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                                  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, 2007
                                       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 a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and larger  accelerated  filer" in Rule 12b-2 of the Exchange Act.  (Check
one):

Large Accelerated Filer [ ]   Accelerated Filer [ ]   Non-Accelerated Filer [X]

Indicate by check mark whether the  Registrant  is a shell company (as defined
in Rule 12b-2 of Exchange Act).   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 February 8, 2007.

                                TABLE OF CONTENTS

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

           Item 1. - Financial Information
           Consolidated Balance Sheets as of
           March 31, 2007 (unaudited) and June 30, 2006                  1

           Consolidated Statements of Operations for the Three
           and Nine Months Ended March 31, 2007 (unaudited) and
           2006 (unaudited)                                              2

           Consolidated Statements of Cash Flows for the Nine
           Months Ended March 31, 2007 (unaudited) and
           2006 (unaudited)                                              3

           Notes to Consolidated Financial Statements                  4 - 10

           Item 2. - Management's Discussion and Analysis of
           Financial Condition and Results of Operations              11 - 17

           Item 3. - Quantitative and Qualitative Disclosure about
           Market Risk                                                  17

           Item 4T. - Controls and Procedures                           18

Part II.   Other Information                                            18

           Signatures                                                   19

                              NUTRITION MANAGEMENT SERVICES COMPANY
                                   CONSOLIDATED BALANCE SHEETS

                                                                  March 31, 2007   June 30, 2006
                                                                   (Unaudited)
                                                                  --------------   -------------
Current Assets:
  Cash and cash equivalents                                            322,033        1,613,567
  Accounts receivable, net of allowance for doubtful accounts
     of $979,188 and $964,188 respectively                           2,465,684        2,329,601
  Inventory                                                            154,710          142,220
  Prepaid and Other                                                    398,428          269,353
                                                                  ------------     ------------
Subtotal Current Assets                                              3,340,855        4,354,741

Property and equipment, net                                            125,526          114,921
Assets held for sale                                                 6,345,134        6,522,152

Other Assets
  Restricted cash                                                      250,000          250,000
  Note receivable                                                      102,842          134,865
  Advances to employees                                                410,190          423,294
  Deferred income taxes                                              2,265,908        2,004,333
  Bond issue costs, net of accumulated
      amortization of $150,523 and $139,597 respectively               142,001          151,731
  Other assets                                                          10,205           11,401
                                                                  ------------     ------------
Subtotal Other Assets                                                3,181,146        2,975,624
                                                                  ------------     ------------

Total Assets                                                      $ 12,992,661     $ 13,967,438
                                                                  ============     ============

Current Liabilities
  Current portion of Bonds Payable                                     170,000          165,000
  Current portion of Revolving Credit Line                           3,499,922                0
  Current portion of Note Payable                                       25,446                0
  Accounts payable                                                   2,647,141        2,998,049
  Accrued payroll and related expenses                                 299,128          226,611
  Accrued expenses                                                     202,113          213,883
  Other                                                                120,504           64,075
                                                                  ------------     ------------
Subtotal Current Liabilities                                         6,964,254        3,667,618

Long Term Liabilities
  Bonds Payable, net of current portion                              2,045,000        2,215,000
  Revolving Credit Line due greater than one year                            0        3,499,922
                                                                  ------------     ------------
Subtotal Long-term Liabilities, net of current portion               2,045,000        5,714,922
                                                                  ------------     ------------

Total Liabilities                                                    9,009,254        9,382,540
                                                                  ------------     ------------

Stockholders' Equity
Undesignated preferred stock - no par;
    2,000,000 shares authorized;  none issued or outstanding
Common Stock:
  Common Stock Class A -  no par;  10,000,000 shares authorized;
     3,000,000 issued;  2,747,000 outstanding                        3,801,926        3,801,926
  Common Stock Class B -  no par;  100,000 shares
    authorized, issued, and outstanding                                     48               48
  Retained Earnings                                                    680,996        1,282,487
  Less:  Treasury Stock (Class A Common: 253,000
    and 253,000 shares, respectively)  - at cost                      (499,563)        (499,563)
                                                                  ------------     ------------
Total Stockholder's Equity                                           3,983,407        4,584,898
                                                                  ------------     ------------

Total Liabilities and Stockholders' Equity                        $ 12,992,661     $ 13,967,438
                                                                  ============     ============

                    See Notes to Unaudited Consolidated Financial Statements

                                                1

                                            NUTRITION MANAGEMENT SERVICES COMPANY
                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                         (Unaudited)

                                                     Three Months Ended March 31,            Nine Months Ended March 31,
                                                      2007                 2006              2007                   2006
                                                ---------------       --------------    ---------------        ---------------
Food service revenue                             $  4,953,280          $  5,515,970      $ 15,438,157           $ 17,949,350

Cost of operations
     Payroll and related expenses                   2,212,564             2,382,632         6,504,534              7,447,719
     Other costs of operations                      1,844,824             2,237,426         6,061,520              7,269,551
                                                 ------------          ------------      ------------           ------------
     Total Cost of operations                       4,057,388             4,620,058        12,566,054             14,717,270

Gross Profit                                          895,892               895,912         2,872,103              3,232,080

Expenses
     General and Administrative                     1,078,212             1,321,411         3,203,277              3,812,057
     Depreciation and Amortization                     67,497                86,970           208,788                316,354
     Bad Debt                                         (15,000)                    0            15,000                 60,000
                                                 ------------          ------------      ------------           ------------
     Total Expenses                                 1,130,709             1,408,381         3,427,065              4,188,411

Income from operations                               (234,817)             (512,469)         (554,962)              (956,331)

