<PAGE>  

                                 UNITED STATES                                 
                       SECURITIES AND EXCHANGE COMMISSION  
                           Washington, D.C. 20549  
  
                                  FORM 10-QSB  
  
            Quarterly Report Pursuant to Section 13 or 15(d) of the   
                        Securities Exchange Act of 1934  
  

           For the quarterly period ended          December 31, 1998
  
             Commission file Number                      000-28976  


                      Acadia National Health Systems, Inc.
            (Exact name of registrant as specified in its charter.)  

  

              Colorado                                   10509781
   (State or other jurisdiction of                   (I.R.S. Employer  
    incorporation or organization)                  Identification No.)  

                  95 Park Street, Lewiston, Maine U.S.A.04240
              (Address of principal executive offices)(Zip Code)  
  

              Registrant's telephone number, including area code:
                                (207) 777-3423                    
                                (800) 274-9185
 
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 practical 
date:  
  
Common Stock, $0 Par Value - 4,337,987 shares as of  
December 31, 1998.

<PAGE>

PART I - FINANCIAL INFORMATION 

ITEM 1

                     ACADIA NATIONAL HEALTH SYSTEMS, INC. 
                                BALANCE SHEETS  
                                 (Unaudited)
 
                                   December 31, 1998    December 31, 1997
                                   _________________    _________________
 
Current Assets:
  Cash-Operating                   $      9,955         $     19,525
  Accounts Receivable                   651,166              409,355
  Unbilled Work at Estimated
    Realizable Value                     65,415               84,889
  Inventories                             4,470                3,234
  Other Current Assets                   45,017                3,874
                                   -----------------    -----------------
  Total Current Assets             $    776,024         $    520,877

Prop., Plant & Equip.:
  Cost                                  178,474              159,285
  Less Accum. Depr.                     (86,104)             (59,993)
                                   -----------------    -----------------
                                   $     92,370         $     99,292

Other Assets:
  Other                                   7,952               11,900
  Organization Cost                      33,150               32,819
  Less Accum. Amort.                     (5,037)                   0
  Notes Receivable                       91,689                    0
                                   -----------------    -----------------
Total Assets                       $    996,147         $    664,888
                                   =================    =================
Current Liabilities:
  Accounts Payable                 $      6,330         $      2,568 
  Line of Credit                        490,014              249,717
  Accrued Expense                        65,109               45,108
  Current Portion of
     Long Term Notes                     20,000               18,000
                                   -----------------    -----------------

Total Current Liabilities          $    581,452         $    315,393

Long Term Liabilities:
  Long Term Debt                         92,517              105,445
                                   -----------------    -----------------
Total Liabilities                  $    673,969         $    420,838

<PAGE>

                                   December 31, 1998    December 31, 1997
                                   _________________    _________________

Stockholders' Equity:
  Common Stock                          276,640              251,640
  Paid In Capital & Treas.               42,281                    0
  Retained Earnings                       3,258               (7,590)
                                   -----------------    -----------------
Total Equity                       $    322,178         $    244,050
                                   -----------------    -----------------
Total Liabilities &
Equity                             $    996,147         $    664,888
                                   =================    =================
See Accompanying  
 Notes to Financial
 Statements  

<PAGE>

                     ACADIA NATIONAL HEALTH SYSTEMS, INC. 

                              STATEMENT OF INCOME  
                             FOR THE THREE MONTHS  
                ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997  
                                  (Unaudited)  

                                   Three months ended   Three months ended
                                   December 31          December 31 
                                   __________________   __________________
                                   1998                 1997   
                                   __________________   __________________

Sales                              $    186,883         $   195,339

Operating Expenses                 $    171,683         $   123,359
                                   ------------------   ------------------

Net Operating Income                    (15,200)             71,980

Other Income/(Expense), Net             (13,808)             83,970
                                   ------------------   ------------------

Net Income Before Taxes                   1,392             (11,990)

(Provision for)
Benefit From  Income Taxes                    0               4,400 
                                   ------------------   ------------------

Net Income                         $      1,392         $    (7,590)
                                   ==================   ==================

Net Income Per
Common Share                       $      0.004         $    (0.002)

Weighted Average Number
of Common Shares
Outstanding                           3,837,987           3,733,987      
    
See Accompanying 
Notes to Financial Statements  

<PAGE>

                     ACADIA NATIONAL HEALTH SYSTEMS, INC.

