<PAGE>   1
                                   FORM 10-Q/A

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

        (Mark One)
(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
                                      --------------------------

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

        For the transition period from ______ to _______

                         Commission File Number 0-16343

                        OIS OPTICAL IMAGING SYSTEMS, INC.
   -------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                   38-2544320
    ------------------------------------------------------------------------
    (State or other jurisdiction of     (I.R.S. Employer Identification No.)
    incorporation or organization   


       47050 Five Mile Road Northville, Michigan                 48167
  ----------------------------------------------------------------------------
       (Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code     (734) 454-5560
                                                   ---------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes  X     No
                                   ----      ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of February 19, 1999:

Common Stock, $0.01 par value                               97,468,429
-----------------------------                               ----------
         Class                                           Number of Shares




<PAGE>   2



                         PART I - FINANCIAL INFORMATION
                         
Financial Statements

                        OIS OPTICAL IMAGING SYSTEMS, INC.

                             STATEMENT OF CHANGES IN
                         NET ASSETS (LIQUIDATION BASIS)
             FOR THE PERIOD FROM JUNE 30, 1998 TO SEPTEMBER 30, 1998
                                   (Unaudited)
<TABLE>
<S>                                                                                                       <C>          
Stockholders' deficit at June 30, 1998 (going concern
   historical cost basis)                                                                                 $(11,339,920)
Net loss from operations for the period from July 1, 1998 to
   September 18, 1998                                                                                       (4,624,961)
Change in deferred compensation from July 1, 1998 to September 18, 1998                                        248,012
                                                                                                          ------------
Stockholders' deficit at September 18, 1998 (going concern historical
   cost basis)                                                                                             (15,716,869)
Accrual of estimated closure costs anticipated from discontinuance of
  manufacturing operations on September 18, 1998, net of Tax Benefit
  of $1,826,000                                                                                             (3,802,234)
Recognition of local government subsidy due to discontinuance of manufacturing
  operations on September 18, 1998                                                                           2,775,000
                                                                                                          ------------

Net asset deficiency at September 30, 1998                                                                $(16,744,103)
                                                                                                          ============
</TABLE>



                                       -2-


<PAGE>   3



                        OIS OPTICAL IMAGING SYSTEMS, INC.
                 STATEMENTS OF OPERATIONS (GOING CONCERN BASIS)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                              For the Period from
                                              July 1, 1998 through        Three Months Ended
                                               September 18, 1998         September 30, 1997
                                               ------------------         ------------------
<S>                                               <C>                         <C>         
REVENUES
Display revenue                                   $  2,541,638                $  5,471,532
Engineering revenue                                       --                       384,179
Sensor and other revenue                               394,405                     623,017
                                                  ------------                ------------
TOTAL REVENUES                                       2,936,043                   6,478,728

COST OF SALES
Display                                              5,936,692                  10,170,131
Engineering                                               --                       858,467
Sensor and other                                     1,419,069                     659,743
                                                  ------------                ------------
TOTAL COST OF SALES                                  7,355,761                  11,688,341

  GROSS LOSS                                        (4,419,718)                 (5,209,613)

OPERATING EXPENSES
Internal research and development                      351,491                     365,067
Selling, general and administrative                  1,417,780                   1,472,228
                                                  ------------                ------------
TOTAL OPERATING EXPENSES                             1,769,271                   1,837,295

   OPERATING LOSS                                   (6,188,989)                 (7,046,908)

OTHER INCOME (EXPENSE)
Interest expense                                    (1,093,430)                 (1,098,926)
Interest income                                          6,158                       9,279
Licensing and royalties                                120,000                      77,204
Other                                                   25,300                      60,700
                                                  ------------                ------------
TOTAL OTHER INCOME (EXPENSE)                          (941,972)                   (951,743)
                                                  ------------                ------------

Loss before Income Tax benefit                    $ (7,130,961)               $ (7,998,651)
Income Tax benefit                                   2,506,000                   2,801,000
                                                  ------------                ------------

NET LOSS                                          $ (4,624,961)               $ (5,197,651)
                                                  ------------                ------------

Preferred stock dividends                            1,837,721                   1,484,845
                                                  ------------                ------------

NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS                                      $ (6,462,682)               $ (6,682,496)
                                                  ============                ============

NET LOSS PER COMMON SHARE (Note B)                $       (.07)               $       (.07)
                                                  ============                ============
</TABLE>


See notes to financial statements.

                                       -3-


<PAGE>   4



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                   STATEMENT OF NET ASSETS (LIQUIDATION BASIS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        September 30, 1998
                                                                        ------------------



ASSETS
<S>                                                                          <C>         
  Cash and cash equivalents                                                  $    185,319
  Accounts receivable                                                           2,681,848
  Inventory                                                                     9,311,727
  Prepaid assets                                                                  860,172
  Property and equipment                                                       21,000,000
  Deferred income taxes                                                         8,826,000
                                                                             ------------

     TOTAL ASSETS                                                              42,865,066
                                                                             ------------

LIABILITIES
  Accounts payable                                                                353,514
  Accrued liabilities                                                             479,581
  Accrued interest                                                              1,080,468
  Accrued closure costs                                                         5,216,000
  Income taxes payable to affiliate                                             1,229,606
  Bank debt (not revalued to liquidation value)                                39,250,000
  Subordinated note payable to affiliate (not revalued to
    liquidation value)                                                         12,000,000
                                                                             ------------

     TOTAL LIABILITIES                                                         59,609,169
                                                                             ------------

     NET ASSET DEFICIENCY                                                    $(16,744,103)
                                                                             ============
</TABLE>


See notes to financial statements.