Other Income
     Other income                                      (4,510)               84,132               612                 82,398
     Gain on Sale of Securities                             0                44,256                 0                 44,256
     Interest income                                    8,338                17,615            37,171                 59,849
     Interest expense                                (115,772)             (100,015)         (345,887)              (284,728)
                                                 ------------          ------------      ------------           ------------
       Total other (expense) /  income               (111,944)               45,988          (308,104)               (98,225)

Income before taxes                                  (346,761)             (466,481)         (863,066)            (1,054,556)

Income Tax Benefit                                   (104,272)             (190,454)         (261,575)              (434,595)

Net (Loss)                                           (242,489)             (276,027)         (601,491)              (619,961)

Net loss per share - basic and diluted           $      (0.09)         $      (0.10)     $      (0.21)          $      (0.22)
                                                 ============          ============      ============           ============

Weighted average basic and diluted shares           2,847,000             2,847,000         2,847,000              2,847,000
                                                 ============          ============      ============           ============

                                                              2

                                   NUTRITION MANAGEMENT SERVICES COMPANY
                                   CONSOLIDATED STATEMENT OF CASH FLOWS
                                                (Unaudited)

                                                                           Nine Months Ended March 31,
                                                                           2007                  2006
                                                                       -----------           -----------
OPERATING ACTIVITIES:
Net Income/(loss)                                                      ($  601,491)          ($  619,961)
Adjustments to reconcile net loss to
  net cash provided by (used in) operating activitites:
  Gain on Sale of Marketable Securities                                          0               (44,256)
  Depreciation and amortization                                            208,788               316,354
  Provision for bad debts                                                   15,000                60,000
  Amortization of bond costs                                                10,923                10,326
  Deferred tax (benefit)                                                  (261,575)             (434,595)
Changes in assets and liabilities
  Accounts receivable, net                                                (119,060)             (187,019)
  Inventory and other                                                      (12,490)              (31,031)
  Prepaid and other current assets                                         (39,075)               94,240
  Income tax refund                                                              0                43,730
  Accounts payable                                                        (350,908)             (879,836)
  Accrued payroll and related expenses                                      72,517                 4,928
  Accrued expenses and other                                               (45,340)             (422,975)
                                                                       -----------           -----------
Net cash provided by (used in) operating activities                     (1,122,711)           (2,090,095)

INVESTING ACTIVITIES:
  Purchase of property and equipment (net)                                 (42,374)              (46,686)
  Proceeds from Sale of Marketable Securities                                    0               249,577
  Repayment of Advances to Employees                                        13,104                 9,489
                                                                       -----------           -----------
Net cashprovide by (used in) investing activities                          (29,270)              212,380

FINANCING ACTIVITIES:
  Proceeds from note payable                                               297,659               238,869
  Repayment of note payable                                               (272,213)             (197,137)
  Proceeds from long term borrowing                                              0               275,000
  Repayment of long term borrowing                                        (165,000)             (150,000)
                                                                       -----------           -----------
Net cash provided by(used In) financing activities                        (139,554)              166,732

                                                                       -----------           -----------
  Net (decrease) in cash                                                (1,291,534)           (1,710,983)

Cash - beginning of period                                               1,613,567             2,889,616

Cash - end of period                                                   $   322,033           $ 1,178,633
                                                                       ===========           ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  CASH PAID DURING THE PERIOD FOR:
Interest Paid                                                          $   321,682           $   276,984
Taxes Paid                                                             $    30,913           $     5,362

                                                     3

                      NUTRITION MANAGEMENT SERVICES COMPANY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

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  and such
     adjustments are of a normal recurring nature. The results of operations for
     the interim period  presented is not necessarily  indicative of the results
     that may be expected for the entire  fiscal year ending June 30, 2007.  The
     financial  information  presented  should be read in  conjunction  with the
     Company's 2006 financial statements that were filed under Form 10-K.

2.   NEW ACCOUNTING PRONOUNCEMENTS

     In December 2004, the FASB issued SFAS No. 123R (Revised 2005) "SHARE-BASED
     PAYMENT." The statement  requires  that the  compensation  cost relating to
     share-based  payment  transactions  be recognized in financial  statements.
     That  cost  will be  measured  based on the fair  value  of the  equity  or
     liability   instrument  issued.  The  statement  covers  a  wide  range  of
     share-based compensation  arrangements including share options,  restricted
     share plans,  performance-based  awards,  share  appreciation  rights,  and
     employee share  purchase  plans.  The Company has adopted the  requirements
     contained  in this  statement,  the effects of which are  reflected  in the
     financial statements for this quarter. The Company has adopted SFAS 123 (R)
     as of July 1, 2006.

     In March 2005, the FASB issued  Interpretation  No. 47 (FIN 47) "Accounting
     for  Conditional  Asset  Retirement  Obligations,"  which refers to a legal
     obligation to perform an asset  retirement  activity in which the timing or
     method of settlement are  conditional on a future event that may or may not
     be within the control of the entity.  A liability  must be  recognized  for
     such an  obligation  (e.g.  major  clean-up  costs under a leasehold)  when
     incurred if the  liability's  fair value can be reasonably  estimated.  The
     adoption of this  statement is required for fiscal  years  beginning  after
     December 15, 2005. The adoption of this statement is not expected to have a
     material impact on the consolidated financial statements of the Company.

