<PAGE>   1


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                AMENDMENT NO. 2
                                       TO
                                  FORM 10-QSB



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


                For the quarterly period ended September 30, 1998
                                               ------------------

                         Commission file number 0-16011
                                                -------

                            USTMAN TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)


                                   California
                                   ----------
                         (State or other jurisdiction of
                         incorporation or organization)

                                   95-2873757
                                   ----------
                      (I.R.S. Employer Identification No.)

                            12265 W. Bayaud Ave #110
                                  Lakewood, CO
                            ------------------------
                    (Address of principal executive offices)

                                      80228
                                      -----
                                   (Zip Code)

                                 (303) 986-8011
                                 --------------
                           (Issuer's telephone number)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date: 19,855,243 shares of Common Stock as of
November 5, 1998.

Transitional Small Business Disclosure Format (check one):   X  Yes     No
                                                            ---     ---



                                       1
<PAGE>   2



PART I -- FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

                            USTMAN TECHNOLOGIES, INC.
                                AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheet


<TABLE>
<CAPTION>
                                                          September
                                                           30, 1998        June 30,
                                                         (unaudited)         1998
                                                         ------------    ------------
<S>                                                      <C>             <C>
ASSETS
       CURRENT ASSETS
             Cash and equivalents                        $    354,000    $    366,000
             Accounts receivable, net                         869,000         826,000
             Inventory                                        232,000         112,000
             Prepaid expenses and other current assets         92,000          70,000
                                                         ------------    ------------
      Total current assets                                  1,547,000       1,374,000

       PROPERTY AND EQUIPMENT, NET                            526,000         544,000
       INTANGIBLES AND GOODWILL, NET                        9,390,000       9,699,000
                                                         ------------    ------------
                                                         $ 11,463,000    $ 11,617,000
                                                         ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY
       CURRENT LIABILITIES
             Accounts payable, accrued expenses
                      and other liabilities              $  1,242,000    $  1,135,000
             Current portion of long-term debt              1,000,000         875,000
                                                         ------------    ------------
      Total current liabilities                             2,242,000       2,010,000

       LONG-TERM DEBT AND OTHER LIABILITIES                 9,796,000       9,784,000
       DEFERRED EMPLOYEE BENEFITS                             434,000         435,000

SHAREHOLDERS' EQUITY
       Common stock                                        12,810,000      12,810,000
       Additional paid-in capital                           2,863,000       2,517,000
       Accumulated deficit                                (16,682,000)    (15,939,000)
                                                         ------------    ------------
                                                           (1,009,000)       (612,000)

                                                         ------------    ------------
                                                         $ 11,463,000    $ 11,617,000
                                                         ============    ============
</TABLE>


                                       2


<PAGE>   3




                            USTMAN TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Operations
                 Three Months Ended September 30, 1998 and 1997

<TABLE>
<CAPTION>
                                                                 1998          1997
                                                             (unaudited)    (unaudited)
                                                             -----------    -----------
<S>                                                          <C>            <C>
 Sales                                                       $ 1,523,000    $ 1,560,000

 Cost of sales                                                   544,000        580,000
                                                             -----------    -----------

        Gross profit                                             979,000        980,000

 Selling, general and administrative expenses                    603,000        958,000

 Depreciation and amortization                                   312,000        304,000

 Interest expense, net of interest income                        807,000        272,000
                                                             -----------    -----------


      Loss from operations before benefit for income taxes      (743,000)      (554,000)

 Benefit for income taxes                                             --             --

                                                             -----------    -----------
      Net loss                                               $  (743,000)   $  (554,000)
                                                             ===========    ===========

      Basic and diluted, net loss, per share                 $     (0.04)   $     (0.03)
                                                             ===========    ===========
</TABLE>


                                       3
<PAGE>   4



                            USTMAN TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                 Three Months Ended September 30, 1998 and 1997

<TABLE>
<CAPTION>
                                                                  1998         1997
                                                               (unaudited)  (unaudited)
                                                                ---------    ---------
<S>                                                             <C>          <C>
 Operating Activities
        Net loss                                                $(743,000)   $(554,000)
        Adjustments to reconcile net loss to net cash
           provided by (used in) operating activities:
         Depreciation and amortization                            420,000      391,000
         Warrants to be issued under Senior Subordinated Note
        Agreement                                                 346,000           --
         Loss on sale and write-off of property and equipment          --       54,000
        Issuance of common stock to settle lawsuit                     --       27,000
        Interest converted to long-term debt                      212,000      199,000
         Net changes in operating assets and liabilities          (79,000)    (352,000)
                                                                ---------    ---------
 Cash flows provided by (used in) operating activities            156,000     (235,000)

