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

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                      FOR THE QUARTER ENDED: JUNE 30, 1998
                          COMMISSION FILE NO. 333-06121

                             COMPRESSENT CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                 ---------------


FLORIDA                                                               65-0581474
(STATE OF INCORPORATION)                       (IRS EMPLOYER IDENTIFICATION NO.)


2105 HAMILTON AVENUE, SUITE 140, SAN JOSE, CA                              95125
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                              (ZIP CODE)


                    REGISTRANT'S TELEPHONE NO. (408) 879-6600

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


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                  COMMON STOCK
                       REDEEMABLE STOCK PURCHASE WARRANTS

Check 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 past 12
months (or such shorter period that the Registrant was required to file such
reports); and, (2) has been subject to such filing requirements for the past 90
days.
                                                              Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date, 5,278,869 shares of common stock, as
of June 30, 1998.


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<PAGE>   2

                             COMPRESSENT CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>               <C>                                                                                <C>
                  PART I.  FINANCIAL INFORMATION
Item              1. Financial Statements Condensed Statements of Operations -
                  three and nine months ended June 30, 1997 and 1998, and for
                  the period from inception (August 26, 1994)
                  to June 30, 1998 .............................................................       3   
                                                                                                           
                  Condensed Balance Sheets -                                                               
                  June 30, 1997 and June 30, 1998 ..............................................       4   
                                                                                                           
                  Condensed Statements of Cash Flows - nine months ended June 30,                            
                  1998 and 1998, and for the period from inception (August 26,                             
                  1994) to June 30, 1998 .......................................................       5   
                                                                                                           
                  Notes to Condensed Financial Statements ......................................       6   
                                                                                                           
Item 2            Management's Discussion and Analysis of Financial                                        
                  Condition and Results of Operations ..........................................      12   
                                                                                                           
                  PART II. OTHER INFORMATION                                                      
Item 1.           Legal Proceedings ............................................................      17   
                                                                                                           
Item 6            Exhibits and Reports on Form 8-K .............................................      18   
                                                                                                           
                  SIGNATURES ...................................................................      19   
                                                                                                      
</TABLE>



                                       2
<PAGE>   3

ITEM 1. FINANCIAL STATEMENTS.

                             COMPRESSENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                         Period from
                                           Three Months Ended                Nine Months Ended            Inception
                                      ----------------------------      ----------------------------      -----------
                                       June 30,         June 30,         June 30,         June 30,      (August 26, 1994
                                         1997             1998             1997             1998        to June 30, 1998)
                                      -----------      -----------      -----------      -----------      -----------
<S>                                   <C>              <C>              <C>              <C>            <C>      
Sales, net                                     --           27,467               --           85,084           85,084
Cost of goods sold                             --          120,399               --          373,721          373,721
                                      -----------      -----------      -----------      -----------      -----------
Gross profit on sales                          --          (92,932)              --         (288,637)        (288,637)

Operating costs and expenses:
  Research and development                292,016          215,369        1,015,347          984,702        3,393,545
  Sales and marketing                     273,126           58,252        1,111,530        1,274,640        3,141,492
  General and administrative              591,612          387,511        1,526,957        3,556,929        6,787,754
                                      -----------      -----------      -----------      -----------      -----------
        Total operating costs
            and expenses                1,156,754          661,131        3,653,834        5,816,271       13,322,791
                                      -----------      -----------      -----------      -----------      -----------
Loss from operations                   (1,156,754)        (754,063)      (3,653,834)      (6,104,908)     (13,611,428)
  Interest income and other,
    net                                    41,143         (264,571)         156,884         (366,781)        (182,998)
                                      -----------      -----------      -----------      -----------      -----------
        Net Loss                       (1,115,611)      (1,018,634)      (3,496,950)      (6,471,689)     (13,794,426)
                                      -----------      -----------      -----------      -----------      -----------
Less: Accretion on preferred
  stock                                        --               --               --               --         (900,000)
Accrued dividend on preferred
  stock                                        --               --               --               --               --
                                      -----------      -----------      -----------      -----------      -----------
Net loss applicable to common
     shareholders                      (1,115,611)      (1,018,634)      (3,496,950)      (6,471,689)     (14,694,426)
                                      ===========      ===========      ===========      ===========      ===========

Net loss per share applicable to
  common shareholders:
  Basic                                     (0.22)           (0.19)           (0.70)           (1.23)
  Diluted                                   (0.22)           (0.19)           (0.70)           (1.23)

Shares used in computing net loss
  per share applicable to common
  shareholders:
  Basic                                 5,032,349        5,278,869        4,994,685        5,278,869
  Diluted                               5,032,349        5,278,869        4,994,685        5,278,869
</TABLE>



                             See accompanying notes



                                       3
<PAGE>   4

                             COMPRESSENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 September 30,       June 30,
                                                                     1997              1998
                                                                 -----------        -----------
<S>                                                              <C>                <C>   
Current Assets
  Cash                                                             1,900,171             16,877
  Short Term Investments                                                  --          3,500,500
  Inventory                                                           55,620             53,353
  Other receivable from underwriter in connection with IPO                --                 --
  Other current assets                                               114,709            193,821
                                                                 -----------        -----------
    Total current assets                                           2,070,500          3,764,550
Property, Plant & Equipment, net                                     217,656            174,427
Other Assets                                                         576,989            482,439
                                                                 -----------        -----------
    Total assets                                                   2,865,145          4,421,416
                                                                 ===========        ===========

       LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
  Accounts payable and other accrued liabilities                     474,292          1,401,056
  Loans                                                                   --          2,000,000
  Other Current Liabilities                                          105,742              3,753
                                                                 -----------        -----------
    Total current liabilities                                        580,034          3,404,809
Long-Term Debt                                                     1,000,000          1,000,000
Shareholder's equity
  Preferred Stock                                                         --          2,240,500
  Common stock and additional paid in capital                      8,655,848         11,617,332
  Deficit accumulated during development stage                    (7,322,737)       (13,825,226)
  Deferred compensation                                              (48,000)           (16,000)
                                                                 -----------        -----------
    Total shareholder's equity                                     1,285,111             16,607
                                                                 ===========        ===========
    Total liabilities and shareholder's equity                     2,865,145          4,421,416
                                                                 ===========        ===========
</TABLE>



