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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, 2006

                                       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 Identification No.)
incorporation or organization)

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 May 5, 2006.

                                TABLE OF CONTENTS

Part I.     FINANCIAL INFORMATION                                       PAGE NO.

            Item 1. - Financial Information                                2

            Consolidated Balance Sheets as of
            March 31, 2006 (unaudited) and June 30, 2005                   2

            Consolidated Statements of Operations for the Nine
            Months Ended March 31, 2006 (unaudited) and
            2005 (unaudited)                                               3

            Consolidated Statements of Cash Flows for the Nine
            Months Ended March 31, 2006 (unaudited) and
            2005 (unaudited)                                               4

            Notes to Consolidated Financial Statements                   5 - 9

            Item 2. -- Management's Discussion and Analysis of
            Financial Condition and Results of Operations               10 - 14

            Item 3. - Quantitative and Qualitative Disclosure
            about Market Risk                                             14

            Item 4 - Controls and Procedures                            14 - 15

Part II.    Other Information                                             15

            Signatures                                                    16

                      NUTRITION MANAGEMENT SERVICES COMPANY
                           CONSOLIDATED BALANCE SHEETS

                                                                               March 31, 2006      June 30, 2005
                                                                                (Unaudited)
                                                                               --------------      -------------
Current assets:
  Cash and cash equivalents                                                     $  1,178,633       $  2,889,616
  Marketable securities                                                                - 0 -            213,561
  Accounts receivable, net of allowance for doubtful
    accounts of $973,900 and $958,702, respectively                                3,218,324          3,063,514
  Inventory                                                                          159,980            128,949
  Prepaid and other current assets                                                   319,682            413,922
  Income Tax Refund                                                                      -0-             43,730
                                                                                ------------       ------------
Total current assets                                                               4,876,619          6,753,292

Property and equipment, net                                                        6,719,959          6,989,627

Other assets:
  Restricted cash                                                                    250,000            250,000
  Note receivable                                                                    101,911            129,702
  Advances to employees                                                              424,794            434,283
  Deferred income taxes                                                            1,890,709          1,456,114
  Bond issue costs, net of accumulated amortization of $135,955
    and $125,029, respectively                                                       155,969            166,295
  Other assets                                                                        11,321             11,321
                                                                                ------------       ------------
Total other assets                                                                 2,834,704          2,447,715
                                                                                ------------       ------------
Total assets                                                                    $ 14,431,282       $ 16,190,634
                                                                                ============       ============

Current liabilities:
  Current portion of long-term debt                                             $    150,000       $    150,000
  Current portion of note payable                                                     41,732              - 0 -
  Accounts payable                                                                 3,111,431          3,991,267
  Accrued payroll and related expenses                                               262,247            257,319
  Accrued expenses and other                                                         350,573            773,547
                                                                                ------------       ------------
Total current liabilities                                                          3,915,983          5,172,133

Long-Term liabilities:
  Long-term debt, net of current portion                                           5,729,922          5,604,921

Commitments and contingencies

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,
    2,747,000 outstanding                                                          3,801,926          3,801,926
  Class B - no par, 100,000 shares authorized, issued and outstanding                     48                 48
  Retained earnings                                                                1,482,966          2,102,929
  Other comprehensive income                                                           - 0 -              8,240
  Less:  treasury stock (Class A common: 253,000 and 253,000
    shares, respectively) - at cost                                                 (499,563)          (499,563)
                                                                                ------------       ------------
Total stockholders' equity                                                         4,785,377          5,413,580
                                                                                ------------       ------------
                                                                                $ 14,431,282       $ 16,190,634
                                                                                ============       ============

