UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549

                             FORM 10-Q


   (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 0-27280

                             META Group, Inc.
          (Exact name of registrant as specified in its charter)


             Delaware                             06-0971675
  -------------------------------         ---------------------------------
  (State or other jurisdiction of         (IRS Employer Identification No.)
   incorporation or organization)

      208   Harbor   Drive,   Stamford,    Connecticut 06912-0061
      ------------------------------------------------------------
     (Address of principal  executive offices, including Zip Code)

                              (203) 973-6700
                              --------------
          (Registrant's telephone number, including area code)

                      ----------------------------

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  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

         Yes (X)                       No ( )

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of the latest  practicable  date:  The number of shares of the
issuer's Common Stock,  $.01 par value per share,  outstanding as of October 30,
1998 was 11,586,019.

                      Total Number of Pages:    51 

                      Exhibit Index is on Page  20

<PAGE> 2

                               META Group, Inc.


                                    INDEX

                                                                           Page

Part I            FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Balance Sheets:
                     September 30, 1998 (unaudited) and December 31, 1997    3

                  Statements of Income (unaudited):
                     Three months ended September 30, 1998 and 1997          4
                     Nine months ended September 30, 1998 and 1997

                  Statements of Cash Flows (unaudited):
                     Nine months ended September 30, 1998 and 1997           5

                  Notes to Financial Statements                              6

         Item 2.  Management's Discussion and Analysis of Financial 
                  Condition and Results of Operations                        8


Part II           OTHER INFORMATION

         Item 1.  Legal Proceedings                                         17

         Item 2.  Changes in Securities and Use of Proceeds                 17

         Item 6.  Exhibits and Reports on Form 8-K                          18


Signature                                                                   19

<PAGE>  3

PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements


                             META Group, Inc.

                              BALANCE SHEETS
                              (in thousands)
<TABLE>
<CAPTION>
                                          September 30,            December 31,
--------------------------------------------------------------------------------
<S>                                          <C>                     <C>    
Assets                                            1998                     1997
                                             ---------                ---------                 
Current assets:                              (unaudited)
  Cash and cash equivalents                    $13,281                  $12,910
  Marketable securities                         20,530                   23,700
  Accounts receivable, net                      25,504                   26,302
  Other current assets                           4,853                    3,967
                                             ---------                ---------
      Total current assets                      64,168                   66,879

Marketable securities                           12,283                    4,046
Furniture and equipment, net                     3,684                    2,765
Deferred tax asset                               3,844                    7,759
Other assets                                    10,005                    8,004
                                              --------                ---------
      Total assets                             $93,984                  $89,453
                                              ========                =========

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable and accrued expenses         $ 4,178                $  4,917
  Deferred revenues                              27,021                  29,136
                                              ---------               ---------
     Total current liabilities                   31,199                  34,053
                                              ---------               ---------

Stockholders' equity:
  Preferred stock                                    --                      --                                                     
Common stock                                        120                     118
  Paid-in capital                                51,355                  49,943
  Retained earnings                              11,630                   5,659
  Treasury stock, at cost                          (320)                   (320)
                                               ---------              ---------
    Total stockholders' equity                    62,785                 55,400
                                               ---------              ---------
    Total liabilities and stockholder's equity   $93,984                $89,453
                                               =========              =========                                                  

                    See notes to financial statements.

</TABLE>

<PAGE>  4
                                META Group, Inc.

                            STATEMENTS OF INCOME
                    (in thousands, except per share data)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                   For the three months ended   For the nine months ended
                                                       September 30,                 September 30,
----------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>                <C>              <C>    

                                                     1998           1997           1998           1997
                                                  -------        -------        -------        -------
Revenues:
  Continuous services                             $14,126        $10,713        $40,445        $29,731
  Other, principally consulting and
    publications                                    4,328          2,705          9,611          6,236
     
                                                  -------        -------        --------       -------

      Total revenues                               18,454         13,418         50,056         35,967
                                                  -------        -------        -------        -------

Operating expenses:
  Cost of services and fulfillment                  8,675          6,344         24,070         17,714
  Selling and marketing                             4,270          3,469         11,766          8,580
  General and administrative                        1,764          1,279          4,721          3,636
  Depreciation and amortization                       458            391          1,358          1,090
                                                  -------        -------        -------        -------

      Total operating expenses                     15,167         11,483         41,915         31,020
                                                  -------        -------        -------        -------

Operating income                                    3,287          1,935          8,141          4,947

Interest income                                       681            571          1,963          1,537
                                                  -------        -------        -------        -------     

Income before provision for income taxes            3,968          2,506         10,104          6,484

Provision for income taxes                          1,612            936          4,133          2,609
                                                  -------        -------        -------        -------

Net income                                        $ 2,356        $ 1,570        $ 5,971        $ 3,875
                                                  =======        =======        =======        =======

Net income per diluted common share               $   .19        $   .13        $   .48        $   .33
                                                  =======        =======        =======        =======

Weighted average number of diluted common
shares outstanding                                 12,717         12,081         12,539         11,905
                                                  =======        =======        =======        =======
Net income per basic common share                 $   .21        $   .14        $   .53        $   .36
                                                  =======        =======        =======        =======

Weighted average number of basic common
shares outstanding                                 11,350         11,043         11,254         10,735
                                                  =======        =======        =======        =======


                                              See notes to financial statements.
</TABLE>

<PAGE>5
                               META Group, Inc.

