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

                                   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 March 31, 1999

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

                           Commission File No. 1-10416

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

                              OPTICAL SYSTEMS, INC.
                 (Name of small business issuer in its charter)

         Florida                                    65-0755071
 (State of Incorporation)            (I.R.S. Employer Identification Number)

 Raritan Plaza II, Raritan Center, Fieldcrest Avenue, Edison, New Jersey, 08818
                                 (732) 417-0023
          (Address and telephone number of principal executive offices)

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

   Securities registered pursuant to Section 12(b) of the Exchange Act: None.

          Securities registered to Section 12(g) of the Exchange Act:
                        Common Stock, $0.0001 par value.

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 twelve months (or for such
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 [ ]

As of May 15, 1999 there were 6,510,320 shares of Common Stock outstanding.

Transitional Small Business Disclosure format:   Yes  [ ]    No  [X]

<PAGE>   2
                                      INDEX
                                       OF
                              OPTICAL SYSTEMS, INC.

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999


<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                              <C>
PART I.  FINANCIAL INFORMATION

         ITEM 1.  FINANCIAL STATEMENTS (Unaudited)

              Balance Sheets
                Six Months Ended March 31, 1999 and Twelve Months Ended September 30, 1998..........1

              Statements of Operations
                Three Months Ended March 31, 1999 and 1998..........................................2
                Six Months Ended March 31, 1999 and 1998............................................2

              Statements of Cash Flows
                Six Months Ended March 31, 1999 and 1998............................................3

              Notes to Financial Statements.......................................................4-5

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS............................................5-8


PART II  OTHER INFORMATION

         ITEMS 1-6..................................................................................8


SIGNATURES..........................................................................................9
</TABLE>






<PAGE>   3
PART I:  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS


                              OPTICAL SYSTEMS, INC.
                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                               March  31,    September 30,
                                                                              -----------    ------------
                                                                                 1999            1998
                                                                                 ----            ----
                                                                               Unaudited        Audited
                                                                              -----------     -----------
<S>                                                                           <C>             <C>    
ASSETS
Current assets:
   Cash and cash equivalents                                                  $    32,971     $    81,765
   Accounts receivable--trade, net of allowance
     for doubtful accounts of $3,000                                              198,093         336,083
   Loan receivable--officer                                                        87,543          52,136
   Prepaid expenses and other current assets                                        6,156          19,708
                                                                              -----------     -----------
     Total current assets                                                     $   324,763     $   489,692
                                                                              ===========     ===========

Property and equipment:
   Office furniture and equipment                                             $    37,066     $    36,515
   Computer hardware and software                                                 348,027         343,966
   Leasehold improvements                                                           6,650
   Vehicle                                                                         24,654          24,654
                                                                              -----------     -----------
   Total cost                                                                 $   416,397     $   405,135
   Accumulated depreciation                                                       262,901         222,401
                                                                              -----------     -----------
     Total property and equipment                                                 153,496         182,734
Deferred rental expense                                                       $    24,000     $    24,600
                                                                              -----------     -----------

     Total assets                                                             $   502,259     $   697,026
                                                                              ===========     ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY 
Current liabilities:
   5% convertible notes payable                                               $    33,840     $    40,000
   5% demand note payable                                                          35,000          35,000
   Current maturities of long-term debt                                             6,295           6,295
   Loans payable--shareholders                                                    134,461          34,461
   Accounts payable--trade                                                        735,221         486,120
   Accrued expenses                                                                81,577          81,437
                                                                              -----------     -----------
     Total current liabilities                                                $ 1,026,394     $   683,313
Long-term debt                                                                     55,396          57,997
                                                                              -----------     -----------
     Total liabilities                                                        $ 1,081,790     $   741,310
                                                                              ===========     ===========

Stockholders' deficiency:
   Convertible preferred stock--$.0001 par value, authorized 
   10,000,000 shares; issued and outstanding 0 
   Common stock, $0.0001 par value authorized
     50,000,000 shares; issued and outstanding - 6,510,320 and
     4,372,712 shares, respectively                                           $       651     $       517
Additional paid in capital                                                      1,652,393       1,571,363
Accumulated deficit                                                            (2,232,575)     (1,616,265)
                                                                              -----------     -----------
   Total stockholders' deficiency                                             $  (579,531)    $   (44,284)
                                                                              -----------     -----------

   Total liabilities and stockholders' deficiency                             $   502,259     $   697,026
                                                                              ===========     ===========
</TABLE>

                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                       1

<PAGE>   4
                              OPTICAL SYSTEMS, INC.

