<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION 

                            Washington, D.C. 20549
                               ________________

                                   Form 10-Q

(Mark One)
[X]  Quarterly Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange
     Act Of 1934

                 For the quarterly period ended March 31, 1999

                                      or
                                        
[ ]  Transition Report Pursuant To Section 13 Or 15(D) Of The Securities
     Exchange Act Of 1934

       For the transition period from ............... to ...............
                                        
                        Commission file number 0-22601
                                               -------

                              Telesciences, Inc.

                                        
            (Exact Name of Registrant as Specified in its Charter)


<TABLE> 

<S>                                                                                     <C> 
                         Delaware                                                                      51-0356153
(State or Other Jurisdiction of Incorporation or Organization)                          (I.R.S. Employer Identification Number.)
</TABLE> 

                             4000 Midlantic Drive
                         Mount Laurel, NJ  08054-5476
             (Address of Principal Executive Offices)  (Zip Code)

                                (609) 866-1000
             (Registrant's Telephone Number, Including Area Code)

                           Former Name:  Axiom Inc.
                           ------------------------
                    Former Name, Former Address and Former
                   Fiscal Year, if changed since last report

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes X   No 
                                              ---     ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 7,619,265 shares of Common
Stock, par value of $.01 per share, were outstanding as of May 12, 1999.

--------------------------------------------------------------------------------
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) and Subsidiaries
                                        
                                     Index
                                        
<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ---- 
<S>                                                                                             <C>
Part I - Financial Information:

Item 1.   Consolidated Financial Statements (Unaudited)

          Consolidated Balance Sheets as of March 31, 1999 and September 30, 1998..............    3
 
          Consolidated Statements of Operations - Three and Six Months Ended March 31, 
           1999 and 1998.......................................................................    4
 
          Consolidated Statements of Cash Flows - Six Months Ended March 31, 1999 and 1998.....    5
 
          Notes to Consolidated Financial Statements...........................................    6
 
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations   11
 
Item 3.   Quantitative and Qualitative Disclosures About Market Risk...........................   18
 
Part II - Other Information:
 
Item 1.   Legal Proceedings....................................................................   19
 
Item 2.   Changes in Securities................................................................   19
 
Item 3.   Defaults Upon Senior Securities......................................................   19
 
Item 4.   Submission of Matters to a Vote of Security Holders..................................   19
 
Item 5.   Other Information....................................................................   20
 
Item 6.   Exhibits and Reports on Form 8-K.....................................................   20
          (a)  Exhibits
          (b)  Reports on Form 8-K
</TABLE>

                                       2
<PAGE>
 
Part I.  Financial Information
Item 1.  Consolidated Financial Statements (Unaudited)
           Telesciences, Inc. (Formerly Axiom Inc.) and Subsidiaries
                          Consolidated Balance Sheets
                       (In thousands, except share data)
                                  (Unaudited)

<TABLE> 
<CAPTION> 
                                                                                             March 31,       September 30,
                                                                                                1999              1998
                                                                                            -------------     ------------
<S>                                                                                          <C>             <C>
                                          ASSETS
CURRENT ASSETS:
  Cash and cash equivalents...............................................................    $  1,842            $  1,093
  Accounts receivable, net of allowance for doubtful accounts of $3,704 and $3,985........       7,182              11,325
  Inventories.............................................................................       5,905               6,561
  Deferred tax assets.....................................................................         436                 436
  Income tax receivable...................................................................          --                 722
  Restricted cash.........................................................................         548                  --
  Other...................................................................................         698                 392
                                                                                            -------------     ------------
     Total current assets.................................................................      16,611              20,529
                                                                                            -------------     ------------
PROPERTY AND EQUIPMENT
  Computer hardware and software..........................................................       4,523               4,354
  Production and test equipment...........................................................       3,456               3,016
  Furniture fixtures and leasehold improvements...........................................       1,638               1,636
                                                                                            -------------     ------------
                                                                                                 9,617               9,006
  Less - Accumulated depreciation and amortization........................................      (5,472)             (4,569)
                                                                                            -------------     ------------
     Net property and equipment...........................................................       4,145               4,437
DEFERRED TAX ASSETS.......................................................................       2,502               2,502
RESTRICTED CASH...........................................................................          --                 548
OTHER ASSETS..............................................................................       1,751               1,783
                                                                                            -------------     ------------
                                                                                              $ 25,009            $ 29,799
                                                                                            =============     ============

 
 
                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt.......................................................    $    318            $    330
  Obligations to Securicor and affiliates.................................................          44                  64
  Accounts payable........................................................................       2,127               4,930
  Accrued compensation and related benefits...............................................       1,085               1,085
  Accrued agent commissions...............................................................         200                 353
  Other accrued expenses..................................................................       1,564               1,885
  Deferred revenues.......................................................................       3,798               1,602
                                                                                            -------------     ------------
     Total current liabilities............................................................       9,136              10,249
                                                                                            -------------     ------------
 
LONG-TERM LIABILITIES:
  Deferred tax liabilities................................................................         220                 220
  Long-term debt..........................................................................         340                 499
                                                                                            -------------     ------------
     Total long term liabilities..........................................................         560                 719
                                                                                            -------------     ------------
 
COMMITMENTS AND CONTINGENCIES (NOTE 6)
 
STOCKHOLDERS' EQUITY
  Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and               
   outstanding............................................................................          --                  --
  Common stock, $0.01 par value, 25,000,000 shares authorized, 7,778,268 and 7,790,305              
   shares issued and outstanding..........................................................          78                  78
  Additional paid-in capital..............................................................      37,109              37,156
  Accumulated deficit.....................................................................     (21,226)            (18,397)
  Treasury stock, 187,500 shares, at cost.................................................        (644)                 --
  Cumulative translation adjustment.......................................................          (4)                 (6)
                                                                                            -------------     ------------
     Total stockholders' equity...........................................................      15,313              18,831
                                                                                            -------------     ------------
                                                                                              $ 25,009            $ 29,799
                                                                                            =============     ============
</TABLE> 

       The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
 
<TABLE>
<CAPTION>
                                         Telesciences, Inc. (Formerly Axiom Inc.) and Subsidiaries
                                                   Consolidated Statements of Operations
                                                              (In thousands)
                                                                (Unaudited)
 
 
                                                                    For the Three Months                For the Six Months 
                                                                      Ended March 31,                     Ended March 31,
                                                                  -----------------------            -------------------------
                                                                    1999           1998                 1999          1998
                                                                 ----------    ----------           ----------      ----------
<S>                                                                <C>            <C>                  <C>             <C>
    REVENUES:
    Equipment ..............................................      $ 3,477        $ 4,034              $ 8,026         $ 8,782  
    Services ...............................................        2,011          2,262                4,641           4,442  
                                                                 ----------    ----------           ----------      ----------
       Total revenues ......................................        5,488          6,296               12,667          13,224  
                                                                 ----------    ----------           ----------      ----------
 