                           STATEMENTS OF CASH FLOWS
                               (in thousands)
                                (unaudited)
<TABLE>
<CAPTION>
                                                     For the nine months ended
                                                             September 30,
--------------------------------------------------------------------------------
                                                         1998              1997
                                                      -------           -------
<S>                                                  <C>               <C>   

Operating activities:
Net income                                            $ 5,971           $ 3,875
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization                         1,358             1,090
  Deferred income taxes                                 3,915             2,470
  Changes in assets and liabilities:
    Accounts receivable                                   798               933
    Other current assets                                 (886)             (184)
    Other assets                                         (809)               13
    Accounts payable and accrued expenses                (739)           (1,660)
    Deferred revenues                                  (2,115)             (289)
                                                      -------           -------
 Net cash provided by operating activities              7,493             6,248
                                                      -------           -------

Investing activities:
   Capital expenditures                                (2,277)           (1,558)
   Investments in marketable securities                (5,067)           (9,557)
   Investments and advances                            (1,192)             (698)
                                                      -------           -------
Net cash used in investing activities                  (8,536)          (11,813)
                                                      -------           -------               

Financing activities:
   Proceeds from exercise of stock options              1,246               292
   Proceeds from employee stock purchase plan             168               148
                                                      -------           -------
Net cash provided by financing activities               1,414               440
                                                      -------           -------

Net increase (decrease) in cash and cash equivalents      371            (5,125)                                              
Cash and cash equivalents, beginning of period         12,910            19,335
                                                      -------           -------
Cash and cash equivalents, end of period              $13,281           $14,210
                                                      =======           =======


                  See notes to financial statements.
</TABLE>

<PAGE>6
                               META Group, Inc.

   
                        NOTES TO FINANCIAL STATEMENTS


Note 1 - Interim Financial Statements
-------------------------------------

     The accompanying  unaudited interim financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities  and Exchange  Commission  for  reporting on Form 10-Q.  Accordingly,
certain  information and footnote  disclosures  required for complete  financial
statements  are not included  herein.  It is  recommended  that these  financial
statements  be read in  conjunction  with the financial  statements  and related
notes of META Group,  Inc. (the  "Company") as reported on the Company's  Annual
Report on Form 10-K for the year ended  December  31,  1997.  In the  opinion of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
considered  necessary for a fair presentation of financial position,  results of
operations  and cash flows at the dates and for the periods  presented have been
included.  Results for interim periods are not necessarily indicative of results
for the entire year.


Note 2 - Income Taxes
---------------------

     During the quarter and nine months ended  September  30, 1998,  the Company
recorded  a tax  provision  of $1.6  million  and  $4.1  million,  respectively,
reflecting  an  effective  tax rate of 41%.  The Company was not required to pay
federal income tax due to the  utilization of net operating loss  carryforwards.
The total deferred tax asset,  including the current portion (included in "Other
current  assets"),  decreased to $5.3  million at  September  30, 1998 from $9.2
million at December  31, 1997 as the Company  utilized  its net  operating  loss
carryforwards to offset taxable income.


Note 3 - Stock Dividend
-----------------------

     On  April  27,  1998,  the  Company's  Board  of  Directors   authorized  a
three-for-two  stock split of the Company's common stock,  which was effected in
the form of a 50% stock dividend paid on June 11, 1998 to shareholders of record
on May 22,  1998.  All  share  and per share  amounts  have  been  retroactively
restated  for all periods  presented  to reflect the stock  split.  Accordingly,
approximately $40,000 was transferred from paid-in capital to common stock.


Note 4 - Related Party Transaction
----------------------------------

     On July 31,  1998,  the Board of Directors  approved a Long-Term  Incentive
Compensation  Plan (the "Plan")  with a  significant  retention  feature for key
management  employees.  The Plan will be funded with  potential  returns  from a
commitment by the Company to invest up to $4.0 million in a venture capital fund
managed by JMI Associates, which will co-invest with other JMI venture funds. In
addition,  a JMI affiliate  concurrently  became a client of the Company.  Harry
Gruner,  a director of the Company,  is a managing member of the general partner
of JMI Equity Fund III, L.P.

<PAGE>  7
Note 5 - Acquisition
---------------------

     During September 30, 1998, the Company made a $1.0 million minority
investment in Client/Server Labs, Inc., a supplier of performance and functional
testing services.

Note 6 - Subsequent Event - Acquisition
---------------------------------------

     On October 20, 1998, the Company  completed  the acquisition  of all of the
outstanding  capital  stock  of  The  Sentry  Group,  Inc. ("Sentry"),  an  IT
consulting  company,  for an initial  payment of 195,066 shares of the Company's
common stock and a  contingent  payment of up to $7.0 million in common stock or
cash (at the Company's option) in the event certain financial targets are met by
Sentry in the 1999  calendar  year. In addition,  the Company  issued to Sentry
stockholders  warrants to purchase up to 200,000 shares of the Company's  common
stock at $30.00 per share, 125,000 shares of which are currently exercisable and
75,000  shares of which  are  contingently  exercisable  upon  Sentry  achieving
certain  financial  targets in  calendar  year 1999.  This  acquisition  will be
accounted for as a purchase.

<PAGE>  8
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

The   discussion   and  analysis   below   contains  trend  analysis  and  other
forward-looking  statements.  Actual results could differ  materially from those
projected in the forward-looking  statements as a result of the risk factors set
forth below under  "Certain  Factors That May Affect Future  Results" and in the
Company's other filings with the Securities and Exchange Commission, principally
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.

