U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

(X)  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934

     For the quarterly period ended September 30, 1998

(  ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES  
     EXCHANGE ACT OF 1943 (No Fee Required)

     For the transition period from_______________________to_______________

                  Commission File number 33-18174-D

                        SIEMANN EDUCATIONAL SYSTEMS, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

           Colorado                                            84-1067172
-------------------------------                            -------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                            Identification No.)


           405 S. Platte River Drive, Suite 3A, Denver, Colorado 80223
           -----------------------------------------------------------
                    (Address of principal executive offices)

                                  303/733-9673
                      -------------------------------------
                            Issuer's telephone number

         Check  whether  the issuer (1) filed all reports to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 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
               -----------              -----------

         State the number of shares  outstanding of each of the issuer's classes
of common equity as of the latest practicable date.

3,765,000 shares of common stock were outstanding as of November 10, 1998.
--------------------------------------------------------------------------------


<PAGE>

Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

               SIEMANN EDUCATIONAL SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     Assets


                                                    September 30,   December 31,
                                                        1998            1997
                                                     -----------    ------------
                                                     (Unaudited)      (Audited)

Current assets:
    Cash                                             $   401,630     $    18,830
    Student accounts receivable                        3,473,531         657,814
    Student notes receivable                             777,489         746,693
    Note receivable - stockholder                         68,002         216,300
    Note receivable - related party                      207,000         200,000
    Inventory                                             84,711           7,392
    Prepaid and other                                     42,475          31,401
    Deferred stock offering costs                         82,125            --
    Deferred tax asset                                    54,325            --
                                                     -----------     -----------
                   Total current assets                5,191,288       1,878,430
                                                     -----------     -----------
Student accounts and notes receivable                    781,972         718,275
Property and equipment, net of
       accumulated depreciation                          627,019         284,774
Investment in acquisition of business                       --           223,936
Intangibles, net                                       8,765,187            --
Perkins matching funds                                    70,000          70,000
Other                                                     32,995          25,597
                                                     -----------     -----------

Total assets                                         $15,468,461     $ 3,201,012
                                                     ===========     ===========




                                       2

<PAGE>


               SIEMANN EDUCATIONAL SYSTEMS, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      Liabilities and Stockholders' Equity


                                                     September 30,  December 31,
                                                         1998           1997
                                                      ----------   -------------
                                                      (Unaudited)    (Audited)

Current liabilities:
    Accounts payable                                  $   117,170   $   123,449
    Student refunds payable and credit balances            20,403        21,061
    Payable to owner of business to be acquired              --          61,968
    Accrued liabilities                                   713,608       133,321
    Income taxes payable                                   20,117          --
    Deferred tuition income                             3,169,613       871,537
    Common stock repurchase commitment                       --          61,968
    Note payable - stockholder                             94,400          --
    Current maturities of capital lease obligations       128,670          --
    Current maturities of long-term debt                2,793,683       462,149
                                                      -----------   -----------
          Total current liabilities                     7,057,664     1,735,453
                                                      -----------   -----------
Rent payable, related party                               132,902       132,902
Capital lease obligations                                 193,684          --
Long-term debt, net of current maturities
   and discount                                         4,319,694       605,730
Deferred tax liability                                     34,208          --
Note payable - stockholder                              2,115,966       355,307
                                                      -----------   -----------
          Total liabilities                            13,854,118     2,829,392
                                                      -----------   -----------

Redeemable warrants                                       211,863          --
                                                      -----------   -----------

Stockholders' equity:
    Common stock, $.10 par value,
       100,000,000 shares  authorized,
        3,765,000 (1998) and 3,795,984 (1997)
       shares issued and outstanding                      376,500       379,598
    Additional paid-in capital                            948,278        88,706
    Common stock repurchase commitment                       --         (61,968)
    Retained earnings                                      77,702       (34,716)
                                                      -----------   -----------
          Total stockholders' equity                    1,402,480       371,620
                                                      -----------   -----------

Total liabilities and stockholders' equity            $15,468,461   $ 3,201,012
                                                      ===========   ===========




                                       3

<PAGE>

<TABLE>
<CAPTION>
                                         SIEMANN EDUCATIONAL SYSTEMS, INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                            (Unaudited)