  COST OF REVENUES:  
      Equipment................................................     2,793          2,648                5,640           5,175  
    Services ...............................................        1,039          1,843                2,385           3,155  
                                                                 ----------    ----------           ----------      ----------
       Total cost of revenues ..............................        3,832          4,491                8,025           8,330  
                                                                 ----------    ----------           ----------      ----------
       Gross Profit ........................................        1,656          1,805                4,642           4,894  
                                                                 ----------    ----------           ----------      ----------
 
  OPERATING EXPENSES:  
    Research, development and engineering ..................        1,852          1,918                3,666           3,872  
    Selling, general and administrative ....................        1,649          4,120                3,775           6,934  
                                                                 ----------    ----------           ----------      ----------
       Total operating expenses ............................        3,501          6,038                7,441          10,806  
                                                                 ----------    ----------           ----------      ----------
       Operating loss ......................................       (1,845)        (4,233)              (2,799)         (5,912)  
  INTEREST EXPENSE (INCOME), net (including related party          
     interest) .............................................            5            (96)                   4            (195)  
  OTHER INCOME (EXPENSE) ...................................          (41)            14                  (26)             14  
                                                                 ----------    ----------           ----------      ----------
    Loss before income taxes ...............................       (1,891)        (4,123)              (2,829)         (5,703)  
  INCOME TAX BENEFIT .......................................          --           1,323                  --            1,939   
                                                                 ----------    ----------           ----------      ----------
  NET LOSS .................................................      $(1,891)       $(2,800)             $(2,829)        $(3,764)  
                                                                 ==========    ==========           ==========      ==========
 
  BASIC AND DILUTED NET LOSS PER COMMON SHARE ..............      $ (0.24)       $ (0.43)             $ (0.36)        $ (0.58)  
                                                                 ==========    ==========           ==========      ==========
 
  SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER           
     COMMON SHARE ..........................................        7,777          6,467                7,780           6,467  
                                                                 ==========    ==========           ==========      ==========
</TABLE> 
 
 
       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
           Telesciences, Inc. (Formerly Axiom Inc.) and Subsidiaries
                     Consolidated Statements of Cash Flows
                                (In thousands)
                                  (Unaudited)

<TABLE> 
<CAPTION> 
 
 
                                                                                           For the Six Months Ended March 31,
                                                                                   ----------------------------------------------
                                                                                            1999                       1998
                                                                                   -------------------        -------------------
<S>                                                                                <C>                        <C> 
OPERATING ACTIVITIES:
Net loss...........................................................................            $(2,829)                   $(3,764)
Adjustments to reconcile net loss to net cash provided by operating activities -      
   Depreciation and amortization...................................................              1,078                        673
   Provision for doubtful accounts.................................................                 --                        755
  Changes in assets and liabilities, net -                                            
    Decrease (increase) in -                                                          
     Accounts receivable...........................................................              4,091                      2,923
     Inventories...................................................................                656                      1,140
     Other current assets..........................................................               (306)                      (271)
     Other assets..................................................................                 93                        (90)
     Deferred taxes................................................................                 --                     (1,453)
     Income tax receivable.........................................................                722                       (517)
    Increase (decrease) in -                                                          
     Accounts payable..............................................................             (2,798)                    (1,321)
     Accrued compensation and related benefits.....................................                 --                        (38)
     Accrued agent commissions.....................................................               (153)                      (142)
     Other accrued expenses........................................................               (321)                       902
     Deferred revenues.............................................................              2,196                      1,340
                                                                                      ----------------        -------------------
       Net cash provided by operating activities...................................              2,429                        137
                                                                                      ----------------        -------------------
                                                                                      
INVESTING ACTIVITIES:                                                                 
Purchase of property and equipment.................................................               (611)                      (847)
Cash paid for acquisition, net.....................................................                 --                        (91)
Capitalized software development costs.............................................               (880)                        --
                                                                                      ----------------        -------------------
       Net cash used in investing activities.......................................             (1,491)                      (938)
                                                                                      ----------------        -------------------
                                                                                      
FINANCING ACTIVITIES:                                                                 
Payments on long-term debt.........................................................               (171)                       (73)
Advances on obligations to Securicor and affiliates................................                 66                        391
Repayment on obligations to Securicor and affiliates...............................                (86)                      (549)
                                                                                      ----------------        ------------------- 
       Net cash used in financing activities.......................................               (191)                      (231)
                                                                                      ----------------        -------------------
                                                                                      
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................................                  2                         (2)
                                                                                      
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...............................                749                     (1,034)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.....................................              1,093                      7,206
                                                                                      ----------------        -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD...........................................            $ 1,842                    $ 6,172
                                                                                      ================        ===================
</TABLE> 
 
       The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) And Subsidiaries
                  Notes To Consolidated Financial Statements 
                                  (Unaudited)
                                        


1. Background:

The Company

     Telesciences, Inc. (the "Company"), a Delaware corporation, changed its
name from Axiom Inc. in March 1999.  Through May 1997, the Company's business
was conducted through its wholly-owned subsidiary, Securicor Telesciences Inc.
("STI").  On that date, STI merged into the Company.  Prior to May 1998, the
Company was a majority-owned subsidiary of Securicor Communications Limited
("SCL"), an entity organized under the laws of the United Kingdom and a wholly-
owned subsidiary of Securicor plc ("Securicor"), a company organized under the
laws of the United Kingdom.  As the merger represented a transaction between
entities under common control, the net assets of STI were transferred at net
book value.  Prior to the completion of the Company's initial public offering,
Securicor provided the financing requirements for the Company through advances.
SCL currently owns approximately 44.7% of the Company's outstanding Common
Stock.

2. Summary Of Significant Accounting Policies:

Interim Financial Information and Summary Financial Information

     The financial statements as of March 31, 1999 and for the three month and
six month periods ended March 31, 1999 and 1998 are unaudited and, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary for the fair presentation of results for these
interim periods.  The results for the six months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the entire year.  While
the Company believes that the disclosures presented are adequate to make the
information not misleading, these Consolidated Financial Statements should be
read in conjunction with the Consolidated Financial Statements and the notes
included in the Company's Form 10-K for the fiscal year ended September 30,
1998, as amended.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated.

Restricted Cash

     Restricted cash consists of funds to support a standby letter of credit
required under a contractual arrangement with one of the Company's customers.
Based upon the contractual agreement, this amount will be released on December
31, 1999.  Accordingly, this restricted cash is reflected as a current asset as
of March 31, 1999.

Software Development Costs

     The Company accounts for software development costs in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed."  Under
SFAS No. 86, costs incurred to create a computer software product are charged to
research and development expense as incurred until technological feasibility has
been established.  The Company establishes technological feasibility upon
completion of a detailed program design.  At that point, computer software costs
are capitalized until the product is available for general release to customers.
The establishment of technological feasibility and the ongoing assessment of
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future revenues, estimated economic life, and
changes in technology.