Overview

         META  Group  is an  independent  market  assessment  company  providing
research and analysis of developments, trends and organizational issues relating
to the computer  hardware,  software,  communications,  and related  information
technology  ("IT")  industries  to IT users and vendors.  IT user  organizations
utilize  META Group's  research,  analysis  and  recommendations  to develop and
employ  cost-effective  strategies  for  selecting  and  implementing  timely IT
solutions and for aligning these solutions with business priorities.  IT vendors
use META Group's services for help in product positioning,  marketing and market
planning, as well as for internal IT decision making.

         Continuous  Services  revenues  are  derived  from  annually  renewable
contracts,  generally payable by clients in advance, and comprised approximately
77% and 80% of the Company's total revenues for the quarters ended September 30,
1998 and 1997,  respectively.  Billings attributable to the Company's Continuous
Services are largely recorded as deferred revenues and then recognized as earned
over  the  contract  term.  The  Company's   other  revenues  are  derived  from
non-renewable project consulting, benchmarking,  conferences, speaker engagement
fees and  publications.  The Company's  consulting  clients typically consist of
Continuous   Services  clients  seeking  additional  advice  tailored  to  their
individual IT requirements.

         One measure of the volume of the Company's  business is its  annualized
"Contract Value," which the Company calculates as the aggregate annualized value
of subscription  revenue  recognized from all Continuous  Services  contracts in
effect at a given point in time,  without  regard to the  remaining  duration of
such  contracts.  While Contract Value is not  necessarily  indicative of future
revenues,  Contract  Value has grown,  sequentially  and  year-over-year,  every
quarter  since the  Company's  inception  and  increased 32% to $56.5 million at
September  30, 1998 from $42.9  million at September  30, 1997. At September 30,
1998, the Company had 3,740  Continuous  Services  subscribers in  approximately
1,620 client organizations  worldwide, as compared to 3,160 subscribers in 1,325
organizations at September 30, 1997.

         Continuous Services revenues  attributable to international clients are
billed  and  collected  by  the  Company's  international  sales  representative
organizations.  The  Company  realizes  revenues  from the  international  sales
representative  organizations  at rates of 40% to 60% of amounts billed to those
clients.

         The  Company's  operating  expenses  consist  of cost of  services  and
fulfillment,  selling and  marketing  expenses  and  general and  administrative
expenses.  Cost of services and fulfillment represents the costs associated with
production and delivery of the Company's  products and services and includes the
costs of research,  development  and  preparation of periodic  reports,  analyst
telephone  consultations,  executive  briefings and  conferences,  publications,
consulting services,  new product development,  and all associated editorial and


<PAGE>  9
support services.  Selling and marketing expenses include the costs of salaries,
commissions  and related  benefits  for such  personnel,  travel and  promotion.
General  and  administrative  expenses  include  the  costs of the  finance  and
accounting  departments,   legal,  human  resources,   corporate  IT  and  other
administrative functions of the Company.


THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

TOTAL  REVENUES  Total  revenues  increased  38% to $18.5 million in the quarter
ended  September 30, 1998 from $13.4 million in the quarter ended  September 30,
1997.  Revenues from Continuous  Services  increased 32% to $14.1 million in the
quarter  ended  September  30,  1998 from  $10.7  million in the  quarter  ended
September  30, 1997.  The increases in revenues  from  Continuous  Services were
primarily due to the launch of three new continuous  services in early 1997 and
continued  expansion of the  Company's  domestic  sales force and  international
business. The Company increased Contract Value 32% to $56.5 million at September
30,  1998 from  $42.9  million at  September  30,  1997.  The  Company  grew its
subscriber client base 18% to 3,740 Continuous  Service clients at September 30,
1998 from 3,160 clients at September 30, 1997.

         Other revenues,  consisting principally of revenues from consulting and
publications,  increased 60% to $4.3 million in the quarter ended  September 30,
1998 from $2.7 million in the quarter ended September 30, 1997, and increased as
a percentage of total  revenues to 23% from 20%. The increase in Other  Revenues
was primarily  attributable  to the increase in analyst  consulting and speaking
fees, the expansion of META Group Consulting  activities,  and the growth of the
Company's publications division. The Company currently expects Other Revenues to
continue to grow at a faster rate than Continuous Services revenue,  principally
due to a shift in market demand  toward more  targeted,  focused and  definitive
research,  continued expansion of existing consulting  practices,  the hiring of
new consulting professionals, the Sentry acquisition, and the expected growth of
the publications business.

         Continuous  Services  revenues  attributable to  international  clients
increased  26% in the quarter  ended  September  30, 1998 from the quarter ended
September 30, 1997, and increased as a percentage of Continuous Services revenue
to 15% from 13%. The increase was due principally to continued  expansion of the
Company's  international  business,  the successful  international launch of the
Enterprise  Architecture Strategies ("EAS") service and, to a lesser extent, the
expansion in the total number of sales representative organizations. The Company
has independent  sales  representation in 36 countries as of September 30, 1998,
compared to 29  countries as of September  30,  1997.  The Company  expects that
international revenues will continue to account for a significant portion of its
total revenues.

COST OF SERVICES AND FULFILLMENT Cost of services and fulfillment  increased 37%
to $8.7 million in the quarter ended September 30, 1998 from $6.3 million in the
quarter  ended  September  30, 1997  principally  due to increased  staffing for
analyst,  consultant and fulfillment positions and related compensation expense.
Cost of services and  fulfillment  remained  constant as a  percentage  of total
revenues at 47%. While the Company anticipates continuing increases in the costs
of services and  fulfillment,  it expects that such  expenses as a percentage of
sales will increase slightly.

