    10-K.

2.  NEW ACCOUNTING PRONOUNCEMENTS

    In May 2003,  the FASB issued  Statement  No. 150,  "Accounting  for Certain
    Financial  Instruments with  Characteristics of both Liabilities and Equity"
    ("SFAS  150").  SFAS 150  clarifies  the  accounting  for certain  financial
    instruments  that,  under  previous  guidance,  issuers could account for as
    equity.   SFAS  150  requires  that  those   instruments  be  classified  as
    liabilities in statements of financial  position.  SFAS 150 is effective for
    all financial  instruments  entered into or modified after May 31, 2003, and
    otherwise  is  effective  at the  beginning  of  the  first  interim  period
    beginning after June 15, 2003. To date, the adoption of this  interpretation
    did not have an effect on the  Company's  financial  position  or results of
    operations.

    In April 2003,  the FASB issued  Statement No. 149,  "Amendment of Statement
    133 on Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149
    amends SFAS No. 133,  "Accounting  for  Derivative  Instruments  and Hedging
    Activities" to clarify the financial accounting and reporting for derivative
    instruments  and  hedging  activities.  SFAS  149  is  intended  to  improve
    financial reporting by requiring  comparable  accounting methods for similar
    contracts.  SFAS 149 is  effective  for  contracts  entered into or modified
    subsequent to June 30, 2003. The  requirements of SFAS 149 do not affect the
    Company's   current   accounting  for  derivative   instruments  or  hedging
    activities; therefore, it has no effect on the Company's financial condition
    or results of operations.

    In January 2003 the FASB issued FIN 46,  "Consolidation of Variable Interest
    Entities" ("FIN 46"). This  interpretation  of Accounting  Research Bulletin
    No. 51,  "Consolidated  Financial  Statements,"  addresses  consolidation by
    business  enterprises of certain variable interest entities where there is a
    controlling  financial  interest in a variable  interest entity or where the
    variable  interest  does not have  sufficient  equity at risk to finance its
    activities  without  additional  subordinated  financial  support from other
    parities. The interpretation applies in the first year or


                                        6




                      NUTRITION MANAGEMENT SERVICES COMPANY

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2004

2.  NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED

    interim  period  beginning  after  January 31, 2003 and applies in the first
    year or interim period  beginning  after June 15, 2003 to variable  interest
    entities in which an enterprise  holds a variable  interest that it acquired
    before   February  1,  2003.  The  Company  will  apply  the   consolidation
    requirement  of FIN 46 in  future  periods  if the  Company  should  own any
    interest in any variable interest entity.

3.  Earnings Per Common Share

    Earnings per common share amounts are based on the  weighted-average  number
    of  shares of  common  stock  outstanding  during  the three and nine  month
    periods  ended March 31, 2004 and 2003.  Stock  options and warrants did not
    impact earnings per share each period as they were anti-dilutive.

4.  LITIGATION

    On February 7, 2001,  NMSC filed a suit  against a major client in the Court
    of Common  Pleas in Chester  County,  PA.  This suit has  subsequently  been
    removed to the United  States  District  Court for the  Eastern  District of
    Pennsylvania.  In the lawsuit, NMSC has made various claims, including among
    others a claim that the client failed to pay  approximately  $2.1 million in
    invoiced  amounts,  a claim that the client failed to pay  approximately  $1
    million in other amounts owing, a claim for reimbursement for start up costs
    in an  amount in excess of  $400,000,  a claim for over $2  million  in lost
    profits (or,  alternatively,  a claim for reimbursement for over $300,000 in
    credits  issued in exchange  for the promise to extend the  arrangement),  a
    claim in the nature of treble  damages and counsel  fees,  and other claims.
    The client has filed a counterclaim  which the Company is contesting as part
    of the  overall  proceedings.  Although it is not  possible to predict  with
    certainty  the  outcome of these  unresolved  legal  actions or the range of
    possible  loss or recovery,  the Company  believes  these  unresolved  legal
    actions will not have a material adverse effect on its financial position or
    results of operations.

