<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                  FORM 10-QSB

     [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                      or

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                        COMMISSION FILE NUMBER: 0-11933


                                  AXCESS INC.
       (Exact name of small business issuer as specified in its charter)

          Delaware                                              85-0294536
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)


                             3208 Commander Drive
                            Carrollton, Texas 75006
                                (972) 407-6080
                   (Address, including telephone number and
                  area code, of principal executive offices)

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

Number of shares of common stock outstanding on May 01, 2001: 3,489,062. Number
of shares of non-voting common stock outstanding on May 01, 2001: 112,492.

Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>

                                  AXCESS INC.
                                     INDEX


<TABLE>
<CAPTION>
<S>                                                                                       <C>
                                                                                          Page
PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements:

             Balance Sheets at March 31, 2001 and December 31, 2000.......................   1

             Statements of Operations for the Three Months ended March 31, 2001 and 2000..   2

             Statements of Cash Flows for the Three Months ended March 31, 2001 and 2000..   3

             Notes to Financial Statements................................................   4

     Item 2. Management's Discussion and Analysis or Plan of Operation....................   7

PART II. OTHER INFORMATION

     Item 1. Legal Proceedings............................................................  10

     Item 2. Changes in Securities........................................................  10

     Item 3. Defaults Upon Senior Securities..............................................  10

     Item 4. Submission of Matters to a Vote of Security Holders..........................  10

     Item 5. Other Information............................................................  10

     Item 6. Exhibits and Reports on Form 8-K.............................................  10

 SIGNATURES...............................................................................  11
</TABLE>
<PAGE>

PART 1. FINANCIAL INFORMATION
 Item 1. Financial Statements

                                   AXCESS INC.
                           CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                             March 31,         December 31,
ASSETS                                                                         2001               2000
                                                                           -------------      -------------
<S>                                                                        <C>                <C>

Current assets:
  Cash and cash equivalents                                                $      68,552      $     454,374
  Accounts receivable - trade, net of allowance for doubtful accounts            391,264            209,793
  Inventory                                                                    1,534,409          1,245,003
  Prepaid expenses and other                                                   1,111,871          1,091,435
                                                                           -------------      -------------

     Total current assets                                                      3,106,096          3,000,605

Property, plant and equipment, net                                               492,666            493,729
Long-term note receivable - stockholder                                        3,902,375          3,902,375
Intellectual property, net                                                     4,492,985          4,792,154
Other assets                                                                      34,716             34,716
                                                                           -------------      -------------

     Total assets                                                          $  12,028,838      $  12,223,579
                                                                           =============      =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabiliites:
  Accounts payable                                                         $   1,374,524      $   1,079,154
  Other accrued liabilities                                                      907,860            824,287
  Notes payable:
     Stockholders                                                                996,106          1,071,106
     Other                                                                        21,925                  -
  Dividends payable                                                              119,605              3,680
                                                                           -------------      -------------
     Total current liabilities                                                 3,420,020          2,978,227

  Non-current notes payable to stockholders                                    6,169,028          6,078,269
                                                                           -------------      -------------

     Total liabiliites                                                         9,589,048          9,056,496
                                                                           -------------      -------------

Stockholders' equity:
  Convertible preferred stock, 7,000,000 shares authorized;  165,469 shares
     outstanding in 2001 and 165,187 in 2000; $48,044,225 aggregate
     liquidation preference in 2001 and $45,233,025 in 2000                   48,044,225         45,233,025
  Common stock, $.01 par value, 50,000,000 shares authorized
     in 2001 and 2000; 3,478,086 shares
     issued and outstanding in 2001 and 3,466,486 in 2000                         34,781             34,665
  Non-voting convertible common stock, $.01 par value, 2,250,000 shares
     authorized; 112,492 shares issued and outstanding in 2001 and 2000,
     convertible into common stock on a one for one share basis                    1,125              1,125
  Additional paid-in capital                                                  70,834,923         69,490,368
  Accumulated deficit                                                       (116,475,264)      (111,592,100)
                                                                           -------------      -------------

     Total stockholders' equity                                                2,439,790          3,167,083
                                                                           -------------      -------------

     Total liabilities and stockholders' equity                            $  12,028,838      $  12,223,579
                                                                           =============      =============
</TABLE>

           See accompanying notes to unaudited financial statements.