SELLING AND MARKETING  EXPENSES Selling and marketing  expenses increased 23% to
$4.3 million in the quarter  ended  September  30, 1998 from $3.5 million in the
quarter ended September 30, 1997 and decreased as a percentage of total revenues
to 23% from 26%.  The  increase in expenses  was  principally  due to  increased

<PAGE> 10
sales-related  compensation  expense associated with domestic continuous service
revenues  and  the  expansion  of  the  direct   marketing   sales  channel  for
publications.  The decrease in expense as a percentage of sales was  principally
attributable  to a decrease in the rate of  domestic  sales  hiring,  and a
decrease in marketing  expenditures and costs relating to  international  market
development. While the Company anticipates continuing increases in the amount of
selling and marketing expenses, it expects that such expenses as a percentage of
total revenues will remain approximately the same.

GENERAL  AND  ADMINISTRATIVE   EXPENSES  General  and  administrative   expenses
increased 38% to $1.8 million in the quarter ended  September 30, 1998 from $1.3
million in the  quarter  ended  September  30, 1997 and  remained  constant as a
percentage  of total  revenues at 10%. The increase in expenses was  principally
due  to  increased  payroll,  benefits,   facility  and  recruiting  costs,  all
associated with increased headcount during the quarter.  The Company anticipates
continuing  increases  over  the  prior  year  in  the  amount  of  general  and
administrative  expenses  and expects  such  expenses as a  percentage  of total
revenues will remain approximately the same.

DEPRECIATION AND AMORTIZATION  Depreciation and amortization  expense  increased
17% to $458,000 in the quarter  ended  September  30, 1998 from  $391,000 in the
quarter ended September 30, 1997. The increase in depreciation  and amortization
expense  was  principally  due to  purchases  of computer  equipment,  leasehold
improvements, and office furniture required to support business growth.

INTEREST INCOME  Interest income  increased 19% to $681,000 in the quarter ended
September 30, 1998 from $571,000 in the quarter ended  September 30, 1997 due to
an increase in the Company's  cash and  marketable  securities  balances,  which
resulted  from a positive  cash flow from  operations  during 1997 and the first
nine months of 1998. In addition, the Company benefited from the reinvestment of
a portion of its cash into short-term,  higher yield marketable securities. (See
"Liquidity and Capital Resources" )

PROVISION  FOR INCOME  TAXES  Provision  for income  taxes of $1.6  million  was
recorded for the quarter ended September 30, 1998, as compared to a provision of
$936,000  recorded  for the quarter  ended  September  30, 1997,  reflecting  an
effective  tax  rate of 41% and  37%,  respectively.  During the third quarter
of 1997, the Company lowered its effective tax rate to reflect a shift in
business into states with lower income tax rates. The  Company  was not
required to pay federal income tax in either  quarter due to the  utilization of
net  operating  loss  carryforwards.  Total  deferred tax asset,  including  the
current  portion,  decreased  to $5.3  million at  September  30, 1998 from $9.2
million at December  31, 1997 as a result of utilizing  existing  net  operating
loss carryforwards to offset taxable income.

EARNINGS PER SHARE  Diluted EPS increased to $.19 per common share for the third
quarter of 1998 as compared to $.13 for the third quarter of 1997 as a result of
increased net income.  For the quarter ended  September 30, 1998,  the Company's
weighted average number of diluted common shares  outstanding were approximately
12,717,000 shares.


NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

TOTAL REVENUES Total revenues  increased 39% to $50.1 million in the nine months
ended  September 30, 1998 from $36.0 million in the nine months ended  September
30, 1997.  Revenues from Continuous  Services  increased 36% to $40.4 million in
the nine months ended  September  30, 1998 from $29.7 million in the nine months
ended  September  30, 1997.  The  increases in total  revenues and revenues from
Continuous  Services were  primarily  due to the launch of three new  continuous
services in early 1997,  continued  expansion of the  Company's  domestic  sales
force and the growth in international Continuous Services.

<PAGE> 11
         Other  Revenues  increased 54% to $9.6 million in the nine months ended
September  30, 1998 from $6.2  million in the nine months  ended  September  30,
1997,  and  increased  as a  percentage  of total  revenues to 19% from 17%. The
increase in Other Revenues was primarily attributable to an increase in analyst
consulting and speaking fees, the expansion of META Group Consulting activities,
and the growth of the company's publications.

         Continuous  Services  Revenues  attributable to  international  clients
increased  47% in the nine months ended  September 30, 1998 from the nine months
ended  September 30, 1997, and increased as a percentage of Continuous  Services
revenues  to 14%  from  13%.  The  increase  was due  principally  to  continued
expansion of the Company's international business, the successful  international
launch  of the EAS  service  and the  expansion  in the  total  number  of sales
representative organizations.

COST OF SERVICES AND FULFILLMENT Cost of services and fulfillment  increased 36%
to $24.1 million in the nine months ended  September 30, 1998 from $17.7 million
in the nine  months  ended  September  30,  1997  principally  due to  increased
staffing for analyst and fulfillment positions and related compensation expense.
Cost of services and fulfillment  decreased as a percentage of total revenues to
48% from 49%,  primarily due to lower relative  payroll and related costs in the
fulfillment and events departments.

SELLING AND MARKETING  EXPENSES Selling and marketing  expenses increased 37% to
$11.8  million in the nine months ended  September 30, 1998 from $8.6 million in
the nine months ended  September 30, 1997 and remained  constant as a percentage
of total  revenues  at 24%.  The  increase in expenses  was  principally  due to
increased sales-related  compensation expense associated with increased domestic
continuous  services  revenues and the expansion of the direct  marketing  sales
channel for publications,  as well as increased international market development
and  conference  promotion  expenses,  offset in part by a decrease  in domestic
marketing expenditures,  particularly with respect to the marketing of the three
new Continuous Services launched in the first quarter of 1997.