                            STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                          3 Months Ended                   6 Months Ended
                                                             March 31,                        March 31,  
                                                        --------------------           ---------------------
                                                        1999            1998           1999             1998
                                                        ----            ----           ----             ----
                                                            (Unaudited)                     (Unaudited)
<S>                                                  <C>             <C>             <C>             <C>
Gross revenue                                        $ 290,349       $ 627,714       $ 558,939       $ 901,799
Cost of revenue                                         71,947         257,381         158,415         402,171
                                                     ---------       ---------       ---------       ---------

Gross profit                                         $ 218,402       $ 370,333       $ 400,524       $ 499,628
                                                     =========       =========       =========       =========

Operating expenses:
   Payroll and related fringe costs                  $ 208,348       $ 153,397       $ 419,310       $ 280,878
   Selling and marketing                               101,486         104,645         247,446         143,529
   Administrative                                      165,715         161,038         299,548         243,484
   Depreciation                                         20,250          30,400          40,500          36,900
                                                     ---------       ---------       ---------       ---------
     Total operating expenses                          495,799         449,480       1,006,804         704,791
                                                     =========       =========       =========       =========

Loss from operations                                 $(277,397)      $ (79,147)      $(606,280)      $(205,163)
                                                     =========       =========       =========       =========

Other income (expense):
   Interest expense                                  $  (3,118)      $    (884)      $  (6,279)      $  (4,381)
   Interest income                                          16               6             433              10
   Miscellaneous expense                                (1,179)         (4,141)         (4,185)         (6,969)
                                                     ---------       ---------       ---------       ---------
     Total other income (expense)                       (4,281)         (5,019)        (10,031)        (11,340)
                                                     =========       =========       =========       =========

Net loss                                             $(281,678)      $ (84,166)      $(616,311)      $(216,503)
                                                     =========       =========       =========       =========

Net loss per share                                   $    (.04)      $    (.02)      $    (.10)      $    (.04)
                                                     =========       =========       =========       =========

Weighted average common shares outstanding           6,369,812       5,174,557       6,003,598       5,174,557
                                                     =========       =========       =========       =========
</TABLE>



                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS






                                       2
<PAGE>   5
                              OPTICAL SYSTEMS, INC.

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                     6 Months Ended
                                                                                       March 31,   
                                                                                ------------------------
                                                                                  1999           1998
                                                                                  ----           ----
                                                                                       (Unaudited)

<S>                                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                     $(616,311)     $(216,503)
                                                                                ---------      ---------
   Adjustments to reconcile net loss to net cash
     used in operating activities:
   Depreciation                                                                 $  40,500      $ 369,500
   Financial and legal services
   Interest expense
   Increase (decrease) in cash resulting from 
     changes in current operating
     assets and liabilities:
   Accounts receivable                                                            137,990       (464,421)
   Loan receivable--officer                                                       (35,407)       (25,818)
   Prepaid expenses                                                               (10,448)      (116,968)
   Deferred lease payments                                                         24,600
   Accounts payable--trade                                                        249,101        376,621
   Accrued expenses                                                                   140          2,264
                                                                                ---------      ---------
     Total adjustments                                                          $ 406,476      $  56,128
     Net cash provided by (used in)
       operating activities                                                     $(209,835)     $(228,272)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property and equipment                                          $ (11,262)     $ (81,674)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of 5% convertible notes payable                                    $  (6,160)     $ (20,000)
   Proceeds from loan from shareholder                                            100,000          1,000
   (Repayment) Proceeds of long-term debt                                          (2,601)        19,968
   Issuances of common stock                                                       81,063        427,566
                                                                                ---------      ---------
     Net cash provided by financing activities                                  $ 172,302      $ 441,768
                                                                                ---------      ---------