                                       -4-


<PAGE>   5



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                                  BALANCE SHEET

                                     ASSETS
                              (GOING CONCERN BASIS)
<TABLE>
<CAPTION>

                                                                                   June 30,1998
                                                                                 ----------------
CURRENT ASSETS
<S>                                                                                   <C>       
  Cash and cash equivalents                                                           $1,078,567
  Accounts receivable
    (Net of reserve for doubtful accounts of
     $60,000)                                                                          4,040,661
  Inventories                                                                          9,411,086
  Income tax receivable from affiliate                                                 5,100,756
  Prepaid expenses and other current assets                                              771,105
                                                                                     -----------

     TOTAL CURRENT ASSETS                                                             20,402,175

PROPERTY AND EQUIPMENT
  Land                                                                                 3,000,000
  Building                                                                            11,100,000
  Machinery and other equipment                                                        6,900,000
                                                                                     -----------

  TOTAL PROPERTY AND EQUIPMENT                                                        21,000,000


Less accumulated depreciation                                                               --


  TOTAL PROPERTY AND EQUIPMENT, NET                                                   21,000,000
                                                                                     -----------

  DEFERRED INCOME TAXES                                                                7,000,000
                                                                                     -----------

  TOTAL ASSETS                                                                       $48,402,175
                                                                                     ===========
</TABLE>



See notes to financial statements.

                                       -5-


<PAGE>   6



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                                  BALANCE SHEET

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                              (GOING CONCERN BASIS)

<TABLE>
<CAPTION>

                                                                                             June 30,1998
                                                                                          -------------------
CURRENT LIABILITIES
<S>                                                                                           <C>          
  Subordinated note payable to affiliate                                                      $  12,000,000
  Current installment on long-term debt                                                          42,000,000
  Accounts payable                                                                                1,569,244
  Accrued interest                                                                                  997,129
  Other accrued liabilities                                                                         375,722
                                                                                              -------------

     TOTAL CURRENT LIABILITIES                                                                   56,942,095

LOCAL GOVERNMENT SUBSIDY                                                                          2,800,000
                                                                                              -------------

     TOTAL LIABILITIES                                                                           59,742,095

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred Stock, par value $0.01 per share:
    Series B, 8% cumulative, non-convertible and voting
      Authorized - 100,000 shares
       91,137 issued and outstanding                                                                    911
 Common Stock, par value $0.01 per  share:
      Authorized - 125,000,000 shares
      97,468,429 issued and outstanding                                                             974,684
  Additional paid-in capital                                                                    159,581,155
  Accumulated deficit                                                                          (171,458,726)
  Deferred compensation                                                                            (437,944)
                                                                                              -------------

     TOTAL STOCKHOLDERS' DEFICIT                                                                (11,339,920)
                                                                                              -------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                              $  48,402,175
                                                                                              =============
</TABLE>


See notes to financial statements.

                                       -6-


<PAGE>   7



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                              (GOING CONCERN BASIS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                For the Period from
                                                                                July 1, 1998 through          Three Months Ended
                                                                                 September 18, 1998           September 30, 1997   
                                                                               ----------------------       ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>                             <C>         
  Net loss                                                                        $(4,624,961)                    $(5,197,651)
  Adjustments to reconcile net loss to net cash used in
  operating activities:
    Depreciation and amortization of local government subsidy                         (25,000)                      1,550,000
    Deferred compensation expense                                                     248,012                         246,666
  Impact on cash flows from changes in assets and liabilities:
    Receivables                                                                     6,349,574                         (21,066)
    Prepaid expenses and other assets                                                (176,722)                       (120,301)
    Inventory                                                                          99,359                        (725,322)
    Accounts payable and accrued liabilities                                          201,074                         (81,367)

    Deferred revenues                                                                    --                          (112,204)
                                                                                  -----------                     -----------

NET CASH PROVIDED BY (USED IN) OPERATING                                            2,071,336                      (4,461,245)
 ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                               (214,584)                       (352,863)
                                                                                  -----------                     -----------

    NET CASH USED IN INVESTING ACTIVITIES                                            (214,584)                       (352,863)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long term debt                                             (2,750,000)                           --
  Net proceeds from issuance of debt and notes                                           --                         6,000,000
                                                                                  -----------                     -----------
                                                                                  

     NET CASH PROVIDED BY (USED IN)
       FINANCING ACTIVITIES                                                        (2,750,000)                      6,000,000
                                                                                  -----------                     -----------

DECREASE IN CASH AND CASH EQUIVALENTS                                                (893,248)                      1,185,892

NET CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                                               1,078,567                         960,042
                                                                                  -----------                     -----------

NET CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                                                   $   185,319                     $ 2,145,934
                                                                                  ===========                     ===========
</TABLE>


See notes to financial statements.