                                       6
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) And Subsidiaries
            Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)
                                        

2.  Summary Of Significant Accounting Policies:  (Continued)

     Amortization will begin when the product is released.  Capitalized software
development costs are amortized on a product-by-product basis using the
straight-line method over the estimated life of the product enhancement.

     Capitalized software development costs consist primarily of salary,
consulting, and computer costs incurred to develop new products.  During the six
months ended March 31, 1999 and 1998, respectively, software development costs
of $880,000 and $0 were capitalized.  Amortization has not yet begun.

Revenue Recognition

     Revenues are generally recognized upon shipment of the equipment.  In "bill
and hold" transactions, the Company recognizes revenues when the following
conditions are met: the equipment is complete, ready for shipment and segregated
from other inventory; the Company has no further significant performance
obligations in connection with the completion of the transaction; the commitment
and delivery schedule is fixed; the customer requested the transaction be
completed on this basis; and the risks of ownership have passed to the customer.
There were no outstanding accounts receivable balances relating to "bill and
hold" transactions at March 31, 1999 or September 30, 1998.  Revenues from
installation and engineering activities are recognized as services are provided.

     Depending on contract terms and conditions, software license fees are
recognized upon delivery of the product if no significant vendor obligations
remain and collection of the resulting receivable is deemed probable.  The
Company had nominal stand-alone software license fee revenues for the six months
ended March 31, 1999 and 1998, respectively, and these amounts are included in
equipment revenues.  If significant vendor obligations exist at delivery and/or
the product is subject to customer acceptance, revenue is deferred until no
significant obligations remain and/or acceptance has occurred.  If the payment
of the license fee is coincident to services which are deemed to be essential to
the transaction, the license fee is deferred and recognized using contract
accounting over the period during which the services are performed.  The
Company's software licensing agreements provide for a warranty/customer support
(typically 90 days).  The portion of the license fee associated with the
warranty/customer support is unbundled from the license fee and is recognized
ratably over the warranty period as services revenue.

     The Company offers support agreements to its customers.  Revenues from
customer support are recognized as services are provided.  Services are
generally provided ratably over the term of the customer support agreement and
are included in services revenue in the accompanying statements of operations.

Net Loss Per Common Share

     In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share," which superseded Accounting Principles Board Opinion
No. 15, "Earnings per Share."  SFAS No. 128 requires dual presentation of basic
and diluted net loss per common share for complex capital structures on the face
of the statements of operations.  According to SFAS No. 128, basic net loss per
common share, which replaced primary loss per share, is calculated by dividing
net loss available to common stockholders by the weighted average number of
shares of common stock outstanding for the period.  Diluted net loss per common
share, which replaced fully diluted loss per common share, reflects the
potential dilution from the exercise or conversion of securities into shares of
common stock, such as stock options.  The Company was required to and did adopt
SFAS No. 128 during

                                       7
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) And Subsidiaries
            Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)
                                        

2.  Summary Of Significant Accounting Policies:  (Continued)


the period ended December 31, 1997, as earlier application was not permitted. As
required by SFAS No. 128, all prior-period loss per common share data has been
restated to conform with the provisions of this statement.

     The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per common share computations:

<TABLE>
<CAPTION>
                                            For the Three Months Ended March 31,
 
                                                                Loss                     Shares                Per Share
                     1999                                    (Numerator)              (Denominator)              Amount
----------------------------------------------------     -------------------      --------------------      ----------------
<S>                                                         <C>                      <C>                       <C>
Basic net loss per common share.....................             $(1,891,000)                7,777,000               $(0.24)
                                                                                                            ===============
  Dilutive effect of stock options..................                      --                        --
                                                         -------------------      --------------------
Diluted net loss per common share...................             $(1,891,000)                7,777,000               $(0.24)
                                                         ===================      ====================      ===============
                        1998
----------------------------------------------------
Basic net loss per common share.....................             $(2,800,000)                6,467,000              $(0.43)
                                                                                                           ===============
  Dilutive effect of stock options..................                      --                        --
                                                         -------------------      --------------------
Diluted net loss per common share...................             $(2,800,000)                6,467,000              $(0.43)
                                                         ===================      ====================     ===============
</TABLE>
                                                                                
<TABLE>
<CAPTION>
                                             For the Six Months Ended March 31,
 
                                                                 Loss                     Shares                Per Share
1999                                                          (Numerator)             (Denominator)              Amount
----------------------------------------------------     -------------------      --------------------      ----------------
<S>                                                         <C>                      <C>                       <C>
Basic net loss per common share.....................             $(2,829,000)                7,780,000               $(0.36)
                                                                                                            ===============
  Dilutive effect of stock options..................                      --                        --
                                                         -------------------      --------------------
Diluted net loss per common share...................             $(2,829,000)                7,780,000               $(0.36)
                                                         ===================      ====================      ===============

                        1998
----------------------------------------------------
Basic net loss per common share.....................             $(3,764,000)                6,467,000              $(0.58)
                                                                                                           ===============
  Dilutive effect of stock options..................                      --                        --
                                                         -------------------      --------------------
Diluted net loss per common share...................             $(3.764,000)                6,467,000              $(0.58)
                                                         ===================      ====================     ===============
</TABLE>

     Diluted loss per common share is the same as basic net loss per common
share as no additional shares for the potential dilution from the exercise or
conversion of securities into shares of common stock are included in the
denominator as the result is anti-dilutive due to the Company's losses.  Options
to purchase 938,316 and 386,176 shares of common stock with a weighted average
exercise price of $3.65 and $5.50 per share were outstanding during the three
months ended March 31, 1999 and 1998, respectively, but were not included in the
computation of diluted net loss per common share.

Comprehensive Income

     The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements and requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
presented with equal prominence as other financial statements.  The
comprehensive losses for the six months ended March 31, 1999 and 1998 were
$2,827,000 and $3,766,000, respectively.

                                       8
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) And Subsidiaries
             Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)
                                        

2.  Summary Of Significant Accounting Policies:  (Continued)


<TABLE>
<CAPTION>
                                                        Cumulative
                                                       Translation
                                                       Adjustments 
                                                      --------------
<S>                                                  <C>
Beginning balance.................................               $(6)
Current period change.............................                 2
                                                      --------------
Ending Balance....................................               $(4)
                                                      ==============
</TABLE>

Supplemental Disclosures of Cash Flow Information

     For the six months ended March 31, 1999 and 1998, the Company paid interest
of $41,000 and $13,000, respectively.  For the six months ended March 31, 1999
and 1998, income taxes paid by the Company were immaterial.