                           STATEMENTS OF CASH FLOWS
                 FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 
                             AND DECEMBER 31, 1997  
                                  (Unaudited)  

                                   Quarter Ending       Quarter Ending
                                   December 31, 1998    December 31, 1997
                                   -----------------    -----------------
Net Income (Loss)                  $      1,392         $     (7,590)

Depreciation & Amortization        $      7,180         $     10,920

Changes in Assets & Liabilities:
   Accounts Receivable             $     50,808         $   (273,961)
    Other Current  Assets                   535                 (302)
  Other Non-current Assets                1,168               (2,158) 
  Accounts Payable                      (12,335)             (30,934)
  Other Current Liabilities             (21,390)              31,536
                                   -----------------    -----------------
Net Cash (Used for) Provided
  By Operating Activities          $     27,357         $   (272,489)

Investment Activities                   (18,401)                   0
 
Financing Activities                     (4,712)             171,026
                                   -----------------    -----------------
   
Net Increase (Decrease) in         $      4,244         $   (101,463)
  Cash or Cash Equivalents
 
Cash & Cash Equivalents:
  Beginning of Period                     5,711              120,988
  
  End of Period                    $      9,955         $     19,525
                                   =================    =================
  
See Accompanying
 Notes to Financial
 Statements  

<PAGE>

                     ACADIA NATIONAL HEALTH SYSTEMS, INC.
                         NOTES TO FINANCIAL STATEMENTS  
  
                               December 31, 1998

Note 1. Summary of Significant Accounting Policies  
  
     The accompanying unaudited financial statements have been prepared in 
accordance with Generally Accepted Accounting Principles for interim financial 
information and with the instructions to Form 10QSB and Rule 310 of Regulation 
S-B.  Accordingly, they do not include all of the information and footnotes 
required by Generally Accepted Accounting Principles for complete financial 
statements.  In the opinion of management, all adjustments (consisting of 
normal recurring accruals) considered necessary for fair presentation have 
been included.

     The accompanying unaudited financial statements should be read in 
conjunction with the audited balance sheet of Acadia National Health Systems, 
Inc. ("the Company") included in the 1998 Annual Report filed on Form 10-KSB.
The unaudited financial statements have been prepared in the ordinary  
course of business for the purpose of providing information with respect to 
the interim period.  
  
Note 2. Net Income Per Common Share  
  
     Computation of net income per common share was based on the weighted 
average number of shares outstanding during such periods.  These amounted to 
4,337,987 shares for the three months ending December 31, 1998 and 3,733,987 
shares for the three months ending December 31, 1997.

Note 3. Long Term Debt - Short Term Financing  
  
     The total of lines of credit drawn upon (outstanding) from Northeast 
Bank, FSB ("Bank") as of December 31, 1998 was $476,193 on a $650,000 demand 
line limit, compared to $490,014 at December 31, 1997.

On July 24, 1997, Bank provided the Company an $100,000 term loan, and 
on June 24, 1998 an additional $30,000, of which 99,942 is still outstanding 
at December 31, 1998.

On September 1, 1998, Bank provided the Company a $200,000 term loan with 
interest at 9.25%, due in monthly installments of $4,177, including interest, 
through September 2003.  The note balance at December 31, 1998 is $192,031.  
The note, which was primarily used to fund the acquisition of Northeast 
Medical Billing, is collateralized by equipment and fixtures of the Company.

The company also has a note payable collateralized by a vehicle which totals 

<PAGE>

$14,577 at December 31, 1998.

A total of $155,243 of equipment was acquired at various times during the 
year under capital leases.  Capital lease obligations at December 31, 1998 
total $135,898.

     All  other loans and repayment of lines of credit payable to Bank and 
future borrowings under any such credit facilities have been collateralized by 
the accounts receivable and equipment of the Company.

Note 4. Majority Stockholders  
 
     Mr. Paul W. Chute, Mrs. Jacquelyn J. Magno and Mr. Mark T. Thatcher, all 
Board of Directors, had total voting authority, on December 31, 1998 and owned 
approximately 60% of the Common Stock of the Company.  

Note 5. Account Receivable Financing

     The Company has arrangements with certain customers whereby the Company 
advances the customers amounts based on their security and collateralized by 
their accounts receivable.  The Company then assumes the responsibility for 
billing and collecting such receivables.  