                                       -7-


<PAGE>   8



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                            STATEMENTS OF CASH FLOWS
                              (GOING CONCERN BASIS)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                               For the Period from
                                               July 1, 1998 through        Three Months Ended
                                                September 18, 1998         September 30, 1997
                                              ----------------------      ---------------------

SUPPLEMENTAL DISCLOSURE OF
    CASH FLOW INFORMATION:

<S>                                                  <C>                         <C>       
  Cash paid for interest                             $1,010,091                  $1,309,631



   Cash equivalents:
   Cash equivalents consist of investments in short-term, highly-liquid securities having maturity of 
   three months or less, made as a part of OIS' cash management activity.

<CAPTION>


SUPPLEMENTAL SCHEDULE OF NONCASH
  TRANSACTIONS:

                                                Three Months Ended 
                                                September 30, 1997
                                               ---------------------

<S>                                                  <C>     
Adjust deferred compensation                         $146,470
</TABLE>


See statements of cash flows.

                                       -8-


<PAGE>   9



                        OIS OPTICAL IMAGING SYSTEMS, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - Financial Statements Presentation

The condensed financial statements included herein have been prepared by OIS
Optical Imaging Systems, Inc. ("OIS" or "the Company") without audit pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's latest annual report on Form 10-K. On
September 18, 1998 the Company changed its basis of accounting from the going
concern historical cost basis to the liquidation basis of accounting. The
primary differences between these methods are discussed below.

During fiscal 1998, the Company, with the encouragement and cooperation of
Guardian Industries Corp. ("Guardian"), had been exploring a full range of
strategic alternatives. Guardian, through its majority-owned subsidiary, GD
Investments Corp. ("GDIC"), is the Company's majority stockholder. In February
1998, the Company retained an investment banking firm and began seeking one or
more investors with a strategic interest in providing long term funding to the
Company. The results of this search were not successful in securing additional
financing or a buyer for the Company. In September 1998, in light of the
Company's continued operating losses and the failure of this strategic
investment process, Guardian informed the Company that it would not make any
further investments in the Company. As a result of these developments effective
September 18, 1998, the Company ceased manufacturing operations at its
Northville facility in accordance with a plant shutdown plan approved by its
Board of Directors. In addition, the Company canceled substantially all of its
outstanding contracts and laid off substantially all of its employees.

On September 28, 1998, the U.S. Department of Commerce ("Department of
Commerce") issued a directive to the Company requiring that it continue to
produce and deliver active matrix liquid crystal displays ("AMLCDs") pursuant to
certain contracts between the Company and certain of its customers which were
allegedly subject to, and rated under, the Defense Priorities and Allocations
System ("DPAS") regulations (15 C.F.R. Part 700), which regulations govern the
performance of certain contracts for the supply of goods in connection with U.S.
defense programs. In response to the directive, the Company advised the
Department of Commerce that the Company believes the Department of Commerce's
directive is not authorized by applicable law and is based on incorrect factual
premises, particularly concerning the existence of any remaining obligations
under any DPAS rated contracts. In addition, the Company believes that, given
its present financial difficulties and its reduction of employees at its
Northville manufacturing facility, compliance with the Department of Commerce's
directive would not be in the best interests of its creditors and stockholders.
As a result of discussions between the parties, the Department of Commerce and
the Company entered into a standstill agreement originally effective from
October 14, 1998, through November 14, 1998 ("Standstill Agreement"), which


                                      -9-

<PAGE>   10


was extended to November 18, 1998 by the mutual agreement of the parties. During
the term of the Standstill Agreement, the Department of Commerce agreed that it
would not initiate action to enforce the directive, and the Company agreed that
it would not sell the Northville facility or certain finished goods and
work-in-process inventory without the consent of the Department of Commerce. The
Company is not aware of any plans by the Department of Commerce to seek
enforcement of the directive after the term of the Standstill Agreement.
However, if the Department of Commerce seeks to enforce the directive, the
Company intends to advance all factually and legally supported positions in
opposition to the directive. Successful enforcement of the directive could have
a material adverse effect on the Company's ability to conduct an orderly
liquidation of its assets if it so desired.

The Company is in violation of certain covenants contained in its credit
agreement with NBD Bank N.A. and Bank of America NT&SA. Certain of the
violations have been waived by the lending institutions but the lending
institutions have the right to demand the repayment of all amounts outstanding.
In addition, under the terms of the credit agreement the lending institutions
have the right to demand repayment of amounts due based on the lending
institutions' discretion as to whether a material adverse change has occurred in
the Company's business. It is probable that the Company will be unable to meet
the ongoing covenants in the credit agreement during fiscal 1999. The Company
anticipates that it will be able to obtain waivers of these violations as they
occur and that the lending institutions will not exercise their demand rights.