     On May 15, 1998, pursuant to an Agreement of Merger and Plan of
Reorganization by and among the Company, AV Technology, Inc., a Delaware
corporation ("Technology") and a wholly-owned subsidiary of the Company,
Innovative Data Technology, a California corporation ("IDT"), and the
Shareholders of IDT (the "Shareholders") IDT was merged into Technology in
accordance with the relevant provisions of the California General Corporation
Law and the Delaware General Corporation Law (the "Merger"). In connection with
the Merger, the Company issued to the Shareholders, in exchange for their shares
of common stock of IDT, $1.00 par value, which constituted in the aggregate all
of the issued and outstanding common stock of IDT, an aggregate of 1,290,000
shares of the Common Stock. In November 1998, this number of shares was reduced
by 15,056 to 1,274,944 based on certain post closing adjustments. In March 1999,
the number of shares was further reduced by 187,500 to 1,087,444 based on
certain sales amount adjustments, and may be subject to further adjustment. In 
conjunction with the reduction in shares, the Company reduced its intangibles 
related to the IDT acquisition and recorded Treasury Stock in the amount of 
$644,000.

Management's Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

Reclassifications

     Certain prior year amounts have been reclassified to conform with current
year presentation.

3.  Accounts Receivable:

<TABLE>
<CAPTION>
                                                      March 31,               September 30,
                                                        1999                       1998
                                                 -----------------         -----------------
<S>                                                <C>                       <C>
Billed..........................................       $ 9,543,000               $13,970,000
Unbilled........................................         1,343,000                 1,340,000
                                                 -----------------         ----------------- 
                                                        10,886,000                15,310,000
Less - allowance for doubtful accounts..........        (3,704,000)               (3,985,000)
                                                 -----------------         ----------------- 
                                                       $ 7,182,000               $11,325,000
                                                 =================         =================
</TABLE>

                                       9
<PAGE>
 
           Telesciences, Inc. (Formerly Axiom Inc.) And Subsidiaries
             Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)
                                        

4.  Inventories:

<TABLE>
<CAPTION>
                                                      March 31,               September 30,
                                                        1999                      1998
                                                   -----------------        -----------------
<S>                                                  <C>                      <C>
Raw materials.....................................        $4,177,000               $4,323,000
Work-in-process...................................           461,000                  581,000
Finished goods....................................         1,267,000                1,657,000
                                                   -----------------        ----------------- 
                                                          $5,905,000               $6,561,000
                                                   =================        =================
</TABLE>

5.  Line Of Credit:

     On December 7, 1998, the Company entered into an agreement with Silicon
Valley Bank to establish a $5,000,000 line of credit (the "Line of Credit")
which the Company is using to meet its short-term borrowing requirements. The
amount available under the Line of Credit is based upon a percentage of eligible
accounts receivable, as defined. Interest is charged at Silicon Valley Bank's
prime rate plus 1%. Borrowings under the Line of Credit are secured by an
interest in substantially all of the Company's assets. Under the Line of Credit,
the Company is required to comply with specified financial and non-financial
covenants, as defined. The Company intends to seek amendments to certain of
these covenants to enhance availability under the Line of Credit. In this
connection, the Company's largest stockholder has indicated a willingness to
provide a partial guarantee of the Line of Credit, subject to agreement with
Silicon Valley Bank on the terms of such guarantee. However, there is no
assurance that such a guarantee will be given or that any covenants will be
amended and, accordingly, there is no assurance as to the extent, if any, of the
continued availability of the Line of Credit. All receivable collections are
first applied against any outstanding balance under the Line of Credit. The
highest principal balance outstanding during the quarter ended March 31, 1999
was $264,000. Interest was charged at a weighted average rate of 8.75% and
interest expense was $5,900. No amounts were outstanding under the line of
credit at March 31, 1999.


6.  Commitments And Contingencies:

     The Company is obligated to make certain payments to certain key Company
employees if such employees are terminated.  In addition, certain key employees
have performance incentives in the form of cash and equity (in Securicor or an
affiliate) related compensation.  The Company does not expect to make these
payments other than in the normal course of business.

     The Company is party to various claims arising in the ordinary course of
business.  Although the ultimate outcome of these matters is presently not
determinable, management believes that the resolution of these matters will not
have a material adverse effect on the Company's financial position or results of
operations.

     In August 1997, Acxiom Corporation ("Acxiom") filed suit against the
Company in the United States District Court for the District of Delaware
alleging trademark infringement and dilution under the Lanham Act, as well as
related state law causes of action.  On November 16, 1998, the District Court
rendered its decision that Acxiom was entitled to an order enjoining the Company
from making further use of the Axiom name and related injunctive relief.  The
court also concluded that Acxiom was not entitled to any money damages.  The
Company and Acxiom agreed that neither would appeal the Court's decision, and
the Company agreed to reimburse Acxiom for ancillary costs in the amount of
$50,000.

     Pursuant to the court order, on March 30, 1999, the Company amended its
Amended and Restated Certificate of Incorporation to change the name of the
Company from Axiom Inc. to Telesciences, Inc.  In connection with the name
change, the Company's symbol on the Nasdaq National Market was changed to TLSI,
effective March 31, 1999.

                                       10
<PAGE>
 
ITEM 2.  Management's Discussion and Analysis of Financial Condition And Results
          of Operations

Overview

     The Company's principal products are billing data collection, transaction
data management, revenue assurance, fraud management systems and traffic
management systems.  The Company also provides professional engineering services
for telecommunications service providers.

     The Company's billing data collection and transaction data management
systems collect and normalize data from telecommunications switches that connect
users of telecommunications networks.  They provide data to applications
including billing, customer care, marketing, fraud management, data warehousing
and network management applications.  The Company's systems interface with all
major switch types.

     The revenue assurance and fraud management systems help ensure carriers'
ability to bill accurately and completely for the services they render and guard
against fraudulent use of their networks.  The need for such systems is
increasing as a result of the complexity in the marketplace introduced by the
growing number of telecommunications carriers and their interconnections.  The
Company provides revenue assurance capabilities through its Sterling Fraud
Management System and in Specialized Processing Modules ("SPMs") running on the
Sterling Billing Mediation System.

     The Company's traffic management systems capture information on trunk
usage.  This information is transmitted to the customer's network planners who
use the information to optimize network performance.  This capability helps
carriers avoid problems of too many available trunks, resulting in increased
costs, and too few available trunks, resulting in disconnected calls, poor
service and lost revenue.

     The Company provides professional engineering services to integrate the
Company's product lines into customer networks and applications.

     A significant portion of the Company's revenues have been, and are expected
to continue to be, derived from substantial orders placed by large
organizations, and in particular three Regional Bell Operating Companies
("RBOCs").  Aggregate revenues from US West, Inc., Southwestern Bell Telephone
Company and Ameritech Corporation accounted for 40.6% and 60.0% of the Company's
total revenues for the six months ended March 31, 1999 and 1998, respectively.

     Domestic revenues are typically generated under cancelable general purchase
agreements which provide for the continuing supply of products and services over
future years.  Pricing is based upon the volume of products ordered.
Internationally, the Company typically enters into long-term contracts for the
delivery of turnkey systems which include products and services.  All sales
arrangements with international customers are denominated in U.S. dollars.
Sales of Greendown Software Limited, which was acquired by the Company in
February 1998, and which subsequently changed its name to Telesciences, Europe
Ltd. ("Telesciences, Europe"),  are denominated in pounds Sterling.  These sales
have been insignificant to date.  The Company's revenues are difficult to
forecast because the purchase of its systems generally involves a significant
commitment of capital and management time, which often results in lengthy sales
cycles.

