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 September 30, 1998

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

         For the transition period from ______________ to _______________

                         Commission File Number 0-19824

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

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

2,742,734  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 November 16, 1998.


<PAGE>
                                TABLE OF CONTENTS


Part I.       Financial Information                                     Page No.

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

              Consolidated Statements of Operations for the
              Three Months Ended September 30, 1998 (unaudited) and
              1997 (unaudited)                                             4

              Consolidated Statements of Cash Flows for the
              Three Months Ended September 30, 1998 (unaudited)
              and 1997 (unaudited)                                         5

              Notes to Financial Statements                                6

              Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                  7 - 8

Part II.      Other Information                                           10

              Signatures                                                  11



                                      -1-
<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                           September 30,    June 30,

                                                                                                1998          1998
                                                                                                ----          ----
                                                                                           (unaudited)
Current assets:
<S>                                                                                          <C>         <C>        
   Cash and cash equivalents                                                                 $ 75,499    $   131,517
   Accounts receivable, net of allowance for doubtful
      accounts of $783,387 and $702,406, respectively.                                      5,455,287      5,665,739
   Unbilled  revenue                                                                          140,580        201,950
   Deferred income taxes                                                                      455,625        469,797
   Inventory and Other                                                                        455,028        336,380
                                                                                          -----------    -----------
Total current assets                                                                        6,582,019      6,805,383
                                                                                          -----------    -----------

Property and equipment, net                                                                10,325,061     10,386,775

Other assets:
   Restricted cash                                                                            922,835        906,838
   Advances to officers                                                                       292,373        289,623
   Investment in contracts, net of accumulated amortization of
    $1,658,667 and $1,630,859, respectively.                                                   62,822         90,630
   Deferred income taxes                                                                      575,709        453,209
   Bond issue costs                                                                           264,619        268,260
   Deferred costs and other assets                                                             10,122         10,122
                                                                                          -----------    -----------
Total assets                                                                              $19,035,560    $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>

                                                                                           September 30,          June 30,
                                                                                               1998                1998
                                                                                               ----                ----
                                                                                            (unaudited)
Current liabilities:
<S>                                                                                         <C>             <C>        
     Accounts payable                                                                       $4,719,603      $ 4,984,804
     Accrued expenses                                                                          793,103          601,526
     Accrued payroll and related expenses                                                      425,669          440,356
     Current portion of long-term debt                                                         407,311          407,311
     Other                                                                                     289,660          157,632
                                                                                             ---------        ---------
Total current liabilities                                                                    6,635,346        6,591,629
                                                                                             ---------        ---------

Long-term debt, net of current portion                                                       5,584,682        5,616,552
Other                                                                                           89,220          126,564
                                                                                             ---------        ---------
Total long-term liabilities                                                                  5,673,902        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, 2,742,734 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                                                                       3,450,249        3,600,032
                                                                                             ---------        ---------
                                                                                             7,252,223        7,402,006

     Less:  treasury stock (Class A common: 257,266 and 257,266
       shares, respectively) - at cost                                                        (525,911)        (525,911)
                                                                                            ---------        ----------
Total stockholders' equity                                                                   6,726,312        6,876,095
                                                                                             ---------       ----------

Total liabilities and stockholders' equity                                                 $19,035,560      $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
                                                                                                 September 30,
                                                                                           1998                 1997
                                                                                           ----                 ----
<S>                                                                                       <C>                <C>      
Revenues                                                                                  $9,115,066         $9,128,381

Operating costs and expenses
     Cost of services provided                                                             7,573,290          7,375,458
     General and administrative expenses                                                   1,580,968          1,559,749
                                                                                           ---------          ---------

Income/(loss) from operations                                                               (39,192)            193,174

Other income
     Other income                                                                             14,205             56,068
     Interest (expense)                                                                     (104,796)           (68,898)
                                                                                           ---------           --------

Income/ (loss) before income taxes                                                         (129,783)            180,344
Provision for income taxes                                                                   20,000              95,072
                                                                                           ---------           --------

Net income/ (loss)                                                                        ($149,783)        $    85,272
                                                                                          ==========        ===========

Earnings/(loss) per common share - basic and diluted                                         ($0.05)        $     0.03
                                                                                          ==========        ==========

Weighted average share outstanding                                                        2,742,734          2,866,619
                                                                                          ==========        ===========
</TABLE>


                                      - 4 -
<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                    Three Months Ended
                                                                                       September 30,

                                                                                      1998               1997
                                                                                      ----               ----

