<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB
                        QUARTERLY OR TRANSITIONAL REPORT

    X          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
  -----            OF THE SECURITIES EXCHANGE ACT OF 1934       
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
                                                                

          TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
  -----


Commission file number            2-95836-NY
                      ----------------------------------------------------------

                              Egan Systems, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                              13-3250816    
----------------------------------------                 -----------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.
                                                        
                                                        
1501 Lincoln Ave., Holbrook, New York                            11741    
----------------------------------------                 -----------------------
(Address of principal executive offices)                

(516) 588 - 8000
--------------------------------------------------------------------------------
Registrant's telephone number


--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year if changed since last
                                    report)


Check whether the issuer (1) filed all reports required 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
    -----      -----

The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date is as follows:


<TABLE>
<S>                                <C>                        <C>
Date                                  Class                   Shares Outstanding
----                                  -----                   ------------------
                                                              
11/05/97                           Common Stock                     13,439,652
</TABLE>
<PAGE>   2
                       EGAN SYSTEMS, INC. AND SUBSIDIARY


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                       Page No.
<S>                                                                                                     <C>
PART I. FINANCIAL INFORMATION


  Item 1.  Financial statements

   Condensed consolidated balance sheets as of
    September 30, 1997 (unaudited) and December 31, 1996                                                  1

   Condensed consolidated statements of operations (unaudited) for the
    nine months ended September 30, 1997 and 1996                                                         2

   Condensed consolidated statements of cash flows (unaudited) for the
    nine months ended September 30, 1997 and 1996                                                         3

   Notes to condensed consolidated financial statements (unaudited)                                     4 - 5


  Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                                          6 - 7


PART II - OTHER INFORMATION


  Item 6.  Exhibits and reports on Form 8-K                                                               8


SIGNATURES                                                                                                9


EXHIBITS                                                                                                  10
</TABLE>
<PAGE>   3
                         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                       EGAN SYSTEMS, INC. AND SUBSIDIARY
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   September 30,               December 31,
ASSETS                                                                                 1997                        1996    
                                                                                    -----------                -----------
                                                                                    (Unaudited)
<S>                                                                               <C>                        <C>
Current Assets                                                             
  Cash and cash equivalents                                                       $      788,466             $       37,298
  Accounts receivable                                                                    132,913                     85,358
  Inventory                                                                               13,152                     12,856
  Other current assets                                                                     4,501                      5,894
                                                                                  --------------             --------------
      Total Current Assets                                                               939,032                    141,406
                                                                                  --------------             --------------
                                                                           
Property and Equipment - net                                                             102,834                     61,543
                                                                                  --------------             --------------
                                                                           
Other Assets                                                               
  Computer software development costs - net                                              527,398                    435,401
  Note receivable - employee                                                               5,000                      -
  Security deposits                                                                        3,126                      3,126
                                                                                  --------------             --------------
      Total Other Assets                                                                 535,524                    438,527
                                                                                  --------------             --------------
                                                                           
      Total Assets                                                                $    1,577,390             $      641,476
                                                                                  ==============             ==============
                                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY                                       
Current Liabilities                                                        
 Note payable                                                                     $        -                 $       75,750
 Accounts payable                                                                          2,932                      8,352
 Payroll taxes payable                                                                     5,449                      5,013
 Accrued expenses and other current liabilities                                           14,147                     27,290
 Due to officer                                                                            -                          7,156
                                                                                  --------------             --------------
      Total Current Liabilities                                                           22,528                    123,561
                                                                           
Long-term debt - convertible notes payable                                                50,000                     -     
                                                                                  --------------             --------------
      Total Liabilities                                                                   72,528                    123,561
                                                                                  --------------             --------------
                                                                           
Stockholders' Equity                                                       
 Common stock - $.05 par value, shares authorized -                        
  30,000,000 shares, issued and outstanding, 13,439,652 and                
  10,185,000 in 1997 and 1996                                                            671,983                    509,250
 Additional paid-in capital                                                            2,723,744                  1,912,814
 Deficit                                                                              (1,890,865)                (1,904,149)
                                                                                  --------------             -------------- 
      Total Stockholders' Equity                                                       1,504,862                    517,915
                                                                                  --------------             --------------
                                                                           
      Total Liabilities and Stockholders' Equity                                  $    1,577,390             $      641,476
                                                                                  ==============             ==============
</TABLE>

The condensed consolidated balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date.