            See Notes to Unaudited Consolidated Financial Statements

                                       2

                      NUTRITION MANAGEMENT SERVICES COMPANY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                   Three Months Ended                   Nine Months Ended
                                                        March 31,                            March 31,
                                                2006               2005               2006               2005
                                            ------------       ------------       ------------       ------------
Food Service Revenue                        $  5,515,970       $  6,627,280       $ 17,949,350       $ 20,006,860
Cost of Operations
  Payroll and related expenses                 2,382,632          2,836,670          7,447,719          8,064,678
  Other costs of operations                    2,237,426          2,742,528          7,269,551          8,246,529
                                            ------------       ------------       ------------       ------------
Total cost of operations                       4,620,058          5,579,198         14,717,270         16,311,207
                                            ------------       ------------       ------------       ------------

Gross Profit                                     895,912          1,048,082          3,232,080          3,695,653

Expenses
  General and administrative expenses          1,321,411          1,239,134          3,812,057          3,624,399
  Depreciation and amortization                   86,970            140,339            316,354            443,323
  Provision for doubtful accounts                  - 0 -             30,000             60,000            135,000
                                            ------------       ------------       ------------       ------------
Total expenses                                 1,408,381          1,409,473          4,188,411          4,202,722
                                            ------------       ------------       ------------       ------------

Loss from operations                            (512,469)          (361,391)          (956,331)          (507,069)

Other income/(expense)
  Other                                           84,132            (12,467)            82,398              - 0 -
  Gain on sale of securities                      44,256              - 0 -             44,256              - 0 -
  Interest income                                 17,615              2,223             59,849              4,478
  Interest expense                              (100,015)           (74,257)          (284,728)          (200,819)
                                            ------------       ------------       ------------       ------------
Total other income/(expense)                      45,988            (84,501)           (98,225)          (196,341)
                                            ------------       ------------       ------------       ------------

Loss before income taxes                        (466,481)          (445,892)        (1,054,556)          (703,410)

Income tax benefit                              (190,454)               -0-           (434,595)               -0-
                                            ------------       ------------       ------------       ------------

Net loss                                    $   (276,027)      $   (445,892)      $   (619,961)      $   (703,410)
                                            ============       ============       ============       ============

Net loss per share - basic and diluted      $      (0.10)      $      (0.16)      $      (0.22)      $      (0.25)
                                            ============       ============       ============       ============

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

            See Notes to Unaudited Consolidated Financial Statements

                                       3

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

                                                           Nine Months Ended March 31,
                                                             2006              2005
                                                         ------------      ------------
Operating activities:
Net loss                                                 $   (619,961)     $   (703,410)
Adjustments to reconcile net loss to
  net cash used in operating activities:
     Gain on sale of marketable securities                    (44,256)              -0-
     Depreciation and amortization                            316,354           443,323
     Provision for bad debts                                   60,000           135,000
     Amortization of bond costs                                10,326            10,926
     (Benefit)/provision for deferred taxes                  (434,595)              -0-
Changes in assets and liabilities:
     Accounts receivable                                     (187,019)       (1,383,407)
     Inventory                                                (31,031)            6,834
     Prepaid and other current assets                          94,240           (42,001)
     Income tax refund                                         43,730               -0-
     Accounts payable                                        (879,836)        1,063,662
     Accrued payroll and related expenses                       4,928            (3,094)
     Accrued expenses and other                              (422,975)         (174,641)
                                                         ------------      ------------
Net cash used in operating activities                      (2,090,095)         (646,808)

Investing activities:
    Purchases of marketable securities                            -0-           (37,328)
    Proceeds from sale of marketable securities               249,577            35,570
    Repayment of advance to employee                            9,489               -0-
    Purchase of property and equipment                        (46,686)           (2,961)
                                                         ------------      ------------
Net cash provided by/(used in) investing activities           212,380            (4,719)

Financing activities:
     Proceeds from note payable                               238,869               -0-
     Repayment of note payable                               (197,137)         (203,000)
     Repayments of long-term borrowing                       (150,000)         (154,453)
     Proceeds from long-term borrowing                        275,000           436,000
                                                         ------------      ------------
     Net cash provided by financing activities                166,732            78,547
                                                         ------------      ------------