Since October 9, 1998, several of the Company's former customers have initiated
claims against the Company in Michigan state court seeking damages for breach of
contract. In addition, certain of these customers sought preliminary injunctive
relief directing the Company to continue manufacturing operations. After a
hearing on October 16, 1998 concerning the preliminary injunction, the court
declined to order the Company to resume manufacturing operations or to take any
steps to complete any work-in-process but did order the Company to deliver
certain finished goods to these former customers and to refrain from selling
certain work-in-process inventory to third parties. The Company has complied
with the court order. The Company is in the process of completing the filing of
its answers to the complaints relating to the foregoing actions. The Company
believes that it has valid defenses to all such litigation pending against it
and intends to vigorously defend the claims. The Company does not expect that
the court order or the pending litigation will have a materially adverse effect
on the Company's ability to conduct an orderly liquidation of its assets in the
future. While the Company is unable to make a meaningful estimate of the amount
or range of loss that could result from an unfavorable outcome of this
litigation, the Company believes that, regardless of the outcome of this
litigation, its common stockholders will not receive any proceeds from a
liquidation of the Company.

On November 11, 1998, the Company's Board of Directors approved a Plan of
Liquidation and Dissolution, which the Board of Directors will submit to the
stockholders of the Company for their approval. Due to the existing debt and
other obligations of the Company, the Company does not believe that the common
stockholders of the Company will receive any proceeds from the liquidation.

Although Guardian will not make any additional investments in the Company, the
Company anticipates that funds received under a tax sharing agreement entered
into with Guardian and through the disposition of its assets will be sufficient
to allow the Company to implement the 


                                      -10-

<PAGE>   11


shutdown plan and pay its debts as they become due.

As a result of the contemplated liquidation discussed above, the Company changed
its method of accounting from the going concern historical cost basis to the
liquidation basis of accounting effective September 18, 1998. The going concern
historical cost basis of accounting contemplates the realization of assets and
liabilities in the ordinary course of business. The liquidation basis of
accounting requires that assets and liabilities be valued at their estimated
liquidation value. Assets and liabilities which have not been revalued to
liquidation value are disclosed as such on the face of the financial statements.
In addition, under the liquidation basis of accounting, gains and losses from
dispositions of assets are displayed as net amounts versus gross revenue and
expenses under the going concern historical cost basis of accounting. The
primary financial statements required under the liquidation basis of accounting
are a Statement of Net Assets (Deficiency) and a Statement of Changes in Net
Assets (Deficiency). 

Under the liquidation basis of accounting, the Company believes that the going
concern historical cost basis of cash, inventory and property and equipment will
be realized and therefore determined that no adjustment to the carrying value
was necessary. Certain accounts receivable from employees, totaling
approximately $110,000, were deemed uncollectable due to the lay off of the
employees and were written off to adjust the going concern historical costs
basis of accounts receivable to liquidation value. Prepaid assets and deferred
income taxes were valued at their estimated cash liquidation value. Accordingly,
the Company wrote off approximately $90,000 in prepaid assets as a result of the
change to the liquidation basis of accounting. The Company recorded deferred
income taxes of $1,826,000 due to the accrual of closure costs discussed below
(See Note B). In addition, the Company wrote off approximately $214,000 in
construction in progress which was not expected to be completed due to the
probable liquidation of the Company. The Company anticipates that accounts
payable, accrued liabilities, accrued interest and income taxes payable to
affiliate will be settled at there going concern basis carrying values and
accordingly they have not been adjusted upon the change to the liquidation basis
of accounting. Bank debt and subordinated note payable to affiliate have not
been revalued to liquidation basis primarily due to uncertainties as to when
they would be settled based on the ultimate disposal of the Company's assets.
The Company's accounting policies under the liquidation basis of accounting
which differ from those under the going concern basis of accounting are
discussed in Note B.

In the opinion of the Company, the accompanying unaudited condensed financial
statements include all adjustments required to present fairly its net assets as
of September 30, 1998 (liquidation basis), changes in net assets from June 30,
1998 to September 30, 1998 (liquidation basis), the results of operations from
July 1, 1998 to September 18, 1998 (going concern basis) and for the three
months ended September 30, 1997 (going concern basis) and cash flows for the
period from July 1, 1998 to September 18, 1998 (going concern basis) and for the
three months ended September 30, 1997 (going concern basis).

NOTE B - Significant Liquidation Basis of Accounting Policies

Accounts Receivable - Since the cessation of manufacturing operations on
September 18, 1998, the Company has put most customers on a cash on delivery
basis.

Accrued Closure Costs - Accrued closure costs represent costs to be incurred by
the Company in implementing the shutdown plan approved by the Board of Directors
and in preparing the facility for sale (see Note A). The Company has accrued all
reasonably estimatable costs directly associated with implementing the shutdown
plan and in preparing for the sale of the 


                                      -11-

<PAGE>   12



facility. The accrual consists primarily of employee payroll and severance
costs, totaling approximately $3,900,000 and estimated operating expenses during
shutdown. Estimated operating expenses during the shutdown consist primarily of
insurance expense, totaling $286,000, utilities expenses totaling $658,000 and
other operating expenses totaling $372,000. Employee payroll and severance costs
were estimated based on known payroll and severance commitments, including
applicable fringe benefits, through approximately June 30, 1999, the date upon
which most of the Company's current employees' employment agreements terminate.
Operating expenses were estimated based on historical amounts, adjusted for the
reduced activity of the Company during the liquidation period, which are
expected to be incurred through June 30, 1999 to maintain the facility as
required by the Company's debt and other agreements. Although no timetable has
been formally established, it is expected that the liquidation will be
substantially complete by June 30, 1999. The Company has not accrued costs which
could vary significantly based on the timing of the proposed liquidation or are
not reasonably estimatable. The most significant of these costs are interest and
legal expenses. This accrual represents the Company's estimate of anticipated
closure costs, however, actual costs incurred could differ materially from this
estimate.