     Quarterly revenues are subject to substantial fluctuations due primarily to
the Company's concentration of customers and the timing of orders received.  The
timing of orders is, in part, dependent on the timing of the Company's
customers' annual budget process.  Prior to fiscal 1998, the Company's first and
second fiscal quarters generated a lower level of revenues compared to the
Company's third and fourth fiscal quarters, by which time the Company's
customers typically approve their budgets.  Historically, product and service
backlog has been a relatively small amount and the majority is fulfilled within
three months.  Because of its close links to, and ongoing communications with,
its customers, the Company generally is able to plan for product demand and,
when the order is received, ship its products within a relatively short time
period thereafter.

                                       11
<PAGE>
 
     Cost of revenues includes the direct cost of hardware and software modules,
other manufacturing costs related to the assembly and testing of products,
customer service costs, agent commissions where applicable, and other variable
costs such as freight, scrap and installation materials.  The Company has a
relatively high fixed cost base which is included in cost of revenues.  As a
result, any significant decline in revenues would likely have a significant
adverse effect on margins.

     Research, development and engineering expenses consist of payroll and
related expenses and other costs associated with the design and development of
the Company's products.  The majority of these costs are charged to expense as
incurred.  During fiscal 1998, the Company embarked upon a rearchitecture of its
core systems, principally for the Sterling Host Collector.  This work is
expected to enable the Company to further enhance its product offerings to its
existing customer base, as well as new and multi-service providers, which will
include companies using new technology such as Asynchronous Transfer Mode and
Internet Protocol.  The new technology is expected to use object oriented design
tools and the latest proven software tools and methods.  Due to the nature of
this rearchitecture project, the Company is capitalizing the costs of the
project and for the six months ended March 31, 1999, the total amount
capitalized was $880,000.  These software development costs are accounted for
under SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed."  No costs were capitalized during the six months
ended March 31, 1998.  In fiscal 1999, the Company expects to capitalize
approximately $1.6 million of costs under SFAS No. 86 associated with this
project.

     Selling, general and administrative expenses consist of costs to support
the Company's sales, marketing and administrative functions.  Included within
these costs are payroll and related expenses, supplies, travel, outside
services, as well as the cost of the Company's participation in trade shows,
industry conferences and related travel and promotional costs.

     Certain prior year amounts have been reclassified to conform with current
year presentation.


                                       12
<PAGE>
 
Disclosure Concerning Forward-Looking Statements

     From time to time, the Company may publish statements that are not
historical facts but are forward-looking statements relating to such matters as
anticipated financial performance, business prospects, technological
developments, new products, research and development activities and similar
matters.  Such statements are generally identified by the use of forward-looking
words and phrases such as "intended," "expects," "anticipates," and "is (or are)
expected (or anticipated)."  The Private Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements.  In order to comply with the terms
of the safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's forward-
looking statements.  The risks and uncertainties that may affect the operations,
performance, development and results of the Company's business include, but are
not limited to the following important factors:

     (i)      reliance on a limited number of significant customers and
              dependence on Sterling Series products;

     (ii)     difficulty in predicting quarterly revenues because of long sales
              cycles and customer budgetary constraints;

     (iii)    competition in the market for billing data collection and traffic
              management systems;

     (iv)     rapid and unexpected changes in the telecommunications markets and
              technologies;

     (v)      the success of the Company's sales and marketing strategies;

     (vi)     the ability of the Company to manage its growth;

     (vii)    the ability of the Company to obtain financing for operations and
              growth;

     (viii)   the ability of the Company to motivate, and retain the services
              of, its key management and technical personnel and continue to
              hire additional qualified personnel to meet the Company's evolving
              staffing needs; and

     (ix)     risks related to sales to international customers, including, but
              not limited to, currency fluctuations, instability in financial
              markets and unanticipated shifts in economic policies of foreign
              governments, particularly as it relates to Asia.


Results of Operations

Quarter ended March 31, 1999 Compared to Quarter ended March 31, 1998

     Revenues

     Revenues decreased 12.8% to $5.5 million for the quarter ended March 31,
1999 from $6.3 million for the quarter ended March 31, 1998.  The mix in sales
by customer type in the quarter varied significantly from the prior year.  RBOC
sales, which were relatively high in 1998 due to sales of the data server
product, were lower at $2.2 million compared with $5.0 million in the previous
year.  However, this reduction was, in large part, offset by increases in
international sales, from $1.1 million to $2.2 million, and sales through
channels which increased from $0 to $800,000.  Equipment revenues were $3.5
million for the quarter ended March 31 1999, a decrease of 13.8% from the $4.0
million of equipment revenues for the quarter ended March 31, 1998..  Services
revenues decreased 11.1% to $2.0 million for the quarter ended March 31, 1999
from $2.3 million for the quarter ended March 31, 1998.

                                       13
<PAGE>

     Gross Profit

     Gross profit decreased to $1.7 million for the quarter ended March 31, 1999
from $1.8 million for the quarter ended March 31, 1998.  This decrease was
primarily caused by an increase in system sales through channels, which caused a
small reduction in margins.  Gross profit related to equipment revenues
decreased to $684,000 for the quarter ended March 31, 1999 from $1.4 million for
the quarter ended March 31, 1998.  The Company has a relatively high fixed cost
base which is included in cost of revenues.  As a result, fluctuations in
revenues have a significant effect on margins.  Gross profit from services
revenues increased to $972,000 for the quarter ended March 31, 1999 from
$419,000 for the quarter ended March 31, 1998.  Gross profit from services
revenues increased during the quarter ended March 31, 1999 due to installation
services provided to one of the RBOCs.

     Research, Development and Engineering

     Research, development and engineering expenses were $1.9 million for each
of the quarters ended March 31, 1999 and 1998.  As a percentage of revenues,
research, development and engineering expenses increased during the quarter
ended March 31, 1999 to 33.7% from 30.1% for the quarter ended March 31, 1998.
Software development costs of $534,000 and $0 were capitalized during the
quarters ended March 31, 1999 and 1998, respectively, and therefore, were not
charged to research, development and engineering expense.  In 1999, engineering
related to the new products acquired as part of the Company's acquisitions in
1998 were included, whereas these costs did not occur in the same period in
1998.

     Selling, General and Administrative

     Selling, general and administrative expenses were $1.6 million for the
quarter ended March 31, 1999, a decrease of 60.0% compared to $4.1 million for
the same period in 1998.  As a percentage of revenues, selling, general and
administrative expenses decreased during the quarter ended March 31, 1999 to
30.0% from 65.4% for the quarter ended March 31, 1998.  Primarily, this decrease
resulted from the Company's program, instituted in July 1998, to reduce expenses
through a reduction in its work force, as well as other cost cutting measures.
Additionally, during the quarter ended March 31, 1998, there was an increase to
the allowance for bad debts of approximately $700,000 as a result of the
uncertainty in the Company's Asian markets and legal costs of $270,000 related
to the Acxiom lawsuit.  No such costs were incurred during the quarter ended
March 31, 1999.  See Part II Item I - Legal Proceedings.