                                        12/31/98     13/27/97

    Accounts Receivable (Trade)         $422,858     $ 38,922
      Advances                           632,896      612,244

Total Accounts Receivable               $1,055,754   $651,166
                                        ==========   =========

Note 6. Note Receivable

     The Company holds $90,208 in conditional notes receivable from a vendor 
of which $75,000 earns 10% interest, due in monthly installments of $2,420, 
including interest beginning November 1, l998.  The $75,000 note is secured by 
accounts receivable, equipment and inventory of the vendor.  

<PAGE>

ITEM 2. 

                     ACADIA NATIONAL HEALTH SYSTEMS, INC.
                         MANAGEMENT'S DISCUSSION AND  
                     ANALYSIS OF FINANCIAL CONDITION AND   
                            RESULTS OF OPERATIONS  

                              December 31, 1998  

RESULTS OF OPERATIONS:
=====================================
THREE MONTHS ENDING DECEMBER 31, 1998
=====================================

The Company's financial statements and notes thereto for the current period 
and the audited financial statements and notes thereto for the fiscal year 
ending September 30, l998, should be read in conjunction with this 
Management's Discussion.  

FORWARD-LOOKING INFORMATION

THIS FORM 10QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY 
ACADIA NATIONAL HEALTH SYSTEMS, INC. OR ITS REPRESENTATIVES CONTAIN STATEMENTS 
WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE 
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY 
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. 
SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS 
REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF ACADIA NATIONAL HEALTH 
SYSTEMS, INC. AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON 
WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY 
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND 
INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY 
FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS 
CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER 
MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE 
HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 
99.1 TO THIS FORM 10QSB AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE 
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING 
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED 
EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.

RISK FACTORS

In addition to the other information contained in this report, 
individuals should carefully consider the following risk factors:

1.    The Company believes that its assumptions are based upon reasonable 
data derived from and known about its business and operations.  No assurances 
are made that actual results of operations or the results of the Company's 
future activities will not differ materially from its assumptions;  

2.    Additional risks factors such as the uncertainty of the Company's 
marketing activities, and the results of bringing additional acquisitions and 
affiliations into a smooth operation with Company are unknown;  

3.    Additional concerns regarding the year 2000 compliance standards as 
they effect the Company's operating technology as well as the technologies of 
the industry which effect payment and processing of Company's billings; 

4.    Additional uncertainties regarding the ability for operating cash to 
meet the current and projected cash flow needs of the organization;  

5.    Readers are cautioned not to place undue reliance on these 
forward-looking statements, as they attempt to speak only of activities known 
or anticipated as of this date.   

YEAR 2000 COMPLIANCE

The Company continues to review its technology systems to attempt to discover 
what effects year 2000 issues may have on its operations.  Many of the earlier 
systems, found not to be compliant, have been replaced while others are being 
modified to comply.  The Company is working with its known suppliers of  
technology or services controlled by technology that might be effected by the 
year 2000 events and are seeking written assurances from those determined to 
have a potential effect upon Company's operations.  However, there can be no
assurance that the Company will identify all of its data handling problems in 
its business systems or those of its suppliers or clients in advance of any 
effect upon Company's operations.  The Company, therefore, bears some 
unlimited and unknown risks to the year 2000 issue and could also be adversely 
effected if other entities (State of Maine Department of Medicaid or 
Medicare)do not adequately or timely resolve their payment mechanisms as it 
relates to the Company's ongoing billing operations for its clients.  

<PAGE>

Note:

On September 1, 1998, Acadia National Health Systems purchased selected assets 
of Northeast Medical Business Group, Inc., a medical billing and management 
services corporation located in Keene, New Hampshire.  The following 
management discussion and analysis of financial conditions and results of 
operations includes the operations of Northeast from October 1, 1998 to 
December 31, 1998. 

SALES

Sales for the period were $523,107 compared to $186,883 for the corresponding 
period in 1997. This significant increase is the result of new client business 
which commenced mid March 1998 resulting in additional annualized revenues of 
$425,000 as well as the acquisition of Northeast Medical Billing in September 
1998 with annualized revenues of $650,000.  The Company also signed a major 
contract in July 1998 with a large local behavioral medicine group for a one 
year term.  Revenue on this contract in the 1998 fiscal year totaled $61,000 
with additional revenue of $100,000 expected before the contract expires in 
mid 1999.  Two additional client contracts have been signed effective 1/1/99 
with annualized gross revenues of $106,000 expected for fiscal year 1999.