Investing Activities
        Purchase of property and equipment                        (43,000)     (65,000)
                                                                ---------    ---------
 Cash flows used in investing activities:                         (43,000)     (65,000)

 Financing Activities
           Borrowings/Repayments                                 (125,000)     125,000
                                                                ---------    ---------
 Cash flows (used in) provided by financing activities           (125,000)     125,000

 Decrease in cash                                                 (12,000)    (175,000)
 Cash and equivalents, beginning of period                        366,000      799,000
                                                                ---------    ---------
 Cash and equivalents, end of period                            $ 354,000    $ 624,000
                                                                =========    =========
</TABLE>


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<PAGE>   5



                            USTMAN TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements

1.      The interim financial information furnished herein has not been audited
        by independent accountants; however, in the opinion of management, all
        adjustments (only consisting of normal recurring accruals) necessary for
        a fair presentation of the results of operations for the three month
        period ending September 30, 1998 have been included.

2.      On May 22, 1997, Watson General Corporation (Watson) completed the
        private placement of $7 million 10% Senior Subordinated Notes Due 2002
        and 7,304,520 shares of its common stock (the Private Placement). In
        connection with the valuation of the common stock issued in the
        transaction, an original issue discount of $1,000,000 was recorded.
        Approximately $17,000 of the discount is amortized into interest expense
        monthly.

        Interest on the Senior Subordinated Notes is 10% per annum for the first
        year, payable quarterly, and increases by one percent each year during
        the term of the Notes. As of September 30, 1998 the interest rate was
        11%. At the option of the Company, interest payments due can be
        converted to debt under the same terms as the original principal. During
        the quarter ended September 30, 1998, the Company converted interest due
        of $212,000 to long term debt. In addition, if on the earlier of (i) the
        third anniversary of the date of the Securities Purchase Agreement or
        such other date thereafter designated by the Investors, (ii) the date of
        a stock offering or (iii) a sale of the Company (the "Adjustment Date"),
        the Company's cumulative adjusted earnings before taxes, depreciation
        and amortization ("EBTDA") fail to meet specific projections provided by
        the Company to the Investors, additional interest is payable in the form
        of warrants to the Investors. If the resulting actual percentage of
        EBTDA per share is less than 70% of the projected amount, an adjustment
        to interest expense is calculated and warrants are issued in an amount
        equal to the additional interest expenses divided by the fair market
        value of the common stock on the Adjustment Date. The adjusted interest
        rate cannot exceed 29.76%. Due to the lower than expected performance in
        fiscal 1998, the Company determined it was unlikely to meet these
        projections in the future. Accordingly, the Company has recorded
        interest expense on the Senior Subordinated Notes at a rate of 29.76% as
        of the beginning of the agreement and reflected the adjustment as a
        change in accounting estimate. Therefore, interest in the first quarter
        of 1998 is accrued at 10% while interest for the first quarter of fiscal
        year 1999 is recorded at 29.76%. The Company reflected additional
        interest as warrants to be issued.

        In December 1998, the Investors reached an agreement to convert all of
        the Private Placement and accrued interest to Series A Preferred Stock
        ("Preferred Stock") effective July 1, 1998. The Preferred Stock will
        have an aggregate allocation amount (the "Allocation Amount") of
        $15,000,000 for the purposes of liquidation priority and dividends. The
        Preferred Stock will bear an annual 8% cumulative dividend, if and when,
        declared by the Board of Directors. The Allocation Amount will increase
        by the amount of any dividends not declared for payment by the Company.
        The Preferred Stock has no mandatory redemption or voting rights and is
        not convertible into Common Stock.

        In February 1999, the Company filed an amended September 30, 1998 Form
        10-Q which gave effect to this transaction as of July 1, 1998. However,
        because the agreement was not finalized until December 1998, this
        treatment was incorrect. Accordingly , this amended filing restates the
        notes, interest and debt costs at their original amounts at September
        30, 1998 and does not reflect the issuance of the preferred stock.

                                       5


<PAGE>   6

                            USTMAN TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

        Notes to Condensed Consolidated Financial Statements (continued)

2.      (continued)
        During the three months ended September 30, 1998, interest expense
        attributable to the Senior Subordinated Notes which was converted to
        equity (including warrants to be issued for additional interest expense)
        was $558,000 $.03 per share.

        On December 17, 1997, the Company obtained $3.75 million in financing
        from BankBoston and used the proceeds to, among other things, acquire
        all of the outstanding common stock of Advanced Tank Certification, Inc.
        (ATC), pursuant to stock purchase agreements between the Company and all
        of the shareholders of ATC. The ATC acquisition was accounted for using
        the purchase method.