                                       1
<PAGE>

                                   AXCESS INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,
                                                        --------------------------
                                                            2001           2000
                                                            ----           ----
<S>                                                     <C>            <C>

Sales                                                   $   537,917    $   710,644
Cost of sales                                               325,799        349,013
                                                        -----------    -----------

       Gross profit                                         212,118        361,631

Expenses:
   Research and development                                 712,075        629,426
   General and administrative                               601,531        559,276
   Selling and marketing                                    852,947        718,895
   Depreciation and amortization                            396,183        392,930
                                                        -----------    -----------
       Operating expenses                                 2,562,736      2,300,527
                                                        -----------    -----------

       Loss from operations                              (2,350,618)    (1,938,896)
Other income (expense):
   Interest expense                                        (367,170)      (284,531)
   Interest income                                           83,234         85,406
   Other                                                        418          2,242
                                                        -----------    -----------

       Other expense,net                                   (283,518)      (196,883)
                                                        -----------    -----------

       Loss from operations                              (2,634,136)    (2,135,779)
                                                        -----------    -----------

Preferred stock dividend requirements                    (2,249,028)      (700,020)
                                                        -----------    -----------

       Net loss applicable to common stock              $(4,883,164)   $(2,835,799)
                                                        ===========    ===========

Basic and diluted net loss per share                    $     (1.41)   $     (0.86)
                                                        ===========    ===========

Weighted average shares of common stock outstanding       3,473,005      3,308,832
                                                        ===========    ===========
</TABLE>


           See accompanying notes to unaudited financial statements.

                                       2

<PAGE>

                                  AXCESS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                  March, 31
                                                                         ---------------------------
                                                                             2001           2000
                                                                             ----           ----
<S>                                                                      <C>            <C>

Cash flows from operating activities:
  Net loss                                                               $(2,634,136)   $(2,135,779)
  Adjustments to reconcile net loss to net cash used
   by operating activities:
     Depreciation and amortization                                           396,183        392,930
     Changes in operating assets and liabilities:
       Accounts receivable                                                  (181,471)      (137,245)
       Inventory                                                            (298,892)       (35,258)
       Prepaid expenses and other                                            (20,436)        91,765
       Other assets                                                          (33,290)        (8,000)
       Accounts payable                                                      295,370         59,243
       Other                                                                 183,818         42,154
                                                                         -----------    -----------
         Net cash used by operating activities                            (2,292,854)    (1,730,190)

Cash flow from investing activities:
  Capital expenditures                                                       (40,736)       (34,336)
                                                                         -----------    -----------
         Net cash used by investing activities                               (40,736)       (34,336)

Cash flow from financing activities:
  Borrowings under financing agreements                                    1,925,000      2,000,000
  Principal payments on financing agreements                                     -       (2,018,366)
  Net proceeds from issuance of common and preferred stock                    22,768      5,098,400
                                                                         -----------    -----------
         Net cash provided by financing activities                         1,947,768      5,080,034

         Net increase (decrease) in cash and cash equivalents               (385,822)     3,315,508
Cash and cash equivalents, beginning of period                               454,374         69,450
                                                                         -----------    -----------
Cash and cash equivalents, end of period                                      68,552      3,384,958
                                                                         ===========    ===========

Supplemental information:
  Cash paid during the year for interest                                 $     1,012    $     3,044
                                                                         ===========    ===========
</TABLE>


           See accompanying notes to unaudited financial statements.