                             See accompanying notes



                                       4
<PAGE>   5




                             COMPRESSENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                          Nine Months Ended                Period from
                                                                     ------------------------------         Inception 
                                                                       June 30,          June 30,        (August 26, 1994
                                                                         1997              1998          to June 30, 1998)
                                                                     -----------        -----------        -----------
<S>                                                                  <C>                <C>              <C>         
Cash flows from operating activities
  Net cash used in operating activities                               (3,044,565)        (5,116,979)       (11,118,917)
                                                                     -----------        -----------        -----------
Cash flow from investing activities
  Investment in joint venture                                                 --            (80,000)           (80,000)
  Purchase of available-for-sale investments                          (4,853,727)                --         (4,868,029)
  Maturities of available-for-sale investments                         2,597,571          1,300,000          6,168,029
  Purchase of property and equipment                                    (133,514)           (42,678)          (420,960)
  Capitalized software development                                            --                 --           (369,324)
                                                                     -----------        -----------        -----------
      Net Cash used in investing activities                           (2,389,670)         1,177,322            429,716
                                                                     -----------        -----------        -----------
Cash flow from financing
  Sale of common stock                                                        --                 --          1,952,263
  Receipt of proceeds from underwriter                                 5,549,573                 --          5,549,573
  IPO registration costs paid                                                 --                 --           (269,968)
  Loans from shareholders                                                     --                 --             75,000
  Repayment of full recourse note payable                                     --                 --             90,000
  Sale of redeemable preferred stock                                          --                 --            450,000
  Redemption of preferred stock                                         (450,000)                --           (450,000)
  Exercise of redeemable stock purchase warrants for
    common stock                                                              --             32,700            421,212
  Proceeds from issuance of loans and notes payable                    1,250,000          2,000,000          3,250,000
  Principal payment of loans and notes payable                                --                 --         (1,250,000)
  Debt offering registration costs paid                                       --                 --           (135,665)
  Proceeds from issuance of subordinated long-term debt                       --                 --          1,000,000
  Exercise of stock options                                                   --             23,662             23,662
  Conversion of redeemable stock warrant                                 388,512                 --                 --
                                                                     -----------        -----------        -----------
      Net cash provided from financing activities                      6,738,085          2,056,362         10,706,077
                                                                     -----------        -----------        -----------
  Net increase (decrease) in cash                                      1,303,850         (1,883,295)            16,877
Cash at beginning of period                                              155,533          1,900,171                 --
                                                                     -----------        -----------        -----------
Cash at end of period                                                  1,459,383             16,877             16,877
                                                                     ===========        ===========        ===========
Supplemental schedule of noncash investing and financing
  activities
Common stock to be issued in redemption of preferred stock                    --                 --            900,000
Conversion of loan and advance from shareholder to
  common stock                                                                --                 --             75,000
Issuance of common stock in exchange for full-recourse
  note payable                                                                --                 --             90,000
Issuance of preferred stock in exchange for full recourse
  note payable                                                                --          2,240,500          2,240,500
Issuance of warrant in exchange for full recourse note payable                --          1,260,000          1,260,000
Fair value of warrants issued in exchange for services                        --                 --          1,610,000
</TABLE>



                             See accompanying notes



                                       5
<PAGE>   6

                             COMPRESSENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

1.       BUSINESS ACTIVITIES AND BASIS OF PRESENTATION

Business

Compressent Corporation (the "Company") was incorporated in the state of Florida
on August 26, 1994, but did not commence formal operations until April 1995. It
is engaged in the development of digital image coding and data compression
software products which will enable the facsimile transmission of color images
from computers equipped with the Company's software program.

BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and in accordance with the instructions to Form 10-Q and Articles 10 of
Regulation S -X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Management recommends that
these interim financial statements be read in conjunction with the audited
financial statements and the related notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1997 previously
filed with the Security and Exchange Commission. The results of operations for
the nine months ended June 30, 1998, are not necessarily indicative of the
results that may be expected for the year ended June 30, 1998.

In February 1997, the Financial Accounting Standards Board issued Statement No.
128 (SFAS 128), "Earnings per Share", which is required for all financial
statements issued for periods ending after December 15, 1997, including interim
periods. The new requirements include a calculation of basic earnings per share,
from which the dilutive effect of stock options, warrants and convertible debt
are excluded. The basic earnings per share calculation does not change the
primary earnings per share previously reported for the three month period ended
December 31, 1996. A calculation of diluted earnings per share is required;
however, this does not differ materially from the Company's reported primary
earnings per share because the Company had net losses for all prior periods
reported and therefore, the dilutive effect of stock options, warrants, and
convertible debt will be excluded. Accordingly, diluted earnings per share will
be the same as basic earnings per share until the Company has net income. The
accompanying condensed statement of operations for the three month period ended
December 31, 1997 and December 31, 1996 includes the presentation of both basic
and diluted earnings per share.

2.       INVENTORY

Inventories are summarized as follows:

<TABLE>
<CAPTION>
                              December 31,                  June 30,
                              1998                          1998
                              --------                      -------
<S>                           <C>                           <C>    
Raw Materials                 $102,311                      $53,353
Finished Goods
                              ========                      =======
Total Inventories             $102,311                      $53,353
                              ========                      =======
</TABLE>