Net decrease in cash                                       (1,710,983)         (572,980)

Cash and cash equivalents - beginning of period             2,889,616           946,523
                                                         ------------      ------------

Cash and cash equivalents - end of period                $  1,178,633      $    373,543
                                                         ============      ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:

Interest Paid                                            $    276,984      $    193,819
Taxes Paid                                                      5,362             3,187

            See Notes to Unaudited Consolidated Financial Statements

                                       4

                      NUTRITION MANAGEMENT SERVICES COMPANY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

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,
      2006. The financial  information  presented  should be read in conjunction
      with the Company's  2005 financial  statements  that were filed under Form
      10-K.

2.    NEW ACCOUNTING PRONOUNCEMENTS

      In November 2004, the Financial Accounting Standards Board ("FASB") issued
      SFAS  No.  151,  "INVENTORY  COSTS - AN  AMENDMENT  TO APB NO.  43."  This
      statement provides guidance to clarify the accounting for abnormal amounts
      of idle facility  expense,  freight  handling  costs,  and wasted material
      (spoilage),  among other production costs. Provisions of APB No. 43 stated
      that  under  some  circumstances,  items  such as idle  facility  expense,
      excessive  spoilage  and other  costs  may be so  abnormal  as to  require
      treatment as current period  charges.  This statement  requires that those
      items be recognized as current period  charges  regardless of whether they
      meet the criterion of "so  abnormal." In addition,  SFAS 151 requires that
      allocation  of fixed  production  overheads to the costs of  conversion be
      based on the normal capacity of the production facilities. The adoption of
      this statement is required for fiscal years beginning after June 15, 2005.
      Adoption  of the  Statement  has  not had  and is not  expected  to have a
      material impact on the financial statements of the Company.

      In November 2004, the FASB issued SFAS No. 152 "ACCOUNTING FOR REAL ESTATE
      TIME-SHARING  TRANSACTIONS  - AN  AMENDMENT  OF SFAS NO. 66 AND 67".  This
      Statement  amends SFAS No. 66  "ACCOUNTING  FOR SALES OF REAL ESTATE",  to
      reference the financial  accounting and reporting guidance for real estate
      time-sharing  transactions that is provided in AICPA Statement of Position
      (SOP) 04-2,  Accounting for Real Estate  Time-Sharing  Transactions.  This
      Statement  also  amends  SFAS No. 67,  "ACCOUNTING  FOR COSTS AND  INITIAL
      RENTAL  OPERATIONS OF REAL ESTATE PROJECTS," to state the guidance for (a)
      incidental  costs and (b) costs incurred to sell real estate projects does
      not apply to real estate  time-sharing  transactions.  The  accounting for
      those  operations and costs is subject to guidance in SOP 04-2,  effective
      for financial  statements with fiscal years beginning after June 15, 2005.
      Adoption  of this  statement  has not  had and is not  expected  to have a
      material impact on the financial statements of the Company.

      In November 2004, the FASB issued SFAS No. 153,  "EXCHANGES OF NONMONETARY
      ASSETS - AN AMENDMENT TO APB NO. 29." This Statement amends Opinion No. 29
      to eliminate the exception for nonmonetary exchanges of similar productive
      assets  and  replaces  it  with  a  general  exception  for  exchanges  of
      nonmonetary  assets that do not have commercial  substance.  A nonmonetary

                                       5

      exchange has  commercial  substance if the future cash flows of the entity
      are  expected to change  significantly  as a result of the  exchange.  The
      adoption of this  statement is required for fiscal years  beginning  after
      June 15, 2005.  Adoption of this statement has not had and is not expected
      to have a material impact on the financial statements of the Company.

      In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "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 will be required to adopt SFAS
      123 (R) as of July 1, 2006. 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 adoption of this  statement is not expected to have a material  impact
      on the consolidated financial statements of the Company.