Professional Fees - Legal and other professional fees incurred in connection
with the shutdown, liquidation or in the prosecution or defense of any lawsuits
are expensed as incurred.

Interest Expenses - Interest costs are expensed as incurred.

NOTE C - Net Loss Per Common Share

Basic net loss per common share, which equals diluted loss per share, is based
on the weighted average number of shares of OIS Common Stock outstanding during
the period. The number of shares used in the computation for the period from
July 1, 1998 to September 18, 1998 and for the three months ended September 30,
1997 were 97,466,869 and 97,467,920, respectively. For all periods presented,
all Common Stock equivalents are antidilutive and therefore have not been
considered in the calculation of diluted net loss per common share.


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

SUMMARY

         OIS Optical Imaging Systems, Inc.'s ("OIS" or "the Company") operating
results for the first quarter of fiscal 1999 continued to reflect substantial
operating losses. The Company's cost of sales continued to exceed revenues due
to the relatively high cost of sales driven by the Company's overhead, scrap
rates and depreciation expense for the period. While the Company worked to
improve production yields and volumes, the Company was unable to increase its
production and sales volumes enough to significantly reduce the incremental cost
of sales.

         As disclosed in its recent reports, OIS, with the encouragement and
cooperation of Guardian, had been exploring a full range of strategic
alternatives throughout fiscal 1998. Guardian, through its majority-owned
subsidiary, GD Investments Corp. ("GDIC"), is the majority stockholder of the
Company. In February 1998, OIS retained an investment banking firm and

                                      -12-

<PAGE>   13

began seeking one or more investors with a strategic interest in providing long
term funding to OIS. During this process numerous companies in the avionics and
electronics industries, among others, were contacted and presented with
information about OIS. In August and September 1998, OIS and Guardian also
attempted to interest a group of OIS's key customers in acquiring control of
OIS. In September 1998, in light of the Company's continued operating losses and
the failure of this strategic investment process, Guardian informed the Company
that it would not make any further investments in the Company. As a result of
these developments, effective as of September 18, 1998, OIS ceased manufacturing
operations in its Northville facility in accordance with a plant shutdown plan
approved by its board of directors. The Company did not conduct significant
operations for the period from September 18, 1998 to September 30, 1998.
Accordingly, the Company anticipates that it will generate little or no future
revenues, except in connection with the liquidation of its assets.

         The Company is in violation of certain covenants contained in its
credit agreement with NBD Bank N.A. and Bank of America NT&SA. Certain of the
violations have been waived by the lending institutions but the lending
institutions have the right to demand the repayment of all amounts outstanding.
In addition, under the terms of the credit agreement the lending institutions
have the right to demand repayment of amounts due based on the lending
institutions' discretion as to whether a material adverse change has occurred in
the Company's business. It is probable that the Company will be unable to meet
the ongoing covenants in the credit agreement during fiscal 1999. The Company
believes that it will be able to obtain waivers of these violations as they
occur and that, if so, the lending institutions will not exercise their demand
rights.

         On November 11, 1998, OIS's board of directors authorized, subject to
stockholder approval, the orderly liquidation of the Company's assets pursuant
to the Company's Plan of Liquidation and Dissolution (the "Plan"). The Plan 
provides that, if the requisite stockholder approval is received (such time of
approval deemed the "Effective Date"), the officers and directors of the Company
will initiate the complete liquidation and subsequent dissolution of the
Company. After the Effective Date, OIS will not engage in any business
activities except for the purpose of preserving the value of its assets,
prosecuting and defending suits by or against OIS, adjusting and winding up its
business and affairs, selling and liquidating its properties and assets,
including its intellectual property and other intangible assets, paying its
creditors and making distributions to stockholders, if any, in accordance with
the Plan.

         Under the Plan, OIS will sell, transfer, or otherwise dispose of all of
its property and assets, including its intellectual property and other
intangible assets, to the extent, for such consideration and upon such terms and
conditions as its board of directors deems expedient and in the best interest of
OIS, its creditors and its stockholders. Prior to making any distributions, if
any, to its stockholders, OIS will pay or make reasonable provisions to pay all
of its claims and obligations, including all contingent, conditional or
unmatured claims known to OIS. As part of the benefits granted thereto, GDIC, 
the holder of the outstanding shares of the Company's Series B Cumulative
Preferred Stock, par value $.01 per share, has the right to a preferential
distribution of the assets of the Company in the event of a liquidation (the
"Liquidation Preference"). If the Company's stockholders approve the Plan, in
addition to paying the debts of its creditors, the Company will be obligated to
distribute the Liquidation Preference to GDIC prior to any distributions to its 
common stockholders.

                                      -13-

<PAGE>   14



         Subject to its stockholders' approval of the Plan, the Company has been
and will continue focusing its efforts on locating prospective buyers primarily
interested in acquiring all or substantially all of the tangible assets of the
Company. In anticipation of the possibility that it will be unable to effect a
single transaction sale, the Company has been and will continue preparing for a
liquidation involving separate multiple transactions by identifying prospective
buyers for much of the Company's equipment and soliciting such buyers to access
levels of interest. Although no timetable has been formally established the 
Company anticipates that the liquidation of its assets will be substantially 
complete by June 30, 1999.