DECREASES IN CASH AND
   CASH EQUIVALENTS                                                             $ (48,794)      $(62,014)
   Cash and cash equivalents, beginning of period                                  81,765         85,927
                                                                                ---------      ---------
   Cash and cash equivalents, end of period                                     $  32,971      $  23,913
                                                                                =========      =========

Supplementary cash flow data:
   Interest paid                                                                $     122      $     268
   Income taxes paid                                                                   -0-            -0-
Non cash financing transaction:
   Conversion of preferred stock into common stock                                    101
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS



                                       3

<PAGE>   6


                              OPTICAL SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

         The accompanying unaudited financial statements have been prepared in
         accordance with generally accepted accounting principles for interim
         financial information and with the instructions to Form 10-QSB and Item
         310(b) of Regulation S-B. Accordingly, they do not include all of the
         information and footnotes required by generally accepted accounting
         principles for complete financial statements. In the opinion of
         management, all adjustments (consisting of normal recurring accruals)
         considered necessary for a fair presentation have been included.
         Operating results for the six-month period ended March 31, 1999, are
         not necessarily indicative of the results for the year ending September
         30, 1999. For further information, refer to the consolidated financial
         statements and footnotes thereto included in the Company's annual
         report on Form 10-KSB for the year ended September 30, 1998.


NOTE B - SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

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

PROPERTY AND EQUIPMENT

         Property and equipment are recorded at cost. Depreciation is computed
         using both straight-line and accelerated methods over the estimated
         service lives which range from 5 to 7 years. Expenditures for
         maintenance and repairs are charged to operations. Given the rapid
         technology changes and obsolescence that is occurring with computer
         hardware and software, it is reasonably possible that the Company's
         estimate that it will recover the carrying amount of this equipment
         from future operations will change in the near term.

         With respect to costs incurred to develop software for its information
         processing services, the Company's policy is to capitalize such costs
         only after technological feasibility has been established. No software
         development costs have been capitalized in the accompanying financial
         statements.

REVENUE RECOGNITION

         Information processing services are reported as earned when services
         are performed. Sales of information processing hardware and turnkey
         systems are reported as earned when systems have been delivered and
         accepted by the customer.

         Income from the joint venture is recognized after the services are
         rendered and billed and related expenses incurred by the joint venture.

INCOME TAXES

         Provision for income taxes is based on income reported in the
         accompanying financial statements.



                                       4
<PAGE>   7


LOSS PER SHARE

         Loss per share is based on the weighted average of common shares
         outstanding during the reporting periods. Shares issuable upon the
         conversion of preferred stock and notes payable, exercise of warrants
         have not been included since their effect would be anti-dilutive.

CASH AND CASH EQUIVALENTS

         For cash flow reporting purposes, cash and cash equivalents include
         money market fund investments with an initial maturity of three months
         or less.



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

OVERVIEW

         OSI was formed in 1992 and the founders are the senior management
         today. OSI was incorporated in the state of New Jersey in 1992 and was
         the successor in a reverse merger transaction effective June 30, 1997.
         OSI is a reporting company trading on OTC Bulletin Board system using
         the symbol OPSY.

         At the outset, OSI was conceived to market document management services
         that would create the "paperless office" by substituting
         electronic/optical media and directories for hard copy reports. The
         name Optical Systems was chosen to communicate this marketing emphasis.
         Six years later, the Company has evolved into a marketer of a broad
         range of IT Solutions: document management, imaging and network
         support, C.O.L.D. (Computer Output to Laser Disk), SafeCD(TM)--a data
         migration product, e-Commerce applications, Internet/Intranet services,
         CD-ROM Service Bureau, and Year 2000 solutions.

RESULTS OF OPERATION

THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998

GROSS REVENUES

         The Company is an Information Technology Solutions Provider marketing
         products and services in the areas of document management, service
         bureau operations, custom programming, consulting or network, Internet
         and Intranet environments and identifying and remediating "Year 2000"
         (Y2K) program code. The revenues from these businesses for the three
         months ended March 31, 1999 were 54% lower than the same period ended
         March 31, 1998.