     Interest Expense and Income

     Net interest expense was $5,000 for the quarter ended March 31, 1999.  Net
interest income was $96,000 for the quarter ended March 31, 1998.

     Income Taxes

     Due to continued losses throughout the twelve months ended September 30,
1998 ("fiscal 1998"), the Company did not record an income tax benefit during
the quarter ended March 31, 1999.  However, as of March 31, 1999, the Company
recorded net deferred tax assets of $2,718,000.  Based on an assessment of the
Company's taxable earnings history and expected future taxable income,
management has determined that it is more likely than not that the net deferred
tax assets will be realized in future periods.  The Company may be required to
provide an additional valuation allowance for this asset in the future if it
does not generate sufficient taxable income as planned.  Additionally, the
ultimate realization of this asset could be negatively impacted by market
conditions and other variables not known or anticipated at this time.

     The Company's effective tax rate was 32.1% for the quarter ended March 31,
1998.  An income tax benefit of $1.3 million was recorded during the quarter
ended March 31, 1998.

                                       14
<PAGE>
 
Six Months ended March 31, 1999 Compared to Six Months Ended March 31, 1998

     Revenues

     Revenues decreased 4.2% to $12.7 million for the six months ended March 31,
1999 from $13.2 million for the six months ended March 31, 1998.  The mix in
sales by customer type in the six months varied significantly from the prior
year.  RBOC sales reduced from $8.9 million to $5.3 million.  In 1998,
significant sales of the data server product to the RBOCs and project
engineering services to US West accounted for much of the total and these were
not at the same level in 1999.  However, sales through channels, such as NEC,
increased from $600,000 to $1.1 million, sales to other domestic customers
increased from $1.0 million to $1.9 million and international sales increased
from $2.7 million to $4.4 million.  Equipment revenues were $8.0 million for the
six months ended March 31 1999, a decrease of 8.6% from the $8.8 million of
equipment revenues for the six months ended March 31, 1998.  Services revenues
increased 4.5% to $4.6 million for the six months ended March 31, 1999 from $4.4
million for the six months ended March 31, 1998.

     Gross Profit

     Gross profit decreased to $4.6 million for the six months ended March 31,
1999 from $4.9 million for the six months ended March 31, 1998.  Gross profit
related to equipment revenues decreased to $2.4 million for the six months ended
March 31, 1999 from $3.6 million for the six months ended March 31, 1998.  The
Company has a relatively high fixed cost base which is included in cost of
revenues.  As a result, fluctuations in revenues have a significant effect on
margins.  Gross profit from services revenues increased to $2.3 million for the
six months ended March 31, 1999 from $1.3 million for the six months ended March
31, 1998.  Gross profit from services revenues increased during the six months
ended March 31, 1999 due to the significant installation services provided to
one of the RBOCs.

     Research, Development and Engineering

     Research, development and engineering expenses were $3.7 million and $3.9
million for the six months ended March 31, 1999 and 1998.  As a percentage of
revenues, research, development and engineering expenses decreased during the
six months ended March 31, 1999 to 28.9% from 29.3% for the six months ended
March 31, 1998.  Software development costs of $880,000 and $0 were capitalized
during the six months ended March 31, 1999 and 1998, respectively, and
therefore, were not charged to research, development and engineering expense.
In 1999, engineering related to the new products acquired as part of the
Company's acquisitions in 1998 were included, whereas these costs did not occurr
in the same period in 1998.

     Selling, General and Administrative

     Selling, general and administrative expenses were $3.8 million for the six
months ended March 31, 1999, a decrease of 45.6% compared to $6.9 million for
the same period in 1998.  As a percentage of revenues, selling, general and
administrative expenses decreased during the six months ended March 31, 1999 to
29.8% from 52.4% for the six months ended March 31, 1998.  Primarily, this
decrease resulted from the Company's program, instituted in July 1998, to reduce
expenses through a reduction in its work force, as well as other cost cutting
measures.  Additionally, during the six months ended March 31, 1998, there was
an increase to the allowance for bad debts of approximately $700,000 as a result
of the uncertainty in the Company's Asian markets and legal costs of $370,000
related to the Acxiom Corporation lawsuit.  No such costs were incurred during
the six months ended March 31, 1999.  See Part II Item I - Legal Proceedings.

     Interest Expense and Income

     Net interest expense was $4,000 income for the six months ended March 31,
1999.  Net interest income was $195,000 for the six months ended March 31, 1998.

                                       15
<PAGE>
 
 
     Income Taxes

     Due to continued losses throughout fiscal 1998 and the first quarter of the
twelve months ending September 30, 1999 ("fiscal 1999") , the Company did not
record an income tax benefit during the six months ended March 31, 1999.
However, as of March 31, 1999, the Company recorded net deferred tax assets of
$2,718,000.  Based on an assessment of the Company's taxable earnings history
and expected future taxable income, management has determined that it is more
likely than not that the net deferred tax assets will be realized in future
periods.  The Company may be required to provide an additional valuation
allowance for this asset in the future if it does not generate sufficient
taxable income as planned.  Additionally, the ultimate realization of this asset
could be negatively impacted by market conditions and other variables not known
or anticipated at this time.

     The Company's effective tax rate was 39.0% for the six months ended March
31, 1998.  An income tax benefit of $1.9 million was recorded during the six
months ended March 31, 1998.

     Backlog

     The Company's backlog (firm purchase orders for products and services that
have not yet been recognized as revenue) was approximately $9.0 million and $7.4
million at March 31, 1999 and March 31, 1998, respectively.  The Company
normally has a relatively small amount of product and service backlog because
ongoing informal communication with its major customers generally enables the
Company to anticipate orders and ship products within a relatively short time
after the customer's order is received.  The Company expects to be able to 
fulfill substantially all backlog existing at March 31, 1999 prior to the end of
fiscal 1999.

Liquidity and Capital Resources

     The Company completed the initial public offering of its Common Stock (the
"Offering") in July 1997.  Prior to the Offering, the Company had financed its
operations primarily with cash generated from operations and borrowings from
Securicor.  In July 1997, the Company received net proceeds from the Offering of
approximately $32.4 million (after deducting underwriters' discounts and
commissions and other offering expenses).  In August 1997, the Company repaid
$22.9 million in Company borrowings from Securicor.  As of March 31, 1999, the
Company had $1.8 million of cash and cash equivalents, $7.2 million in net trade
accounts receivable and $7.5 million of working capital.