OPERATING EXPENSES

Increases in operating expenses during the period were principally due to 
increased costs incurred in servicing the expanded client base, in addition to 
increases in depreciation, occupancy and administrative costs related to the 
acquisition of Northeast Medical Billing.

<PAGE>

OPERATING INCOME

The operating gain for the quarter was $11,177 compared to a gain of $1,392 
for the three month period in 1997. 

INCOME TAXES

Acadia is a C Corporation with accruals of $390 for State and Federal taxes 
at December 31, 1998. 

NET INCOME

Acadia's gain of $11,177 was ($0.00279) per share on 4,004,654 outstanding 
common shares.  

LIQUIDITY AND CAPITAL RESOURCES

The Company's non-trade accounts receivable increased to $632,896 due to the 
rapid growth of the waivered foster home and non-medical billing programs.  
These are clean secured receivables with the majority due from the State of 
Maine.  During this same period, the Company added $33,621 in property, plant 
and equipment, principally computer systems and related equipment. Anticipated 
public reporting expenses and planned acquisitions will place additional 
demands on liquidity during the remainder of the next year.  Management, with 
its new principal lender, Northeast Bank FSB, maintain routine analysis of the  
lines of credit and the Company's capital needs.  

MAJOR ACQUISITION

The Company has initiated discussions with various companies towards major 
acquisitions that will greatly strengthen Acadia and its product lines.  

SALES TRENDS

Trends in Acadia's existing business lines, medical billing services and 
billing for waivered foster home care, are positive, with expected
growth throughout FY 1999.  Added billing clients, software sales, practice 
management consulting, related support services and major acquisitions are 
expected to result in significant revenue and earning increases in FY 1999 
and beyond.

<PAGE>

PART II - OTHER INFORMATION  

ITEM 1.   Legal Proceedings

          Neither the Registrant nor any of its affiliates are a 
          party, nor is any of their property subject, to material 
          pending legal proceedings or material proceedings known 
          to be contemplated by governmental authorities.

ITEM 2.   Changes in Securities

          None

ITEM 3.   Defaults Upon Senior Securities

          None

ITEM 4.   Submission of Matters to a Vote of Security Holders

          None

<PAGE>

ITEM 5.   Other Information

OTHER INFORMATION
=================

Acadia has spent the last few months of operation preparing the organization 
for rapid sales growth and expansion.  We have completely revised our 
operating policies, installed a new financial management system and recruited 
experienced, operational and management personnel.  Additionally, we timely 
maintained our Section 12, Exchange Act of 1934 public reporting requirements
and trade on the OTC Bulletin Board under our symbol OTCBB: "ACAD".  

Discussions continue with other similar businesses for future acquisitions 
and mergers.  Also, the Company is actively working with underwriters and 
capital formation specialists, concentrating in health care companies, to 
arrange a secondary offering capitalization.  Additionally the Company has 
raised $275,000 of a $500,000 private placement offering, with the balance 
expected to be raised in the second quarter of fiscal year 1999.

Another major accomplishment this year was the development and adoption of a 
medical reporting compliance program.  Acadia takes very seriously the need 
for correct verification, reporting and billing of medical services to all 
payors.  Education of our employees and providers is constant and critical to 
remain abreast in this very complex and rapidly changing medical billing and 
regulated arena.

ITEM 6.   Exhibits and Reports on Form 8-K  
  
          a.  Exhibits  
  
              Exhibit 27.  Financial Data Schedule
  
              Exhibit 99.1 Safe Harbor Compliance Statement

          b.  Reports on Form 8-K  
  
              A report on Form 8-K was filed by the Company during
              the quarter on the following dates:

              Press Release dated November 12, 1998;
              Press Release dated November 24, 1998;
              Press Release dated December 18, 1998.     
  
<PAGE>


                     ACADIA NATIONAL HEALTH SYSTEMS, INC. 

                                 SIGNATURES  
  
  
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly cause this report to be signed on its behalf 
by the undersigned thereunto duly authorized.  
  
    
  
                    ACADIA NATIONAL HEALTH SYSTEMS, INC.
                    Registrant  
  
  
February 16, l999   /s/ Mark T. Thatcher                


                    MARK T. THATCHER,            
                    Filing Agent  
  
  
February 16, 1999   /s/ Paul W. Chute


                    PAUL W. CHUTE
                    Chief Executive Officer  
 
<PAGE>