    In addition to the  litigation  described  above,  the Company is exposed to
    asserted and unasserted claims. In the opinion of management, the resolution
    of these  matters will not have a material  adverse  effect on the Company's
    financial position, results of operations or cash flows.


                                        7




                      NUTRITION MANAGEMENT SERVICES COMPANY

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2004

5.  BUSINESS SEGMENTS

    The Company follows the disclosure  provisions of SFAS No. 131,  Disclosures
    about Segments of an Enterprise  and Related  Information.  This  management
    approach  focuses  on  internal  financial   information  that  is  used  by
    management to assess performance and to make operating  decisions.  SFAS No.
    131 also requires  disclosures about products,  services,  geographic areas,
    and major customers.

    The Company's  reportable  segments are (1) food service  management and (2)
    training and conference center.  The Company reports segment  performance on
    an after tax  basis.  Deferred  taxes are not  allocated  to  segments.  The
    management  accounting  policies and processes utilized in compiling segment
    financial   information  are  highly   subjective   and,  unlike   financial
    accounting,  are not based on  authoritative  guidance similar to accounting
    principals  generally accepted in the United States of America. As a result,
    reported  segment  results  are  not  necessarily  comparable  with  similar
    information reported by other similar companies.


                                                  Food Service    Training and
                                                  Management      Conference Center        Total
                                                  ----------      -----------------        -----

     For the quarter ended Mar. 31, 2004:
       Food service revenue                     $  6,925,999      $    215,973      $  7,141,972
       Depreciation and amortization                  28,291           124,107           152,398
       Income (loss) from operations                 218,387          (291,598)          (73,211)
       Interest income                                 3,067                 0             3,067
       Interest expense                              (28,667)          (16,943)          (45,610)
       Income (loss) before taxes (benefit)          192,675          (313,053)         (120,378)
       Net income (loss)                             192,675          (313,053)         (120,378)
       Total assets                                6,515,902         8,003,460        14,519,362



                                                  Food Service    Training and
                                                  Management      Conference Center        Total
                                                  ----------      -----------------        -----

     For the quarter ended Mar. 31, 2003:
       Food service revenue                     $  6,212,344      $    145,957      $  6,358,301
       Depreciation and amortization                  73,927           127,881           201,808
       Income (loss) from operations                 157,066          (419,287)         (262,221)
       Interest income                                 3,832                 0             3,832
       Interest expense                              (25,146)          (18,716)          (43,862)
       Income (loss) before taxes (benefit)          135,752          (442,511)         (306,759)
       Net income (loss)                             135,752          (442,511)         (306,759)
       Total assets                                7,280,692         8,476,017        15,756,709


                                             8




                      NUTRITION MANAGEMENT SERVICES COMPANY

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2004

5.  BUSINESS SEGMENTS - CONTINUED


                                                  Food Service    Training and
                                                  Management      Conference Center            Total
                                                  ----------      -----------------            -----
For the nine months ended Mar. 31, 2004:
  Food service revenue                          $ 20,329,434         $    694,948         $ 21,024,382
  Depreciation and amortization                       89,735              372,608              462,343
  Income (loss) from operations                      783,432           (1,001,162)            (217,730)
  Interest income                                      6,615                    8                6,623
  Interest expense                                   (86,424)             (51,810)            (138,234)
  Income (loss) before taxes (benefit)               703,511           (1,066,493)            (362,983)
  Net income (loss)                                  703,511           (1,066,493)            (362,983)


                                                  Food Service    Training and
                                                  Management      Conference Center            Total
                                                  ----------      -----------------            -----

For the nine months ended Mar. 31, 2003:
  Food service revenue                          $ 20,168,296         $    613,058         $ 20,781,354
  Depreciation and amortization                      223,163              392,451              615,614
  Income (loss) from operations                      577,349           (1,175,671)            (598,322)
  Interest income                                      7,859                    0                7,859
  Interest expense                                   (85,768)             (62,553)            (148,321)
  Income (loss) before taxes (benefit)               487,828           (1,251,749)            (763,921)
  Net income (loss)                                  487,828           (1,251,749)            (763,921)