GENERAL  AND  ADMINISTRATIVE   EXPENSES  General  and  administrative   expenses
increased  30% to $4.7 million in the nine months ended  September 30, 1998 from
$3.6  million in the nine months  ended  September  30, 1997 and  decreased as a
percentage  of total  revenues to 9% from 10%.  The  increase  in  expenses  was
principally due to increased benefits costs,  facilities  expense,  professional
development, recruiting and legal expenses.

DEPRECIATION AND AMORTIZATION  Depreciation and amortization  expense  increased
25% to $1.4  million  in the nine  months  ended  September  30,  1998 from $1.1
million  in  the  nine  months  ended   September  30,  1997.  The  increase  in
depreciation  and  amortization  expense was  principally  due to  purchases  of
computer equipment and office furniture required to support business growth.

INTEREST INCOME Interest income increased 28% to $2.0 million in the nine months
ended  September  30, 1998 from $1.5 million in the nine months ended  September
30, 1997 due to an  increase in the  Company's  cash and  marketable  securities
balances resulting from a positive cash flow from operations during 1997 and the
first  nine  months  of  1998.  In  addition,  the  Company  benefited  from the
reinvestment of a portion of its cash into  short-term,  higher yield marketable
securities. (See "Liquidity and Capital Resources")

PROVISION  FOR INCOME  TAXES  Provision  for income  taxes of $4.1  million  was
recorded  for the nine  months  ended  September  30,  1998,  as  compared  to a
provision of $2.6 million recorded for the nine months ended September 30, 1997,

<PAGE> 12
reflecting an effective tax rate of 41% and 40%,  respectively.  The Company was
not required to pay federal  income tax in either period due to the  utilization
of net operating loss carryforwards.

EARNINGS PER SHARE  Diluted EPS increased to $.48 per common share for the first
nine  months of 1998 as  compared to $.33 for the first nine months of 1997 as a
result of increased  net income.  For the nine months ended  September 30, 1998,
the Company's  weighted average number of diluted common shares outstanding were
approximately 12,539,000 shares.


LIQUIDITY AND CAPITAL RESOURCES

         The Company  generated $7.5 million of cash from operations during the
     nine months ended  September  30, 1998,  compared with $6.2 million of cash
generated  from  operations  in the nine months ended  September  30, 1997.  The
increase in cash generated from operations in 1998 is primarily due to increased
net income and the  collection  of the  December 31, 1997  accounts  receivable,
partially offset by payment of 1997 annual employee bonuses in the first half of
1998.
         The  Company  used  $2.3  million  of cash  in the  nine  months  ended
September  30,  1998,  compared  with  $1.6  million  in the nine  months  ended
September  30, 1997,  for the purchase of  furniture,  equipment,  computers and
related  software for use by the Company's  employees.  The Company expects that
additional  purchases of equipment  will be made as the Company's  employee base
continues to grow. As discussed  below,  the Company  acquired Sentry on October
20, 1998,  adding 28 new  employees.  In connection  with the  acquisition,  the
Company  consolidated  its Waltham,  MA office into the prior Sentry location in
Westborough,  MA.  The cost of the move did not  have a  significant  effect  on
results of operations  for the current  period.  As of September  30, 1998,  the
Company  had no material  commitments  for capital  expenditures;  however,  the
Company is currently  planning a significant  upgrade of internal systems within
the next twelve months. The total cash outlay for the project is not expected to
exceed $1.0 million.

         The  Company  regularly  invests  excess  funds  in   investment-grade,
short-term commercial paper, debt instruments,  and money market funds. As these
investments  generally  have terms of less than three months,  they are included
under the caption "Cash and cash equivalents" in the balance sheets.

         In addition,  the Company invests in other  short-term  (primarily less
than  one-year   maturity),   high  quality  investment  grade  marketable  debt
securities.  Generally,  these  securities are purchased in  denominations of
$1 million to $5 million and held to maturity.

         On October 20, 1998, the Company completed the acquisition of all of
     the  outstanding  capital stock of The Sentry Group,  Inc.("Sentry")for  an
initial payment of 195,066 shares of the Company's common stock and a contingent
payment of up to $7.0 million in common stock or cash (at the Company's  option)
in the event certain  financial  targets are met by Sentry for the 1999 calendar
year.  In  addition,  the  Company  issued to Sentry  stockholders  warrants  to
purchase up to 200,000 shares of the Company's common stock at $30.00 per share,
125,000 shares of which are currently exercisable and 75,000 shares of which are
contingently  exercisable upon Sentry  achieving  certain  financial  targets in
calander year 1999.

<PAGE> 13
         During  September,  1998,  the Company made a $1.0  million  minority
equity  investment in  Client/Server  Labs,  Inc., a supplier of performance and
functional IT testing services.

         As of September 30, 1998, the Company had cash and cash  equivalents of
$13.3  million,  marketable  securities of $32.8 million and working  capital of
$33.0 million.  The Company believes that existing cash balances and anticipated
cash flows from  operations  will be sufficient to meet its working  capital and
capital expenditure requirements for the foreseeable future.


Year 2000 Readiness Disclosure

The following disclosure may be deemed "Year 2000 Readiness Disclosure" pursuant
to the Year 2000 Information and Readiness Disclosure Act.