                                       6
<PAGE>   7

3.       EQUITY-BASED LINE OF CREDIT

On December 3, 1997, the Company secured a $10,000,000 equity-based line of
credit from Kingsbridge Capital Limited, a company organized and existing under
the laws of the British Virgin Islands ("KCL"). Under the privately-placed
financing, the Company has the right to draw up to $10,000,000 in cash in
exchange for the Company's Common Stock. Each draw must be for an amount greater
than $300,000, but no more than $1,000,000. There must be a minimum of 20
business days between each draw. The number of shares to which the investor is
entitled pursuant to a draw shall be determined by dividing the dollar value of
the draw by the purchase price. The purchase price is defined as 88% of the
lowest closing bid price of the Company's Common Stock over the five trading
days beginning two trading days prior to the date of the draw. No more than
1,008,000 shares may be sold pursuant to the equity line. The purchase price was
determined as an equivalent to the net received in the IPO. No draws may be made
under the line of credit until the Company registers for resale the shares
issued pursuant to the equity line of credit and the shares issuable on exercise
of the warrant, has been declared effective by the Securities and Exchange
Commission. No draws may be made during any 20 trading day period in which the
average trading volume of the Company's Common Stock is less than 22,500 shares
per day. The market price of the Company's common stock must equal or exceed $6
per share for the previous 3 trading days prior to a draw. No draws may be made
without KCL's consent to the extent the draw would cause KCL to hold more than
9.9% of the Company's Common Stock. The Company's common stock must be qualified
for continued listing on the NASDAQ Small-Cap Market, the Company must, among
other requirements, maintain net assets in excess of $2,000,000 or have a total
market capitalization greater than $35,000,000. The line of credit will remain
in effect for a period of eighteen months. In connection with the agreement, the
Company issued KCL a warrant to purchase up to 45,000 shares of the Company's
Common Stock at a price of $10.64 per share. The Warrant expires on December 3,
2000. The fair value of the warrant was estimated at the date of grant using a
Black-Scholes options pricing model with the following assumptions, risk free
interest rate of approximately 6%; no dividend yield; volatility factor of .7;
and a weighted average expected life of 3 years. The estimated fair value of the
warrants is $108,000 and will be amortized over 18 months.

As of August 14, 1998, no funds were available under the equity-based line of
credit as the Company has not filed a registration statement on Form S-3 to
register the shares that may be sold pursuant to the line and the average daily
trading volume requirement has not been met. Should the Company not make any
draws under the equity-based line of credit during the term of the agreement,
the Company will be required to pay $120,000 to KCL.

4.       LINE OF CREDIT

On February 3, 1998, the Company secured a $10,000,000 line of credit to Call
Now, Inc. Under the agreement, the Company has the right to draw up to
$10,000,000 on or before September 30, 1998. Proceeds paid to the Company upon
making draws under the line may be in the form of Retama Park Racetrack Bonds
similar to the proceeds received on the sale of Preferred Stock (see below).
Borrowings must be approved through resolution of the Company's Board of
Directors and must be used for working capital or acquisitions due within ten
days of the adoption of the resolution. The Company will be required to issue a
Promissory Note bearing interest at 15% per year, payable quarterly, for any
funds drawn against the line of credit. The Company is required to pay Call Now,
Inc. a commitment fee of $400,000 within thirty (30) days after the first draw
pursuant to the line of credit.

In connection with the line of credit agreement, the Company issued 500,000
warrants (the "underlying warrants") to Call Now exercisable for $2.00 per
warrant. Each underlying warrant may be exercised by Call Now to purchase the
Company's common stock at an exercise price of $6.25 per share. The underlying
warrants expires three years after the date of grant. The fair value of the
underlying warrants was determined at the date of the grant using a
Black-Scholes option pricing model with the following assumptions, risk free



                                       7
<PAGE>   8

interest rate of approximately 6%; no dividend yield; volatility factor of .7;
and a weighted average expected life of 3 years. The fair market value of the
underlying warrants is estimated to be $80,000, will be recorded as a component
of interest expense in the following quarter.

As of May 20, 1998 the Company had made no draws nor paid any commitment fee
against the Call Now line of credit. On August 4, 1998, the Company completed
termination of this and all other agreements with Call Now. All warrants issued
pursuant to this transaction have been cancelled. The $80,000 interest charge
associated with this transaction will be reversed in the upcoming quarter.

5.       LOAN FROM SHAREHOLDER

On January 15, 1998, the Company issued a promissory note to a certain
shareholder for $425,000. The note bears interest at 15% per year and is payable
on demand or within thirty (30) days of issuance. The promissory note has been
paid on March 16, 1998. The Company also issued a warrant to purchase up to
100,000 shares of the Company's common stock at an exercise price of $6.25 per
share. The warrants expire on January 15, 2001. The fair value of the warrant
determined at the date of the grant using a Black-Scholes option pricing model
with the following assumptions, risk free interest rate of approximately 6%; no
dividend yield; volatility factor of .7; and a weighted average expected life of
3 years. The amount of $32,937.50 was recorded as a component of interest
expense in the quarter ended March 31, 1998.

During September 1997, the Company issued $1,000,000 of convertible subordinated
debentures which bear interest at a rate of 10% per annum, payable
semi-annually, and matures in September 2002. The notes are convertible at the
option of the holder into the Company's Common Stock. The conversion price shall
be determined by dividing the purchase price of the notes by the lesser of
$10.00 per share or the closing price of the Common Stock on the day prior to
conversion, but no lower than $7.00 per share. The notes are redeemable at the
option of the Company at any time on or after the two year anniversary of the
issuance at the original issue price plus accrued interest to the redemption
date, provided that the average trading price of the Common Stock is greater
than or equal to $20 per share, as adjusted for stock splits, stock dividends
and similar events for 30 consecutive trading days prior to the date of the
redemption price.

Cash used in operating activities has increased from approximately $2,012,000
for the nine month period ended June 30, 1997 to approximately $4,271,000 for
the nine month period ended June 30, 1998, reflecting increased net losses. The
Company's cash requirements may increase for the upcoming fiscal year due to
expected increases in expenses related to further research and development of
its technologies and increased marketing, manufacturing, sales and distribution
and technical support expenses associated with the introduction of its initial
color fax products to the market place.

Management believes that the sale of preferred stock and warrants to purchase
common stock in exchange for municipal bonds with an aggregate total fair value
of $3,500,000 secured in February 1998 from Call Now, a related party, and the
$10,000,000 line of credit also obtained from Call Now during February 1998 may
not be sufficient to provide the Company with working capital to support the
Company's planned operating activities through the fiscal year ended September
30, 1998. As a result, the Company has entered into an agreement with Call Now
to rescind both transactions. As part of the agreement, Call Now will receive
500,000 shares of Company common stock in exchange for assuming $2,000,000 in
Company debt to Howe Solomon & Hall.

The Company does not currently have the funding available for planned operating
activities through the fiscal year ended September 30, 1998. As part of its
business strategy, the Company has investigated, and will continue to
investigate, potential funding arrangements, acquisitions of businesses,
products and technologies. Such potential activities may require substantial
capital resources, which may require the Company to seek additional debt or
equity financing.



