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, 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 /  /.

2,746,171  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 14, 1998.


<PAGE>
                                TABLE OF CONTENTS


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

          Consolidated Balance Sheets of
          March 31, 1998 (unaudited) and June 30, 1997                       2-3

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

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

          Notes to Financial Statements                                        6

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

Part II.  Other Information                                                    9

          Signatures                                                          10


                                      - 1 -


<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                                             March 31,              June 30,
                                                                               1998                    1997
                                                                               ----                    ----
                                                                            (unaudited)
Current assets:
<S>                                                                       <C>                    <C>         
     Cash and cash equivalents                                            $   (450,640)          $  2,267,813
     Restricted Cash                                                           911,007                   --
     Accounts receivable, net of allowance for doubtful
        accounts of $657,373 and $531,428, respectively.                     5,328,306              5,900,572
     Unbilled  revenue                                                         285,783                244,107
     Notes and leases receivable                                                  --                  202,124
     Advances to employees                                                     273,717                281,026
     Deferred income taxes                                                     867,999                599,000
      Inventory and Other                                                      303,113                409,068
                                                                          ------------           ------------
  Total current assets                                                       7,519,285              9,903,710
                                                                          ------------           ------------

  Property and equipment, net of accumulated depreciation of
      $1,421,428 and $969,175, respectively.                                10,562,031              8,143,131

  Other assets:                                                              
     Restricted Cash                                                              --                1,096,076
     Long-term accounts receivable, net of allowance for doubtful
       accounts of  $0 and $57,509 , respectively                                 --                   50,815
     Investment in contracts, net of accumulated amortization of
      $1,545,034 and $1,278,561, respectively.                                 176,455                427,928
     Deferred income taxes                                                     252,994                233,000
     Lease receivable                                                             --                  157,952
     Deferred costs and other assets                                           406,864                368,945
                                                                          ------------           ------------
  Total assets                                                            $ 18,917,629           $ 20,381,557
                                                                          ============           ============
</TABLE>


            See Notes to Unaudited Consolidated Financial Statements


                                      - 2 -
<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                             March 31,        June 30,
                                                                                              1998              1997
                                                                                              ----              ----
                                                                                            (unaudited)
Current liabilities:
<S>                                                                                         <C>              <C>       
     Accounts payable                                                                       $4,063,553       $4,322,662
     Accrued expenses                                                                          855,281          757,286
     Accrued payroll and related expenses                                                      171,392          460,898
     Accrued professional fees                                                                 279,552          392,012
     Current portion of long-term debt                                                         125,000          744,504
     Accrued income taxes                                                                      119,042          232,521
     Other                                                                                     277,733          193,453
                                                                                             ---------        ---------
Total current liabilities                                                                    5,891,553        7,103,336
                                                                                             ---------        ---------

Long-term debt, net of current portion                                                       5,885,101        6,083,851
Other                                                                                          127,402          222,217
Total long-term liabilities                                                                  ---------        ---------
                                                                                             6,012,503        6,306,068

Commitments and Contingencies                                                                ---------        ---------

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, 2,746,171 and 2,797,665 outstanding, respectively.                  3,801,926        3,801,926
     Class B - no par, 100,000 shares authorized, issued and outstanding.                           48               48
     Retained earnings                                                                       3,731,216        3,591,210
                                                                                          ------------       ----------
                                                                                             7,533,190        7,393,184
     Less:  treasury stock (Class A common: 253,829 and 202,335
       shares, respectively) - at cost                                                        (519,617)        (421,031)
                                                                                          ------------       ----------
Total stockholders' equity                                                                   7,013,573        6,972,153
                                                                                          ------------      -----------
Total liabilities and stockholders' equity                                                 $18,917,629      $20,381,557
                                                                                          ============      ===========
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                      - 3 -

<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                          Three Months Ended                  Nine Months Ended
                                                                March 31,                           March 31,
                                                           1998             1997             1998                1997
                                                           ----             ----             ----                ----

<S>                                                    <C>               <C>              <C>                <C>
Revenues                                               $8,850,579        $8,947,786       $27,400,357        $25,928,468

Operating costs and expenses
     Cost of services provided                          7,117,901         7,168,056        22,210,386         20,979,111
     General and administrative                         1,786,730         1,490,500         4,935,683          4,096,489
                                                     ------------        ----------       -----------        -----------


Income from operations                                   (54,052)           289,230           254,288            852,868

Other income
     Other income                                         130,347            70,731           223,824            210,912
     Interest expense                                    (124,635)          (57,833)         (294,904)          (204,543)
                                                  ---------------        ----------         ---------          ---------