                                       3

<PAGE>

                                  AXCESS INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

(1) Summary of Significant Accounting Policies

     (a) Description of Business

     AXCESS provides computer network-based asset management solutions to
improve asset utilization, operations productivity, physical security,
manufacturing logistics, enterprise resource planning (commonly referred to as
"ERP"), and financial reporting. The Company's products are based on hands-free,
long range radio frequency identification ("RFID") technology used to track and
monitor people, assets, inventory and vehicles, as well as patented digital
video compression technology for enterprise multi-media transmission and digital
recording. The Company's intellectual property includes patented technologies in
wireless, automatic identification and multi-media. In 2000, the Company's
products were further developed as network add-on appliances and coupled with
browser-based software. This enabled the Company to sell complete systems as
opposed to discrete products. The browser software delivers information tailored
to each end user via the enterprise network/Internet, with an added capability
to provide custom alerts in the form of e-mail, or pages to wireless application
protocol ("WAP") enabled devices.

    The future results of operations and financial condition of the Company will
be impacted by the following factors, among others: access to capital,
technological change, dependence on identifying, developing and marketing
product enhancements and new products, dependence on third party manufacturers,
vendors, suppliers and contractors, dependence on key personnel, intellectual
property rights, and product liability.

    (b) Company Organization and Basis of Presentation

    The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the audited financial
statements and notes thereto included in the Company's annual report on Form 10-
KSB for the year ended December 31, 2000. In the opinion of management, all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the financial position at March 31, 2001, results of operations
for the three month periods ended March 31, 2001 and 2000, and cash flows for
the three months ended March 31, 2001 and 2000, have been made. The results of
operations for any given three month period are not necessarily indicative of
the results of the entire year.

     The Company has received working capital in various forms from Amphion
Ventures, L. P. and affiliates of Amphion Ventures, L.P. including Amphion
Partners L.L.C., Amphion Investments L.L.C., Antiope Partners L.L.C., XL Vision,
Inc. and VennWorks LLC, formerly incuVest LLC (collectively, the "Amphion
Group"). If the Amphion Group were to exercise warrants options which it holds
and convert its holdings of convertible preferred stock, debt and non-voting
common stock to common stock, it would have majority ownership and voting
control of the Company.

    (c) Inventory

    Inventory is valued at the lower of cost or market using the first-in,
first-out method. Inventory was comprised of the following at March 31, 2001 and
December 31, 2000:

                                             March 31,      December 31,
                                               2001            2000
                                            ----------      ------------
          Raw materials................     $  665,195      $    571,230
          Work-in-progress.............         34,535            65,350
          Finished goods...............        834,679           608,423
                                            ----------      ------------
                                            $1,534,409      $  1,245,003
                                            ==========      ============

                                       4
<PAGE>

                                  AXCESS INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

     (d) Recent Accounting Pronouncements

     In June 1998, Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), was
issued. SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as "derivatives") and for hedging
activities. It requires that all derivatives be recognized as either assets or
liabilities at fair value. The accounting for gains and losses from changes in
fair value of a derivative depends on the intended use of the derivative and its
resulting classification as one of three designated types of hedges or as a non-
hedging instrument. SFAS 133 was adopted by the Company on January 1, 2001. The
adoption of this statement did not have a material impact on the Company's
financial statements and related disclosures.

(2) Contingencies

     The Company is involved in various claims and legal actions arising in the
ordinary course of business. Estimated legal and litigation costs are reflected
in the accompanying financial statements. In the opinion of management of the
Company, the ultimate disposition of these matters will not have a material
effect on the accompanying condensed financial statements.

(3) Preferred Stock

    The Company has authorized 7,000,000 shares of convertible preferred stock,
of which shares designated in seven series have been issued. Information with
respect to the series of preferred stock outstanding at each balance sheet date
is summarized below.