     In May 2005,  the FASB  issued SFAS No. 154  "ACCOUNTING  CHANGES AND ERROR
     CORRECTIONS"  This  Statement  replaces  APB  Opinion  No.  20,  Accounting
     Changes, and FASB Statement No. 3, "REPORTING ACCOUNTING CHANGES IN INTERIM
     FINANCIAL STATEMENTS",  and changes the requirements for the accounting for
     and reporting of a change in accounting  principle.  This Statement applies
     to all  voluntary  changes  in  accounting  principle.  It also  applies to
     changes  required by an accounting  pronouncement  in the unusual  instance
     that the  pronouncement  does not include specific  transition  provisions.
     When  a  pronouncement  includes  specific  transition  provisions,   those
     provisions  should be followed.  Adoption of this statement is required for
     fiscal years  starting after December 15, 2005. The Company has adopted the
     requirements  contained  in  this  statement,  the  effects  of  which  are
     reflected in the financial  statements.  The adoption of this  statement is
     not  expected  to have a  material  impact  on the  consolidated  financial
     statements of the Company.

                                       4

     In February  2006,  the FASB issued  SFAS No. 155  "ACCOUNTING  FOR CERTAIN
     HYBRID  FINANCIAL  INSTRUMENTS  (AS AMENDED)".  This Statement  amends FASB
     Statements  No. 133,  ACCOUNTING  FOR  DERIVATIVE  INSTRUMENTS  AND HEDGING
     ACTIVITIES,  and  No.  140,  ACCOUNTING  FOR  TRANSFERS  AND  SERVICING  OF
     FINANCIAL ASSETS AND  EXTINGUISHMENT  OF LIABILITIES,  and, resolves issues
     addressed in Statement No. 133 Implementation Issue No. D1, "APPLICATION OF
     STATEMENT NO. 133 TO BENEFICIAL INTERESTS IN SECURITIZED FINANCIAL ASSETS".
     This  Statement   requires  the  evaluation  of  interests  in  securitized
     financial assets to identify interests that are freestanding derivatives or
     that are hybrid financial  instruments that contain an embedded  derivative
     requiring  bifurcation.  This Statement clarifies that embedded derivatives
     do not include  concentrations  of credit risk in the form of subordination
     and further clarifies the accounting for  interest-only and  principal-only
     strips.  This  statement also  eliminates  the  prohibition on a qualifying
     special-purpose  entity from holding a derivative financial instrument that
     pertains to a beneficial  interest other than another derivative  financial
     instrument.  Lastly,  this statement permits fair value measurement for any
     hybrid financial instrument that contains an embedded derivative that would
     otherwise require bifurcation.  The adoption of this Statement is effective
     for financial  statements with fiscal years beginning on or after September
     15, 2006, or for all financial  instruments acquired or issued beginning on
     or after September 15, 2006. The adoption of this statement is not expected
     to have a material impact on the consolidated  financial  statements of the
     Company.

     In March, 2006, the FASB issued SFAS No. 156,  "ACCOUNTING FOR SERVICING OF
     FINANCIAL  ASSETS- An Amendment of FASB Statement No. 140".  This Statement
     amends FASB Statement No. 140,  "Accounting  for Transfers and Servicing of
     Financial Assets and  Extinguishments  of Liabilities," with respect to the
     accounting  for  separately   recognized  servicing  assets  and  servicing
     liabilities.  This Statement  requires the recognition of a servicing asset
     or  liability  initially  measured  at fair  value,  for  every  obligation
     incurred for contracts to service  financial  assets in certain  sales-type
     transfers,  qualifying  special  purpose  entity  transfers,  or in certain
     acquisitions  that  do  not  relate  to  the  financial   servicer  or  its
     consolidated  affiliates.  This Statement  permits the choice of either the
     amortization  method or the fair value method for each class of  separately
     recognized  servicing  assets  and  servicing  liabilities,  and,  requires
     separate  disclosure at fair value in the statement of financial  position.
     The  adoption of this  Statement  is  effective  for  financial  statements
     beginning with fiscal years on or after September 15, 2006. The adoption of
     this  statement  is  not  expected  to  have  a  material   impact  on  the
     consolidated financial statements of the Company.

     In June,  2006, the FASB issued FIN No. 48,  "ACCOUNTING FOR UNCERTAINTY IN
     INCOME TAXES - AN  INTERPRETATION  OF FASB STATEMENT NO. 109 ACCOUNTING FOR
     INCOME TAXES".  This  interpretation  requires a recognition  threshold and
     measurement   attribute  for  the  financial   statement   recognition  and
     measurement  of a tax  position  taken  or  expected  to be  taken in a tax
     return.  This  interpretation  also  provides  guidance  on  derecognition,
     classification,   interest,  penalties,   accounting  in  interim  periods,
     disclosure and transition.  This interpretation  requires the evaluation of
     whether the technical  merits of a tax position is more likely or not to be
     sustained upon examination, including the resolution of any related appeals
     or litigation. The Statement requires the measurement of the largest amount
     of benefit that is greater than a 50%  likelihood  of being  realized  upon
     final   settlement,   presuming  the  position  will  be  examined  by  the
     appropriate  taxing  authority  with  the  benefit  of full  knowledge  and
     relevant information.  The adoption of this interpretation is effective for
     fiscal years beginning after December 15, 2006.

     In   September,   2006,   the  FASB  issued  SFAS  No.  157,   "Fair  VALUE
     MEASUREMENTS".  This  Statement  defines  fair value as `exit  prices'  NOT
     `entry prices' in generally  accepted  accounting  principles  (GAAP),  and
     expands  disclosures  about  fair  value  measurements  for the  purpose of
     promoting  consistency and  simplification of the existing  codification of
     accounting  principles.  To  eliminate  differences  in practice and reduce

                                       5

     complexity in the  application of GAAP, the Statement  emphasizes that fair
     value is a market-based measurement, not an entity specific measurement and
     should be  determined  based on the  assumptions  that market  participants
     would use in pricing the asset or liability.  This statement  establishes a
     fair value hierarchy that distinguishes between observable and unobservable
     inputs  and  clarifies  the need for  adjustments  to fair  value  based on
     nonperformance,  other market risk  assessment  criteria,  certain asset or
     event restrictions, and trading blockage. The adoption of this Statement is
     effective for financial  statements beginning with fiscal years on or after
     September 15, 2007,  including  interim  financial  statements  within that
     fiscal year.