         In September 1997 the Company made a strategic decision to allocate
         resources to market products and services dedicated to the "Year 2000
         Solutions". Management believes now some fifteen months later that the
         Y2K market has not and probably will not develop to extent forecasted.
         The Y2K services in the second quarter of 1998 created revenues of
         $561,000 with only $6,000 of comparable revenues in 1999. During the
         same period there was an increase in revenues from the general
         consulting business of $230,000.

COST OF REVENUES

         For the second quarter ended March 31, 1998, expenses associated with
         the Y2K work were about $182,000 with no comparable expenditures in
         1999. The general consulting business expenses increased approximately
         $3,000.



                                       5

<PAGE>   8



PAYROLL COSTS

         Payroll expenses for the second quarter of fiscal 1999 increased about
         $55,000 above 1998. The increase reflects the higher cost of additional
         technical people (+$29,000) to complete general consulting assignments
         and $26,000 for awards of common stock based on 1998 sales growth paid
         in 1999.

SELLING & MARKETING

         Selling and marketing expenses for the three months ended March 31,
         1999, decreased 3% reflecting lower expenses due to decreased marketing
         effort for Y2K business development. The decrease was partially offset
         by the cost of a marketing study in 1999.

GENERAL & ADMINISTRATION

         General and administration expenses for second fiscal quarter 1999
         decreased 3% over 1998. Lower cost ($13,000) for professional
         fees--accountants, lawyers, etc., in 1999 were offset by increased
         facilities expense. The balance of the decrease of $4,000 was spread
         over 19 classifications of expense.

DEPRECIATION

         For the quarter ended March 1999, the increase in depreciation expense
         (+$10,000) reflects the investment in fixed assets made in fiscal year
         1998 of $100,000 or +33%.

INTEREST EXPENSE

         For the quarter ended March 31, 1999, interest expense increased $2,800
         over March 31, 1998, as the result of new loans from a minority
         shareholder.


SIX MONTHS ENDED MARCH 31, 1999 COMPARED TO MARCH 31, 1998

GROSS REVENUES

         For the six months ended March 31, 1999 vs. March 31, 1998, revenues
         decreased 38%. A decline of $345,000 in Y2K Services revenues accounts
         for virtually all the difference with only a modest loss of $3,000 in
         general consulting revenues.

COST OF REVENUES

         The decline in revenues for the six months ended March 31, 1999 vs.
         March 31, 1998 resulted in a reduction in costs of $244,000. Y2K
         Services costs were approximately $119,000 lower. General consulting
         service had a decline of $129,000 in costs on approximately the same
         revenues, as the 1999 business did not require expenditures for
         equipment and third party software.

PAYROLL COSTS

         Payroll costs for the six months ended March 31, 1999 vs. the same
         period in 1998 increased $138,000, reflecting the higher costs for
         technicians and enhancement to fringe benefit programs. Management
         believes the enhancements were necessary to be competitive when
         recruiting technicians in the current market.

SELLING AND MARKETING

         For the six months ended March 31, 1999 vs. March 31, 1998, selling and
         marketing expenses increased $104,000. Of this increase, $24,000 was
         incurred for a marketing study and $80,000 in winding down the
         company's Y2K Services programs.




                                      6

<PAGE>   9


GENERAL AND ADMINISTRATION

         For the six months ended March 31, 1999 vs. March 31, 1998, general and
         administrative costs increased $56,000 primarily as the result of
         higher professional fees and facilities cost.

INTEREST EXPENSE

         Interest expenses for the six months ended March 31, 1999 were $6,200
         vs. $4,300 in 1998. The increase is attributed to the interest expense
         on new loans from a shareholder.

LIQUIDITY AND CAPITAL RESOURCES (SEE SUBSEQUENT EVENTS)


         The Company's liquidity requirements include working capital needs,
         interest payments and capital investments. The company intends to
         finance its current operating activities with cash from operations.
         Additionally, a minority shareholder of the Company has committed to
         provide financing to the Company.

         The Company has experienced late vendor payments and is currently
         looking to extend terms. On March 22, 1999, Romac International, a
         successor to Source Services corporation filed a civil action in the
         Superior Court of New Jersey claiming Optical Systems, Inc. has
         defaulted on a debt owed to Romac for services rendered by Romac in
         1998 and that $139,067.83 plus interest, costs of suit and legal fees
         remains past due and unpaid. The company has filed an appropriate
         response with the Superior Court.