         Once the liquidation of OIS's property and assets is substantially
completed, or at such earlier time as determined by its board of directors, the
officers of the Company will promptly execute and file a certification of
dissolution with the Secretary of State of the State of Delaware. Because of the
existing debt and other obligations of OIS, OIS does not believe that its common
stockholders will receive any proceeds from a liquidation.

         As a result of the contemplated liquidation discussed above, the
Company changed its method of accounting from the going concern historical cost
basis to the liquidation basis of accounting effective September 18, 1998. The
going concern historical cost basis of accounting contemplates the realization
of assets and liabilities in the ordinary course of business. The liquidation
basis of accounting requires that assets and liabilities be valued at their
estimated liquidation value. Assets and liabilities which have not been revalued
to liquidation value are disclosed as such on the face of the financial
statements. In addition, under the liquidation basis of accounting, gains and 
losses from dispositions of assets are displayed as net amounts versus gross 
revenue and expenses under the going concern historical cost basis of 
accounting.  The primary financial statements required under the liquidation
basis of accounting are a Statement of Net Assets (Deficiency) and a Statement
of Changes in Net Assets (Deficiency). 

         Under the liquidation basis of accounting, the Company believes that
the going concern historical cost basis of cash, inventory and property and
equipment will be realized and therefore determined that no adjustment to the
carrying value was necessary. Certain accounts receivable from employees,
totaling approximately $110,000, were deemed uncollectable due to the lay off of
the employees and were written off to adjust the going concern historical costs
basis of accounts receivable to liquidation value. Prepaid assets and deferred
income taxes were valued at their estimated cash liquidation value. Accordingly,
the Company wrote off approximately $90,000 in prepaid assets as a result of the
change to the liquidation basis of accounting. The Company recorded deferred
income taxes of $1,826,000 due to the accrual of certain closure costs. In
addition, the Company wrote off approximately $214,000 in construction in
progress which was not expected to be completed due to the probable liquidation
of the Company. The Company anticipates that accounts payable, accrued
liabilities, accrued interest and income taxes payable to affiliate will be
settled at there going concern basis carrying values and accordingly they have
not been adjusted upon the change to the liquidation basis of accounting. Bank
debt and subordinated note payable to affiliate have not been revalued to
liquidation basis primarily due to uncertainties as to when they would be
settled based on the ultimate disposal of the Company's assets.

         Accrued closure costs represent costs to be incurred by the Company in
implementing the shutdown plan approved by its board of directors and in
preparing its Northville facility for sale. The Company has accrued all
reasonably estimatable costs directly associated with implementing the shutdown
plan and in preparing for the sale of the facility. The accrual consists
primarily of employee payroll and severance costs, totaling approximately
$3,900,000 and estimated operating expenses during shutdown. Estimated operating
expenses during the shutdown consist primarily of insurance expense, totaling
$286,000, utilities expenses totaling

                                      -14-

<PAGE>   15
$658,000 and other operating expenses totaling $372,000. Employee payroll and
severance costs were estimated based on known payroll and severance commitments,
including applicable fringe benefits, through approximately June 30, 1999, the
date upon which most of the Company's current employees' employment agreements
terminate. Operating expenses were estimated based on historical amounts,
adjusted for the reduced activity of the Company during the dissolution period,
which are expected to be incurred through June 30, 1999 to maintain the facility
as required by the Company's debt and other agreements. Although no timetable
has been formally established, it is expected that the liquidation will be
substantially complete by June 30, 1999. The Company has not accrued costs which
could vary significantly based on the timing of the proposed liquidation or are
not reasonably estimatable. The most significant of these costs are interest and
legal expenses. This accrual represents the Company's estimate of anticipated
closure costs, however, actual costs incurred could differ materially from this
estimate.  The Company's accounting policies under the liquidation basis of
accounting which differ from those under the going concern basis of accounting
are discussed in Note B.


         Although Guardian will not make any additional investments in OIS, OIS
anticipates that funds received under a tax sharing agreement entered into with
Guardian (the "Tax Sharing Agreement") and through the disposition of its assets
will be sufficient to allow OIS to implement the shutdown plan and liquidation
and pay its debts as they become due.


             PERIOD FROM JULY 1, 1998 TO SEPTEMBER 18, 1998 AND THE
                      THREE MONTHS ENDED SEPTEMBER 30, 1997

RESULTS OF OPERATIONS

Revenues

         Total revenues for the period from July 1, 1998 to September 18, 1998
(the "Fiscal 1999 First Quarter Operating Period") of approximately $2.9 million
were 55% lower than total revenues for the same period in the preceding fiscal
year of approximately $6.5 million. This decrease was attributable to the
cessation of operations on September 18, 1998.