     In October,  2006, the FASB issued SFAS No.158,  "EMPLOYERS' ACCOUNTING FOR
     DEFINED  BENEFIT  PENSION AND OTHER  POSTRETIREMENT  PLANS- AN AMENDMENT OF
     FASB  STATEMENTS NO. 87, 88, 106 AND 132( R )". This statement  requires an
     employer to recognize  the  overfunded or  underfunded  status of a defined
     benefit  postretirement plan, other than a multi-employer plan, as an asset
     or  liability  in its  statement  of  financial  position  and to recognize
     changes  in that  funded  status  in the year in which  the  changes  occur
     through  the  comprehensive  income of a business  entity.  This  statement
     requires the  measurement  and  recognition of the difference  between plan
     assets at fair  value  and the  benefit  obligation,  as of the date of the
     employer's fiscal year-end statement of financial position.  This statement
     also  requires  additional  disclosure  in the  footnotes to the  financial
     statements  about certain effects on net periodic benefit cost for the next
     fiscal  year that arise from  delayed  recognition  of the gains or losses,
     prior  service  costs or credits,  and  transition  assets or  obligations.
     Employers who have issued outstanding publicly traded equity securities are
     required to adopt this Statement by initially recognizing the funded status
     of a defined benefit  postretirement  plan including the required  footnote
     disclosures  as of the end of the fiscal year  ending  after  December  15,
     2006.

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-month and nine-month
     period  ended March 31,  2007 and 2006.  The Company did not have any stock
     options and warrants that impacted earnings per share in each period.

4.   LITIGATION

     On February 7, 2001, the Company filed a suit against a major client in the
     Court  of  Common  Pleas  of  Chester  County,   Pennsylvania,   which  was
     subsequently  removed to the United States  District  Court for the Eastern
     District of Pennsylvania.  On February 25, 2005,  judgment was entered on a
     jury  verdict  in favor of the  Company,  in the amount of  $2,500,000  for
     damages related to its claims, including breach of contract and contractual
     interference.  The client's  counterclaim  was dismissed by the judge.  The
     Company filed a post-trial  motion to amend the judgment to add prejudgment
     interest.  On June 1, 2006 this motion was denied.  The Company has engaged
     independent legal counsel to pursue alternative  recourse in regards to the
     denial of prejudgment interest.

     The  Company is  involved  in  litigation  with a  construction  contractor
     related to the  renovations  of  Collegeville  Inn  Conference and Training
     Center.  The Company denies its liability for the  contractor's  claims and
     has asserted offsets against the amounts claimed.  The case is currently in
     discovery.

                                       6

     Although it is not  possible to predict with  certainty  the outcome of the
     unresolved  legal action,  or the range of possible  loss or recovery,  the
     Company  believes these  unresolved  legal actions will not have a material
     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 normal  course of business.  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.

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
     principles 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.

     For the quarter ended March 31, 2007:

                                          Food Service       Training and
                                           Management       Conference Center       Total
Food service revenue                     $  4,814,173       $    139,107       $  4,953,280
Depreciation and amortization                   9,179             58,318             67,497
Income (loss) from operations                   1,369           (236,186)          (234,817)
Interest income                                 8,338                  0              8,338
Other income                                        0             (4,510)            (4,510)
Interest expense                              (79,624)           (36,148)          (115,772)
Income (loss) before taxes (benefit)          (69,917)          (276,844)          (346,761)
Net income (loss)                              34,355           (276,844)          (242,489)
Total assets                             $  5,686,447       $  7,306,214       $ 12,992,661

                                             7

For the quarter ended March 31, 2006:

                                          Food Service       Training and
                                           Management       Conference Center       Total
Food service revenue                     $  5,369,310       $    146,660       $  5,515,970
Depreciation and amortization                  12,235             74,735             86,970
Income (loss) from operations                (322,841)          (189,628)          (512,469)
Interest income                                17,615                  0             17,615
Other income                                        0             85,000             85,000
Interest expense                              (62,485)           (37,530)          (100,015)
Income (loss) before taxes (benefit)         (323,455)          (143,026)          (466,481)
Net income (loss)                            (133,001)          (143,026)          (276,027)
Total assets                             $  7,135,317       $  7,295,965       $ 14,431,282

For the Nine Months ended March 31, 2007:

                                         Food Service         Training and
                                           Management       Conference Center      Total
Food service revenue                     $ 14,917,899       $    520,258       $ 15,438,157
Depreciation and amortization                  28,253            180,535            208,788
Income (loss) from operations                 (26,099)          (528,863)          (554,962)
Interest income                                37,171                  0             37,171
Other income                                   14,140            (13,528)               612
Interest expense                             (235,192)          (110,695)          (345,887)
Income (loss) before taxes (benefit)         (209,980)          (653,086)          (863,066)
Net income (loss)                              51,595           (653,086)          (601,491)
Total assets                             $  5,686,447       $  7,306,214       $ 12,992,661

For the Nine Months ended March 31, 2006:

                                         Food Service         Training and
                                           Management       Conference Center      Total
Food service revenue                     $ 17,587,432       $    361,918       $ 17,949,350
Depreciation and amortization                  37,317            279,037            316,354
Income (loss) from operations                (245,224)          (711,107)          (956,331)
Interest income                                59,849                  0             59,849
Other income                                        0             85,000             85,000
Interest expense                             (176,557)          (108,171)          (284,728)
Income (loss) before taxes (benefit)         (317,676)          (736,880)        (1,054,556)
Net income (loss)                             116,919           (736,880)          (619,961)
Total assets                             $  7,135,317       $  7,295,965       $ 14,431,282

                                              8

6.   REVOLVING CREDIT FACILITY

     In February 2001,  the Company  executed a loan agreement with a bank for a
     revolving  credit facility 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 October  2003,  the Company
     entered into an amended credit agreement  whereby the $4,000,000  Revolving
     Credit Loan Facility was reduced to $3,500,000 and $500,000 was placed in a
     cash collateral  account and pledged as additional  collateral  against the
     revolving  credit line. A portion of the cash  collateral  account has been
     released and as of March 31, 2007 and June 30, 2006, the Company maintained
     restricted cash balances of $250,000, which was not available for operating
     purposes.