                                                              Three Months Ended                 Nine Months Ended
                                                                 September 30,                      September 30,
                                                           1998               1997              1998             1997
                                                       ------------       -----------       -----------       -----------
Revenue:
<S>                                                     <C>               <C>               <C>               <C>        
    Tuition revenue                                     $ 2,892,504       $   815,610       $ 6,634,862       $ 2,133,454
    College supply and cafeteria sales                      110,358            33,904           241,605           122,871
    Other                                                    44,079            83,008           107,213           141,146
                                                        -----------       -----------       -----------       -----------
       Total revenues                                     3,046,941           932,522         6,983,680         2,397,471
Operating expenses:
    Educational services and facilities                   1,412,201           392,105         3,146,632         1,059,900
    Cost of college supplies and cafeteria sales             99,866            39,878           260,536           131,774
    Selling and promotion                                   307,210           151,954           725,514           425,612
    General and administrative                              661,209           113,428         1,723,176           317,320
    Depreciation and amortization                           155,965            46,648           360,663           136,594
    Bad debt expense                                         24,844           109,126           102,287           166,942
                                                        -----------       -----------       -----------       -----------
       Total operating expenses                           2,661,295           853,139         6,318,808         2,238,142
                                                        -----------       -----------       -----------       -----------

       Income from operations                               385,646            79,383           664,872           159,329

Interest income                                              30,171              --              63,322              --
Interest (expense)                                         (270,442)          (33,964)         (615,776)          (52,897)
                                                        -----------       -----------       -----------       -----------

       Income before provision for income taxes             145,375            45,419           112,418           106,432

Provision for income taxes:
   Current                                                     --                --                --                --
   Deferred                                                    --                --                --                --
                                                        -----------       -----------       -----------       -----------
      Total provision for income taxes                         --                --                --                --
                                                        -----------       -----------       -----------       -----------

Net income                                              $   145,375       $    45,419       $   112,418       $   106,432
                                                        ===========       ===========       ===========       ===========

Net income (loss) per common share
    Basic                                               $      0.04       $      0.01       $      0.03       $      0.06
                                                        ===========       ===========       ===========       ===========
    Fully diluted                                       $      0.02       $      0.01       $      0.02       $      0.06
                                                        ===========       ===========       ===========       ===========

Weighted number of common shares outstanding
    Basic                                                 3,765,000         3,335,870         3,776,583         1,651,282
                                                        ===========       ===========       ===========       ===========
    Fully diluted                                         6,265,846         3,335,870         5,517,098         1,651,282
                                                        ===========       ===========       ===========       ===========

                                                            4

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                 SIEMANN EDUCATIONAL SYSTEMS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)

                                                                              Nine Months Ended September 30,
                                                                                1998                   1997
                                                                            -----------            ------------
<S>                                                                         <C>                    <C>   
Cash flows from operating activities:
   Net income                                                               $   112,418            $   106,432
    Cash provided (used) by operating activities:
          Depreciation and amortization                                         360,663                136,594
          Contributed assets                                                    (25,838)                  --
          Contributed materials                                                    --                   25,718
    Changes in operating assets and liabilities:
        Student accounts and notes receivable                                (1,457,521)            (1,176,576)
        Inventory                                                                   538                   --
        Prepaid expenses and other assets                                        13,506                 (4,926)
        Deferred tax assets and liabilities                                     (20,117)                  --
        Accounts payable                                                        (68,696)                (2,261)
        Student refunds payable and credit balances                                (658)               (94,699)
        Accrued liabilities and income taxes                                    375,800                  6,741
        Rent payable, related party                                                --                  142,683
        Deferred tuition revenue                                                867,365                481,564
                                                                            -----------            -----------
             Net cash provided (used) by operating activities                   157,460               (378,730)
                                                                            -----------            -----------

Cash flows from investing activities:
        Purchases of property and equipment                                     (80,369)               (11,493)
        Collections on loans to related parties                                 148,300                   --
        Loans to related parties                                                 (7,000)                  --
        Acquisition of subsidiary, net of cash acquired                      (3,521,100)                  --
                                                                            -----------            -----------
            Net cash provided (used) by investing activities                 (3,460,169)               (11,493)
                                                                            -----------            -----------

