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 December 31, 1998

                                       or
/ /      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

 For the transition period from ______________ to _______________

                         Commission File 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 / /.

2,727,734  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 16, 1999.

<PAGE>

                                TABLE OF CONTENTS


Part I.      Financial Information                                     Page No.

             Consolidated Balance Sheets of
             December 31, 1998 (unaudited) and June 30, 1998           2 - 3

             Consolidated Statements of Operations for the Three and
             Six Months Ended December 31, 1998 (unaudited) and
             1997 (unaudited)                                              4

             Consolidated Statements of Cash Flows for the
             Six Months Ended December 31, 1998 (unaudited)
             and 1997 (unaudited)                                          5

             Notes to Unaudited Consolidated Financial Statements          6

             Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                 7 - 9

Part II.     Other Information                                            10

             Signatures                                                   11





                                      - 1 -


<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                            December 31,    June 30,
                                                                                              1998            1998
                                                                                            ------------    --------
                                                                                          (unaudited)
<S>                                                                                          <C>         <C>        
Current assets:
   Cash and cash equivalents                                                                 $ 13,853    $   131,517
   Accounts receivable, net of allowance for doubtful
      accounts of $843,387 and $702,406, respectively.                                      7,374,701      5,665,739
   Unbilled  revenue                                                                           48,333        201,950
   Deferred income taxes                                                                      469,797        469,797
   Inventory                                                                                  439,169        336,380
   Prepaid expenses                                                                           173,541          -----
                                                                                            ---------     ----------
Total current assets                                                                        8,519,394      6,805,383
                                                                                            ---------     ----------

Property and equipment, net                                                                10,250,867     10,386,775
                                                                                           ----------     ----------

Other assets:
   Restricted cash                                                                            946,349        906,838
   Advances to officers                                                                       333,265        289,623
   Investment in contracts, net of accumulated amortization of
    $1,691,137 and $1,630,859, respectively.                                                   30,352         90,630
   Deferred income taxes                                                                      453,209        453,209
   Bond issue costs                                                                           260,977        268,260
   Deferred costs and other assets                                                              4,962         10,122
                                                                                           ----------      ---------
Total other assets                                                                          2,029,114      2,018,682
                                                                                            ---------      ---------

Total assets                                                                              $20,799,375    $19,210,840
                                                                                          ===========    ===========
</TABLE>





            See Notes to Unaudited Consolidated Financial Statements

                                      - 2 -


<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                          December 31,       June 30,
                                                                                              1998             1998
                                                                                              ----             ----
                                                                                          (unaudited)
<S>                                                                                        <C>              <C>        
Current liabilities:
     Accounts payable                                                                       $5,972,143      $ 4,984,804
     Accrued expenses                                                                          856,274          601,526
     Accrued payroll and related expenses                                                      510,019          440,356
     Current portion of long-term debt                                                         141,250          407,311
     Other                                                                                     195,439          157,632
                                                                                             ---------       ----------
Total current liabilities                                                                    7,675,125        6,591,629
                                                                                             ---------       ----------

Long-term debt, net of current portion                                                       6,237,053        5,616,552
Other                                                                                          105,958          126,564
                                                                                             ---------      -----------
Total long-term liabilities                                                                  6,343,011        5,743,116
                                                                                             ---------      -----------

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

     Common stock:
     Class A - no par, 10,000,000 shares authorized; 3,000,000 and
       3,000,000 issued, 2,727,734 and  2,742,734 outstanding, respectively.                 3,801,926        3,801,926
     Class B - no par, 100,000 shares authorized, issued and outstanding.                           48               48
     Retained earnings                                                                       3,520,176        3,600,032
                                                                                             ---------       ----------
                                                                                             7,322,150        7,402,006

     Less:  treasury stock (Class A common: 272,266 and 257,266
       shares, respectively) - at cost                                                        (540,911)        (525,911)
                                                                                            ----------       ----------
Total stockholders' equity                                                                   6,781,239        6,876,095
                                                                                            ----------       ----------

Total liabilities and stockholders' equity                                                 $20,799,375      $19,210,840
                                                                                           -----------      -----------
</TABLE>


            See Notes to Unaudited Consolidated Financial Statements

                                      - 3 -

<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                           Three months ended                Six months ended
                                                              December 31,                     December 31,
                                                          1998             1997             1998              1997
                                                          ----             ----             ----              ----
<S>                                                  <C>               <C>                <C>                <C>      
Food service revenue                                $9,996,543        $9,421,397         $19,111,609        $18,549,778