         Revenue from the sale of displays and sensors for the Fiscal 1999 First
Quarter Operating Period of approximately $2.9 million were 52% lower than
revenues from the sale of displays and sensors for the first quarter of fiscal
1998 of approximately $6.1 million. As previously discussed, this decrease was
partially attributable to the cessation of manufacturing on September 18, 1998.
As a result of the shutdown, the Company was not able to obtain normal levels of
shipments during September 1998. Additionally, revenues for the first quarter of
fiscal 1997 were above average due to the fact that the Company was still trying
to fulfill the backlog of orders which existed during the end of calendar 1996
from operations during fiscal 1996.

         The Company derived no revenues from engineering development agreements
during the Fiscal 1999 First Quarter Operating Period, a decrease of
approximately $384,179 in revenues from the first quarter of fiscal 1998. This
decrease was due to the Company's efforts to continue its strategy of pursuing
the sale of standard active matrix liquid crystal display and sensor products
and minimizing engineering work.


                                      -15-

<PAGE>   16

Cost of Sales

         Cost of sales for the Fiscal 1999 First Quarter Operating Period of
approximately $7.4 million was 37% lower than cost of sales for the first
quarter of fiscal 1998 of $11.7 due to the lower revenues and the absence of
depreciation expense caused by the write down of assets on June 30, 1998 to net
realizable value. Cost of sales as a percentage of revenue increased
substantially to 251% for the first quarter of fiscal 1999 from 180% for the
same period in the preceding fiscal year. This increase was attributable to the
significant decrease in revenue due to the cessation of manufacturing on
September 18, 1998.

         Direct labor and material for the Fiscal 1999 First Quarter Operating
Period decreased approximately $2.5 million when compared to the first quarter
of fiscal 1998. This decrease was due to the decreased plant activity. However,
direct material and direct labor, on a per unit basis, decreased approximately
8% during the Fiscal 1999 First Quarter Operating Period when compared to the
same period during fiscal 1998. This decrease was attributable mainly to higher
product yields along with improved manufacturing processes.

         Overhead for the Fiscal 1999 First Quarter Operating Period decreased
approximately $181,000 when compared to the first quarter of fiscal 1998.
Processing chemical usage decreased substantially due to a combination of
improved processes, fewer experiments performed throughout the quarter and
twelve days of plant shutdown. Equipment uptime also improved, which resulted in
a decrease in repairs and maintenance costs.

Other Costs

         The Company's operating expenses, which consist of internal research
and development and selling, general and administrative expenses, decreased
approximately $68,000 or 4% during the First 1999 First Quarter Operating Period
when compared to the first quarter of fiscal 1998. This decrease resulted
principally from the timing of expenses and not from any known trends.

         Other income and expenses, which consist mainly of interest expense,
decreased approximately $10,000 or 1% during Fiscal 1999 First Quarter Operating
Period when compared to the same period during the preceding fiscal year.

Changes in Net Asset Deficiency

         The change in net asset deficiency of approximately $1.0 million was
due to the accrual of estimated closure costs of approximately $3.8 million, net
of related tax benefit of approximately $1.8 million and the recognition of the
local government subsidy of approximately $2.8 million. Accrued closure costs
represent costs to be incurred by the Company in implementing the shutdown plan
approved by the board of directors and in preparing the Company's Northville
facility for sale. The Company has accrued all reasonably estimatable costs
directly associated with implementing the shutdown plan and in preparing for the
sale of its Northville facility. The accrual consists primarily of employee
payroll and severance costs, estimated operating expenses during the shutdown
and cost to cancel certain leases. The Company has not accrued costs which could
vary significantly based on the timing of the proposed liquidation or are not
reasonably estimatable. The most significant of these costs are interest and
legal expenses. This accrual represents the 


                                      -16-

<PAGE>   17



Company's estimate of anticipated closure costs, however, actual costs incurred
could differ materially from this estimate. The local government subsidy had
been amortized over 30 years. As the Company has met all requirements of the
local government subsidy, and will no longer have any operations, it has been
reversed as of September 18, 1998.


LIQUIDITY AND CAPITAL RESOURCES

Liquidity

         On September 17, 1998 Guardian, the Company's principal source of
funding, informed OIS that, in light of the Company's continued operating losses
and the failure of the strategic investment process, Guardian would not make any
further investments in the Company to fund operations. As a result, effective
September 18, 1998, OIS ceased manufacturing operations in accordance with a
plant shutdown plan approved by its board of directors. The Company's cash and
cash equivalents at September 30, 1998 were $185,319.

         OIS's board of directors has, subject to stockholder approval,
authorized the orderly liquidation of the Company's assets pursuant to the plan
of liquidation. Because of the existing debt and other obligations of OIS, OIS
does not believe that its common stockholders will receive any proceeds from
liquidation. However, OIS currently anticipates that funds received under the
Tax Sharing Agreement and through the disposition of its assets will be
sufficient to allow OIS to implement the shutdown plan and liquidation and pay
its debts as they become due.

         While the Company's cash had decreased at September 30, 1998, to
approximately $0.2 million from approximately $1.1 million at June 30, 1998, the
Company expects to meet its obligations through collection of accounts
receivable, the sale of both finished and partially completed inventory on hand,
the sale of raw materials, supplies, fixtures, equipment and the facility and
amounts received under the Tax Sharing Agreement.


Capital Resources

         As a result of the discontinuation of its operations, the Company's
sole source of funds will be from the disposition of the assets described above.