3.      Inventory consists of tank gauge equipment and is accounted for using 
        the weighted average method.

4.      Included in interest expense on the Statements of Operations is
        amortization of the original issue discount and deferred debt costs.
        These amounts are shown as depreciation and amortization on the
        Statements of Cash Flows.

5.      Certain amounts for the prior period have been reclassified to conform
        to the current quarter presentation.

6.      Due to the Company's loss position, diluted net loss per share is the
        same as basic earnings per share as the result would be antidilutive.



                                       6
<PAGE>   7




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

    Results of Operations:

    In the first quarter of fiscal 1999 the Company reported a net loss of
    $743,000 or $0.04 per share as compared to a net loss of $554,000 or $0.03
    per share in the prior year. Sales for the quarter were $1,523,000 compared
    with $1,560,000 in the prior year. The 2% decrease in sales from the same
    quarter in the prior year is due primarily to the sale of Toxguard Fluid
    Technologies, Inc. ("Toxguard") which was divested as part of the Company's
    strategic plan in January 1998. Toxguard's revenue represented approximately
    13% of the Company's total revenues in the same period of the prior year.
    Although revenues decreased, gross margins remained relatively consistent
    compared to the same period of prior year. This is due to an expected
    corresponding decrease in cost of sales. The Company's strategic plan calls
    for it to reposition itself in pursuit of its most significant market
    opportunity, leak detection/monthly monitoring of underground storage tanks.

    Included in the loss of $743,000 for the quarter is $558,000 of interest
    expense related to the Senior Subordinated Notes (see Note 2 of the Notes to
    Consolidated Financial Statements). Of the total interest $212,000 was
    converted to long term debt and $346,000 represents warrants to be issued.

    The Company's depreciation and amortization decreased 7% compared to the
    same period in prior year due to the write off of certain proprietary
    software during the prior fiscal year. Selling, general and administrative
    expenses decreased by 34% due to the reduction of expenses incurred in the
    prior year related to the merger of USTMAN Industries, Inc. and Watson
    General Corporation and the Advanced Tank Certification, Inc. acquisition.
    These expenses consisted primarily of fees for relocating offices, severance
    of terminated employees, exit costs, attorneys' fees, and accounting fees.
    Management believes the selling, general and administrative expenses will
    continue throughout the fiscal year at the lower level.

    The Company's sales depend in part upon its customers' decisions as to when
    and how to implement measures to meet the December 22, 1998 Environmental
    Protection Agency ("EPA") underground storage tank compliance requirements.
    These requirements require, among other things, some form of permanent
    monthly monitoring of underground storage tanks. The Company believes that
    the market for its services may accelerate as compliance deadlines approach.

    Financial Condition and Liquidity:

    At September 30, 1998 the Company's current liabilities exceeded current
    assets by $695,000 compared to $636,000 at June 30, 1998. This is a result
    of the current portion of long term debt on the BankBoston term loan. The
    Company's business does not require material ongoing capital expenditures.
    The Company's management believes that it has adequate resources for the
    next twelve months of operations.

    Except for historical information contained herein, the statements in this
    report are forward-looking statements that are made pursuant to the safe
    harbor provisions of the Private Securities Litigation Reform Act of 1995.
    Forward-looking statements involve known and unknown risks and uncertainties
    which may cause the actual results in future periods to differ materially
    from forecasted results. These risks and uncertainties include, among other
    things, product demand, customers' strategies regarding the December 22,
    1998 EPA compliance requirements, and market competition.


                                       7
<PAGE>   8



    Year 2000 Assessment

    The following disclosure is made pursuant to the Year 2000 Information and
    Readiness Disclosure Act. The following disclosure originated from the
    Company and concerns (1) assessments, projections, or estimates of Year 2000
    processing capabilities; (2) plans, objectives or timetables for
    implementing or verifying Year 2000 processing capabilities; (3) test plans
    dates or results; and/or (4) reviews and comments concerning Year 2000
    processing capabilities as defined by the Act.

    The Company has assessed Year 2000 compliance matters and has determined
    that it has potential for exposure regarding Year 2000 compliance in three
    areas of its internal and external business activities. These areas include
    (1) its own internal hardware and software systems which are utilized to
    process and provide the Company's operations and accounting information, (2)
    the hardware and software systems it has provided to its clients for
    automation of the Company's statistical inventory reconciliation ("SIR")
    process and (3) clients' hardware and software systems which are utilized to
    provide data to the Company. The following discusses management's assessment
    of those risks and the steps it is taking to minimize them.