Cost of operations
     Payroll and related expenses                    3,756,574         4,131,532           7,659,991          7,921,093
     Other costs of operations                       4,389,645         3,585,495           8,059,518          7,171,392
                                                     ---------         ---------         -----------        -----------
          Cost of operations                         8,146,219         7,717,027          15,719,509         15,092,485
                                                     ---------         ---------          ----------        -----------
          Gross profit                               1,850,324         1,704,370           3,392,100          3,457,293
                                                     ---------         ---------          ----------         ----------
                                                                                           
Expenses                                                                                     
     General and administrative                      1,399,793         1,242,203           2,749,790          2,575,519
     Depreciation and amortization                     176,776           286,276             347,747            425,551
     Provision for doubtful accounts                    60,000            60,726             120,000            147,884
                                                     ---------         ---------           ---------          ---------
          Expenses                                   1,636,569         1,589,205           3,217,537          3,148,954
                                                     ---------         ---------           ---------          ---------
          Income from operations                       213,755           115,165              74,563            308,339
                                                     ---------         ---------           ---------          ---------

Other income
     Other income                                        6,130            10,024              7,454             13,433
     Interest income                                    12,989            27,835             25,870             80,044
     Interest (expense)                               (132,947)         (101,371)          (237,743)          (170,269)
                                                     ---------          --------          ---------           --------
          Other expense - net                         (113,828)          (63,962)          (204,419)           (76,792)
                                                     ---------          --------          ---------           --------

Income (loss) before income taxes                       99,927            51,203            (29,856)           231,547
Provision for income taxes                              30,000            32,433             50,000            127,505
                                                     ---------          --------          ---------           --------

Net income (loss)                                    $  69,927          $ 18,770           ($79,856)          $104,042
                                                     =========          ========          =========           ========

Basic and diluted earnings
  (loss) per common share                            $     .03          $    .01             ($0.03)          $   0.04
                                                     ---------          --------          ---------          ---------

Weighted average share outstanding                   2,735,560         2,866,619          2,738,332          2,869,609
                                                    ==========         =========          =========          =========
</TABLE>


            See Notes to Unaudited Consolidated Financial Statements

                                      - 4 -


<PAGE>

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

<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                             December 31,
                                                                                     1998                    1997
                                                                                     ----                    ----
Operating activities:
<S>                                                                               <C>                      <C>     
Net income/ (loss)                                                                ($ 79,856)              $104,042
Adjustment to reconcile net income to net cash used in operating
activities:                                                                                                 
     Depreciation and amortization                                                  347,747                425,551
     Provision for doubtful accounts                                                120,000                147,884
     Amortization of deferred gain                                                  (60,278)                 -----
     Amortization of bond costs                                                       7,283                  -----
     Amortization of unearned interest income                                          ---                 (16,714)
Changes in assets and liabilities:
     Accounts receivable                                                         (1,708,962)               328,859
     Notes receivable                                                                  ---                   4,546
     Prepaid expenses                                                              (173,541)               (71,934)
     Deferred income taxes                                                             ---                 (62,663)
     Unbilled revenue                                                               153,617                  -----
     Accrued income receivable                                                        -----                (11,660)
     Deferred costs                                                                   -----                 84,259
     Inventory and other                                                           (102,789)               (51,636)
     Accounts payable                                                               987,339                483,864
     Accrued legal and expenses                                                     254,748                 35,258
     Accrued payroll and taxes                                                       69,663                  -----
     Accrued income taxes                                                            (5,092)              (112,503)
     Other                                                                           22,849                (25,894)
                                                                                     ------                  -----
Net cash provided by (used in) operating activities                                (167,272)             1,261,259
                                                                                   ---------               -------
Investing activities:
Deferred costs                                                                        5,160                   ----
Advances to employees and officers                                                  (43,642)               (18,752)
Payment of lease receivable                                                            ----                 78,976
Transfer restricted cash to/(from) cash                                             (39,511)                 -----
Acquisition of fixed assets                                                        (211,839)            (2,603,682)
                                                                                   --------              ---------
Net cash (used in) investing activities                                            (289,832)            (2,543,458)
                                                                                   --------              ---------
Financing activities:
Repayments of long term debt                                                       (168,060)              (548,332)
Advances from line of credit                                                        522,500                -------
Purchase of treasury stock                                                          (15,000)               -------
Other                                                                               -------               (165,372)
                                                                                    -------            ------------
Net cash (used in) financing activities                                             339,440               (713,704)
                                                                                    -------            ------------
     Net (decrease) in cash                                                        (117,664)            (1,995,903)
Cash and cash equivalents at beginning of period                                    131,517              2,267,813
                                                                                    -------            ------------
Cash and cash equivalents at end of period                                          $13,853               $271,910
                                                                                    =======             ===========

Supplemental cash flow information:
     Interest paid                                                                 $237,743               $170,089
     Income taxes paid                                                             $143,629                $41,067
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                                  - 5 -