                                        9




                      NUTRITION MANAGEMENT SERVICES COMPANY

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2004

6.  REVOLVING CREDIT FACILITY

    In February  2001,  the Company  executed a loan agreement with a bank for a
    revolving credit and two irrevocable letters of credit issued in conjunction
    with the issuance of the Industrial Revenue Bonds,  totaling  $4,000,000 and
    $3,065,000,  respectively.  In March 2003, the revolving credit was extended
    from  March 31,  2004 to  December  31,  2004 and the  letters of credit are
    available  for four years  with  annual  renewals.  At March 31,  2004,  the
    Company had available  approximately  $568,078  under the revolving  credit.
    Advances under the revolving credit are used for working capital purposes.

    These credit  agreements  contain  covenants  that include the submission of
    specified  financial  information and the maintenance of insurance  coverage
    for the pledged  assets  during the term of the loans.  The  covenants  also
    include the maintenance of a certain fixed coverage ratio, total liabilities
    to  consolidated   tangible  net  worth,   and  minimum   working   capital.
    Compensating  balances required for these credit agreements totaled $655,102
    as of June 30, 2003.

    At June 30, 2003 the Company was not in compliance with these covenants.  On
    October 20,  2003,  the Company  entered  into an amended  credit  agreement
    whereby the  non-compliance  at June 30,  2003 was waived and new  financial
    covenants were negotiated through June 30, 2004, which reflect the Company's
    current operating projections.  As a condition of obtaining said waivers and
    amendments,  the Loan Facility  availability  was reduced from $4,000,000 to
    $3,500,000 and $500,000 was placed in a cash collateral  account and pledged
    as additional  collateral  against the revolver  note. At March 31, 2004 the
    Company was current  with all its  obligations  to its bank and on its bonds
    and has met all financial covenants in its loan documents.

    The maturity date of the revolving credit facility has been extended to June
    30, 2005.


                                       10



           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

     The following  discussion and analysis  should be read in conjunction  with
the financial statements and notes thereto.

FORWARD LOOKING STATEMENTS

     This Form 10-Q contains  forward-looking  statements  within the meaning of
Section  27A of the  Securities  Act of 1933,  as amended and Section 21E of the
Securities Exchange Act of 1934, as amended,  that are intended to be covered by
the  safe  harbors   created   thereby.   Investors  are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the  adequacy  of the  Company's  cash  from  operations,  existing
balances and  available  credit line.  Although  the Company  believes  that the
assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the  forward-looking  statements included in this Form 10-Q
will prove to be accurate.  Factors  that could cause  actual  results to differ
from the results discussed in the forward-looking  statements  include,  but are
not limited to, the outcome of the Company's litigation discussed under Item 4 -
Litigation.   In   light   of   significant   uncertainties   inherent   in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

CRITICAL ACCOUNTING POLICIES

     The  discussion  and  analysis of our  financial  condition  and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires the Company to make  estimates and  judgments  that affect the reported
amount of assets and liabilities,  revenues and expenses, and related disclosure
of contingent  assets and  liabilities  at the date of the  Company's  financial
statements.  Actual  results may differ  from these  estimates  under  different
assumptions or conditions.

     Critical  accounting  policies are defined as those that are  reflective of
significant  judgments and  uncertainties,  and potentially result in materially
different  results  under  different  assumptions  and  conditions.  The Company
believes that its critical accounting policies include those described below.

REVENUE RECOGNITION

     Revenue is generated  primarily  from fees for food service  management  at
continuing care and health care facilities and the  Collegeville Inn restaurant.
Revenue is recognized  when services are performed.  Ongoing  assessments of the
credit  worthiness  of  customers  provide the Company  reasonable  assurance of
collectibility upon performance of services.