     Net cash provided by operating activities was $2.4 million and $137,000 for
the six months ended March 31, 1999 and 1998, respectively.  For the six months
ended March 31, 1999, the major contributors to the net cash provided by
operating activities were a decrease in accounts receivable of $4.1 million,
amortization and depreciation of $1.1 million, a decrease in inventories of
$656,000, a decrease to income tax receivable of $722,000 and an increase in
deferred revenues of $2.2 million, partially offset by a net loss of $2.8
million and a decrease in accounts payable of $2.8 million.  For the six months
ended March 31, 1998, amortization and depreciation of $673,000, a decrease in
accounts receivable of $2.9 million, a decrease in inventories of $1.1 million,
an increase in deferred revenues of $1.3 million and an increase in other
accrued expenses of $902,000 were offset by the net loss of $3.8 million, an
increase in other current assets of $271,000, a decrease in accounts payable,
accrued compensation and related benefits, and accrued agent commissions of $1.5
million and an increase in income tax receivable of $517,000.

     Net cash used in investing activities relating to purchases of property and
equipment was $611,000 and $847,000 for the six months ended March 31, 1999 and
1998, respectively.  In addition, the Company capitalized $880,000 of software
development costs during the six months ended March 31, 1999.  No such costs
were capitalized in 1998.  During the quarter ended March 31, 1998, the Company
acquired  Telesciences, Europe for a net cash outlay of $91,000.

     Net cash used in financing activities was $191,000 and $231,000 for the six
months ended March 31, 1999 and 1998, respectively.

                                       16
<PAGE>

     On December 7, 1998, the Company entered into an agreement with Silicon
Valley Bank to establish a $5,000,000 line of credit (the "Line of Credit")
which the Company is using to meet its short-term borrowing requirements. The
amount available under the Line of Credit is based upon a percentage of eligible
accounts receivable, as defined. Interest is charged at Silicon Valley Bank's
prime rate plus 1%. Borrowings under the Line of Credit are secured by an
interest in substantially all of the Company's assets. Under the Line of Credit,
the Company is required to comply with specified financial and non-financial
covenants, as defined. The Company intends to seek amendments to certain of
these covenants to enhance availability under the Line of Credit. In this
connection, the Company's largest stockholder has indicated a willingness to
provide a partial guarantee of the Line of Credit, subject to agreement with
Silicon Valley Bank on the terms of such guarantee. However, there is no
assurance that such a guarantee will be given or that any covenants will be
amended and, accordingly, there is no assurance as to the extent, if any, of the
continued availability of the Line of Credit. All receivable collections are
first applied against any outstanding balance under the Line of Credit. The
highest principal balance outstanding during the quarter ended March 31, 1999
was $264,000. Interest was charged at a weighted average rate of 8.75% and
interest expense was $5,900. No amounts were outstanding under the Line of
Credit at March 31, 1999.

     The Company believes that its existing cash balances, cash generated from
operations and borrowings under the Line of Credit will be sufficient to meet
the Company's cash requirements into its fiscal year ending September 30, 2000.
However, depending upon profitability, its rate of growth and the timing of its
collections and other operating factors, the Company may require additional
equity or debt financing to meet its working capital requirements or capital
expenditure needs.  There can be no assurance that additional financing, if
needed, will be available when required or, if available, will be on terms 
satisfactory to the Company.

Year 2000 Readiness Disclosure

Background

     In the past, many computer software programs were written using two digits
rather than four to define the applicable year.  As a result, date-sensitive
computer software may recognize a date using "00" as the year 1900 rather than
the year 2000.  This is generally referred to as the Year 2000 issue.  If this
situation occurs, the potential exists for computer system failures or
miscalculations by computer programs, which could disrupt operations.

Approach

     The Company has established a group to coordinate the Company's response to
the Year 2000 issue, both as to its internal systems and as to its products.
This group includes the Company's Vice President - Operations Support, Director
of Quality, Director of Product Line Management, Manager of Engineering
Operations, Purchasing Manager and Manager of Information Technology, as well as
support staff.  The Company is in the process of implementing a Year 2000
compliance program consisting of the following: (i) compiling a list of internal
information technology ("IT") and non-IT systems, as well as Company products,
that may require adaptation, remediation or replacement with respect to the Year
2000 issue; (ii) identifying and prioritizing critical systems and products from
the list compiled in part (i) and making inquiries of third parties with whom
the Company does significant business (i.e., vendors and service providers) as
to the state of their Year 2000 readiness; (iii) analyzing critical systems and
products to determine which systems or products are not Year 2000 compliant and
evaluating the costs of adapting, repairing or replacing those systems; and (iv)
adapting, repairing or replacing noncompliant systems or products and testing of
the adapted, repaired or replaced systems.

     The Company intends to complete the above process and to be Year 2000
compliant in all material respects by mid-1999.

Status

     The Company believes that all of its internal systems are currently Year
2000 compliant in all material respects, or will be Year 2000 compliant in all
material respects, by mid-1999.  It is anticipated that additional minor Year
2000 problems will be identified and continuing efforts will be required to
validate the internal systems for Year 2000 compliance.

     The Company believes that its internal telephone system is Year 2000
compliant.  The Company expects to complete Year 2000 compliance testing on the
telephone system by September 1999.  The Company does not expect that there will
be a material cost to the Company in the event that software must be upgraded.

     The Company believes that the products which will be supported beyond the
year 2000 are currently Year 2000 compliant.  It continues to test all such
products on an ongoing basis.  Certain products sold by the Company in the past
that have been discontinued are not Year 2000 compliant.  Most customers of
these products have been notified of such noncompliance.  The Company does not
intend to repair or replace such products.  The Company does not expect any of
such customers to assert that the Company has an obligation to repair or replace
such products, but there can be no assurance that such an assertion will not be
made.

Costs

     The total cost to the Company of making its systems Year 2000 compliant is
currently estimated to be less than $500,000, of which the Company has already
incurred approximately $302,000. The cost for replacement of the equipment and
software will be capitalized and depreciated over their respective expected
useful lives. Any assets that will be replaced are fully depreciated at this
time. Furthermore, all costs related to software modification, as well as all
costs associated with the Company's administration of its Year 2000 project, are
being expensed as incurred and are likewise included in the cost estimate above.

Risks Associated with the Year 2000 Problem

     The Company utilizes computer systems in many aspects of its business.  As
noted, the Company's critical systems are Year 2000 compliant in all material
respects, or are expected to be so no later than mid-1999.

     The Company is also exposed to the risk that one or more of its vendors or
service providers could experience Year 2000 problems that impact the ability of
such vendor or service provider to provide goods and services.  Though this is
not considered as significant a risk with respect to the suppliers of goods, due
to the availability of alternative suppliers, the disruption of certain
services, such as utilities, could, depending upon the nature and extent of the
disruption, have a material adverse impact on the Company's operations.  The
Company is in the process of contacting all vendors and suppliers with whom the
Company has a material relationship to determine whether they will be
sufficiently Year 2000 compliant so as not to cause any material adverse effect
on the Company.  To date, the Company is not aware of any vendor or service
provider Year 2000 issue that management believes would have a material adverse
impact on the Company's operations.  However, the Company has no means of
guaranteeing that its vendors or service providers will be Year 2000 ready.  The
inability of vendors or service providers to complete their Year 2000 resolution
process in a timely fashion could have a material adverse impact on the Company.
The effect of non-compliance by vendors or service providers is not determinable
at this time.

     Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from Year 2000 issues or
in certain industries, such as disruptions affecting the financial industry and
commercial or investment banks, could also have a material adverse impact on the
Company.  The likelihood and effect of such disruptions is not determinable at
this time.

Inflation

     To date, inflation has not had a material impact on the Company's financial
condition and results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

     The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio.  The Company does not have any
derivative financial instruments in its portfolio.  The Company places its
investments in instruments that meet high credit quality standards.  The Company
is adverse to principal loss and ensures the safety and preservation of its
invested funds by limiting default risk, market risk and reinvestment risk.  As
of March 31, 1999, the Company's investments consisted of a money market account
and an overnight repurchase agreement.  The Company does not expect any material
loss with respect to its investment portfolio.

Foreign Currency Risk

     The Company does not use foreign currency forward exchange contracts or
purchased currency options to hedge local currency cash flows or for trading
purposes.  All sales arrangements with international customers are denominated
in U.S. dollars.  Sales of Telesciences, Europe are denominated in pounds
Sterling.  These sales have been insignificant to date.

     Through its subsidiary, Telesciences, Europe, the Company has limited
operations in the United Kingdom.  Due to this limited activity, the Company
does not expect any material loss with respect to foreign currency risk.

                                       17
<PAGE>
 
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     In August 1997, Acxiom  filed suit against the Company in the United States
District Court for the District of Delaware alleging trademark infringement and
dilution under the Lanham Act, as well as related state law causes of action.
On November 16, 1998, the District Court rendered its decision that Acxiom was
entitled to an order enjoining the Company from making further use of the Axiom
name and related injunctive relief.  The court also concluded that Acxiom was
not entitled to any money damages.  The Company and Acxiom agreed that neither
would appeal the Court's decision, and the Company agreed to reimburse Acxiom
for ancillary costs in the amount of $50,000.

     Pursuant to the court order, on March 30, 1999, the Company amended its
Amended and Restated Certificate of Incorporation to change the name of the
Company from Axiom Inc. to Telesciences, Inc.  In connection with the name
change, the Company's symbol on the Nasdaq National Market was changed to TLSI,
effective March 31, 1999.

ITEM 2.  CHANGES IN SECURITIES

     None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On March 24, 1999, the Company held its Annual Meeting of Stockholders for
1999.  The total number of shares of Common Stock represented at the Annual
Meeting was 7,218,105, constituting a quorum.  The holders of the Company's
Common Stock voted on the following proposals:

     1.   The election of all six members of the Company's Board of Directors.
          All six nominees of the Board of Directors were reelected. The
          following is a report of the votes cast at the Annual Meeting for each
          nominee for director:

<TABLE>
<CAPTION>
                                                                                           Withhold
          Nominee Name                                             Votes For               Authority
          ------------                                         ----------------        ----------------
          <S>                                                   <C>                     <C>
          C. Thomas Faulders, III............................         7,090,272                 127,732
          Andrew P. Maunder..................................         7,058,688                 159,316
          Robert B. Kelly....................................         7,086,447                 131,557
          Sammy W. Pearson...................................         7,090,998                 127,007
          Trevor Sokell......................................         7,075,313                 142,691
          Michael G. Wilkinson...............................         7,089,447                 128,557
</TABLE>                                                      

     2.   Proposals to amend (a) Section 2-7 (relating to actions at
          stockholders meetings generally), (b) Section 3-10 (relating to
          removal of directors) and (c) Article X (relating to amendments of the
          by-laws) of the Company's Amended and Restated Bylaws, in each case to
          change the affirmative vote required to approve matters coming before
          meetings of the Company's stockholders (other than the election of
          directors, who shall be elected by a plurality) from two-thirds of all
          votes entitled to be cast at such meeting (whether or not holders of
          such shares are present in person or represented by proxy at the
          meeting) to a majority of shares present in person or represented by
          proxy at the meeting and entitled to vote on the subject matter, or
          such greater vote as may be required by applicable law. The three
          proposals were approved. The following is a report of the votes cast
          at the Annual Meeting for each of the proposals:

                                       18
<PAGE>
 
 
<TABLE>
<CAPTION>
                                                                                                          
          Amendment                                     FOR                   AGAINST               ABSTAIN 
          --------------------------------------   ---------------        ----------------       ----------------
          <S>                                      <C>                     <C>                    <C>
          (A) Section 2-7.......................       5,374,726               302,841                23,500
          (B) Section 3-10......................       5,312,576               289,291                99,200
          (C) Article X.........................       5,385,681               290,191                25,195
</TABLE>

     3.   A proposal to amend the Company's 1997 Stock Incentive Plan (the
          "Plan") to increase the number of shares of Common Stock available for
          grants under the Plan from 450,000 to 2,000,000. The proposal was
          approved. The following is a report of the votes cast at the Annual
          Meeting for the proposal:

<TABLE> 
<CAPTION>
                 FOR             AGAINST         ABSTAIN
              ----------       -----------     -----------
               <S>           <C>                  <C>
               5,237,749         430,836          32,482
</TABLE>

     4.   A proposal to amend the Company's Amended and Restated Certificate of
          Incorporation to change the name of the Company to Telesciences, Inc.
          The proposal was approved. The following is a report of the votes cast
          at the Annual Meeting for the proposal:

<TABLE>
<CAPTION>
                 FOR             AGAINST         ABSTAIN
              ----------       -----------     -----------
              <S>                <C>              <C>
               7,088,215         114,199          13,400
</TABLE>

     5.   A proposal to ratify the appointment of Arthur Andersen LLP as the
          Company's independent auditors for the fiscal year ending September
          30, 1999. The proposal was approved. The following is a report of the
          votes cast at the Annual Meeting for the proposal:

<TABLE>
<CAPTION>
                 FOR             AGAINST         ABSTAIN
              ----------       -----------     -----------
              <S>                <C>              <C>
               6,993,768         207,467          14,135
</TABLE>


ITEM 5.  OTHER INFORMATION

     None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

           (a)  Exhibits

                3.1  Amended and Restated Certificate of Incorporation of the
                     Company, as amended to the date hereof.

                3.2  Amended and Restated By-Laws of the Company, as amended to
                     the date hereof.

                27   Financial Data Schedule (EDGAR only)

           (b)  Reports on Form 8-K
                None

                                       19
<PAGE>
 
Signatures

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

                                          Telesciences, Inc.


Dated: May 12, 1999              By:          /s/ Andrew P. Maunder
                                    --------------------------------------------
                                                   Andrew P. Maunder
                                         President and Chief Executive Officer
                                             (Principal Executive Officer)
 
Dated: May 12, 1999             By:             /s/ Frances Penfold
                                   ---------------------------------------------
                                               Vice President, Finance
                                    (Principal Financial and Accounting Officer)
 

                                       20