Cash Flows from Financing Activities:
        Loan fees and costs                                                      (8,751)                  --
        Proceeds from debt                                                    3,255,052                330,364
        Proceeds from debt - related party                                    2,118,987                   --
        Payments of debt and capital leases                                  (1,430,269)                (6,405)
        Cash received in merger                                                    --                  102,750
        Distributions to stockholder                                               --                 (216,520)
        Deferred stock offering costs                                           (82,125)                  --
        Payments of related party debt                                         (167,385)                  --
                                                                            -----------            -----------
           Net cash provided (used) by financing activities                   3,685,509                210,189
                                                                            -----------            -----------

        Net increase (decrease) in cash                                         382,800               (180,034)
Cash, beginning of period                                                        18,830                311,986
                                                                            ===========            ===========
Cash, end of period                                                         $   401,630            $   131,952
                                                                            ===========            ===========

                                                  
                                                           5

</TABLE>

<PAGE>



               SIEMANN EDUCATIONAL SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (continued)


Supplemental disclosure of cash flow information:
Cash payments for interest                                          $   470,992
                                                                    ===========
Non-cash investing and financing transactions:
      Investment in subsidiary                                      $ 9,052,532
      Future stock to be issued in payments                            (750,000)
      Note to prior owner                                            (4,340,000)
      Cash acquired with acquisition                                   (341,432)
      Earnest money from prior periods applied                         (100,000)
                                                                    ===========
      Cash paid for subsidiary                                      $ 3,521,100
                                                                    ===========

      Loan fees and costs                                           $   174,916
      Loan discounts                                                   (146,165)
      Deposit from prior periods applied                                (20,000)
                                                                    ===========
      Cash paid for loan fees/costs                                 $     8,751
                                                                    ===========

      Warrants issued with financing                                $   380,306
                                                                    ===========

       Equipment acquired under capital lease                       $   145,517
                                                                    ===========



                                       6
<PAGE>



                        SIEMANN EDUCATIONAL SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

                               September 30, 1998


1. BASIS OF PRESENTATION AND ORGANIZATION
   --------------------------------------

The balance sheet as of September 30, 1998, the statements of operations for the
three  months  and nine  months  ended  September  30,  1998 and  1997,  and the
statements of cash flows for the nine months ended  September 30, 1998 and 1997,
have been prepared by the Company. In the opinion of management, all adjustments
(which include  normal  recurring  adjustments)  necessary to present fairly the
financial  position,  results  of  operations,  and  changes  in cash  flows  at
September 30, 1998, and for all periods  presented,  have been made. The balance
sheet as of September 30, 1998,  and the statements of operations and cash flows
for the nine  months  ended  September  30,  1998,  include  additional  officer
compensation  expense and related  accrued  liabilities for the first and second
quarters of 1998 in the amounts of $36,000 and $45,000,  respectively. The first
and second  quarter 1998  financial  statements  will be amended  accordingly to
include this additional expense and liability.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have  been  condensed  or  omitted.  It  is  recommended  that  these  financial
statements  be read in  conjunction  with the  financial  statements  and  notes
thereto  included in the  Company's  December  31, 1997  10-KSB.  The results of
operations  for the  nine  months  ending  September  30,  1998 and 1997 are not
necessarily indicative of the operating results for the full year.

2. ACQUISITION OF SUBSIDIARY AND RELATED DEBT
   ------------------------------------------

The Company acquired Data Processing  Trainers,  Inc. ("DPT") on March 24, 1998,
for a purchase  price of $9,030,624.  DPT, now a wholly-owned  subsidiary of the
Company,  is an  accredited  school  offering a variety of  vocational  training
programs  with two  locations  in  Philadelphia,  Pennsylvania.  The majority of
students are drawn from the surrounding metropolitan area.

The purchase price is comprised of:  $3,940,624 in cash  (including  $119,564 in
repurchased  common stock),  which was paid, less a deposit of $100,000,  at the
time of closing;  a  $4,340,000  promissory  note;  and  $750,000 in stock.  The
promissory note, dated March 24, 1998,  requires quarterly payments beginning in
June,  1998, of $542,500 in principal plus accrued interest at 7% per annum. The
note is due March 24, 2000, and is secured by a Security  Agreement-Stock Pledge
and a Guaranty and Security Agreement. Under the terms of the agreement,  59,782
shares of the Company's  common stock valued at $119,654 were repurchased at the
time of the closing by the Company for cash,  leaving the balance of $750,000 to
be satisfied by the Company issuing on March 24, 1999, an undetermined number of
shares of non-registered common stock equivalent to a value of $750,000 based on
the ten day trailing average market price at the time of the transfer.