See notes to condensed consolidated financial statements.





                                       1
<PAGE>   4
                       EGAN SYSTEMS, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                                Three Months Ended                  Nine Months Ended
                                                                   September 30,                      September 30
                                                                1997            1996              1997            1996
                                                                ----            ----              ----            ----
<S>                                                         <C>             <C>               <C>             <C>
Net sales                                                   $     247,975   $     220,138     $      724,667  $      665,595
                                                            -------------   -------------     --------------  --------------

Cost and expenses:
  Cost of goods sold                                        $      21,938   $      16,200     $       53,823  $       55,531
  Research and development costs                                   96,177          36,054            245,778         215,373
  Selling, shipping,
   general and administrative                                     100,123          84,530            222,912         211,159
  Royalty expense                                                   3,648        -                     8,981        -
  Interest expense                                                    884           6,231              7,945           8,693
  Interest income                                                  (8,815)       -                   (13,565)       -
  Depreciation and amortization                                    53,825          53,895            185,509         160,685
                                                            -------------   -------------     --------------  --------------

                                                                  267,780         196,910            711,383         651,441
                                                            -------------   -------------     --------------  --------------


Net (loss) income                                           $     (19,805)  $      23,228     $       13,284  $       14,154
                                                            =============   =============     ==============  ==============


Weighted average number of
 common shares outstanding                                     19,427,200      10,185,000         19,427,200      10,185,000
                                                            =============   =============     ==============  ==============


Earnings (loss) per common share:

  Primary and fully diluted                                 $        0.00   $        0.00     $         0.00  $         0.00
                                                            =============   =============     ==============  ==============
</TABLE>




See notes to condensed consolidated financial statements.





                                       2
<PAGE>   5
                       EGAN SYSTEMS, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                          INCREASE (DECREASE) IN CASH
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                             Nine Months Ended
                                                                                               September 30,
                                                                                               -------------
                                                                                       1997                       1996
                                                                                       ----                       ----
<S>                                                                              <C>                         <C>
Net cash provided by operating activities                                        $       139,122             $       75,321
                                                                                 ---------------             --------------
                                                                         
                                                                         
Cash flows from investing activities:                                    
  Purchase of property and equipment                                                     (65,291)                   (16,142)
  Computer software development costs                                                   (253,507)                  (168,224)
                                                                                 ---------------             -------------- 
                                                                         
      Net cash used in investing activities                                             (318,798)                  (184,366)
                                                                                 ---------------             -------------- 
                                                                         
                                                                         
Cash flows from financing activities:                                    
  Proceeds from exercise of common stock - options                                       372,000                    160,000
  Proceeds from exercise of common stock - warrants                                      291,000                     -
  Proceeds from issuance of convertible notes payable                                    130,000                     -
  Proceeds from sale of common stock                                                     145,000                     -
  Due to stockholders                                                                     (7,156)                    -     
                                                                                 ---------------             --------------
                                                                         
      Net cash provided by financing activities                                          930,844                    160,000
                                                                                 ---------------             --------------
                                                                         
                                                                         
Net increase in cash                                                                     751,168                     50,955
                                                                         
                                                                         
Cash - beginning of period                                                                37,298                      8,158
                                                                                 ---------------             --------------
                                                                         
                                                                         
Cash - end of period                                                             $       788,466             $       59,113
                                                                                 ===============             ==============
                                                                         
                                                                         
Supplemental cash flows information:                                     
                                                                         
Taxes paid                                                                       $           520             $          470
                                                                                 ===============             ==============
                                                                         
Interest paid                                                                    $         5,830             $       -     
                                                                                 ===============             ==============
</TABLE>



See notes to condensed consolidated financial statements.





                                       3
<PAGE>   6
                       EGAN SYSTEMS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 1.  STATEMENT PRESENTATION:

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of
Egan systems, Inc. and Subsidiary as of September 30, 1997 and the results of
their operations and cash flows for the nine months ended September 30, 1997
and 1996.

Primary net income per common share is computed based on the weighted average
number of outstanding common shares and equivalents (stock options, warrants
and convertible notes payable).  Primary and fully diluted earnings per common
share also assumed the conversion of the convertible note payable.  As of the
date of this report, if the options and warrants were exercised and the
convertible note payable was converted, the total shares outstanding would
amount to 22,302,652 shares.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
for interim reporting under Form 10-QSB have been condensed or omitted.  It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1996.