Income before income taxes                               (48,340)           302,128           183,208            859,237
Provision for income taxes                               (84,303)           131,554            43,202            389,745
                                                  ---------------        ----------         ---------          ---------
Net income                                            $   35,963          $ 170,574         $ 140,006          $ 469,492
                                                  ===============        ==========         =========          ==========
Basic & Diluted Earnings per common
share                                                 $     0.01          $    0.06         $    0.05          $    0.16
                                                  ===============        ==========         =========          ==========

Weighted average share outstanding                     2,847,892          2,934,377         2,847,892          2,941,525
                                                  ===============        ==========         =========          ==========
</TABLE>


                                      - 4 -

<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                           Nine Months Ended
                                                                              March 31
                                                                     1998                    1997
                                                                     ----                    ----
Operating activities:
<S>                                                              <C>                      <C>
  Net Income                                                     $   140,006              $   469,492
  Adjustment to reconcile net income to net
   cash provided by operating activities:
       Depreciation and amortization                                 703,726                  481,673
       Deferred income taxes                                        (288,993)                (157,000)
       Provision for doubtful accounts                               207,338                   90,000
       Amortization of unearned interest income                      (28,882)                 (20,833)
  Changes in assets and liabilities:
       Accounts receivable                                           415,743                  (44,649)
       Notes receivable                                              231,006                  665,649
       Prepaid expenses                                             (271,756)                (317,582)
       Inventory                                                     (74,520)                  51,763
      Accrued Income Receivable                                      (41,676)                 (67,020)
      Deferred Costs                                                 414,313                  167,423
      Accrued Expenses                                               (84,830)                 215,208
       Accounts payable                                             (259,109)                (779,621)
      Accrued/Prepaid income taxes                                  (113,479)                 124,522
       Other                                                          50,208                  119,312
                                                                 -----------              -----------
       Total adjustments                                             859,089                  528,845
                                                                 -----------              -----------
  Net cash provided by operating activities                          999,095                  998,337
                                                                 -----------              -----------

  Investing activities:
  Advances to employees and officers                                   7,309                   (4,240)
  Payment of lease receivable                                        157,952                  113,275
  Purchase of property and equipment                              (2,871,154)              (2,149,305)
                                                                 -----------              -----------
  Net cash  provided by investing activities                      (2,705,893)              (2,040,270)
                                                                 -----------              -----------

  Financing activities:
  Proceeds of long-term debt                                            --                  2,551,956
  Repayments of long term debt                                      (818,254)                (672,501)
  Other                                                             (193,401)                 (79,424)
                                                                 -----------              -----------
  Net cash (used in) financing activities                         (1,011,655)               1,800,031
                                                                 -----------              -----------

       Net (decrease) in cash                                     (2,718,453)                 758,098

  Cash and cash equivalents at beginning of period                 2,267,813                3,026,607
                                                                 -----------              -----------

  Cash and cash equivalents at end of period                     $  (450,640)             $ 3,784,705
                                                                 ===========              ===========

  Supplemental cash flow information:
       Interest paid                                             $   386,296              $   164,986
       Income taxes paid                                         $   459,753              $   423,471
</TABLE>


                                      - 5 -

<PAGE>
                      NUTRITION MANAGEMENT SERVICES COMPANY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 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 which, 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
         which 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 which 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 and nine
         month  periods  ending  March 31,  1998 and  1997.  Stock  options  and
         warrants  did not impact  earnings  per share each quarter as they were
         anti-dilutive.

         The Company  adopted  Financial  Accounting  Standards  Board  ["FASB"]
         Statement of Financial Accounting Standards ["SFAS"] No. 128, "Earnings
         per Share", which was issued in February, 1997. SFAS No. 128 simplifies
         the  Earnings per Share  ["EPS"]  calculations  required by  Accounting
         Principles  Board ["APB"] opinion No. 15, and related  interpretations,
         by replacing the  presentation  of primary EPS with a  presentation  of
         basic EPS. SFAS No. 128 requires Dual presentation of Basic and Diluted
         EPS by entities with complex capital structures.

         Basic EPS  includes  no dilution  and is  computed  by dividing  Income
         Available  to Common  Stockholders  by the  Weighted-Average  Number of
         Common  Shares  Outstanding  for the period.  Diluted EPS  reflects the
         potential dilution of securities that could share in the earnings of an
         entity,  similar to the fully  diluted  EPS of APB Opinion No. 15. SFAS
         No. 128 is effective for Financial Statements issued for periods ending
         after December 15, 1997, including interim periods.  When adopted, SFAS
         No. 128 will require restatement of all prior-period EPS data presented
         and  accordingly,   the  Company  Calculated   Earnings  Per  Share  in
         accordance  with FASB 128 and all  prior-period  EPS data was restated.
         There  was  no  material  effect  on the  Company  as a  result  of the
         restatement of prior periods.

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 notes thereto.