     At March 31, 2007 and June 30, 2006, the Company had $3,499,922 outstanding
     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.  At March 31,  2007 the  Company  was in  compliance  with these
     covenants.

     At June 30, 2006, the covenants also included the  maintenance of a certain
     consolidated fixed debt service coverage ratio, ratio of total consolidated
     liabilities  to  consolidated  tangible  net  worth,  and  minimum  working
     capital.  At June 30, 2006,  the Company was not in  compliance  with these
     covenants.  While not  waiving  these  covenants,  the Company and the bank
     reached an agreement in October,  2006 which maintains the revolving credit
     line in place to July 1, 2007.

     The Company is currently in discussions with several financing institutions
     to obtain new credit  facilities  that would replace the  outstanding  debt
     prior to July 1, 2007. The Company is also in discussions  with the bank to
     extend the Revolving Credit Facility to December 31, 2007.  However,  there
     can be no  assurance  that the  Company  will in fact  obtain a new  credit
     facility or that the Revolving Credit Facility will be extended.

7.   COLLEGEVILLE INN

     Effective June 27, 2005,  the Company  closed the buffet  restaurant at the
     Collegeville  Inn  Conference  &  Training  Center  to  make  the  facility
     available  for catered  events.  The Company is  exploring  all  reasonable
     alternatives  to improve its operating  results,  including but not limited
     to,  increasing  food service  revenues  with targeted  marketing  efforts,
     increasing revenues from the sale of the Company's Cook Chill products, the
     sale or  lease  of all or  part  of the  Collegeville  Inn  Conference  and
     Training Center, sale of excess land at the Collegeville Inn Conference and
     Training  Center  and  reduction  of  operating  expenses.  There can be no
     assurance as to the success of any or all of these alternatives.

     The Company  conducted a one-day auction on February 22, 2007 to attempt to
     sell its banquet and training facility as well as the surrounding land. The
     offers received were not acceptable to the Company.  The auction identified
     several interested and qualified parties. The Company continues its efforts
     to lease or sell all or part of the  facility  and land.  The Company is in
     active discussion with several parties; however, there can be no assurances
     that the Company will successfully  conclude these discussions,  or that it
     will be able to  lease or sell  all or part of the  facilities  and land on
     acceptable terms, if at all.

                                        9

8.   BUSINESS CONDITIONS

     The  Company's  primary  sources of  revenues  are the  management  fees it
     receives  from  contracts  to provide  food and  housekeeping  services  to
     continuing care facilities,  hospitals, retirement communities and schools,
     as well as the Collegeville Inn, which includes the Conference and Training
     Center, Catering facilities and the Cook Chill operations.  The Company has
     a  business  plan in  place  to  improve  the  operating  results  from the
     Collegeville  Inn while it continues  its sale / lease  efforts.  Effective
     June 27, 2005, the Company closed the buffet restaurant at the Collegeville
     Inn to make the facility available for catered events.

     The  Company is  exploring  all  reasonable  alternatives  to  improve  its
     operating  results,  including but not limited to,  increasing food service
     revenues with targeted marketing efforts, increasing revenues from the sale
     of the Company's Cook Chill  products,  the sale or lease of all or part of
     the  Collegeville  Inn,  sale of excess  land at the  Collegeville  Inn and
     reduction of operating  expenses.  The Company has entered into  agreements
     with industry  experts to assess and examine these  alternatives.  However,
     there can be no assurance as to the success of any of these efforts.

     The Company's financial statements as of March 31, 2007 have been presented
     on the basis that it is a going concern, which contemplates the realization
     of assets and the  satisfaction  of  liabilities  in the  normal  course of
     business.

     Although the Company had negative  working  capital of  approximately  $3.6
     million as of March 31, 2007,  which raised some doubt as to its ability to
     satisfy  its  obligations  during that next fiscal year as they become due,
     such doubt was alleviated  after careful review of  Management's  plans for
     the future relating to the Collegeville Inn Assets and operations,  and the
     protections  relating to the management  fees from its contracts and future
     contracts.  The Company  believes  that these plans,  supported by the fact
     that the  Company  still  had  stockholders  equity of  approximately  $4.0
     million as of March 31, 2007,  reinforces the Company's ability to continue
     as a going concern.

     Management  believes that  operating  cash flow,  proceeds from the sale or
     lease of certain assets, available cash and available credit resources will
     be adequate to make  repayments of  indebtedness,  if any, meet the working
     capital needs, satisfy the needs of its operations, and to meet anticipated
     capital expenditures during the next twelve months ending March 31, 2008.

     In view of the matters  described above,  recoverability of a major portion
     of the recorded asset amounts shown in the Company's  accompanying  balance
     sheet is dependent  upon  continued  operations of a continuing  basis,  to
     maintain present financing,  and to succeed in its future  operations.  The
     Company's  financial  statements do not include any adjustment  relating to
     the  recoverability and classification of recorded asset amounts or amounts
     and  classification  of  liabilities  that  might be  necessary  should the
     Company be unable to continue in existence.

                                       10

ITEM 2.

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,
results of operations and the outcome of the Company's  litigation  discussed in
Note 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.