The acquisition is being accounted for as a purchase with a substantial  portion
of the  purchase  price  being  allocated  to  goodwill.  The  goodwill is being
amortized over forty years. The following pro forma  information is presented as
if the acquisition occurred at the beginning of each of the periods:

                                                          Nine Months Ended
                                                             September 30,
                                                        1998            1997
                                                     ---------       -----------
     Pro forma revenues                              $9,044,738      $7,481,801
     Pro forma net income                               222,920         257,984
     Pro forma basic earnings per share                    $.01            $.16
     Pro forma fully diluted earnings per share            $.01            $.06

In order to fund the purchase price,  the Company  borrowed  $2,000,000 from its
president and majority  stockholder,  and $2,900,000  from an outside  financing
source.  The debt of $2,000,000 to the  president  bears 12% interest,  interest
only payable monthly,  and is due on March 24, 2003. The president also received
a warrant  to  purchase  732,360  shares of the  Company's  common  stock for an
aggregate  price of $100 for the  period  ending  March  24,  2003.  The debt of
$2,900,000 to the outside source is payable  interest only quarterly,  bears 12%
interest,  and is due on March 24,  2003.  This  lender  received  a warrant  to
purchase  1,268,486  shares of the  Company's  common stock for a total price of
$100 through March 25, 2003.

                                       7

<PAGE>


The warrants were valued at  approximately  $380,000,  which is presented on the
balance sheet as a discount from the debt and is being  amortized  over the life
of the term of the related notes  payable.  The costs of obtaining the financing
have  been  deferred  and are also  being  amortized  over the term of the notes
payable.

3. COMMITMENTS
   -----------

In July, 1998, the Company signed a letter of intent with an underwriter to sell
approximately  1,857,000  shares of common stock at  approximately $7 per share.
The  sale has been  temporarily  suspended  until  1999  due to  current  market
conditions.




                                       8

<PAGE>



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion of the results of operations and financial condition of
the  Company  should  be read in  conjunction  with the  Company's  Consolidated
Financial Statements and Notes thereto appearing elsewhere herein.

The discussion below contains certain  forward-looking  statements (as such term
is defined in Section 21E of the Securities Exchange Act of 1934) that are based
on the beliefs of the Company's management, as well as assumptions made by , and
information  currently  available  to, the Company's  management.  The Company's
actual growth, results,  performance and business prospects and opportunities in
1998 and beyond could differ  materially from those expressed in, or implied by,
any such forward-looking statements. See "Special Note Regarding Forward-Looking
Statements"  on page 12 for a discussion of risks and  uncertainties  that could
cause or contribute to such material differences.

Background and Overview

Siemann  Educational  Systems,  Inc.  ("SES")  operates  two private  for-profit
post-secondary vocational schools: Denver Automotive and Diesel College ("DADC")
and Data Processing Trainers,  Inc. ("DPT"). DADC, located in Denver,  Colorado,
provides  training  in  automotive  and  diesel  mechanics;  the  school had 283
enrolled  students as of September 30, 1998.  The school is a "Master  Certified
Automotive School" by the National Automotive  Technicians Education Foundation,
and offers several  associate degree and non-degree  programs.  DPT, acquired by
the   Company  on  March  24,   1998  as  more  fully   discussed   below  under
"Acquisitions", consists of two campuses in the Philadelphia, Pennsylvania, area
providing  training  in the areas of  computer  programming,  business  computer
applications,  medical office administration,  and English as a second language.
DPT's two campuses had enrollment of approximately 980 students on September 30,
1998. DADC's enrollment is slightly lower than on September 30, 1997, reflecting
the continuing low unemployment  rate in the general  economy;  DPT's enrollment
has remained  generally  constant  over the past year because it has reached the
limits of its current  physical  capacity.  Both  schools  have long  histories,
dating to 1963  (DADC) and 1987  (DPT).  DADC has been  operated  by the Company
since August 31, 1997,  and, as noted above,  DPT was acquired by the Company in
March, 1998. For the period November, 1993 to August 31, 1997, DADC was operated
by an S corporation owned by the Company's current CEO and primary stockholder.