<PAGE>

                      NUTRITION MANAGEMENT SERVICES COMPANY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


1.               Basis of Presentation

                 The accompanying  unaudited  consolidated  financial statements
                 were prepared in accordance with generally accepted  accounting
                 principles  for interim  financial  information  for  quarterly
                 reports on Form 10-Q and, therefore,  do not include all of the
                 information  and  footnotes   required  by  generally  accepted
                 accounting   principles  for  complete  financial   statements.
                 However, all adjustments that, in the opinion of management are
                 necessary for fair  presentation  of the financial  statements,
                 have been  included.  The results of operations for the interim
                 periods presented are not necessarily indicative of the results
                 that may be expected for the entire fiscal year ending June 30,
                 1999.  The financial  information  presented  should be read in
                 conjunction with the Company's  financial  statements that were
                 filed under Form 10-K.

2.               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 six-month  periods ending December
                 31, 1998 and 1997.  Stock  options and  warrants did not impact
                 earnings per share each period as they were anti-dilutive.

3.               Litigation

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

                 During 1998,  the Company  adopted the  provisions  of SFAS No.
                 128,  Earnings Per Share,  which  eliminates  primary and fully
                 diluted  earnings per share and requires  presentation of basic
                 and  diluted   earnings  per  share  in  conjunction  with  the
                 disclosure of the  methodology  used in computing such earnings
                 per share.  Basic earnings per share  excludes  dilution and is
                 computed by dividing income available to common shareholders by
                 the  weighted  average  common  shares  outstanding  during the
                 period.  Diluted  earnings  per share  takes into  account  the
                 potential  dilution  that could  occur if  securities  or other
                 contracts to issue common stock were  exercised  and  converted
                 into common stock.

                                      - 6 -
<PAGE>
           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 note thereto.

Results of Operations

         Revenues for the quarter ended  December 31, 1998 were  $9,996,543,  an
increase  of  $575,146  or  6.1%  compared  to  revenues  of  $9,421,397  in the
corresponding  quarter  last  year.  Revenues  for the six  month  period  ended
December  31, 1998 were  $19,111,609  an increase of $561,831 and 3% compared to
the  corresponding  period in 1997.  The increases are a result of new contracts
and revenues  from the Company's  Collegeville  Inn & Conference  Center,  which
opened on September 14, 1997.

         Cost of  operations  provided for the current  quarter was  $8,146,219,
compared to  $7,717,027  for similar  expenses in the same period last year,  an
increase of $429,192 or 5.6%.  For the six month period ended December 31, 1998,
cost of operations  provided were  $15,719,509,  compared to $15,092,485 for the
same  period  last  year,  an  increase  of  $627,024  or 4.2%  compares  to the
corresponding  period in 1997. These increases in costs of services provided are
due to increased revenues during the same period.

         Gross Profit for the quarter was $1,850,324, compared to $1,704,370, an
increase of $145,954 or 8.6%. As a percentage of revenue, gross profit increased
from 18.1% in 1997 to 18.5% in 1998. This increase is due to revenues increasing
at a greater  percentage than direct  expenses.  For the six-month  period ended
December 31, 1998, gross profit was $3,392,100  versus  $3,457,293 a decrease of
$65,193.

         General  and  administrative  expenses  for the  quarter  were 16.4% of
revenue,  compared  to 16.9% of  revenue  for the same  quarter  last  year,  an
increase  of  $47,364.  The  increase  is the result of an  increase in overhead
associated with the new business start-up.

         Interest expense for the three-month  period totaled $132,947  compared
to $101,371  for the same  period  last year.  For the  six-month  period  ended
December  31,  1998,  interest  expense  was  $237,743  versus  $170,269  in the
corresponding period in 1997. The increases in interest expense are attributable
to increased short-term borrowings for working capital purposes.

         Net income  after taxes for the  quarter  ended  December  31, 1998 was
$69,927 compared to $18,770 for the  corresponding  quarter last year.  Earnings
per share for the current  quarter was $0.03  compared to earnings  per share of
$0.01 for the same quarter last year. The increase in current quarter net income
and earnings per share are the result of the improved  income from operations in
the Company's core business and reduced losses at the Collegeville Inn.

                                      - 7 -


<PAGE>
Liquidity and Capital Resources

         At December 31, 1998 the Company had working capital of $884,269.

         Operating Activities.  Cash used in operations for the six months ended
December 31, 1998 was $167,272 compared to $1,261,259 provided by operations for
the six months ended  December 31,  1997. A increase in accounts  receivable  of
$1,708,962  and an  increase  in accounts  payable of  $987,339  were  primarily
responsible for the current quarter's activity.