RESULTS OF OPERATIONS -  QUARTER ENDED MARCH 31, 2007

Revenues  for the quarter  ended March 31, 2007 were  $4,953,280,  a decrease of
$562,690 or 10.2%  compared to  revenues  of $  5,515,970  in the  corresponding
quarter last year.  The decrease is primarily  due to two high revenue  accounts
which had been in the prior year. New accounts during this fiscal year more than
offset  the  impact of other  scheduled  contract  terminations.  Revenues  from
ongoing accounts were consistent with prior year levels.

Cost  of  operations  for  the  current  quarter  was  $4,057,388,  compared  to
$4,620,058  for similar  expenses  in the same  period last year,  a decrease of
$562,670  or  12.2%.  The  decreases  are  associated  with the  lower  revenues
mentioned above and better operating performance at ongoing accounts.

Gross profit for the current  quarter was $895,892,  or 18.1 % of gross revenue,
essentially even in dollar terms with the $895,912  reported for the same period
last year.  The Gross Margin  Percentage of Sale  increased to 18.1% from 16.2 %
due to cost takeouts and improved operating  performance at Fixed Rate accounts.
The Company has adapted to changing  market  conditions  with cost reductions in
all of the Cost of Operations  and General &  Administrative  areas.  These cost
reductions, along with improved operating processes, have enabled the Company to
maintain and improve profit margins despite the decline in volume.

General and administrative  expenses for the quarter were $1,078,212 or 21.8% of
revenue,  compared to  $1,321,411  or 24.0% of revenue for the same quarter last
year, a decrease of $243,199 or 18.4%.  This  decrease is due to lower  staffing
related  expenses  in the period as well as a  reduction  in travel and  related
costs.

                                       11

Bad Debt  Expense was a credit of $15,000  for the quarter  compared to zero for
the corresponding quarter last year.

Interest  expense  for the three  month  period  totaled  $115,772  compared  to
$100,015  for the same  period last year,  an increase of $15,757 or 15.8%.  The
increases in interest  expense are the result of an increase in amount  borrowed
and increases in interest rates.

The loss before income taxes for the three month period ended March 31, 2007 was
$346,761 compared with $466,481 for the three month period ended March 31, 2006,
an  improvement  of  $119,720  or 25.7% The net income tax benefit for the three
month  period  ended March 31, 2007 was  $104,272  compared to $190,454  for the
three month period ended March 31, 2006, a decrease of $86,182.

For the reasons  stated above,  net loss after taxes for the quarter ended March
31, 2007 was $242,489,  compared to $276,027 for the corresponding  quarter last
year,  an  improvement  of  $33,538  - the  result  of  cost  effectiveness  and
performance offsetting reduced revenues and lower net income tax benefit.

Net  loss per  share  for the  current  quarter  was  $0.09  per  share  on,  an
improvement  of $0.01 per share from the prior year  reflecting a lower loss and
no change in the amount of shares.

RESULTS OF OPERATIONS -  NINE MONTHS ENDED MARCH 31, 2007
Revenues  for the nine  month  period  ended  March 31,  2007 were  $15,438,157,
compared  to  $17,949,350  for the nine month  period  ended March 31,  2006,  a
decrease of $2,511,193 or 14.0 %. The decrease in almost  entirely  attributable
to accounts which had terminated  during the previous  fiscal year and for which
no revenues were recognized  during the current year.  Revenue from new accounts
during the current year have been sufficient to offset any contracts terminating
in the current year. Revenues at ongoing facilities increased slightly year over
year.

Cost of  operations  for the  nine  month  period  ended  March  31,  2007  were
$12,566,054,  compared to $14,717,270  for the nine month period ended March 31,
2006, a decrease of $2,151,216 or 14.6%.  The decreases are associated  with the
lower  revenues  mentioned  above and better  operating  performance  at ongoing
accounts.

Gross  profit for the nine month  period  ended March 31, 2007 was $  2,872,103,
compared  to  $3,232,080  for the nine month  period  ended  March 31,  2006,  a
decrease of $359,977 or 11.1 %. The Gross Margin Percentage of Sale increased to
18.6% from 18.0% due to cost  takeouts and  improved  operating  performance  at
Fixed Rate accounts.  The Company has adapted to changing market conditions with
cost  reductions in all of the Cost of Operations  and General &  Administrative
areas.

General and  administrative  expenses  for the nine month period ended March 31,
2007 were  $3,203,277  compared to  $3,812,057  for the nine month  period ended
March 31, 2006, a decrease of $608,780 or 16.0%.  This  decrease is due to lower
staffing  related  expenses in the period as well as a  reduction  in travel and
related costs.

Bad Debt  Expense  for the nine month  period  ended  March 31, 2007 was $15,000
compared to $60,000 for the for the nine month  period  ended March 31,  2006, a
decrease of $45,000.

                                       12

Interest  expense for the  nine-month  period  ended March 31, 2007 was $345,887
compared to $284,728 for the nine month period ended March 31, 2006, an increase
of $61,159 or 21.5%.  The  increases  in  interest  expense are the result of an
increase in amount borrowed and increases in interest rates.

The loss before  income taxes for the nine month period ended March 31, 2007 was
$863,066  compared to $1,054,556 for the nine month period ended March 31, 2006,
an  improvement  of $191,490  or 18.2%.  The net income tax benefit for the nine
month period ended March 31, 2007 was $261,575 compared to $434,595 for the nine
month period ended March 31, 2006, a decrease of $173,020.

The net loss  for the nine  month  period  ended  March  31,  2007 was  $601,491
compared  to  $619,961  for the nine  month  period  ended  March 31,  2006,  an
improvement  of  $18,470 - the  result  of cost  effectiveness  and  performance
offsetting reduced revenues and lower net income tax benefit.