State of Readiness
------------------

During  1998,  the Company commenced a program to review the Year 2000
compliance  status of both the IT and non-IT  software  and systems  used in its
internal business processes, to obtain appropriate assurances of compliance from
the manufacturers of these products,  and to modify or replace all non-compliant
products.

The Company is currently  making  inquiries  with critical third party 
providers of intermediary products or services to determine the impact of 
Year 2000 issues on their business and  operations,  and the resulting  impact 
on the business and operations of the Company.  Certain of these  systems  
relate to the  ability  of the  Company to  transmit  its  products  to its
customers via the internet and by CD-ROM,  and are reliant on the  compliance of
the third parties in order to operate past 1999. The Company has been advised by
the applicable third parties that the necessary  modifications for the Year 2000
issue have been  completed or will be completed by the end of 1999. In addition,
the  Company  believes  that its  internal  systems are Year 2000  compliant  to
interface with such third parties.  However,  the Company can offer no assurance
that its systems, to the extent they are reliant on third party systems, will be
operational on January 1, 2000.

The Company has contacted  most of the suppliers of its other  software and
systems to determine  whether the products obtained by the Company are Year 2000
compliant  and is  currently  reviewing  other  areas  within its  business  and
operations which could be adversely  affected by Year 2000 issues.  Based on the
responses  the  Company  has  received  from   manufacturers  and  the  internal
evaluation  performed  to date,  the  Company  believes  that it will be able to
upgrade or replace any critical Year 2000 deficient software or systems prior to
the end of 1999.

Among the systems being reviewed is the Company's current telephone system,
which is critical to the function of the business.  The Company  currently plans
to replace its existing  telephone  system during 1999. Also, in response to the
increase  in  clients  and  employees,  and the  need for  improved  information
management  for  customer   service,   the  Company   expects  to  complete
implementation of a new client information system during the first half of 1999.
In selecting the new client information  system, Year 2000 compliance was one of
the criteria  reviewed,  and the Company has obtained a representation  from the
vendor that the system is Year 2000 compliant.

Currently,  the Company has not identified any internal non-IT systems that
are both  critical to the business  and would cause  significant  disruption  of
business in the event of failure in the year 2000.

Costs to Address Year 2000 Issues
---------------------------------

Based on the Company's internal evaluation  performed to date on potential costs
for completing  the  evaluating,  testing,  modifying or replacing of any of its
internal  IT or non-IT  software or systems,  the Company  currently  expects to
spend  approximately $1.3 million (including $1.2 million of costs for replacing
the client information  system and telephone  system),  of which the Company has
spent approximately $725,000 as of September 30, 1998. The Company will
fund all Year 2000 compliance costs from existing working capital.

<PAGE> 14
The potential costs  associated with failure of the internet or other major
systems outside the Company's control (i.e., utilities,  telephone service,
etc.), or of any significant non-IT systems,  including increased costs of doing
business, inability to conduct business, potential loss of customers, and impact
of certain risk areas as discussed below, are unknown and cannot be estimated by
the Company.

Risks Associated with Year 2000 Issue
-------------------------------------

The primary  risk to the Company in the event of  non-compliance  with Year
2000 issues is a disruption of customer fulfillment. As a significant portion of
the Company's  clients chose to have the  Company's  products  delivered via the
internet,  failure of that system could  prevent  customers  from  accessing the
Company's  products via the Company's  internet site.  Likewise,  failure of the
telephone  systems  would  prevent the Company from  speaking with its customers
directly, which is an integral part of the Company's service and products. Also,
failure of the client  information  system  would result in potential delays in
responding to customers' inquiries.

In  addition  to the  risks to the  Company's  systems  as they  relate  to
customer  service,  and  discussed  above,  the Year  2000  Issue  presents  the
following business risks to the Company:

  .  Because  the  Company's  business  results  from  selling  knowledge  based
     research on a wide variety of IT issues,  the short term demand for certain
     of the Company's products could potentially be hindered while customers and
     potential customers focus immediate resources on fixing their own Year 2000
     issues.  Although the Company's  products include advisory  services on the
     Year 2000 issue itself,  and therefore could potentially  increase business
     for the  Company,  such impacts can not be estimated by the Company at this
     time. As such, there remains a risk that a shift in the focus of customers'
     and potential  customers'  discretionary  IT spending could have a material
     adverse effect on the Company's  business,  operating results and financial
     condition.

  .  Part of the Company's  services to its customers  involves forming opinions
     and making  suggestions with regards to IT issues. As such,  customers rely
     on the  Company  for advice  when  making IT related  decisions,  which may
     involve  Year  2000  issues.  Because  of the  overall  risk of  litigation
     associated  with the Year 2000 issue,  there exists a risk that the Company
     could face legal action from a customer or be named as a co-defendant in an
     action by a third party against a customer.  The  likelihood of such action
     occurring,  and the  potential  related  costs,  cannot be estimated by the
     Company at this time.

  .  Failure of certain systems of third parties due to Year 2000 issues could
     potentially create the risk of impairment of certain assets of the Company.
     In particular, the Company currently  has over $32  million in  marketable
     securities,   which  are  primarily  invested  in  unsecured,  short-  term
     investment grade, corporate debt instruments  (commercialpaper).  Financial
     impairment to certain investees, or a collapse of the securities markets in
     general,  would potentially have a material adverse effect on the Company's
     financial position. In addition, the Company currently has over $25 million
     in   accounts   receivable   from   customers   and   international   sales
     representative  organizations,  as well as significant investments in other
     companies.  Financial  impairment to certain of such  companies due to Year
     2000  issues  could  potentially  have a  material  adverse  effect  on the
     Company's  financial position and results of operations.  The likelihood of
     such action occurring,  and the potential related costs cannot be estimated
     by the Company at this time.