                                       11




           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (continued)

ACCOUNTS RECEIVABLE

     The Company  performs  ongoing  credit  evaluations  of its  customers  and
adjusts credit limits based on payment history and the customer's current credit
worthiness,  as determined by a review of their current credit information.  The
Company  continuously  monitors  collections and payments from its customers and
maintains a provision for estimated credit losses based on historical experience
and any specific  customer  collection  issues that have been identified.  While
such credit losses have historically been within the Company's  expectations and
the provisions  established,  the Company cannot guarantee that it will continue
to experience the same credit loss rates that it has in the past.

IMPAIRMENT OF LONG-LIVED ASSETS EXCLUDING GOODWILL

     The Company  evaluates the carrying value of long-lived  assets,  including
intangible assets subject to amortization, when events and circumstances warrant
such a review.  The carrying value of long-lived  assets is considered  impaired
when the  anticipated  undiscounted  cash flows  from such  assets are less than
their carrying value. In that event, a loss is recognized equal to the amount by
which the carrying  value exceeds the fair value of the long-lived  assets.  The
Company  periodically  reviews the appropriateness of the estimated useful lives
of its long-lived assets.

INCOME TAX ACCOUNTING

     The Company  determines  its provision for income taxes using the asset and
liability  method.  Under this method,  deferred tax assets and  liabilities are
recognized  for the future tax  effects of  temporary  differences  of  existing
assets and  liabilities and their  respective tax bases.  Future tax benefits of
tax loss and credit  carryforwards  also are  recognized as deferred tax assets.
Deferred  tax assets  are  reduced by a  valuation  allowance  to the extent the
Company  concludes  there  is  uncertainty  as to  their  ultimate  realization.
Deferred  tax assets and  liabilities  are measured  using  enacted tax rates in
effect for the year in which  those  temporary  differences  are  expected to be
recovered or settled.  The effect on deferred  taxes of a change in tax rates is
recognized in income in the period that the change is enacted.

RESULTS OF OPERATIONS

     Revenues for the quarter ended March 31, 2004 were $7,141,972,  an increase
of $783,671 or 11.0%  compared to revenues of $6,358,301  for the  corresponding
quarter last year.  Revenues for the nine month period ended March 31, 2004 were
$21,024,382,  an  increase of  $243,028  or 1.2%  compared to the  corresponding
period in 2003.  These increases are primarily due to the net impact of revenues
from new contracts versus revenues from lost contracts.


                                       12




           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (continued)

     Costs of operations for the current  quarter were  $5,800,719,  compared to
$5,261,111  for similar  expenses  in the same period last year,  an increase of
$539,608  or 9.3%.  For the nine month  period  ended  March 31,  2004,  cost of
operations  were  $17,030,238,  compared to $17,153,764 for the same period last
year,  a decrease  of $123,526 or .8%  compared to the  corresponding  period in
2003.  This  increase in cost of services is due to higher  revenues  during the
periods and inflationary  price,  wage and expense  increases along with payroll
and related costs for new contracts.

     Gross Profit for the quarter was  $1,341,253,  compared to  $1,097,190,  an
increase of $244,063 or 18.2%.  For the nine month  period ended March 31, 2004,
gross profit was $3,994,144  versus  $3,627,590 an increase of $366,554 or 9.2%.
These increases are primarily due to higher  revenues  during the period.  Gross
profit as a percentage  of revenue for the quarter was 19% compared to 17.5% for
the same period last year. For the nine month period ended March 31, 2004, gross
profit as a percentage of revenue was 18.8% compared to 17.3%.  These  increases
are due to the cancellation of non performing contracts.

     General and  administrative  expenses  for the quarter were  $1,202,066  or
16.8% of  revenue,  compared  to  $1,071,604  or 16.8% of  revenue  for the same
quarter  last year,  an increase of  $130,462.  For the nine month  period ended
March 31, 2004, general and administrative  expenses were $3,569,532 compared to
$3,332,037  for the  corresponding  period last year,  an increase of  $237,495.
These   increases  are  due  to  higher  fixed  costs  within  the  general  and
administrative expenses.