                                       8
<PAGE>   9

6.       WARRANT ISSUED TO MEMBER OF BOARD DIRECTORS

On December 30, 1997, in connection with assistance to be provided with the
Company's management changes and financing needs, the Company granted a member
of the board of directors warrants to purchase 700,000 shares of the Company's
common Stock. The Warrants have an exercise price of $6.25 per share and expire
three years from the date of grant. The fair value of the warrant was determined
at the date of the grant using a Black-Scholes option pricing model with the
following assumptions, risk free interest rate of approximately 6%; no dividend
yield; volatility factor of .7; and a weighted average expected life of 3 years.
The estimated fair value of the warrants of $1,610,000 has been recorded as a
charge against general and administrative expenses in the quarter ended December
31, 1997.

This member of the board of directors resigned in April 1998. As a result of
this resignation and the conditions of issue of the warrants, these warrants
have been rescinded and the effects of this reversal will be reflected in the
upcoming quarter.

7.       SALE OF PREFERRED STOCK

On February 3, 1998, the Company signed an agreement to sell 56,000 shares of
its redeemable convertible Series A Preferred Stock to Call Now, Inc., a related
party, for $62.50 per share for aggregate total proceeds of $3,500,000. As
payment for the preferred stock, on February 20, 1998, Call Now transferred to
the Company 1997 Series A, Retama Park Racetrack Project Special Facilities
Revenue Bonds with a face value of $3,500,000. The Company utilized the 1997
Series A Bonds as collateral to raise $2,000,000 cash to provide short term
working capital requirements.

On May 20, 1998, the Company and Call Now entered into an agreement to terminate
both the Preferred Stock Agreement and the Line of Credit (see above). The
Preferred Stock sold to Call Now, was initially convertible into common stock on
a ten to one basis, subject to future adjustments for stock splits, stock
dividends or other similar events. The holders of the Preferred Stock have no
voting rights, except as required under any applicable state laws. The Preferred
Stock has mandatory cumulative dividends of $7.50 per share per annum. The
Preferred Stock has an aggregate liquidation preference over the common stock of
$62.50 per share plus cumulative unpaid dividends. The Preferred Stock may have
been redeemed by the Company any time subsequent to 90 days from the date of
issuance for $100 per share plus unpaid dividends.

In connection with the issuance of the Series A Preferred Stock to Call Now,
Inc., for nominal proceeds of $500, the Company sold a warrant to Call Now, Inc.
to purchase 500,000 shares of the Company's common stock with an exercise price
of $6.25 per share. After one year, the exercise price is reduced to the lower
of $6.25 per share or the average bid and ask price of the common stock for the
three days prior to exercise. The warrant expires three years after the date of
grant. The fair value of the warrant determined at the date of the grant using a
Black-Scholes option pricing model with the following assumptions, risk free
interest rate of approximately 6%; no dividend yield; volatility factor of .7;
and a weighted average expected life of 3 years. The fair market value of the
warrant is estimated to be $1,260,000. Total proceeds from the offering of the
Series A Preferred Stock and the sale of the warrant amount to $3,500,000.
Proceeds allocated to the estimated fair value market value of the warrants will
be allocated to Paid-in Capital; with the remaining balance, net offering costs,
allocated to Series A Preferred. Again, as this Preferred Stock transaction has
been rescinded, so will the allocations. (See note below).


8.       SHORT TERM LOAN BORROWED AGAINST SERIES A BONDS

On March 10, 1998, the Company signed the loan agreement with HOWE, SOLOMON &
HALL, Inc. a New Jersey corporation with a business address of International
Place, 100 S. E. 2nd Street, 42nd Floor, Miami, Florida 33131 for $2,000,000
principal with 10% per annum. The loan will provide the partial short 



                                       9
<PAGE>   10

term working capital requirements to support operating activities through the
fiscal year ending September 30, 1998. The loan is secured by the $3,500,000
Retama Development Corporation Special Facilities Revenue Refunding Bonds Series
1997 A (the "Bonds") assigned by the Company to the Lender. The principal on the
Loan is due in full on September 5, 1998. No other principal payments are
required hereunder unless there is an event of default. The loan may be prepaid
at the option of the Company in full only at any date provided that the Company
also pays the accrued but unpaid interest on the Bonds. As part of the
settlement with Call Now, the note has been assumed by Call Now (see note
below).

9.       LEGAL MATTERS

On December 10, 1997, the Company and Color Communications Corporation entered
into a settlement agreement which continued the prohibitions of the preliminary
injunction through January 15, 1998 and permanently prohibited the defendants
from using the Company's confidential information. The agreement further
prohibits the defendants from communicating with six specific companies through
April 15, 1998. As part of the settlement, the Company dismissed its claims
against the defendants and received a release of claims from them. Subsequently,
Color Communications has filed a countersuit making several additional
allegations.

In December 1997, the Board of Directors replaced several members of management
with a new and smaller management team. On February 18, 1998, the Company
received a letter from one member of the former management alleging wrongful
termination and racial discrimination and seeking unspecified damages. The
Company believes the claims are without merit and intends to contest the matter
vigorously. Management does not believe that resolution of the matter will have
a material effect on the Company. However, litigation is inherently costly and
uncertain and there can be no assurance that the matter will be resolved in the
Company's favor or without material cost.

The Company has terminated its relationship with a director and a shareholder.
As part of this settlement, the shareholder has assumed a $2,000,000 liability
of the Company and the director has resigned. In return, the Company has issued
500,000 shares among certain other provisions and mutual releases have been
signed by all parties reducing the potential for any litigation. (See
accompanying notes and exhibits).

In the course of its day to day business, the Company is party to various other
lawsuits. Though the current suits pending are believed to be without merit, any
adverse judgements could have a material adverse effect on the Company and its
ability to operate.

10.      AGREEMENT TO ACQUIRE SOFTLINK, INC.

On December 31, 1997, the Company entered into a definitive agreement to acquire
all of the issued and outstanding shares of Softlink, Inc. (Softlink), a
California corporation, pursuant to a Stock Purchase Agreement dated December
31, 1997 between the Company and the shareholders of Softlink. The final
agreement was (Refer note 12) subject to certain conditions and the approval by
Softlink's shareholders. Subsequent to March 31, 1998, the Company terminated
this agreement and took back a promissory note for $100,000 at 8% interest
payable to the Company in December 1998.