The results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the operating results for the full year.



NOTE 2.  COMPUTER SOFTWARE DEVELOPMENT COSTS:

Computer software development costs for products are capitalized subsequent to
the establishment of technological feasibility.  Capitalization ceases when the
products are available for general release to customers at which time
amortization of the capitalized costs begins on a straight-line basis over the
estimated life of the product, which is estimated at three years.  As of and
for the nine months ended September 30, 1997 and 1996, accumulated amortization
amounted to approximately $528,000 and $320,000, and amortization of computer
software development costs charged to operations was approximately $162,000 and
$141,000, respectively.



NOTE 3.  INVENTORY:

Inventory, which consists of finished goods, is stated at the lower of cost or
market.  Cost is determined by the first-in, first-out method.





                                       4
<PAGE>   7
                       EGAN SYSTEMS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 4.  COMMON STOCK/WARRANTS SALE:

In January 1997, the Company sold 580,000 shares of its $.05 par value common
stock at $.25 per share and granted stock warrants to purchase an additional
800,000 shares of its $.05 par value common stock at $.25 per share, the price
of which was significantly below the market price of the common stock on the
date of sale.  The warrants expire in January 2001.


NOTE 5.  CONVERTIBLE NOTES PAYABLE:

In January 1997, the Company received $130,000 in exchange for two convertible
notes due January 1, 2002 at 10% interest per annum.  The notes are convertible
through January 2002 into 520,000 shares of the Company's $.05 par value common
stock at $.25 per share, the price of which was significantly below the market
price of the common stock on the date of exchange.  In connection with the
issuance of one of the convertible notes payable in January 1997, detachable
stock warrants have been issued entitling the holder to purchase 200,000 shares
of the Company's $.05 par value common stock through January 1, 2002.  In March
1997, 200,000 of the warrants related to this convertible note payable were
exercised.  In addition, one convertible note in the amount of $80,000 was
converted in September 1997 into 320,000 shares at $.25 per share of the
Company's $.05 par value common stock.


NOTE 6.  NOTE PAYABLE:

In August 1997, the Company converted its note payable in the amount of $75,750
and accrued interest of $9,913 into 342,652 shares at $.25 per share of the
Company's $.05 par value common stock.





                                       5
<PAGE>   8
                       EGAN SYSTEMS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE 6.  EXERCISE OF STOCK OPTIONS/WARRANTS:

The following table summarizes the number of shares of the Company's $.05 par
value common stock issued as a result of stock options/warrant's exercised in
1997:

<TABLE>
<CAPTION>
Transaction                             Month                         Number                Number of            Exercise Price
   Type                               Exercised                    Exercised              Shares Issued            Per Share
   ----                               ---------                    ---------              -------------            ---------
<S>                                   <C>                           <C>                        <C>                  <C>
Stock Option                          March 1997                       350,000                   350,000              $0.375
Stock Option                          May 1997                         350,000                   350,000              $0.375
Stock Option                          July 1997                        322,000                   322,000              $0.250
Stock Option                          August 1997                       96,000                    96,000              $0.250
Stock Warrant                         March 1997                       100,000                   100,000              $0.375
Stock Warrant                         June 1997                        240,000                   240,000              $0.375
Stock Warrant                         July 1997                        240,000                   240,000              $0.375
Stock Warrant                         September 1997                    94,000                    94,000              $0.250
                                                                     ---------                 ---------                    

                                                                     1,792,000                 1,792,000
                                                                     =========                 =========
</TABLE>



NOTE 8.  NOTES RECEIVABLE - EMPLOYEE:

In September 1997, an employee exercised 20,000 stock options at $.25 per share
for 20,000 shares of the Company's $.05 par value common stock.  In exchange,
the Company received a note receivable from the employee in the amount of
$5,000.





                                       6
<PAGE>   9
ITEM 2.  MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996:


NET SALES

For the nine months ended September 30, 1997 and 1996, revenue totaled
approximately $725,000 and $666,000, respectively.  Sales have increased
approximately 9% as a result of higher sales to existing customers and greater
exposure to new customers through the Company's internet page.