     Provision  for doubtful  accounts  for the quarter was $60,000  compared to
$85,999 for the corresponding quarter last year. For the nine month period ended
March 31,  2004,  provision  for  doubtful  accounts  was  $180,000  compared to
$278,261 for the same period last year. The aforementioned  decreases are due to
increased  collection  activities,  which led to overall  declines  in  accounts
receivable and associated risk.

     Interest  expense for the quarter totaled  $45,610  compared to $43,862 for
the same  period last year.  For the nine month  period  ended  March 31,  2004,
interest  expense was $138,234 versus $148,321 for the  corresponding  period in
2003. The decrease in interest  expense for the nine month period is a result of
the repayment of long term borrowings and lower interest rates. The average rate
for the nine month  period ended March 31, 2004 was 4.1% as compared to 4.3% for
same period last year.

     For the reasons  stated  above net loss after  taxes for the quarter  ended
March 31, 2004 was  ($120,378)  compared  to  ($306,759)  for the  corresponding
quarter  last  year.  Net loss per share for the  current  quarter  was  ($0.04)
compared to net loss per share of ($0.11)  for the  corresponding  quarter  last
year.

     Net loss for the nine month period was ($362,983) versus ($763,921) for the
corresponding period last year. Net loss per share for the nine month period was
($0.13) compared to net loss per share of ($0.27) for the same period last year.


                                       13




           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2004, the Company had working  capital of $1,926,763  compared
to $1,726,474 at June 30, 2003, an increase of $200,289.

     OPERATING ACTIVITIES. Cash consumed in operations for the nine month period
ended March 31, 2004 was $153,559  compared to cash  provided by  operations  of
$631,198 for the nine months ended March 31, 2003. The current period's activity
is primarily due to a reduction of accounts payable.

     INVESTING ACTIVITIES.  Investing activities consumed $49,212 in cash in the
current  period  compared  to $15,766 in cash  provided  in the same period last
year.

     FINANCING ACTIVITIES.  Current period financing activities provided $82,939
in cash compared to $421,015  consumed in the same period last year.  The change
is attributable  to $2,872,061 of debt  repayments  offset by $2,955,000 of debt
proceeds.

     CAPITAL RESOURCES.  The Company has certain credit facilities with its bank
including a revolving credit line of $3,500,000.  At March 31, 2004, the Company
had $568,078  available under its revolving credit facility.  The Company issued
two  series of  Industrial  Bonds  with a face  amount  totaling  $3,500,000  in
December 1996. The  outstanding  balance on the bonds was $2,675,000 as of March
31, 2004. On October 20, 2003 the Company entered into an amended agreement. The
Loan Facility  contains  certain  covenants that include  maintenance of certain
financial  ratios,  maintenance of minimum levels of working  capital as well as
affirmative and negative  covenants.  The maturity date of the revolving  credit
line has been  extended to June 30,  2005.  The Company is current  with all its
obligations to its bank and on its bonds and has met all financial  covenants in
its loan documents.



As of March 31, 2004
                                                                       Payment Due By Period
                                          ------------------------------------------------------------------------------------
                                                               Less
      Contractual                            Total            than 1          1-3 years            4-5              After 5
      Obligations                                              year                               years              years
------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt*                           $5,619,096        $  147,174        $3,226,922        $  335,000        $1,910,000

Operating Leases                             107,098            41,702            65,396                 0                 0

Total Contractual Cash Obligations        $5,726,194        $  188,876        $3,292,318        $  335,000        $1,910,000


o    Long-Term Debt includes a $2,931,922  outstanding  balance on the revolving
     line of  credit,  leaving  $568,078  available  for  borrowings  under  the
     $3,500,000 revolving line of credit.