11.      CHANGES IN BOARD OF DIRECTORS AND MANAGEMENT

In December 1997, the Board of Directors replaced several members of Company
management and the Company's Chairman and Chief Executive Officer and President
resigned from the Company's Board of Directors. In addition, on December 30,
1997, two other members of the Company's Board of Directors also resigned and
the Company appointed a new Chief Executive Officer and Chief Financial Officer
and Vice President of OEM Sales. The new Chief Financial Officer resigned in
February 1998. The Company's Board of Directors currently consists of four
members.



                                       10
<PAGE>   11

On April 28, 1998, changes of the Company's Board of Directors were made. Mr.
Edward T. Kalinoski a Director of the Company resigned and Mr. Joseph S. Kastrup
was elected as the Chairman of the Board.

12.      MISCELLANEOUS

The Company entered into a joint venture agreement with Vela Partners, Inc. on
March 16, 1998. The purpose of this agreement was to establish a joint venture
to be known as ComCore Systems between the parties for the purposes on
developing an all-purpose, multi-mode, multimedia advanced telecommunications
system. The ownership and equity of the joint venture will be 50% owned by each
party. The initial payment of $80,000 has been made by the Company to Vela
Partners, Inc. The agreement with Vela Partners was terminated on May 19, 1998.
Demand for payment of this $80,000 has been made by the Company.

13.      TERMINATION OF AGREEMENT WITH SOFTLINK

On April 28, 1998, the Company terminated the agreement previously announced
with Softlink, Inc. The original agreement was made on December 31, 1997 between
the Company and Softlink whereby the Company would acquire 100% of the issued
and outstanding shares of Softlink from the shareholders of Softlink in exchange
for 450,000 common shares of Compressent. The termination of this agreement has
been made by mutual consent and no shares have been exchanged at this time. The
payment of $100,000 the Company made to Softlink based on the Promissory Note
signed on April 14, 1998 will be due to the Company on December 31, 1998 with an
interest rate of 8% per annum from December 18, 1997.

SUBSEQUENT EVENTS

14.      CHANGES IN BOARD OF DIRECTORS AND MANAGEMENT

On April 28, 1998 the Company made changes to the Company's Board of Directors.
Mr. Edward T. Kalinoski a Director of the Company resigned and Mr. Joseph S.
Kastrup was elected as the Chairman of the Board. On June 8, 1998, Mr. Won
Gil-Choe was terminated as President and CEO of the Company and subsequently
resigned from the Board of Directors. Mr. Kastrup was elected Chief Executive
Officer. On August 4, 1998, the Company reached an agreement with Mr. Allen, a
director of the Company. Pursuant to this agreement, after the completion of
certain events, Mr. Allen will be resigning from the Board of Directors. This
will leave only two directors remaining, Mr. Stan Young and Mr. Kastrup.

15.       TERMINATION OF AGREEMENTS WITH CALL NOW

On May 20, 1998, the Company entered into Termination Agreements with Call Now
regarding its Line of Credit and Preferred Stock Agreements to reduce dependence
on Call Now. In exchange for the termination, Call Now has assumed $2,000,000 in
Company debt and received 500,000 shares of Company common stock and the Company
returned the $3,500,000 in Series A Retama Bonds. In addition, Mr. Allen has
resigned from the Board of Directors effective immediately pursuant to certain
conditions. Following the completion of the terms of the agreements with Call
Now, there will be no further relationship with Howe Solomon & Hall and the only
remaining relationship with Call Now will be in its status as shareholder of the
Company.

16.       STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY

Due to several of the subsequent transactions, there will be material positive
effects to the Company's financial statements. Several expenses related to the
issuance of warrants and preferred stock will be reversed as well as other
consequences. The Company is currently reviewing its financial condition to best
take advantage of these reversals.




                                       11
<PAGE>   12

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

This report contains forward-looking statements within the meaning of Section
27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Act
of 1934. All forward-looking statements involve risks and uncertainties. Actual
results could differ materially from those discussed in the forward-looking
statements as a result of many factors including, but not limited to those
listed below under "Risk Factors".

Overview

The Company was incorporated in the state of Florida on August 26, 1994, but did
not commence formal operations until April 1995. The Company's primary
activities since inception have been devoted to designing and developing its
initial color facsimile products and related technologies, preparation for
marketing, the recruitment of key management and technical personnel, including
outside consultants, and raising capital to fund operations. As a result, the
financial statements are presented in accordance with Statement of Financial
Accounting Standards No. 7 (SFAS 7), "Accounting and Reporting by Development
Stage Enterprises."

The Company believes its sale of preferred stock and warrant to purchase common
stock and the line of credit with Call Now, Inc. ("Call Now"), a related party,
were not sufficient to support planned operating activities through September
30, 1998. Call Now is a publicly held real estate investment company. Call Now's
major asset is ownership of the Retama Park Racetrack Project Special Facility
Revenue Bonds. The Retama Park Racetrack is a horse racing facility in Selma,
Texas that is managed by the Retama Entertainment Group, an 80 percent owned
subsidiary of Call Now. A member of the Company's Board of Directors is the
Chairman and President of Call Now and owns over 50 percent of Call Now stock.
Another member of the Company's Board of Directors is also a shareholder of Call
Now. In addition, Call Now has been involved in several sales of equity and debt
financings with the Company and Call Now owns common stock of the Company. The
Company is reliant on the availability of funds under the line of credit with
Call Now. The Line of Credit and Preferred Stock Agreement have been terminated
with Call Now. (See accompanying notes).

Risk Factors

The Company's risk factors include, but are not limited to, the following:

Development Stage Company; Absence of Operating History. The Company has been
engaged primarily in the design and development of CHROMAFAX and CHROMAFAX LITE
and related technology. The company's first product release commenced in June
1997. The risks, expenses and difficulties often encountered in a shift from the
research and development of products to the commercialization of new products
based on innovative technology must be considered. The prospects for the
Company's success must be considered in relation to the risks, expenses and
difficulties often encountered in establishing a new business in a competitive
industry subject to rapid technological and price changes, and characterized by
an increasing number of competitors.