DPT's northeast  Philadelphia campus has contracted for expansion space in a new
location;  it is anticipated  that the new facilities will be occupied by DPT in
January  of  1999.   The  campus  is  occupying   its  current   facility  on  a
month-to-month  basis until the move.  This expansion will result in the ability
to  increase   the  student  body  at  that  campus  from  the  current  700  to
approximately  1,400.  The school  expects to have an  additional  120  students
enrolled by June of 1999.  Current  tuition  revenue is  approximately  $900 per
month per student.  Rent expense is expected to increase by approximately $9,500
per month at the new facility.

The Company's principal sources of revenues are tuition,  related fees, and book
sale charges  collected  from its students.  Both schools  record tuition at the
start of each academic term as deferred  tuition  income,  a current  liability.
During the term, the applicable portion of deferred tuition income is recognized
as  revenue  each  month  based on  aggregate  number of credit  hours  taken by
students  during the term. The year is divided into terms,  which are determined
by start dates that vary by school and program.  Payment of each term's  tuition
may be made by full cash payment,  financial aid, and/or an installment  payment
plan. If a student  withdraws  from school prior to the  completion of the term,
the Company  refunds a portion of the tuition already paid which is attributable
to the uncompleted  period of the term. The Company's campuses charge tuition at
varying  amounts  depending  on both  the  school  and the type of  program  and
curriculum.  Each of the Company's  campuses  typically  implements  one or more
tuition increases annually; DADC's last increase was 5% in July of 1998, and DPT
is  projecting  a 6-7%  increase  in April of 1999.  For both DADC and DPT,  the
highest  student  body  levels  occur  during  the  fall  terms,   beginning  in
August/September.

The Company's expenses consist of educational and facilities costs,  selling and
promotional  expense,  general  and  administrative  expense,  depreciation  and
amortization, and bad debt expense.

Education costs generally  consist of salaries and related expenses for faculty,
instructional  support,  academic  administration,  educational  materials,  and
related  expenditures.  Facility costs include leasing and maintenance of campus
facilities, and other building occupancy expenses.

Selling  and  promotional  expenditures  include  the costs of  advertising  and
promotional  materials,  as well as salaries and benefits  for  recruitment  and
marketing personnel.

                                       9

<PAGE>


General and administrative expense includes salaries and benefits of accounting,
and school and corporate administration.

Depreciation  and  amortization   consists  of  depreciation  of  purchased  and
capital-leased computer equipment,  automotive training equipment, and furniture
and fixtures.  Amortization of intangible assets consists primarily of the costs
of goodwill  acquired in the purchase of DPT, and loan fees associated with that
purchase.

Uncollectible  student  receivables  are  written  off to bad debt  expense on a
pro-rata basis through out the year. DADC  experienced a period of ineligibility
for federal  financial aid programs during 1996 and 1997; as a consequence,  the
school  substantially  increased the level of tuition being financed by students
under installment  payment plans. Bad debt expense has been  approximately  4.2%
and 3.9% of DADC revenues in 1998 and 1997, respectively.  As of February, 1998,
DADC  has  been  reinstated  in  the  federal  student  aid  programs.  DPT  has
experienced bad debts of less than 1% of revenue in 1998 and 1997.

As a result of the S Corporation  status of DADC until August 31, 1997, DADC was
not  subject to federal  and state  income  taxes  until it was  acquired by the
Company.  The Company's  operations  from September 1, 1997 to December 31, 1997
resulted in a net operating loss  carry-forward of approximately  $152,700 as of
December 31, 1997.  The tax benefit of the net operating loss was fully reserved
at December 31, 1997. It is expected that net profits generated by operations of
DPT  from  its  date  of  acquisition  will  have  consumed  most  of  the  loss
carry-forwards  during the fourth  quarter of 1998,  and the Company  expects to
record positive provisions for income taxes beginning with that quarter.