         The Company has exhausted its $52.5 million commercial credit facility
with NBD Bank N.A. and Bank of America NT&SA. In addition, on March 30, 1998,
the Company granted those banks a first priority lien and security interest in
all tangible and intangible assets of the Company, including intellectual
property, to secure repayment of the commercial credit facility. The credit
agreement governing the commercial credit facility contains a number of
financial and other covenants. The Company is not currently in compliance with
all of the financial covenants contained in the credit agreement. Although the
banks have waived certain of these violations and have not declared a default
under the credit agreement, the banks have not provided waivers for all of these
violations. The banks have the right to demand repayment of amounts outstanding
as long as the Company has not cured the event of default or obtained a waiver
from the banks or, if in the banks discretion, a material adverse change has
occurred with respect to the Company's business. 



                                      -17-


<PAGE>   18



It is probable that the Company will not be able to meet the ongoing covenants
in its credit agreement during fiscal 1999. If the Company is unable to meet
these covenant requirements and is unable to secure a waiver from the banks, the
banks have the right to demand the immediate repayment of amounts outstanding.
Due to these violations, amounts outstanding under the credit agreement have
been classified as current in the Company's balance sheet as of June 30, 1998.
During fiscal 1998, the Company repaid a total of $10.5 million of principal on
its commercial credit facility, of which $5.5 million was originally due on
December 31, 1997, but the Company obtained a waiver from the banks to delay
such payment until January 30, 1998. The Company funded these principal
repayments through the receipt of a $6.0 million payment from Guardian on
account of the Tax Sharing Agreement and the sale of 4,500 shares of the
Company's Series B Cumulative Preferred Stock, par value $.01 per share, at a
price of $1,000 per share to GDIC. On September 30, 1998, the Company made an
additional principal repayment of $2.75 million which was funded through receipt
of a payment from Guardian under the Tax Sharing Agreement. The commercial
credit facility matures in December 1999, and quarterly principal installments
are due as follows: $2.75 million on December 31, 1998; $3.38 million on each of
March 31, 1999 and June 30, 1999; $3.88 million on September 30, 1999; and
$25.88 million on December 31, 1999.

FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q contains statements that are not
based on historical fact and are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Among other things,
they regard the Company's liquidity, financial condition, operational matters
and certain strategic initiatives and alternatives and their potential outcomes.
Words or phrases denoting the anticipated results of future events, such as
"anticipate," "believe," "estimate," " expects," "may," "not considered likely,"
"are expected to," "will continue," "project," and similar expressions that
denote uncertainty are intended to identify such forward-looking statements.
Additionally, from time to time, the Company or its representatives have made or
may make oral or written forward-looking statements. Such forward-looking
statements may be included in various filings made by the Company with the
Securities and Exchange Commission, or in press releases or oral statements made
by or with the approval of an authorized executive officer of the Company. The
Company's actual results, performance or achievements could differ materially
from the results expressed in, or implied by, such forward-looking statements:
(1) as a result of risks and uncertainties identified in the Company's publicly
filed reports; (2) as a result of risks associated with the implementation of
its manufacturing facility shutdown and its Plan of Liquidation described
herein; (3) as a result of factors over which the Company has no control,
including the overall strength of the avionics display market; (4) as a result 
of the value that potential buyers may place on the Company's assets; or (5) if
the factors on which the Company's conclusions are based do not conform to the
Company's expectations.


                                      -18-


<PAGE>   19



                           PART II - OTHER INFORMATION

Item 4.           Submission of Matters to a Vote of Security Holders

                  None.

Item 5.           Other Information

                  None.

Item 6.           Exhibits and Reports on Form 8-K

                  A.     EXHIBITS

                         Exhibit 2.  Plan of Liquidation and Dissolution of OIS
                  Optical Imaging Systems, Inc. (Filed as Exhibit 2 to the
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  June 30, 1998 and incorporated herein by reference).

                         Exhibit 27. Financial Data Schedule (EDGAR version 
                  only).

                         Exhibit 99.  Standstill Agreement between the Company
                  and the U.S. Department of Commerce effective as of October
                  14, 1998 (Filed as Exhibit 99 to the Company's Annual Report
                  on Form 10-K for the fiscal year ended June 30, 1998 and
                  incorporated herein by reference).

                  B.     REPORTS ON FORM 8-K

                         Report on Form 8-K filed by the Company on November 27,
                         1998.
                         Report on Form 8-K filed by the Company on October 13,
                         1998.
                         Report on Form 8-K filed by the Company on September 
                         22, 1998.
                         Report on Form 8-K filed by the Company on September
                         11, 1998.




                                      -19-


<PAGE>   20


                                   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.


                                     OIS Optical Imaging Systems, Inc.
                                     (Registrant)





Date:  February 22, 1999            By: /s/ Charles C. Wilson
                                         --------------------------
                                         Charles C. Wilson
                                         President and Chief Financial Officer
                                         (Principal Financial and
                                         Accounting Officer)



                                       -20-
<PAGE>   21
                                 Exhibit Index
                                 -------------

<TABLE>
<CAPTION>
Exhibit No.                       Description
------------                      -----------
<S>                               <C>
     27                           Financial Data Schedule
</TABLE>