In January 1997, the Company signed a new marketing agreement with Data General
Corp. whereby Egan Systems, Inc. has become an accredited service provider.
Under this agreement, Data General Corp. will, for a commission, market certain
Egan Systems, Inc.  products and skills to a portion of the Data General
Corp.'s customer base.  The Company is optimistic that this agreement will
continue to provide a substantial new revenue source for at least the next
fiscal year.

Management remains optimistic that the Company will remain profitable in 1997.
The Company's products traditionally offer relatively high gross margins.  The
Company has a number of additional promising software products in its
development pipeline which it expects to release in the near future and which
the Company expects to substantially contribute to sales. However, the Company
is quite small and remains subject to technological obsolescence and
competitive market conditions.


COST AND EXPENSES

Cost of goods sold for the nine months ended September 30, 1997 and 1996 were
approximately $54,000 and $56,000 and gross profit percent was approximately
91% and 92%. The decrease in the gross margin has been attributed by management
to slightly higher sales of certain computer hardware at significantly lower
gross margins than computer software which is the Company's main revenue
source.

Research and development costs were approximately $246,000 and $215,000 for the
nine months ended September 30, 1997 and 1996, respectively.  The Company
continues to expend significant amounts of its funds developing new software
and to remain competitive in its specific field of expertise.  The increase in
research and development is substantially due to the Company's increased
commitment in 1997 to develop new products.

Selling, shipping and general and administrative expenses (SG&A) was
approximately $223,000 and $221,000 for the nine months ended September 30,
1997 and 1996, respectively.  The capitalization of computer software
development costs for the nine months ended September 30, 1997 and 1996 reduced
SG&A expenses by approximately $254,000 and $168,000, respectively. See
research and development comments above.





                                       7
<PAGE>   10
PART II, ITEM 6. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D.):


ROYALTY EXPENSE

Royalty expense for the nine months ended September 30, 1997 was approximately
$9,000 and results from payments to a licensor for software that the Company is
coupling with one of its products.


INTEREST EXPENSE

Interest expense for the nine months ended September 30, 1997 and 1996 was
approximately $8,000 and $9,000, respectively.


DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for the nine months ended September 30,
1997 and 1996 was approximately $186,000 and $161,000, respectively. The
increase is substantially attributed to the increase in amortization of
capitalized computer software costs of approximately $25,000.


LIQUIDITY

As of September 30, 1997, the Company's net cash provided by operations was
approximately $139,000 and is substantially attributed to the net income of
$13,000, depreciation and amortization of $185,000 less an increase in accounts
receivable of $45,000 as compared to the balances at December 31, 1996.

Net cash used in investing activities during the nine months ended September
30, 1997 was approximately $319,000. Cash was used to purchase computer
software and hardware equipment of approximately $65,000 to support the
Company's ongoing research and development activities and $254,000 was
attributed to the capitalization of computer software development costs.

Net cash provided by financing activities approximated $931,000 resulting from
the sale of common stock, the exercise of common stock options and warrants and
the issuance of convertible notes payable.

Management believes that the Company has sufficient resources to meet its
expected needs in the present fiscal year. Management has directed significant
Company resources in the nine months ended September 30, 1997 towards the
Company's attempt to development a product for the "Millenium 2000" problem. At
present the Company does not maintain a line of credit facility with a lending
institution.


INFLATION AND SEASONALITY

The Company does not anticipate that inflation will significantly impact its
business. The Company does not believe its business is subject to fluctuations
due to seasonality.





                                       8
<PAGE>   11
                          PART II - OTHER INFORMATION





ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits - Required by Item 601 of Regulation S-B.

               (11) Statement regarding computation of per share earnings.

               (27) Financial data schedule

(b) Reports on Form 8-K - The Company filed no
    reports on Form 8-K during the quarter ended September 30, 1997.





                                       9
<PAGE>   12
                              S I G N A T U R E S




In accordance with the requirements of the Exchange Act of 1934, the registrant
caused this report to be signed on its behalf of the undersigned, thereunto
duly authorized.



                                                EGAN SYSTEMS, INC.            
                                                ------------------            
                                                (Registrant)                  
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                /s/Edward Egan(President)     
                                                ------------------------------
                                                Edward Egan (President)       
                                                And Chief Financial Officer)  


Date:November 12, 1997                 





                                       10
<PAGE>   13
                                EXHIBIT INDEX

               (11) Statement regarding computation of per share earnings.

               (27) Financial data schedule