Contingency Plans
-----------------

 The Company  has the  following  contingency  plans in place in order to
 protect customer service in the event of Year 2000 disruptions:

  .  The Company's  research is available in written form as well as via the
     internet  and CD-ROM.  In the event of  disruption  of the other forms 
     of  delivery,  the Company will deliver research in printed  form to all
     customers.  The  incremental  cost of doing so would not be material to
     the results of  operations  and is  currently an option many customers
     continue to use.

  .  In the event the Company is unable to replace the  existing  client  
     information system prior to the end of 1999, the Company intends to
     upgrade the existing system be Year 2000 compliant prior to the end of
     1999.

<PAGE> 15

  .  In the event the Company is unable to replace the existing phone system 
     prior to the end of 1999, the Company intends to upgrade the existing
     system to be Year 2000 compliant  prior to the end of 1999. The Company
     does not currently  have a  contingency  plan in the event of a failure
     of long distance telephone service in general.

The Company does not currently have a contingency  plan in place with regards to
the risk of asset  impairment  described above but will be reviewing  investment
risk to include Year 2000 exposure as we approach the year 2000.


CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  Company  does  not  provide  forecasts  of  the  future  financial
performance  of the  Company.  However,  from  time  to  time,  information
provided  by the  Company  or  statements  made  by its  employees  may  contain
"forward-looking"   information  that  involve  risks  and   uncertainties.   In
particular, statements contained in this Form 10-Q that are not historical facts
(including, but not limited to, statements concerning the timing and development
of  existing  consultanting practices  and  the  publications  business,
international  revenues,  anticipated costs of services and fulfillment and
operating  expense  levels,  cost and expense  levels  relative to the Company's
total revenues,  anticipated mix of revenues, the Company's working capital and
capital expenditure requirements, net operating loss carryforwards,  the ability
of the Company's  computer systems and applications to function  properly beyond
1999, and planned capital expenditures)  constitute  forward-looking  statements
and are  made  under  the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995.  The Company's  actual results of operations and
financial  condition have varied and may in the future vary  significantly  from
those  stated in any  forward-looking  statements.  Factors  that may cause such
differences  include,  without  limitation,  the risks,  uncertainties and other
information  discussed below, as well as the accuracy of the Company's  internal
estimates of revenue and operation  expense levels.  Each of these factors,  and
others,  are discussed from time to time in the filings made by the Company with
the Securities and Exchange Commission.

     The Company's future operating results are subject to substantial risks
and  uncertainties.  The Company  currently  derives most of its  revenues  from
subscriptions  to its  Continuous  Services.  As a result,  any  decline  in the
Company's ability to secure subscription renewals,  and/or new subscriptions may
have a material  adverse  effect on the  Company's  results of  operations.  The
Company's ability to secure subscription  renewals, at favorable average selling
prices, as well as to successfully market and sell its consulting  services,  is
dependent upon the Company's  ability to deliver  consistent,  high-quality  and
timely analysis and advice with respect to issues,  developments and trends that
clients view as important.  The Company's  successful  delivery of such analysis
and advice is, in turn,  dependent  upon many  factors,  including,  among other
things:  its ability to recruit and retain highly  talented  professionals  in a
competitive  job  market,   to  understand  and  anticipate   rapidly   changing
technologies  and  market  trends  so as to keep  its  analysis  focused  on the
changing  needs  of its  clients,  and  to  deliver  products  and  services  of
sufficiently   high  quality  and  timeliness  to  withstand   competition  from
competitors  which  may  have  greater  financial,   information  gathering  and
marketing  resources than the Company, and the ability of telephone systems and
the intent to function  properly beyond 1999. The Company's ability to
market and sell its products and  services  could also be adversely  affected by
the  emergence  of new  competitors  into  one or  more of the  market  segments
addressed by the Company's  products and  services,  which could cause  pricing
pressure and loss of market share.  In addition,  a  significant  portion of the
Company's  revenues are  attributable  to  international  clients,  which may be
adversely affected by factors including  difficulties in developing and managing
relationships with independent international sales representative organizations,
reliance  on  sales  entities  which  the  Company  does  not  control,  greater
difficulty in maintaining direct client contact, fluctuations in exchange rates,
adverse  political and economic  conditions,  tariffs and other trade  barriers,
longer accounts receivable  collection cycles and adverse tax consequences.  The
Company's  future  financial  results also depend in part on the  development or
acquisition of new products and services, which may not successfully be achieved

<PAGE> 16
due to the inherent costs and risks  associated with  development,  assimilation
and  marketing  of a new product or service,  as well as the  Company's  limited
experience in introducing new products and services.