    Internal hardware and software

    Over the last three years, the Company has purchased computers, servers and
    other equipment which are certified by the vendor as being Year 2000
    compliant. Because of this, the telephone system, servers and the majority
    of the Company's workstations are Year 2000 compliant. As of September 30,
    1998, the Company has gathered an inventory of current revisions needed on
    older workstations. Those computers which were not compliant will be
    thoroughly tested in the upcoming months and have the needed revisions by
    December 31, 1999.

    The Company's software consists primarily of three distinct areas: network
    operating system, commercial software and proprietary software. The network
    operating system has been certified by the vendor to be Year 2000 compliant
    subsequent to the completion of certain patches which the Company completed
    applying as of September 30, 1998. The commercial software the Company runs
    is very diverse. The Company has identified over thirty types of commercial
    software that are currently used both internally and externally. Over the
    next eight months, the Company will contact the manufacturers to determine
    if the software is Year 2000 compliant. For those software packages which
    will not be Year 2000 compliant, the Company will make a determination to
    either replace the software with a different vendor or continue to use the
    software in a "quarantined" environment. Until responses from all vendors
    are received, it is not possible to estimate costs associated with the new
    software. However it is not anticipated that any new software other than
    that discussed below will be a material capital expenditure. All assessments
    required and the related determinations are expected to be made prior to
    June 30, 1999. The Company will contract for the replacement of its
    accounting and information computer software. One criterion in the selection
    of the new accounting software will be a warranty that the software is Year
    2000 compliant. It is estimated that the system will be installed and
    functional by August 1999. The cost of this system is expected to be
    approximately $50,000 including software, hardware and implementation
    expense. The Company runs internal software developed by the Company's
    software engineers. The Company does not believe that the software code will
    have to be rewritten or recompiled because most of the software is simply a
    front end to well known commercial software which has Year 2000 compliance
    built into the core software.

    In order to ensure that all software and hardware will function properly in
    the Year 2000, the Company has planned to construct a separate testing
    facility. This facility will be dedicated entirely to Year 2000 testing on
    live customer data. This facility will have a server and other hardware to
    mirror the Company's. The Company plans to set the internal date at this
    facility to December 31, 1999 and run analysis for two months to verify that
    no Year 2000 issues occur as the clock approaches, reaches and passes the
    century mark. The equipment has been purchased for this facility and the
    facility is expected to be in use some time after March 1999.


                                       8
<PAGE>   9


    Hardware and software provided to customers

    Over the past couple of years, the Company has provided to its customers
    Extreme(TM), TankTrax(TM), and SIRSend(TM) software for use by its customers
    in providing data to the Company. The Company has tested and believes the
    Extreme(TM) software is Year 2000 compliant but the TankTrax(TM) and
    SIRSend(TM) software packages are not. The Company believes the TankTrax(TM)
    and SIRSend(TM) software can be corrected with few programming changes. The
    Company is currently evaluating the specific changes needed. Because the
    Company's software engineers will do these revisions, the cost to the
    Company is expected to be minimal.

    In addition to software the Company has furnished computer equipment to run
    the above-mentioned software and tank gauges. The Company believes all
    computer equipment sold to current customers is Year 2000 compliant. The
    Company has made provisions with customers so that the Company will not be
    responsible for any Year 2000 issues due to customers moving the proprietary
    software from the machine provided by the Company to other equipment without
    the signed consent of the Company. The Company has obtained a written
    warranty from the manufacturer of its tank gauge that the tank gauge is Year
    2000 compliant.

    Clients' hardware and software

    In order to assess the preparedness of its customers, the Company requested
    that its top two hundred customers complete a Year 2000 survey to determine
    the status of Year 2000 compliance of the customers' software and the data
    provided to the Company. The Company does not believe that any data received
    either electronically or in hard copy which is not Year 2000 compliant will
    have a negative affect on the systems, but may affect services provided due
    to additional manual labor required to correct problems with the data. The
    Company will be working closely with its customers known to generate data
    from equipment which is not Year 2000 compliant to determine what the
    customers' own Year 2000 compliance program encompasses. The Company
    believes by working together with these customers potential problems will be
    avoided.


                                       9
<PAGE>   10






ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)      Exhibits

        Exhibit Number               Description of Document
        --------------               -----------------------
        Exhibit 27                   Financial Data Schedule



                                   SIGNATURES

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

                                            USTMAN TECHNOLOGIES, INC.
                                                      (Registrant)




    Date:  4/9/99                                    By /s/ Dan R. Cook
                                                        -----------------------
                                                        Dan R. Cook
                                                        President and CEO


    Date:  4/9/99                                    By /s/ Heather Murphy
                                                        -----------------------
                                                        Heather Murphy
                                                        Controller


                                       10



<PAGE>   11
                                 EXHIBIT INDEX


Exhibit Number               Description of Document
--------------               -----------------------
  Exhibit 27                 Financial Data Schedule