No Revenues; Anticipated Future Losses. From inception (August 26, 1994) to June
30, 1998, the Company has had no significant revenue from sales. The Company
anticipates incurring significant costs in connection with the development of
its future products and technologies and there can be no assurance that the
Company will achieve sufficient revenues to offset anticipated operating costs
in the future.

Need for Additional Financing. The Company requires additional financing in the
future to acquire technologies that compliment its core products. The Company
believes that additional debt or equity financing, if required, will be
available from existing and future investors. However, there can be no assurance



                                       12
<PAGE>   13

as to the terms and conditions of any such financing and no certainty that funds
would be available when needed. The inability to obtain additional financing,
when needed, would likely curtail any technology acquisition efforts and may
have a material adverse effect on the Company. To the extent that any future
financing involves the sale of the Company's equity securities, the Company's
then existing shareholders could be substantially diluted. The Company is
currently seeking financing to fund its operations for the calendar year ended
September 30, 1998.

Dependence on Lines of Credit. On December 3, 1997, the Company secured a
$10,000,000 equity-based line of credit to Kingsbridge Capital Limited, a
company organized and existing under the laws of the British Virgin Islands
("KCL"). Under the privately-placed financing, the Company has the right to draw
up to $10,000,000 in cash in exchange for the Company's Common Stock, subject to
certain conditions. The line of credit will remain available for a period of
eighteen months. As of May 15, 1998, no funds are available under this line of
credit as the Company does not satisfy all the conditions for borrowing under
the agreement.

On February 3, 1998, the Company secured a $10,000,000 line of credit to Call
Now, Inc., a publicly held real estate investment company. Under the agreement,
the Company has the right to borrow up to $10,000,000 on or before September 30,
1998. Borrowings from Call Now may be provided to the Company in the form of
Retama Track municipal bonds. To obtain cash, the Company may have to sell the
bonds or borrow cash using the bonds as collateral. The Company will be required
to issue a Promissory Note bearing interest at 15% per year, payable quarterly,
for any funds drawn against the line of credit.

The Company believes that the funds under the line of credit with Call Now Inc.
are not sufficient to finance the Company's planned activities during fiscal
1998. This agreement was terminated by agreement with Call Now (see accompanying
notes).

Limited Sales and Marketing Experience. The Company markets and sells its
products through key manufacturers and distributors. Such companies could
develop competitive products to the Company's. As a result, demand and market
acceptance for the Company's technologies and future products are subject to a
high level of uncertainty. The Company relies in part on the manufacturers of
personal computers, fax modems, color printers and scanners for initial
distribution of its Initial Color Fax Products as a software package included
with such hardware purchase. The Company is therefore dependent upon such firms
to distribute its color fax products.

Rapid Technological Change. Research and development efforts are subject to the
risks inherent in the development of new technology and products, including but
not limited to, unanticipated delays, technical problems or difficulties, and
insufficiency of funding to complete development. There can be no assurance as
to when, or whether, such development projects will be successfully completed.
The markets for the Company's products are characterized by rapid changes and
evolving industry standards often resulting in product obsolescence or short
product life cycles. The Company's future operating results will depend upon its
ability to obtain market acceptance of its initial products and technology, to
continually enhance and improve such products and technology, to adapt its
proposed products to be compatible with specific products manufactured by
others, and to successfully develop and market new products and technology.

Substantial Competition. Other companies may be developing technologies or
products of which the Company is unaware which may be functionally similar, or
superior, to some or all of those being developed by the Company. These
companies may have substantially greater, technical, personnel and other
resources than the Company and may have established reputations for success in
developing, licensing and sales of their products. There is no assurance that
the Company will be able to compete successfully, that its competitors or future
competitors will not develop technologies or products that render the Company's
products and technology obsolete or less marketable or that the Company will be
able to successfully enhance its proposed products or technology or adapt them
satisfactorily.



                                       13
<PAGE>   14

Dependence Upon Qualified and Key Personnel. The success of the Company will be
largely dependent on its ability to hire and retain qualified executive,
scientific and marketing personnel. There is no assurance that the Company will
be able to attract or retain such necessary personnel, particularly in light of
the currently high demand for software engineers and other personnel in Silicon
Valley. The loss of key personnel or the failure to recruit additional personnel
could have a material adverse effect on the Company's business.

Protection of Proprietary Information. Competitors in both the United States and
foreign countries, many of which have substantially greater resources and have
made substantial investments in competing technologies, may have applied for or
obtained, or may in the future apply for and obtain, patents that will prevent,
limit or otherwise interfere with the Company's ability to make and sell its
products. The Company has not conducted an independent review of patents issued
to third parties. In addition, because of the developmental stage of the
Company, claims that the Company's products infringe on the proprietary rights
of others are more likely to be asserted after commencement of commercial sales
incorporating the Company's technology.

There can be no assurance that other third parties will not assert infringement
claims against the Company or that such claims will not be successful. The
Company has applied for 6 patents and is in the process of applying for
additional patents. There can also be no assurance that competitors will not
infringe the Company's patents if any such patents are granted to the Company in
the future. Defense and prosecution of patent suits, even if successful, are
both costly and time consuming. An adverse outcome in the defense of a patent
suit could subject the Company to significant liabilities to third parties,
require disputed rights to be licensed from third parties or require the Company
to cease selling its products.

The Company is in the process of applying for copyrights relating to certain
products and is also applying for patent protection. There is no assurance that
any patents will be obtained. If obtained, there is no assurance that any
patents or copyrights will afford the Company commercially significant
protection of its technologies or that the Company will have adequate resources
to enforce its patents and copyrights. The Company also intends to seek foreign
patent and copyright protection. With respect to foreign patents and copyrights,
the laws of other countries may differ significantly from those of the United
States as to the patentability of the Company's products or technology.
Moreover, the degree of protection afforded by foreign patents or copyrights may
be different from that in the United States. Patent applications in the United
States are maintained in secrecy until patents issue, and since publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries by several months, the Company cannot be certain that it will be the
first creator of inventions covered by any patent applications it makes or the
first to file patent applications on such inventions. Furthermore, in the
desktop computer application market today, patents and copyrights cannot give
substantial protection against competitors determined to introduce competing
products since it is likely that such competitors will be able to develop
similar technology which does not infringe on the Company's proprietary
technology.