     Furthermore,  the Company's  quarterly  operating results may fluctuate
significantly due to various factors.  Since a disproportionately  large portion
of the Company's  Continuous  Services contracts expire in the fourth quarter of
each year,  the Company  incurs  operating  expenses in the fourth  quarter at a
higher level than would otherwise be required by its sequential growth, and such
increased  expenses are not normally offset  immediately by higher revenues.  In
addition, the Company's operating results may fluctuate as a result of a variety
of other factors, including the level and timing of renewals of subscriptions to
Continuous Services, the timing and development of existing consulting practices
and the publications  business,  the timing and amount of business  generated by
the Company,  the mix of domestic versus international  business,  the timing of
the development,  introduction  and marketing of new products and services,  the
timing of the  acquisition  and  integration  into the Company of new  business,
products  and  services,  the  timing of the  hiring of  research  analysts  and
consultants, the cost of addressing, or the failure to address, the ability
of the Company's  computer systems and applications to function  properly beyond
1999,  changes  in the  spending  patterns  of  the  Company's  target  clients,
impairment  of the  Company's  financial  assets and the value of the  Company's
strategic  investments,  risk of litigation  assosicated with the Company's Year
2000  products  and  services,  the  Company's  accounts  receivable  collection
experience,  changes  in  market  demand  for  IT  research  and  analysis,  and
competitive  conditions  in the  industry.  Due to these  factors,  the  Company
believes   period-to-period   comparisons  of  results  of  operations  are  not
necessarily  meaningful and should not be relied upon as an indication of future
results of operations.  The potential  fluctuations  in the Company's  operating
results make it likely that, in some future  quarter,  the  Company's  operating
results will be below the  expectations  of securities  analysts and  investors,
which would have a material  adverse effect on the price of the Company's Common
Stock.

<PAGE> 17
PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.
          ------------------

         As disclosed in the  Company's  Annual Report on Form 10-K for the year
ended  December  31,  1997,  in  November,  1995,  a complaint  was filed in the
Bridgeport  Judicial  District of the Superior  Court of Connecticut by a former
consultant to the Company naming the Company and its Chief Executive  Officer as
defendants.  On July 23,  1998,  the  Company  and its Chief  Executive  Officer
reached a settlement with the former  consultant in which the suit was dismissed
with  prejudice.  The settlement did not have a material effect on the financial
statements of the Company.

         The Company and its  subsidiary,  Sentry,  are party to certain other
legal proceedings.  However, the Company believes that none of these proceedings
is likely to have a material adverse effect on the Company's  business,  results
of operations or financial condition.

Item 2.   Changes in Securities and Use of Proceeds
          ------------------------------------------

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      On October 20, 1998, the Company  acquired all of the  
                  outstanding  capital stock of Sentry,  a Massachusetts 
                  corporation. In exchange for all of the outstanding  capital
                  stock of Sentry,  the former  stockholders of Sentry received
                  an initial payment of 195,066 shares of the Company's common
                  stock (the "Shares")and the right to receive a contingent  
                  payment of up to $7.0 million in stock or cash (at the  
                  Company's option) in the event  certain financial targets are
                  met by Sentry in the 1999 fiscal year. In addition, the 
                  Company issued to the former stockholders of Sentry warrants
                  (the "Warrants") to purchase up to 200,000 shares of the 
                  Company's common stock at $30.00 per share, 125,000 shares of 
                  which are currently exercisable and 75,000 shares of which are
                  contingent on Sentry achieving certain financial targets in 
                  fiscal year 1999. The Shares and Warrants were issued in
                  reliance upon an exemption from the registration provisions
                  of the Securities Act of 1933, as amended (the "Act"), set 
                  forth in Section 4(2) thereof and Rule 506 of Regulation D of 
                  the General Rules and Regulations under the Act promulgated
                  by the Securities and Exchange Commission ("Regulation D"). 
                  The Company reasonably believes that there were less than
                  35 purchases of the Shares and the Warrants calculated in 
                  accordance with Rules 501(e) and 502(a) of Regulation  D. In 
                  connection  with the issuances of the Shares and Warrants, the
                  former stockholders of Sentry made certain representations
                  to the Company as to their investment intent and possessed
                  a sufficient level of sophistication and access to 
                  information. The Shares and the Warrants are subject to
                  restrictions on transfer absent registration under the Act 
                  or exemption therefrom.

         (d)      Not applicable.

<PAGE> 18
Item 6.  Exhibits and Reports on Form 8-K.
         --------------------------------

  (a)    Exhibits.

  Exhibit
  Number      Description
   10.1       Form of META Group, Inc./JMI Long Term Incentive Compensation Plan
   10.2       Form of Common Stock Purchase Warrant (Immediate Vesting) issued
                 to stockholders of The Sentry Group, Inc. on October 20, 1998
   10.3       Form of Common Stock Purchase Warrant (Contingent Vesting) issued
                 to stockholders of The Sentry Group, Inc. on October 20, 1998
   11.1       Statement re-computation of per-share earnings
   21.1       List of subsidiaries
   27.1       Financial Data Schedule

  (b)    Reports on Form 8-K.

   None.

<PAGE> 19
                                 SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                              META Group, Inc.




Date: November 16, 1998       By:/s/ Bernard F. Denoyer
                                 -------------------------------------
                                 Bernard F. Denoyer
                                 Senior Vice President, Finance, Chief Financial
                                 Officer, Secretary and Treasurer
                                (Principal Financial and Accounting Officer)


<PAGE> 20
                                EXHIBIT INDEX



                                                                   Sequentially
Exhibit                                                              Numbered
Number                              Description                       Page
                                                                                
      

-----
10.1      Form of META Group, Inc./JMI Long Term Incentive                  
            Compensation Plan                                             21

10.2      Form of Common Stock Purchase Warrant (Immediate Vesting)
            issued to stockholders of The Sentry Group, Inc.
            on October 20, 1998                                           29

10.3      Form of Common Stock Purchase Warrant (Contingent Vesting)
          issued to stockholders of The Sentry Group, Inc. on 
          October 20, 1998                                                39

11.1      Statement re computation of per-share earnings                  49
                       

21.1      List of subsidiaries                                            50

27.1      Financial Data Schedule                                         51 
                                       

------------------