         The short-term and long-term liquidity of the Company is dependent upon
         several factors, including availability of capital, competitive end
         market forces, capital expenditures and general economic conditions. In
         addition, because of the Company's current financial position, its
         financial flexibility is limited.

         Although the Company believes the anticipated cash for future
         operations will provide sufficient liquidity for future operations,
         there can be no assurance this or other possible sources will be
         adequate.

         The Company expects to continue to recognize losses during 1999 due to
         its operating performance unless the acquisitions described below are
         successful. The Company is aggressively working to expand its customer
         base and services. Should the Company incur greater than anticipated
         losses during 1999, the Company would have to consider financial
         alternatives to enable it to adequately fund its operations and meet
         all of its obligations. Such alternatives would include reorganization
         or bankruptcy protection.

         There can be no assurances that the Company will be able to
         satisfactorily resolve all of these concerns in the near term. No
         assurances can be given that the Company will not continue to
         experience operational difficulties, will increase sales to its
         customers or that financing will be available if required or if
         available, whether such financing will be on terms satisfactory to the
         Company.

SUBSEQUENT EVENTS

         The Company has evaluated new strategies to direct its growth as the
         Y2K market did not develop to the extent forecasted. As part of the
         Company's new design, it signed a letter of intent on April 14, 1999,
         to acquire CSSC, Inc. and Coordinated Systems and Services Corp., two
         privately held companies. The transaction is scheduled to close on or
         before May 31, 1999, subject to due diligence procedures.

         CSSC, Inc. is a developer of computer systems presently marketed to the
         publishing industry and provides related maintenance and customized
         computer services. Coordinated Systems and Services Corp., a related
         company, operates a distribution facility marketing fulfillment
         services to CSSC, Inc.'s customers. The combined revenues for the two
         companies for calendar 1998 were $18.4 million and the companies were
         $465,000 profitable.



                                       7


<PAGE>   10



         The Company is planning to fund these acquisitions with a collateral
         loan of approximately $3,000,000 from a commercial lender. Several
         lenders have submitted loan proposals.

FORWARD-LOOKING STATEMENT CONTAINED IN THIS FORM 10-QSB RELATING TO THE ADEQUACY
OF WORKING CAPITAL ARE BASED ON CURRENT EXPECTATIONS THAT INVOLVE UNCERTAINTIES
AND RISK INCLUDING, BUT NOT LIMITED TO, MARKET CONDITIONS, THE INTRODUCTION OF
COMPETITIVE PRODUCTS, ECONOMIC CONDITIONS, AND THE TIMING OF ORDERS FOR
PRODUCTS. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM CURRENT
EXPECTATIONS. READERS ARE CAUTIONED NOT TO PUT UNDUE RELIANCE ON FORWARD-LOOKING
STATEMENTS. THE COMPANY DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE PUBLICLY
THESE FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE.

PART II. OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS

The Company has experienced late vendor payments and is currently looking to
extend terms. On March 22, 1999, Romac International, a successor to Source
Services corporation filed a civil action in the Superior Court of New Jersey
claiming Optical Systems, Inc. has defaulted on a debt owed to Romac for
services rendered by Romac in 1998 and that $139,067.83 plus interest, costs of
suit and legal fees remains past due and unpaid. The company has filed an
appropriate response with the Superior Court.


ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         EXHIBIT NO.         DOCUMENT
         27.2                Financial Data Schedule

(b)      REPORTS ON FORM 8-K. No reports on Form 8-K were filed  during the 
         three month period ended March 31, 1999.









                                       8

<PAGE>   11


                                   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.


                                              OPTICAL SYSTEMS, INC.



Date:  May 14, 1999                           BY:     /s/ Warren R. Zimmerman  
                                                    ----------------------------
                                                       Warren R. Zimmerman
                                                       President/CEO


                                              BY:     /s/ John F. Carlson  
                                                    ----------------------------
                                                       John F. Carlson
                                                       Vice President/CFO











                                       9