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 nine-month period ending
      March 31, 2006 and 2005.  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  former  client  did not  appeal  the jury
      verdict and the Company  received  $2,500,000 on June 1, 2005. The Company
      filed an appeal of the jury's failure to award  interest.  Fees due to the
      Company's  legal  counsel in the amount of  $340,000  have been  placed in
      escrow  pending the outcome of the appeal.  Arguments  are  scheduled  for
      review by the Appellate Judge in May 2006.

      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
      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.

      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 quarter ended March 31, 2005:

                                                Food Service       Training and
                                                 Management      Conference Center       Total
                                                ------------     -----------------    ------------
      Food service revenue                      $  6,453,511       $    173,769       $  6,627,280
      Depreciation and amortization                   15,141            125,198            140,339
      Income (loss) from operations                  139,575           (500,966)          (361,391)
      Interest income                                  2,223                 --              2,223
      Interest expense                               (45,816)           (28,441)           (74,257)
      Income (loss) before taxes (benefit)            83,515           (529,407)          (445,892)
      Net income (loss)                               83,515           (529,407)          (445,892)
      Total assets                              $  6,988,183       $  7,558,895       $ 14,547,078

                                       7

      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

      For the nine months ended March 31, 2005:

                                                Food Service       Training and
                                                 Management      Conference Center       Total
                                                ------------     -----------------    ------------
      Food service revenue                      $ 19,355,672       $    651,188       $ 20,006,860
      Depreciation and amortization                   69,331            373,992            443,323
      Income (loss) from operations                  593,150         (1,100,219)          (507,069)
      Interest income                                  4,478                 --              4,478
      Interest expense                              (121,959)           (78,861)          (200,819)
      Income (loss) before taxes (benefit)           476,534         (1,179,944)          (703,410)
      Net income (loss)                              476,534         (1,179,944)          (703,410)
      Total assets                              $  6,988,183       $  7,558,895       $ 14,547,078

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 of cash was
      placed in a cash collateral  account and pledged as additional  collateral
      against  the  revolving  credit  line.  A portion  of the cash  collateral
      account,  $250,000  has  been  released  and is  available  for  operating
      purposes.  At  March  31,  2006 the  Company  maintained  restricted  cash
      balances of $250,000, which was not available for operating purposes.

      At March 31, 2006 the Company had  utilized  all of the  revolving  credit
      line. At June 30, 2005, the Company had available  approximately  $275,079
      under the revolving credit  facility.  Advances under the revolving credit
      facility are used for working capital purposes.

      In March 2006,  the Company  entered into an agreement  whereby the credit
      loan  facility was extended to April 1, 2007.  The Company is current with
      all its obligations to its bank and on its bonds.  These credit agreements
      contain  covenants that include the  maintenance  of certain  consolidated
      fixed debt service coverage ratio, ratio of total consolidated liabilities
      to consolidated  tangible net worth, and minimum working capital. At March
      31, 2006 the Company had a total  liabilities  to tangible net worth ratio
      of 4.17,  exceeding  the  covenant  requirement  of 4.0.  The  Company has
      requested  a  waiver  of  this   covenant.   The  Company   satisfied  its
      profitability and working capital covenants.

                                       8

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. Additionally,  the agreement of sale for the
      land dated September 8, 2004 has been terminated.  As of February 16, 2006
      the Company has entered  into a letter of intent for an  agreement of sale
      for a  minimum  of  $3,200,000.  A formal  agreement  of sale has not been
      executed while the Company evaluates its strategic alternatives.

8.    OTHER COMPREHENSIVE INCOME (LOSS)

      Based  on  the  Company's  current  activities,   the  only  component  of
      accumulated  other  comprehensive   income  consists  of  changes  in  the
      unrealized gains or losses of marketable securities.  The Company has sold
      the  securities as March 31, 2006.  The gain of $44,256 has been reflected
      in Gain on Sale of Securities in the current quarter.