Net loss per share for the nine month  period ended March 31, 2007 was $0.21 per
share  compared to $0.22 for the nine month  period  ended March 31,  2006,  and
improvement of $0.01 per share  reflecting  improved net income and no change in
the number of shares.

LIQUIDITY AND CAPITAL RESOURCES

At March 31,  2007 the  Company  had  negative  working  capital  of  $3,623,399
compared to positive working capital of $960,636 for the same quarter last year.
This  decrease in working  capital is primarily  attributable  to the  Company's
reclassification of the line of credit debt from long term to short term and the
use of cash in operations.

OPERATING  ACTIVITIES.  Cash used in operations  for the Nine Months ended March
31, 2007 was $1,122,711  compared to $2,090,095  used by operations for the Nine
Months  ended  March 31,  2006.  The  current  period's  activity  is  primarily
attributable to operating  losses  sustained in the current period as well as an
increase in accounts receivable and decreases in accounts payables.

INVESTING  ACTIVITIES.  Investing  activities  used  $29,270 in cash in the Nine
Month period compared to $212,380 in cash provided in the same period last year.
Investing  activities include capital  expenditures in the amount of $42,374 and
are consistent with previous periods.  The change is primarily the proceeds from
the sale of marketable securities $249,577 during the prior year.

FINANCING ACTIVITIES. Current year to date financing activities used $139,554 in
cash  compared  to $166,732  provided in the same period last year.  The year to
date usage is primarily the  scheduled  sinking fund  principle  payment for the
long term bonds.

CAPITAL  RESOURCES  The  Company  has certain  credit  facilities  with its bank
including a revolving credit facility of $3,500,000.  At March 31, 2007 and June
30, 2006, the Company had utilized all of its revolving credit line. The Company
has pledged a $250,000  Certificate of Deposit as additional  collateral against
the revolving line of credit.  The Company issued two series of Industrial Bonds
totaling  $3,560,548 in December 1996. The outstanding  balance on the bonds was
$2,215,000 and  $2,380,000 as of March 31, 2007 and June 30, 2006  respectively.
The Company and the bank reached an agreement in October,  2006 which  maintains
the revolving  credit line in place to July 1, 2007. The Company is currently in
discussion with several  financing  institutions to obtain new credit facilities
that would replace the  outstanding  debt prior to July 1, 2007.  The Company is
also in  discussion  with the bank to extend the  Revolving  Credit  Facility to
December 31, 2007.  However,  there can be no assurance that the Company will in
fact obtain a new credit facility or that the Revolving  Credit Facility will be
extended.

                                       13

As  mentioned  in  previous  filings,  the  Company  has  assets  including  its
Collegeville  facility,  which  have  appreciated   substantially  and  are  not
considered essential to its core business. These assets have been the subject of
Purchase Offers from several parties.  The Company has plans to possibly sell or
lease  a part of all of  these  assets  in a  fashion  that  will  increase  the
liquidity of the Company.  The Company  conducted a one-day  auction on February
22,  2007 to attempt to sell its banquet  and  training  facility as well as the
surrounding  land. The offers  received were not acceptable to the Company.  The
auction identified several interest and qualified parties. The Company continues
its efforts to lease or sell all or part of the facility and land. To date,  the
Company has no  agreements,  commitments or  understandings  with respect to the
sale of all or any part of these assets and there can be no  assurance  that any
such sale will occur.

==================================================================================
                                          Payment Due by Period
                    ==============================================================

  Contractual                   Less Than 1      1 - 3        4 - 5      After 5
  Obligations         Total        Year          Years        Years       Years
==================================================================================
Long-Term Debt *    $5,740,388   $3,695,388   $  350,000   $  390,000   $1,305,000
==================================================================================
Operating Leases        27,250       12,520       14,730         --           --
==================================================================================
Total Contractual
Cash Obligations    $5,767,638   $3,707,908   $  364,730   $  390,000   $1,305,000
==================================================================================

* Long-Term  Debt includes the $3,499,922  outstanding  balance on the revolving
  credit facility.

==================================================================================
                                        Amount of Commitment Expiration
                                                    Per Period
                  ================================================================
Other Commercial  Total Amounts Less Than 1      1 - 3        4 - 5       Over 5
  Commitments       Committed      Year          Years        Years       Years
==================================================================================
Lines of Credit     $3,500,000   $3,500,000   $     --     $     --     $     --
==================================================================================
Standby Letter of
Credit              $3,065,000         --     $3,065,000         --           --
==================================================================================
Total Commercial
Commitments         $6,565,000   $3,500,000   $3,065,000   $     --     $     --
==================================================================================

The Company's  primary  sources of revenues are the management  fees it receives
from  contracts to provide food and  housekeeping  services to  continuing  care
facilities,  hospitals,  retirement  communities  and  schools,  as  well as the
Collegeville  Inn, which includes the Conference and Training  Center,  Catering
facilities  and the Cook Chill  operations.  The Company has a business  plan in
place to improve the operating results from the Collegeville Inn. Effective June
27, 2005, the Company closed the buffet  restaurant at the  Collegeville  Inn to
make the facility available for catered events.

The Company is exploring all  reasonable  alternatives  to improve its operating
results,  including but not limited to,  increasing  food service  revenues with
targeted marketing efforts,  increasing  revenues from the sale of the Company's
Cook Chill products,  the sale or lease of all or part of the Collegeville  Inn,
sale of excess land at the Collegeville Inn and reduction of operating expenses.
The Company has entered  into  agreements  with  industry  experts to assess and
examine these alternatives. However, there can be no assurance as to the success
of any of these efforts.