The Company also relies on unpatented proprietary technology, and there can be
no assurance that others may not independently develop the same or similar
technology or otherwise obtain access to the Company's unpatented technology. To
protect its trade secrets and other proprietary information, the Company
requires employees, consultants, advisors and collaborators to enter into
confidentiality agreements. There can be no assurance that these agreements will
provide meaningful protection for the Company's trade secrets, know-how or other
proprietary information in the event of any unauthorized use, misappropriation
or disclosure of such trade secrets, know-how or other proprietary information.
If the Company is unable to maintain the proprietary nature of its technologies,
the Company could be adversely affected.


RESULTS OF OPERATIONS

Three and Nine Months Ended June 30, 1997 and 1998.



                                       14
<PAGE>   15

Research and Development

From inception through June 30, 1998, a substantial part of the Company's
activities related to research and development. The Company's research and
development expenses were approximately $215,000 and $984,000 for the three and
nine months ended June 30, 1998, respectively, compared to $292,000 and
$1,015,000, respectively in the corresponding periods in fiscal 1997. The
decrease is primarily due to cost containment by management, decreased
engineering labor and supplies costs related to completion of development and
testing activities of the latest software version. The Company believes that
significant investments in research and development will be necessary for both
new products and continuing enhancements to existing products. As a consequence
the company may incur increased research and development expenditures in the
future.

Sales and Marketing

Sales and marketing expenses were approximately $58,000 and $1,274,000 for the
three and nine months ended June 30, 1998, respectively, compared to $273,000
and $1,111,000 respectively in the corresponding periods in fiscal 1997. The
decrease is due to the reallocation of sales and marketing expenses while the
nine month increase is primarily due to costs associated with staffing employees
and consultants, participation in trade shows and other events, and the
Company's marketing efforts and costs associated with the general product
release.

Achieving significant market acceptance and commercialization of the Company's
initial color fax products will require substantial marketing efforts and
expenditures to establish market share. The Company expects significant sales
and marketing expenses in the future as it attempts to increase its market
share.

General and Administrative

General and administrative expenses were approximately $387,000 and $3,556,000
for the three months and nine ended June 30, 1998, respectively, compared to
$591,000 and $1,526,000, respectively in the corresponding periods in fiscal
1997. The increase in general and administrative expenses was primarily
attributable to the recognition of warrants issued in exchange for services,
fees for professional services, and legal expenses in connection with the
lawsuit against Color Communication Corporation. Several agreements were
terminated subsequent to the end of this quarter and the effects, including the
reversal of warrants, will be reflected in the fourth quarter.

On December 30, 1997, in connection with assistance to be provided with the
Company's management changes and financial needs, the Company granted a member
of the Board of Directors warrants to purchase 700,000 shares of the Company's
Common Stock. The Warrants have an exercise price of $6.25 per share and expire
three years from the date of grant. The fair value of the warrant determined at
the date of the grant using a Black-Scholes option pricing model with the
following assumptions, risk free interest rate of approximately 6%; no dividend
yield; volatility factor of .7; and a weighted average expected life of 3 years.
The estimated fair value of the warrants of $1,610,000 was recorded as a charge
against general and administrative expenses for the quarter ended December 1997.
This transaction was terminated. The amounts recorded will be reversed in the
next quarter.

Liquidity and Capital Resources

Since inception, the Company has primarily relied on sales of its equity
securities and borrowings to fund its operations. Between May 1995 and May 1996
the Company received approximately $1,952,000 in cash from sales of its equity
securities. In September 1996, the Company's initial public offering of common
stock and Redeemable Common Stock Purchase Warrants became effective. The
Company received net proceeds of approximately $5,387,614 from this initial
public offering, less $108,000 for advisory services to be provided 



                                       15
<PAGE>   16

over three years by the Underwriter, Barron Chase Securities, Inc. The Company's
outstanding Redeemable Common Stock Purchase Warrants are exercisable at $6.00
per share and could result in the gross receipt of up to an additional
$6,900,000. However, there can be no assurance that such warrants will be
exercised. Through September 30, 1997, redeemable stock purchase warrants to
purchase 64,752 shares of common stock had been exercised for approximately
$389,000.

During June 1997, the Company borrowed $1,250,000 from a bank payable in 30
days, at an interest rate of 6.6% per annum. The loan was secured by a time
deposit of equal amount. The Company repaid the loan during September 1997.

During September 1997, the Company issued $1,000,000 of convertible subordinated
debentures which bear interest at a rate of 10% per annum, payable
semi-annually, and matures in September 2002. The notes are convertible at the
option of the holder into the Company's Common Stock. The conversion price shall
be determined by dividing the purchase price of the notes by the lesser of
$10.00 per share or the closing price of the Common Stock on the day prior to
conversion, but no lower than $7.00 per share. The notes are redeemable at the
option of the Company at any time on or after the two year anniversary of the
issuance at the original issue price plus accrued interest to the redemption
date, provided that the average trading price of the Common Stock is greater
than or equal to $20 per share, as adjusted for stock splits, stock dividends
and similar events for 30 consecutive trading days prior to the date of the
redemption price.

Cash used in operating activities has increased from approximately $3,044,000
for the nine month period ended June 30, 1997 to approximately $5,117,000 for
the nine month period ended June 30, 1998, reflecting increased net losses. The
Company's cash requirements may increase for the upcoming fiscal year due to
expected increases in expenses related to further research and development of
its technologies and increased marketing, manufacturing, sales and distribution
and technical support expenses associated with the introduction of its initial
color fax products to the market place.

Management believes that the sale of preferred stock and warrants to purchase
common stock in exchange for municipal bonds with an aggregate total fair value
of $3,500,000 secured in February 1998 from Call Now, a related party, and the
$10,000,000 line of credit also obtained from Call Now during February 1998 may
not be sufficient to support planned operating activities through the fiscal
year ended September 30, 1998. This agreement has been terminated (See
accompanying notes). As part of its business strategy, the Company has
investigated, and will continue to investigate, potential acquisitions of
businesses, products and technologies. Such potential acquisitions may require
substantial capital resources, which may require the Company to seek additional
debt or equity financing.

Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive
Income," which establishes standards for reporting and displaying comprehensive
income and its components in a full set of general-purpose financial statements
and is required to be adopted by the Company beginning in fiscal 1999. The
Company's management is currently evaluating the impact of this statement on
operations.