Acquisition

On March 24, 1998, the Company acquired all of the outstanding  stock of DPT for
a purchase  price of $9,030,624,  and additional  direct costs of acquisition of
approximately  $21,900 were also capitalized;  the acquisition was accounted for
as a purchase. The purchase price was determined through arms-length negotiation
with the independent  third-party owner based on historical and projected future
cash flow and earnings.  DPT had minimal  tangible  assets,  and the  difference
between the purchase price and the assets and  liabilities  assumed was recorded
as goodwill. None of the purchase price was allocated to identifiable intangible
assets such as leases,  faculty and  curriculum  because  little or no value was
attributable to these assets. The in-force lease on the facilities at one campus
terminated in October,  1998,  and the facilities at the other campus have since
required  expansion  to fully meet the needs of the number of students and staff
even as of the date of acquisition.  Acquired  capital leases were all at market
rates.

The  purchase  price  consisted  of cash  payments  of  $3,599,192  (net of cash
acquired),  a $4,340,000  note payable to DPT's  former  owner,  and $750,000 in
future stock to be issued. Funds used for the acquisition were borrowed from the
company's president (in the amount of $2,000,000) and a financing  subsidiary of
a brokerage firm (in the amount of $2,900,000).  Warrants to purchase  2,008,846
shares of the Company  were issued in  connection  with this debt.  Based on the
provisions of the warrant agreement, a substantial number of shares are expected
to be earned  back by the  Company;  the  remaining  warrants  were  valued  and
recorded at $380,306.

The  acquisition  of DPT  resulted in the  following  balance  sheet  additions:
$1,452,689 to student accounts/notes  receivable,  $77,857 to book and materials
inventories,  $308,206 to tangible  fixed  assets,  $64,478 to prepaid and other
assets, $287,021 to accounts payable, $195,150 to capital lease obligations, and
$1,430,711 to deferred tuition liabilities.  Cash of $341,432 was acquired,  and
goodwill of $8,720,752 was recorded.

As a  result  of  the  acquisition,  amortization  expense  is  expected  to  be
approximately  $218,000  annually.  The loans from the shareholder and financing
subsidiary are due in five years,  and interest  expense at 12% will approximate
$588,000  annually until  maturity.  The note payable to the former owner of DPT
carries interest of 7%; interest expense will be approximately  $200,000 in 1998
and  $142,000  in 1999 on this note;  the note is due in full two years from the
date of acquisition.

Liquidity and Capital Resources

September 30, 1998 as Compared to December 31, 1997
---------------------------------------------------

The  Company  finances  its  operating  activities  and  capital   requirements,
including  debt   repayments,   principally  from  cash  provided  by  operating
activities  and  borrowings  on lines of  credit.  The  Company's  cash  balance



                                       10

<PAGE>

increased  $382,800  over the period  ended  December  31,  1997;  the  increase
resulted  primarily  from  borrowings  associated  with the  acquisition of DPT,
additional borrowings on lines of credit, and cash flows from the newly-acquired
operations of DPT.

Accounts receivable,  net of the effects of the DPT acquisition discussed above,
increased by $609,616  (29%) at DADC and by $839,921 (58%) at DPT (from the date
of acquisition).  The increase at DADC reflects the growth in installment credit
granted to students during the temporary Title IV  ineligibility  period arising
from the ownership change,  and, primarily,  normal fluctuations  related to the
timing of start dates.  Installment  loans are payable by students over a period
ranging  from one to five  years  from  inception,  while  Title  IV  funds  are
generally   collected  within  the  current  academic  year.   DADC's  Title  IV
eligibility  was  restored  as of the  end of  February,  1998.  The  receivable
increase at DPT is primarily  attributable  to normal start date  fluctuations .
Deferred  tuition  liabilities,  which represent the unearned portion of current
academic  year  receivables,  increased  by  $501,170  at DADC  (reflecting  the
receivables and fall term student body  increase),  and by $366,195 at DPT (from
the date of  acquisition).  The DPT increase  results  from normal  inter-period
start date timing fluctuations.