                                       14

The Company's  financial  statements as of March 31, 2007 have been presented on
the basis that it is a going  concern,  which  contemplates  the  realization of
assets and the satisfaction of liabilities in the normal course of business.

Although the Company had negative working capital of approximately  $3.6 million
as of March 31,  2007,  which raised some doubt as to its ability to satisfy its
obligations  during that next  fiscal  year as they  become due,  such doubt was
alleviated after careful review of Management's plans for the future relating to
the Collegeville Inn Assets and operations,  and the protections relating to the
management  fees from its contracts and future  contracts.  Management  believes
that these plans,  supported by the fact that the Company still had stockholders
equity of  approximately  $4.0  million  as of March 31,  2007,  reinforces  the
Company's ability to continue as a going concern.

Management believes that operating cash flow, proceeds from the sale or lease of
certain assets,  available cash and available  credit resources will be adequate
to make repayments of indebtedness,  meet the working capital needs, satisfy the
needs of its operations, and to meet anticipated capital expenditures during the
next twelve months ending March 31, 2008.

In view of the matters described above, recoverability of a major portion of the
recorded  asset  amounts shown in the  Company's  accompanying  balance sheet is
dependent upon continued  operations of a continuing  basis, to maintain present
financing,  and to succeed in its future  operations.  The  Company's  financial
statements  do not include any  adjustment  relating to the  recoverability  and
classification  of  recorded  asset  amounts or amounts  and  classification  of
liabilities  that might be necessary should the Company be unable to continue in
existence.

The Company may seek to access the public equity market whenever  conditions are
favorable.  Any additional public funding may result in significant dilution for
existing  shareholders and could involve the issuance of securities with rights,
which are senior to those of  existing  stockholders.  The Company may also need
additional  funding  earlier than  anticipated,  and its 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.

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.

                                       15

REVENUE RECOGNITION

Revenue  is  generated  primarily  from  fees for food  service  management  and
facilities management at continuing care and health care facilities, schools and
the Collegeville Inn Conference and Training Center.

The Company provides its services under several different financial arrangements
including a fee basis and guaranteed rate basis. For Fee Contracts,  the Company
manages  Operations  at a Customer  facility  and all  expenses  are paid by the
Customer. The Company recognizes Revenue in the amount of the Fee Charged.

For  Guaranteed  Rate  Contract,  the Company  charges  Customers an established
amount for services  provided (for example,  per Patient Day) and is responsible
for all the expenses  related to the delivery of those  services.  The amount of
the billing is recorded as Revenue and the  delivery  costs are recorded as Cost
of Sales. These accounts are also referred to as P&L accounts.

Regardless  of the  different  financial  arrangements,  the Company  recognizes
revenue when services have been rendered and the contract price is determinable,
and  collectibility  is reasonably  assured.  Ongoing  assessments of the credit
worthiness   of   customers   provide  the  Company   reasonable   assurance  of
collectibility upon performance of services. The Company has no other obligation
with respect to its services once services are performed.

ACCOUNTS RECEIVABLE

The Company  performs  ongoing  credit  evaluations of its customers and adjusts
credit   limits   based  on  payment   history   and  the   customer's   current
creditworthiness, 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 OR DISPOSAL OF LONG LIVED ASSETS

The carrying  value of property,  plant,  and equipment is evaluated  based upon
current and  anticipated  undiscounted  operating cash flows before debt service
charges.  An impairment is  recognized  when it is probable that such  estimated
future  cash  flows  will  be  less  than  the  carrying  value  of the  assets.
Measurement  of the amount of  impairment,  if any, is based upon the difference
between the net carrying value and the fair value, which is estimated based upon
anticipated undiscounted operating cash flows before debt service charges. Based
upon a review  of its  long-lived  assets,  the  Company  did not  recognize  an
impairment loss for the quarters ended March 31, 2007 or June 30, 2006; however,
there can be no assurance that the Company will not recognize an impairment loss
on its long-lived assets in future periods.

                                       16

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 carry  forwards are also  recognized as deferred tax assets.
When necessary,  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 as income in the period that the change is enacted.

As of March 31, 2007 and June 30,  2006,  the Company  maintained a deferred tax
asset of $2,265,908 and $2,004,333 respectively.  The Company has not provided a
valuation  allowance  against its deferred tax assets after  consideration  of a
future  gain on the  disposal  of  certain  land  adjacent  to its  Collegeville
facility and anticipated  future  profitable  operating  results.  However,  the
amount  realizable  may be  reduced  if future  taxable  income is reduced or is
insufficient to utilize the entire deferred tax asset.

CAPITAL EXPENDITURES

The Company has no other  material  commitments  for  capital  expenditures  and
believes that its existing cash and cash  equivalents,  cash from operations and
available  revolving  credit  will be  sufficient  to  satisfy  the needs of its
operations and its capital  commitments for the next twelve months.  However, if
the need arose,  the Company  would seek to obtain  capital from such sources as
continuing debt financing or equity financing.

EFFECTS OF INFLATION

Substantially  all of the  Company's  agreements  with its  customers  allow the
Company to pass  through to its  customers  its  increases in the cost of labor,
food  and  supplies.  The  Company  believes  that it  will  be able to  recover
increased  costs  attributable  to inflation by  continuing to pass through cost
increases to its customers.

MEDICARE AND MEDICAID REIMBURSEMENTS

A substantial  portion of the Company's revenue is dependent upon the payment of
its fees by customer health care facilities,  which, 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.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

                                       17

ITEM 4T.

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 Principal  Financial  Manager 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.

                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings                                               None

Item 1A.    There are no material  changes to the risk  factors
            disclosed in the  Company's  Annual  Report on Form 10-K
            for the Fiscal Year ended June 30, 2006.

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                                               None

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.

                                       18

                                   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 Manager

Date:  May 15, 2007

                                       19
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