<S>                                                                                <C>                 <C>
Operating activities:
Net income/ (loss)                                                                 ($149,783)          $ 85,272
Adjustment to reconcile net income to net cash provided by operating
activities:                                                                                           
     Depreciation and amortization                                                   174,404            175,762 
     Provision for doubtful accounts                                                  80,981             60,000 
     Amortization of deferred gain                                                    (6,591)            (6,591)
     Amortization of bond costs                                                        3,641               ----
     Amortization of lease receivable                                                                    (6,474)
Changes in assets and liabilities:                                                                    
     Accounts receivable                                                             129,471            240,607
     Deferred taxes                                                                 (108,328)            64,500
     Unbilled revenue                                                                 61,370             36,662
     Inventory and other                                                            (118,648)              ----
     Accounts payable                                                               (265,201)           699,911
     Accrued legal and expenses                                                      191,577           (242,856)
     Accrued payroll                                                                 (14,687)            41,551
     Other                                                                            94,684           (232,964)
                                                                                  ----------          ---------
Net cash provided by operating activities                                             72,890            915,380
                                                                                  ----------          ---------

Investing activities:
Advances to employees and officers                                                    (2,750)              (903)
Payment of lease receivable                                                             ----             39,488
Transfer restricted cash to/(from) cash                                              (15,997)             9,550
Acquisition of fixed assets                                                          (78,291)        (2,206,948)
                                                                                   ---------         ----------
Net cash (used in) investing activities                                              (97,038)        (2,158,813)
                                                                                   ---------         ----------

Financing activities:                                                                                  
Repayments of long term debt                                                        (154,370)          (224,706) 
Advances from line of credit                                                         122,500               ----
Purchase of treasury stock                                                              ----            (48,521)
                                                                                    --------         ----------
Net cash (used in) financing activities                                              (31,870)          (273,227)
                                                                                    --------         ----------
                                                                                                    
     Net (decrease) in cash                                                          (56,018)        (1,516,660)
                                                                                                      
Cash and cash equivalents at beginning of period                                     131,517          2,267,813
                                                                                     -------         ----------
                                                                                                       
Cash and cash equivalents at end of period                                           $75,499           $751,153
                                                                                     =======         ==========

Supplemental cash flow information:
     Interest paid                                                                  $104,796           $116,628
     Income taxes paid                                                              $143,629           $292,184
</TABLE>



                                      - 5 -

<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 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, 1998.
         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
         period ending  September 30, 1998 and 1997.  Stock options and warrants
         did  not  impact   earnings   per  share  each  quarter  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.



                                      -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  September 30, 1998 were  $9,115,066,  a
slight decrease compared to revenues of $9,128,381 in the corresponding  quarter
last  year.  Revenues  generated  by the  Collegeville  Inn  were  approximately
$264,000.

         Direct cost of operations for the quarter was  $7,573,290,  compared to
$7,375,458  for similar  expenses  in the same period last year,  an increase of
$197,832  or 2.7%.  This  increase  in  direct  costs  is due to cost of  living
adjustments and higher food costs.

         Gross Profit for the quarter was $1,541,776,  compared to $1,752,923, a
decrease of $211,147 or 2.3%.  This decrease is due to revenues  increasing at a
lesser percentage than direct expenses.

         General  and  administrative  expenses  for the  quarter  were 17.3% of
revenue,  compared  to 17.1% of  revenue  for the same  quarter  last  year,  an
increase  of  $21,219.  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 $104,796  compared
to $68,898 for the same period last year.  The  increase in interest  expense is
attributable  to  the  increased  debt,   including   $3,560,548  of  Industrial
Development  bonds issued in December 1996, used to finance  construction of the
Collegeville  Inn and  additional  short-term  borrowings  for  working  capital
purposes.

         Net loss after  taxes for the  quarter  ended  September  30,  1998 was
($149,783) compared to $85,272 for the corresponding quarter last year. Loss per
share for the  current  quarter was  ($0.05)  compared to earnings  per share of
$0.03 for the same quarter last year. The decrease in current quarter net income
and earnings per share are the result of the increased costs associated with the
start up of the Collegeville Inn.  Excluding  Collegeville Inn, net income would
have increased approximately $209,800 for an earnings per share of $0.08


                                      - 7 -

<PAGE>
Liquidity and Capital Resources

         At September 30, 1998 the Company had working capital of ($53,327).

         Operating Activities.  Cash provided by operations for the three months
ended September 30, 1998 was $72,890 compared to $915,380 provided by operations
for the three months ended September 30, 1997. A decrease in accounts payable of
$265,201 and an increase in inventory of $118,648 were primarily responsible for
the current quarter's activity.

         Investing Activities. Investing activities  consumed $97,038 in cash in
the current  quarter  compared to $2,158,813 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
$31,870 in cash  compared to $273,227  consumed in the same  quarter  last year.
Repayment of long term debt consumed  approximately  $154,370 in cash during the
current  quarter.  The Company  also  received  working  capital  line of credit
advances of $122,500 during the current quarter.

         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 September 30, 1998, the Company has approximately $1,500,000 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.

         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.

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:  November 16, 1998






                                     - 11 -