Capital  expenditures  unrelated  to the  acquisition  during  the  period  were
$80,369.  The  Company  expects to incur  approximately  $400,000  in  leasehold
improvements  and other capital  expenditures as a result of the planned January
1999  relocation  of  one  of  its  Philadelphia  campuses.  A  portion  of  the
improvements are being

Cash  provided by operating  activities  of $157,460 for the  nine-month  period
ended September 30, 1998,  primarily results from the addition of DPT operations
to the Company.

Results of Operations

September 30, 1998 as Compared to September 30, 1997

The following table summarizes the Company's  operating  results as a percentage
of net revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                    Three Months Ended           Nine Months Ended
                                                       September 30,               September 30,
                                                    1998            1997           1998       1997
                                            -------------------------------------------------------
<S>                                                 <C>            <C>            <C>        <C>   
    Net revenues                                    100.0%         100.0%         100.0%     100.0%
    Educational services and facilities              46.3%          42.0%          45.1%      44.2%
    Cost of college supplies/sales                    3.3%           4.3%           3.7%       5.5%
    Selling and promotion                            10.1%          16.3%          10.4%      17.8%
    General and administrative                       21.7%          12.2%          24.7%      13.2%
    Depreciation and amortization                     5.1%           5.0%           5.2%       5.7%
    Bad debt expense                                   .8%          11.7%           1.5%       7.0%
                                            -------------------------------------------------------
    Income from operations                           12.7%           8.5%           9.5%       6.6%
    Interest expense - net                            7.9%           3.6%           7.9%       2.2%
    Provision for income taxes                           0              0              0          0
                                            =======================================================
    Net income                                        4.8%           4.9%           1.6%       4.4%
                                            =======================================================
</TABLE>

Total  revenues.  The  Company's  total  revenues  increased  by  $4,586,209  to
$6,983,680  for the nine months ended  September 30, 1998,  compared to the same
period of 1997.  Revenues  include  $4,612,536  attributable to DPT's operations
from the  date of  acquisition  to  September  30.  DADC's  nine-month  revenues
decreased  $27,327 over the previous year due to a slight drop in student units.
Revenue for the three-month period ended September 30, 1998 increased by 5% over
the three-month period ended June 30, 1998.

Educational  facilities and services.  The  educational  services and facilities
cost increase of $2,086,732 in 1998 over the previous year's  nine-month  period
is all due to the inclusion of DPT's operations; DPT incurred $2,104,382 of such
costs in the  period.  These  costs  were  relatively  constant  as a percent of
revenue over all periods.

Selling and promotion expense.  Selling and promotion expense increased $299,902
over  the  previous  year's  nine-month  period.  Inclusion  of  DPT's  expenses
accounted  for all but $15,970 of the increase.  As a percent of revenue,  these
expenses  decreased from 17.8%  (reflecting  DADC operations  only) for the 1997



                                       11

<PAGE>

period to 10.4%  (based on both DADC and DPT  operations)  for the 1998  period;
DPT's  expenses  as a percent of revenue  for 1998  year-to-date  are 6%,  while
DADC's are approximately  18%. DADC's selling and promotion expense increased 3%
for the 1998 period. The Company intends to focus on more effective  utilization
of marketing resources in DADC operations.

General and  administrative.  General and  administrative  expenses increased by
$1,405,856  over  the  same  period  of 1997 as a result  of  indirect  expenses
incurred in conjunction with the purchase of DPT, inclusion of DPT's general and
administrative   expenses  (accounting  for  $745,468  of  the  increase),   and
continuing   accounting  and  legal  expenses   associated  with  the  Company's
transition  to  publicly-held  status.  These  expenses  as a percent of revenue
increased from 13.2% in the 1997 period to 24.7% in the 1998 period. The Company
expects  these  expenses  as a percent of revenue to decrease  slightly  for the
remainder of 1998.

Depreciation  and  amortization.   Amortization  expenses,   primarily  goodwill
acquired in the DPT purchase,  accounted  for $141,940 of the $224,069  increase
for the 1998 period over the 1997 period. DPT's depreciation expense was $88,621
for the 1998  period,  while  DADC's  expense was  $130,102 for the 1998 period,
compared to $136,594 for the 1997 period.

Bad debt expense.  Bad debt expense  decreased  $64,655 for the 1998 period over
the 1997 period; the decrease is due solely to DADC operations, and reflects the
lower  percentage of student tuition funded through  institutional  financing in
the current  year.  The  decrease as a percent of revenue from 7% to 1.5% is the
result of inclusion of DPT's lower bad debt rate.