         Investing Activities. Investing activities consumed $289,832 in cash in
the current  quarter  compared to $2,543,458 in cash consumed in the same period
last year. Prior year investing  activities  included $2,189,427 in purchases of
property and equipment at the Collegeville Inn & Conference Center.

         Financing  Activities.  Current quarter financing  activities  consumed
$117,664 in cash  compared  to  $713,704  consumed in the same period last year.
Repayment of long term debt consumed  approximately  $168,060 in cash during the
current  period.  The  Company  also  received  working  capital  line of credit
advances of $522,500 during the current period.

         Capital  Resources.  The Company has certain credit facilities with its
bank  including  a line of credit and three term loans.  The Company  issued two
series of Industrial  Development Bonds totaling $3,560,548 in December 1996. As
of December 31, 1998, the Company has  approximately  $950,000  available on its
line of credit.  The Company is current with all its obligations to its Bank and
on its bonds and has met all financial  covenants in its loan  documents  except
those that were specifically waived by the bank.

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

         The  Company  has no material  commitments  for  capital  expenditures,
including the  Collegeville Inn & Conference  Center,  and believes that is cash
from operations, existing balances, and available credit facilities are adequate
for the  foreseeable  future to satisfy the needs of its  operations and to fund
continued growth.

Year 2000 Compliance

The Company is aware of the issues  related to the Year 2000 that are associated
with the programming code in existing computer systems.  The "Year 2000 problem"
may affect  every  computer  operation to varying  degrees.  Systems that do not
properly recognize the Year 2000 could generate erroneous data or cause a system
to fail.  Management is in the process of working with  technical  support staff
and  software  vendors to affirm that the Company is prepared for the Year 2000.
Management does not

                                      - 8 -
<PAGE>
anticipate  that the Company  will incur  significant  operating  expenses or be
required to invest  heavily in  computer  systems  improvements  to be Year 2000
compliant.  However,  significant  uncertainty  exists  concerning the potential
costs  and  effects  associated  with any Year  2000  compliance.  Any Year 2000
compliance  problem of either  the  Company or its  customers  could  materially
adversely affect the Company's business,  operating results, financial condition
and prospects.

NASDAQ Notification

The  Nasdaq  Stock  Market  has  notified  the  Company  that the  Company is in
violation of its  requirement  of  maintaining  a  minimum of  $1,000,000 of the
market value of the public float.  The Company has been advised that as a result
of this failure,  its Common Stock will be delisted from The Nasdaq Stock Market
on February 23, 1999. To stay the  delisting,  the Company may request a hearing
by the close of business on February  23, 1999.  In  addition,  The Nasdaq Stock
Market has notified the Company that it is in violation of a requirement  that a
listing  company  must  maintain a closing  bid price  greater  than or equal to
$1.00.  The Company has been  provided  ninety  (90)  calendar  days in which to
regain  compliance  with the minimum bid requirement and maintain its listing of
common stock (NMSCA) on The Nasdaq SmallCap Market.  To stay the delisting,  the
Company may request a hearing by the close of business on April 14, 1999.

If the Common Stock is delisted from The Nasdaq Stock Market,  trading,  if any,
therein would  thereafter be conducted on the OTC Bulletin  Board and the Common
Stock would be  considered a penny stock.  SEC  regulations  generally  define a
penny  stock to be an equity  security  that is not listed on The  Nasdaq  Stock
Market or a national  securities  exchange  and that has a market  price of less
than $5.00 per share,  subject to certain  exceptions.  The  regulations  of the
Securities and Exchange Commission would require  broker-dealers to deliver to a
purchaser  of Common  Stock a  disclosure  schedule  explaining  the penny stock
market and the risks associated with it. Various sales practice requirements are
also  imposed  on  broker-dealers  who sell penny  stocks to persons  other than
established  customers and accredited  investors  (generally  institutions).  In
addition,  broker-dealers  must provide the customer  with current bid and offer
quotations for the penny stock,  the compensation of the  broker-dealer  and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. If the Common Stock is
traded  on the  OTC  Bulletin  Board  and  becomes  subject  to the  regulations
applicable  to penny  stocks,  investors  may find it more  difficult  to obtain
timely and accurate quotes and execute trades in the Common Stock.

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. 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.














                                      - 9 -

<PAGE>
                           PART II - OTHER INFORMATION


Item 1.           Legal Proceedings                                         None

Item 2.           Changes in Securities                                     None

Item 3.           Defaults Upon Senior Securities                           None

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

Item 5.           Other Information                                         None

Item 6.           Exhibits and Reports on Form 8-K

                  (a)  Exhibits                                       Exhibit 27

                  (b)  Reports on Form 8-K                                  None








                                     - 10 -

<PAGE>

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









Date:  February 16, 1999







                                                  - 11 -