                                       14




           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (continued)


                                                                     Amount of Commitment Expiration
                                                                                Per Period
                                                      -----------------------------------------------------------------
  Other Commercial                 Total Amounts      Less than          1 - 3 years          4-5              Over 5
      Commitments                    Committed         1 year                               years              years
-----------------------------------------------------------------------------------------------------------------------
Lines of Credit                     $3,500,000        $        0        $3,500,000        $        0        $        0

Standby Letter of Credit             3,065,000                           3,065,000                 0                 0

Total Commercial Commitments        $6,565,000        $        0        $6,565,000        $        0        $        0



     A  substantial  portion of the Company's  revenues are  dependent  upon the
payment  of its fees by  customer  healthcare  facilities,  that,  in turn,  are
dependent  upon  third-party  payers  such as state  governments,  Medicare  and
Medicaid. Delays in payment by third-party payers,  particularly state and local
governments, may lead to delays in collection of accounts receivable.

     Based upon its present plans, management believes that operating cash flow,
available  cash  and  available  credit  resources  will  be  adequate  to  make
repayments of indebtedness  described  herein,  to meet the working capital cash
needs of the Company and to meet anticipated  capital  expenditure  needs during
the 12 months ending March 2005. In addition,  the Company  anticipates the sale
of certain land adjacent to its  Collegeville Inn facility that it believes will
net  cash  proceeds  of not  less  than  $2,000,000.  However,  there  can be no
assurance  that the  Company  will in fact sell such land or as to the amount of
such proceeds.

     In an effort to extend our  current  bank  debt,  we may seek to access the
public equity market whenever  conditions are favorable,  even if we do not have
an immediate  need for additional  capital at that time. Any additional  funding
may result in significant  dilution and could involve the issuance of securities
with  rights,  which are senior to those of existing  stockholders.  We may also
need additional funding earlier than anticipated, and our cash requirements,  in
general, may vary materially from those now planned, for reasons including,  but
not limited to, competitive  advances and higher than anticipated  revenues from
operations.


                                       15




           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (continued)


ITEM 4.

CONTROLS AND PROCEDURES

     Based on their  evaluation,  as of the end of the  period  covered  by this
report,  the Company's Chief Executive  Officer and Chief Financial Officer have
concluded the Company's  disclosure controls and procedures (as defined in Rules
13a-14 and 15d-14  under the  Securities  Exchange  Act of 1934) are  effective.
There have been no significant  changes in internal controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation,   including  any  corrective  actions  with  regard  to  significant
deficiencies and material weaknesses.



                                       16




                           PART II - OTHER INFORMATION


Item 1.      Legal Proceedings                                           None

Item 2.      Changes in Securities                                       None

Item 3.      Defaults Upon Senior Securities                             None

Item 4.      Submission of Matters to a Vote of Security Holders         None

Item 5.      Other Information

Item 6.      Exhibits and Reports on Form 8-K

             (a) Exhibits
                 31.1        Certification  of Chief Executive  Officer pursuant
                             to Rule 13a-14(a) under the Securities and Exchange
                             Act of 1934, as adopted  pursuant to Section 302 of
                             the Sarbanes-Oxley Act of 2002.

                 31.2        Certification   of  Principal   Financial   Officer
                             pursuant to Rule 13a-14(a) under the Securities and
                             Exchange  Act  of  1934,  as  adopted  pursuant  to
                             Section 302 of the Sarbanes-Oxley Act of 2002.

                 32.1        Certification  of Chief Executive  Officer pursuant
                             to 18 U.S. C. Section 1350, as adopted  pursuant to
                             Section 906 of the Sarbanes-Oxley Act of 2002.

                 32.2        Certification   of  Principal   Financial   Officer
                             pursuant to 18 U.S.  C.  Section  1350,  as adopted
                             pursuant to Section 906 of the Sarbanes-  Oxley Act
                             of 2002.


                                       17




                                   SIGNATURES


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



                                        Nutrition Management Services Company


                                         /s/ Joseph V. Roberts
                                        ----------------------------------------
                                        Joseph V. Roberts
                                        Chairman and Chief Executive Officer


                                         /s/ Linda J. Haines
                                        ----------------------------------------
                                        Linda J. Haines
                                        (Principal Financial Officer)



Date:  May 24, 2004


                                       18`