Income from  operations.  Income from  operations  rose  $505,543  over the 1997
period,  reflecting  the net increase from the inclusion of DPT in the Company's
operating results.  DPT's pre-tax income from operations as a percent of revenue
was 26.9%;  the Company  believes  the  acquisition  and  expansion  of DPT will
continue to favorably affect operating results, although the costs of moving and
expansion  at DPT  during the  remainder  of 1998 will  amount to  approximately
$275,000.

Interest  expense.  Interest  expense  increased  $562,879 over the 1997 period,
attributable to acquisition and operations borrowings;  the use of loan proceeds
to finance operations was required due to the period of temporary  ineligibility
for Title IV funds  associated with the ownership  change during the first and a
portion of the second quarter.

Net income. Net income increased  slightly,  from $106,432 in the 1997 period to
$112,418  in the 1998  period.  This  period  includes  only six  months  of DPT
operations  from the  March  24,  1998,  date of  acquisition.  DADC net  income
decreased  approximately  $113,600  over  the same  period  of 1997 due to lower
revenues  and  higher  expenses  in  the   selling/promotion   and  general  and
administrative  categories.  Weighted  number of shares  outstanding  reflects a
substantial  increase from December 31, 1997,  due to the issuances of shares in
connection with the conversion from privately-held to publicly-held  status, and
issuances in conjunction with acquisition financing.

Year 2000. The Company is actively exploring with its current software providers
the extent and cost of any  measures  that may be required to address  Year 2000
problems.  The Company uses primarily  off-the-shelf student  record-keeping and
accounting  software in its  operations  both these systems are currently  under
review as to possible replacement within the next year. As a result, the Company
will have the opportunity to assure Year 2000 compliance for these systems prior
to purchase and  installation.  The Company intends to test its hardware systems
for Year 2000 recognition ability within the next six months.

Special  Note  Regarding  Forward-Looking  Statements.  This  Form 10Q  contains
certain statements which reflect the Company's expectations regarding its future
growth,  results  of  operations,   performance,   and  business  prospects  and
opportunities. Wherever possible, words such as "anticipate", "believe", "plan",
"expect",   and  similar   expressions   have  been  used  to   identify   these
"forward-looking"  statements.  These statements  reflect the Company's  current
beliefs  and are  based  on  information  currently  available  to the  Company.
Accordingly, these statements are subject to risks and uncertainties which could
cause the Company's actual growth,  results,  performance and business prospects
and  opportunities  to differ  from those  expressed  in, or implied  by,  these
statements.   These  risks  and  uncertainties  include  implementation  of  the
Company's  operating and growth  strategy,  risks inherent in operating  private
for-profit post-secondary education institutions,  risks associated with general
economic and business conditions, charges and costs related to acquisitions, and
the  Company's  ability to  successfully  integrate  its acquired  institutions,
attract and retain students at its institutions, meet regulatory and accrediting
agency  requirements,  compete  with other  institutions  in its  industry,  and
attract and retain key  employees  and faculty.  The Company is not obligated to
update or revise  these  forward-looking  statements  to  reflect  new events or
circumstances.

                                       12


<PAGE>




                                     PART II

Item 1.  LEGAL PROCEEDINGS.

None.

Item 2.  CHANGE IN SECURITIES

None.

Item 3.  DEFAULTS ON 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).  Exhibit No.          Description
               -----------          -----------

                   27           Financial Data Schedule

         (b).  Reports on Form 8-K:

              On April 8,  1998,  the  Company  filed a Report on Form 8-K under
Item 2., "Acquisition or Disposition of Assets".

              On June 9, 1998, the Company filed a Report on Form 8-K under Item
              7.,  "Financial  Statements  and  Exhibits"  for DPT for the years
              ended December 31, 1997 and 1996.

                                   SIGNATURES

Pursuant  to the  requirement  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.

                                    SIEMANN EDUCATIONAL SYSTEMS, INC.
                                              (Registrant)


                                    By:    /s/  PAUL T. SIEMANN
                                           -------------------------------------
                                           Paul T. Siemann, President and CEO

                                       13