Results of Operations

         Revenues  for the  quarter  ended  March 31,  1998 were  $8,850,579,  a
decrease  of  $97,207  or  1.1%  compared  to  revenues  of  $8,947,786  in  the
corresponding  quarter last year. Revenues for the nine month period ended March
31, 1998 were  $27,400,357  an increase of  $1,471,889  or 5.7%  compared to the
corresponding  period in 1997. These changes were the result of normal additions
and  terminations  of  customer  accounts,   and  revenues  from  the  Company's
Collegeville Inn Conference and Training  Center,  which opened on September 14,
1997.

         Gross Profit for the current quarter  amounted to $1,732,678  (19.6% of
revenues) for a decrease of $47,052 or 2.7%,  compared to the third quarter last
year.  For the nine month  period  ended March  31,1998,  Gross  Profit  totaled
$5,189,971  (18.9% of revenues),  compared to $4,949,357 (19.1% of revenues) for
the same period last year.

         General and administrative  expenses for the current quarter were 20.2%
of revenues,  compared to 16.7% of revenues  for the same quarter last year,  an
increase  of  $296,230  or  19.9%.  For the  nine  month  period ,  general  and
administrative  expenses were 18.0% of revenues,  compared to 15.8% for the same
period last year.  These  increases are the result of costs  associated with the
Collegeville  Inn  Conference  and Training  Center during its initial months of
operation.

         Other  income  (expense)  for the three  month  period  totaled  $5,712
compared to $12,898 for the same  period  last year.  For the nine months  ended
March 31,1998,  other income (expense) was ($71,080)  compared to $6,369 for the
corresponding 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
Conference and Training Center.

         Net income after taxes for the quarter ended March 31, 1998 was $35,963
compared to net income of $170,574  for the  corresponding  quarter last year, a
decrease  of 78.9%.  Earnings  per  share for the  current  quarter  were  $0.01
compared  to $0.06 for the same  quarter  last year.  For the nine month  period
ended March  31,1998,  net income was  $140,006 as compared to $469,492  for the
corresponding period last year, a decrease of 70.2%.  Earnings per share for the
nine month  period were $.05 as compared  to $.16 for the  corresponding  period
last year.  Excluding the operating  results for the Collegeville Inn Conference
and Training  Center during its initial  months of  operation,  net income would
have  increased $ 378,712 over the same  quarter  last year,  for an increase of
$0.13 per share.  For the nine month  period,  net income  would have  increased
$610,180, for an increase $0.21 per share.


                                      - 7 -

<PAGE>
Liquidity and Capital Resources

         At March 31, 1998 the Company had working capital of $1,627,732.  As of
June 30, 1997 the Company had working  capital of  $2,803,074.  The  decrease in
working  capital  between  June  30,  1997 and  March  31,  1998 is  principally
attributable  to expenses  associated  with the Company's  contract with Service
America Corporation and capital expenditures  relating to the development of the
Collegeville  Inn Conference and Training  Center.  The Company believes that it
will  not  have  to  make  any  additional  material   commitments  for  capital
expenditures  in the future for the  Collegeville  Inn  Conference  and Training
Center and its contact with Service America Corporation.

         Operating  Activities.  Cash provided by operations for the nine months
ended March 31, 1998 was $999,095  compared to $998,337  provided by  operations
for the nine months ended March 31, 1997.  Decreases in accounts  receivable  of
$415,753 and accounts  payable of $259,109,  were primarily  responsible for the
difference between the periods being compared.

         Investing Activities.  Investing activities utilized $2,705,893 in cash
during the nine month period compared to $2,040,270 in cash utilized in the same
period last year. Current fiscal year investing  activities  included $2,442,843
in purchases of property and equipment at the  Collegeville  Inn  Conference and
Training Center.

         Financing  Activities.  The  nine  month  period  financing  activities
utilized $1,011,655 in cash compared to $1,800,031 in the same period last year.
The  primary  financing  activities  were  repayment  of long term  debt,  which
utilized  $818,254 in cash,  and  purchases of treasury  stock,  which  utilized
$98,586 in cash.

         Capital  Resources.  The Company has certain credit facilities with its
bank,  including  a line of credit and one term  loan.  The  Company  issued two
series of Industrial  Development Bonds totaling $3,560,548 in December 1996. As
of March 31, 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,  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.

         The Company has no material  commitments for capital  expenditures  and
believes that its cash from operations,  existing balances, and available credit
line are adequate for the near term to satisfy the needs of its  operations  and
to fund continued growth.  However, if the need arose, the Company would seek to
obtain  capital  from  such  sources  as  continuing  debt  financing  or equity
financing.

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,  which 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.

                                      - 8 -

<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                                         None

                 (b)  Reports on Form 8-K                              None






                                      - 9 -

<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




                                   /s/ Ralph M. Van
                                   ------------------------------
                                   Ralph M. Van
                                   Controller



Date:  May 14, 1998


                                     - 10 -