Additionally, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information," which established standards for the
way the public business enterprises report information in annual statements and
interim financial reports regarding operating segments, products, and services,
geographic areas and major customers. SFAS 131 will first be reflected in the
Company's financial statements beginning in fiscal 1999. The Company's
management is currently evaluating the impact of this statement on operations.



                                       16
<PAGE>   17

In October 1997, the AIPCA issued Statement of Position (SOP) 97-2, "Software
Revenue Recognition," which supersedes SOP 91-1. The Company will be required to
adopt SOP 97-2 prospectively for software transactions entered into beginning
October 1, 1998. SOP 97-2 generally requires revenue earned on software
arrangements involving multiple elements such as software products, upgrades,
enhancements, postcontract customer support, installation and training, to be
allocated to each element based on the relative fair values of the elements. The
fair value of an element must be based on evidence which is specific to the
vendor. The revenue allocated to software products, including specified upgrades
or enhancements generally is recognized upon delivery of the products. The
revenue allocated to postcontract customer support generally is recognizable
ratably over the term of the support and revenue allocated to service elements
generally is recognizable as the services are performed. If a vendor does not
have evidence of the fair value for all elements in a multiple-element
arrangement, all revenue from the arrangements is deferred until such evidence
exists or until all elements are delivered. In March 1998, the AICPA issued
Statement of Position 98-4 ("SOP 98-4"), which amends certain provisions of SOP
97-2. The Company's management is currently evaluating the impact of this
statement on operations. Detailed implementation guidelines for this standard
have not been issued. Once issued, such guidance could lead to unanticipated
changes in the Company's current revenue recognition practices, and such changes
could be material to the Company's results of operations.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On December 10, 1997, the Company and Color Communications Corporation entered
into a settlement agreement which continued the prohibitions of the preliminary
injunction through January 15, 1998 and permanently prohibited the defendants
from using the Company's confidential information. The agreement further
prohibits the defendants from communicating with six specific companies through
April 15, 1998. As part of the settlement, the Company dismissed its claims
against the defendants and received a release of claims from them. Subsequently,
Color Communications has filed a countersuit making several additional
allegations.

In December 1997, the Board of Directors replaced several members of management
with a new and smaller management team. On February 18, 1998, the Company
received a letter from one member of the former management alleging wrongful
termination and racial discrimination and seeking unspecified damages. The
Company believes the claims are without merit and intends to contest the matter
vigorously. Management does not believe that resolution of the matter will have
a material effect on the Company. However, litigation is inherently costly and
uncertain and there can be no assurance that the matter will be resolved in the
Company's favor or without material cost.

The Company has terminated its relationship with a director and a shareholder.
As part of this settlement, the shareholder has assumed a $2,000,000 liability
of the Company and the director has resigned. In return, the Company has issued
500,000 shares among certain other provisions and mutual releases have been
signed by all parties reducing the potential for any litigation. (See
accompanying notes and exhibits).

In the course of its day to day business, the Company is party to various other
lawsuits. Though the current suits pending are believed to be without merit, any
adverse judgements could have a material adverse effect on the Company and its
ability to operate.



                             See accompanying notes



                                       17
<PAGE>   18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following exhibits are incorporated by this reference to Registrant's
Registration Statement on Form 10-K for the year ended September 30, 1997.

<TABLE>
<CAPTION>
EXHIBIT
NO.                        DESCRIPTION
---                        -----------
<S>                        <C>
         1(a)              Underwriting Agreement
         3(a)              Amended and Restated Articles of Incorporation of the
                           Registrant
         3(b)              Bylaws of the Registrant
         4.1               Form Warrant Certificate
         4.2               Form of Common Stock Certificate
         10.1              Financial Advisory Agreement
         10.2              Merger and Acquisition Agreement
         10.3              Warrant Agreement
         10.4              Underwriter's Warrant Agreement
         10.5              Incentive Stock Option Plan
         10.5(a)           Employment Agreement -- Ostrovsky Consulting, Inc.
         10.5(b)           Employment Agreement -- Wil F. Zarecor
         10.5(c)           Employment Agreement -- John L. Douglas
         10.5(d)           Employment Agreement -- Glenn Crepps
         10.7(a)           10% Convertible Subordinated Promissory Note
         10.7(b)           Common Stock Purchase Warrant
         10.7(c)           Private Equity Line of Credit Agreement
         10.7(d)           Registration Rights Agreement
         10.7(e)           Common Stock Purchase Warrant
         10.7(f)           Loan Agreement
         10.7(g)           Stock Purchase Warrant
         10.7(h)           Preferred Stock and Warrant Purchase Agreement
         10.7(I)           Certificate of Designation of Series A Convertible Preferred
                           Stock of Compressent Corporation
         10.7(j)           Stock Purchase Warrant
         10.7(k)           Reorganization Agreement of Purchase and Sale of Stock
         10.7(l)           Stock Purchase Warrant Computation of Net Loss Per Share
</TABLE>

The following exhibits are filed herewith:

        27      Financial Data Schedule

         (b) Form 8-K filed on January 20, 1998, February 24, 1998, February 28,
1998, April 30, 1998, June 9, 1998 June 12, 1998 and June 14, 1998 are
incorporated by reference on Form 10-K for the year ended September 30, 1997,
Form 10-Q for quarter ended December 31, 1997, Form 10-Q for quarter ended March
31, 1998 and the Form 10-Q for the quarter ended June 30, 1998..



                             See accompanying notes



                                       18
<PAGE>   19

                                   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.

                                            COMPRESSENT CORPORATION

Date:    August 14, 1998                    By: /s/ Joseph S. Kastrup
                                               ---------------------------------
                                               Joseph S. Kastrup
                                               Chairman and
                                               Chief Executive Officer
                                               Signing on behalf of the 
                                               registrant and as principal 
                                               officer



                                       19
<PAGE>   20

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO.                        DESCRIPTION
---                        -----------
<S>                        <C>
         12.1              Termination and Release Agreement
         12.2              Preferred Stock Termination Agreement
         12.3              Line of Credit Termination Agreement
         12.4              Call Now/Howe Solomon Agreement
         27                Financial Data Schedule
</TABLE>