                                         Three months Ended            Nine months End
                                              March 31,                    March 31,
                                        2006           2005          2006           2005
                                      --------       --------      --------       --------
      Beginning balance               $ 20,610       $     --      $  8,240       $     --
      Current period change             39,410             --        60,026             --
      Tax effect                       (15,764)            --       (24,010)            --
                                      --------       --------      --------       --------
      Ending balance                    44,256       $     --        44,256       $     --
                                      ========       ========      ========       ========

      Gain on Sale of Securities       (44,256)            --       (44,256)            --

      Ending Balance                  $     --       $     --           $--       $     --
                                      ========       ========      ========       ========

                                       9

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 of Collegeville Inn Conference & Training Center, the sale
of land adjacent to the Collegeville Inn discussed in Note 7 - Collegeville Inn,
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

Revenues  for the quarter  ended March 31, 2006 were  $5,515,970,  a decrease of
$1,111,310  or 16.8%  compared to revenues of  $6,627,280  in the  corresponding
quarter  last year.  Revenues  for the nine  months  ended  March 31,  2006 were
$17,949,350,  a  decrease  of  $2,057,510  or  10.3%  compared  to  revenues  of
$20,006,860 in the corresponding  quarter last year. The decreases are primarily
due to the net impact of revenues from new contracts  versus  revenues from lost
contracts,  as well as lower revenue from the Collegeville  Inn.  Effective June
27, 2005,  the Company  closed the buffet  restaurant  at the  Collegeville  Inn
Conference  and  Training  Center to make the  facility  available  for  catered
events.

Cost of operations provided for the current quarter was $4,620,058,  compared to
$5,579,198  for similar  expenses  in the same  period last year,  a decrease of
$959,140 or 17.2%.  Cost of operations  for the nine months ended March 31, 2006
were $14,717,270, compared to $16,311,207, a decrease of $1,593,937 or 9.8%. The
decreases are primarily due to lower revenues during the period and the expenses
associated with those revenues.

Gross profit for the current  quarter was $895,912,  or 16.2% of gross  revenue,
compared  to  $1,048,082,  or 15.8% of gross  revenue,  for the same period last
year,  a decrease of $152,170 or 14.5%.  Gross  profit for the nine months ended
March 31, 2006 was  $3,232,080 or 18.0% of gross revenue  compared to $3,695,653
or 18.5% of gross  revenue.  The decrease in gross profit is primarily  due to a
reduction in revenue.

General and administrative  expenses for the quarter were $1,321,411 or 24.0% of
revenue,  compared to  $1,239,134  or 18.7% of revenue for the same quarter last
year, an increase of $82,277 or 6.6%.  General and  administrative  expenses for
the nine months ended March 31, 2006 were  $3,812,057 or 21.2% of gross revenue,
compared to  $3,624,399 or 18.1% of gross revenue for the same period last year,
an increase of $187,658 or 5.2%. These increases are due to additional marketing

                                       10

and business development positions,  higher professional fees and travel related
expenses  associated with new business.  Salary and payroll related expenses for
additional  management  support  personnel also contributed to the increase over
the previous period.

The Company entered the quarter with sufficient  provision for doubtful accounts
providing  for  potential  non-payments  on  a  specific  customer  and  general
unallocated basis. It was determined that no additional provisions were required
during the quarter,  versus an increase in the  provision of $30,000  during the
quarter  ended March 31,  2005.  Provision  for  doubtful  accounts for the nine
months ended March 31, 2006 and 2005 was $60,000 and $135,000, respectively.

Interest  expense for the quarter ended March 31, 2006 was $100,015  compared to
$74,257  for the same  period  last year.  Interest  expense for the nine months
ended March 31,  2006 and 2005 was  $284,728  and  $200,819,  respectively.  The
increase in interest expense is a result of an increase in interest rates.

For the reasons  stated above,  net loss after taxes for the quarter ended March
31, 2006 was $276,027  compared to $445,892 for the  corresponding  quarter last
year.  For the  nine  months  ended  March  31,  2006  and 2005 the net loss was
$619,961 and $703,410, respectively.

Net loss per share for the current  quarter  was $0.10  compared to net loss per
share of $0.16 for the same quarter  last year.  Net loss per share for the nine
months ended March 31, 2006 and 2005 was $0.22 and $0.25, respectively.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2006 the Company had working capital of $960,636.

OPERATING  ACTIVITIES.  Cash used in operations  for the nine months ended March
31, 2006 was  $2,090,095  compared to $646,808 used by  operations  for the nine
months  ended  March 31,  2005.  The  current  period's  activity  is  primarily
attributable to operating losses sustained in the current period.

INVESTING  ACTIVITIES.  Investing  activities  provided  $212,380 in cash in the
current  quarter  compared  to $4,719 in cash used in the same period last year.
The Company's investing activities are due to the sale of investment  securities
and the purchase of property and equipment.

FINANCING ACTIVITIES.  Current quarter financing activities provided $166,732 in
cash compared to $78,547 provided in the same period last year.

CAPITAL  RESOURCES.  The  Company has certain  credit  facilities  with its bank
including  a revolving  credit  facility  of  $3,500,000.  At March 31, 2006 the
company had utilized all of the  revolving  credit line.  At June 30, 2005,  the
Company  had  available  approximately  $275,079  under  the  revolving  credit.
Advances under the revolving credit are used for working capital  purposes.  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  $2,380,000  and  $2,530,000  as of March 31, 2006 and June 30,
2005 respectively.  In March 2006, the Company entered into an agreement whereby
the credit loan  facility was extended to April 1, 2007.  The Company is current
with  all its  obligations  to its bank  and on its  bonds,  but has not met all
financial covenants in its loan documents.

                                       11

================================================================================================================
                                                             Payment Due By Period
                                 ===============================================================================
                                                   Less than 1
    Contractual Obligations           Total            year        2 - 3 years     4 - 5 years    After 5 years
================================================================================================================
Long-Term Debt  *                  $5,879,922        150,000        3,834,922         370,000       1,525,000
================================================================================================================
Operating Leases                       41,665         33,909            7,756              --              --
================================================================================================================
Total Contractual Cash
Obligations                        $5,921,587       $183,909       $3,842,678       $ 370,000       $1,525,000
================================================================================================================

*     Long-Term  Debt  includes  the  $3,500,000   outstanding  balance  on  the
      revolving credit facility.

================================================================================================================
                                                                  Amount of Commitment Expiration
                                                                             Per Period
                                                    ============================================================
     Other Commercial           Total Amounts         Less than 1
       Commitments                Committed               year        1 - 3 years     4 - 5 years   Over 5 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           $       --       $6,565,000     $       --     $       --
================================================================================================================

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 next twelve months.

In an effort to extend its current bank debt, the Company may seek to access the
public equity market whenever conditions are favorable, even if the Company does
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.  The
Company 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.

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.

                                       12

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  and
facilities  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.

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.  During Fiscal
2004,  due to the passage of time,  the Company  made a decision to increase the
provision for doubtful accounts with respect to certain delinquent customers.

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  ending  March 31, 2006,  December 31, 2005 or
September 30, 2005; however, there can be no assurance that the Company will not
recognize an impairment loss on its long-lived assets in future periods.

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  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,  2006 and June 30, 2005 the Company  maintained  a deferred  tax
asset of $1,890,709 and $1,456,114 respectively.  The Company has not provided a
valuation  allowance  against its deferred tax assets after  consideration  of a

                                       13

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.

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 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.

                                       14

                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings                                              None

Item 1A.    Risk Factors                                         Not applicable

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.

                                       15

                                   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, 2006

                                       16
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