                                  Series A      Series B      Series C
                                ------------  ------------  ------------
 Number of shares authorized..     1,500,000     1,500,000     1,500,000

 Stated value.................    $    26.00    $    28.40    $    30.20

 Number of shares issued and
     outstanding:
          December 31, 2000...        63,691        58,309        39,112
          March 31, 2001......        63,691        58,309        39,112

Conversion ratio (or
     conversion price) of
     preferred shares into
     common...................   1 to 1 into   1 to 1 into   1 to 1 into
                                      voting        voting        voting
                                      common        common        common
                                       stock         stock         stock

 Liquidation preference.......  Stated value  Stated value  Stated value
                                plus accrued  plus accrued  plus accrued
                                   dividends     dividends     dividends

 Dividend rights..............       10% per       10% per       10% per
                                      annum,        annum,        annum,
                                  cumulative    cumulative    cumulative

                                       5
<PAGE>

                                  AXCESS INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

(3) Preferred Stock (Continued)
<TABLE>
<CAPTION>

                                                               Series        Series
                                  Series I      Series J        1999          2000
                                ------------  ------------  ------------  ------------
<S>                             <C>           <C>           <C>           <C>
 Number of shares authorized..         2,500         2,500         2,500         2,500

 Stated value.................       $10,000       $10,000       $10,000       $10,000

Number of shares issued and
     outstanding:
          December 31, 2000...           688         2,011           140         1,236
          March 31, 2001......           702         2,051           143         1,461

Conversion ratio (or
     conversion price) of
     preferred shares into
     common...................    $4.00 into    $4.00 into    $2.50 into    $3.50 into
                                      voting    non-voting        voting    non-voting
                                      common        common        common        common
                                       stock         stock         stock         stock

 Liquidation preference.......  Stated value  Stated value  Stated value  Stated value
                                plus accrued  plus accrued  plus accrued  plus accrued
                                   dividends     dividends     dividends     dividends

 Dividend rights..............        8% per        8% per        8% per        8% per
                                      annum,        annum,        annum,        annum,
                                  cumulative    cumulative    cumulative    cumulative
</TABLE>

     The holders of Series I Preferred Stock, Series J Preferred Stock, Series
1999 Voting Preferred Stock, and Series 2000 Non-Voting Preferred Stock are
entitled to receive semi-annual dividends on each such share at the annual rate
of 8% of the original issue price of each share payable in arrears, when, as and
if declared by the Company's board of directors, in cash or additional shares of
preferred stock. Shares of Series I Preferred Stock and Series J Preferred Stock
are convertible into shares of common stock at a conversion price of $4.00 per
share. Shares of Series 1999 Preferred Stock and Series 2000 Preferred Stock are
convertible into shares of common stock at a conversion price of $2.50 and $3.50
per share, respectively.

     On March 30, 2001, the Company issued (a) 14 shares of Series I Preferred
Stock to holders thereof as payment in full for the $137,524 of accrued, but
unpaid dividends of the Series I Preferred Stock as of such date, (b) 40 shares
of Series J Preferred Stock to holders thereof as payment in full for the
$398,368 of accrued, but unpaid dividends of the Series J Preferred Stock as of
such date, (c) 3 shares of Series 1999 Voting Preferred Stock to holders thereof
as payment in full for the $27,971 of accrued, but unpaid dividends of the
Series 1999 Voting Preferred Stock as of such date, and (d) 25 shares of Series
2000 Non-Voting Preferred Stock to the holders thereof as payment in full for
the $247,337 of accrued, but unpaid dividends of the Series 2000 Non-Voting
Preferred Stock as of such date.

(4) Demand Note Payable

     The Company entered into a 9.0% convertible note with VennWorks. During the
three months ended March 31, 2001, the Company borrowed $1,925,000 under this
note. The principal outstanding under this note may be converted into securities
of the Company at the option of VennWorks. The borrowings are unsecured and are
due and payable on demand by VennWorks. On March 30, 2001, VennWorks elected to
convert $2,000,000 of borrowings into 200 shares of Series 2000 Preferred Stock
(see Note 3 above), leaving a balance of $16,106 under the note outstanding at
March 31, 2001. From April 1, 2001 through April 27, 2001, the Company borrowed
an additional $400,000 under this note.

                                       6
<PAGE>

Item 2.   Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

     This quarterly report on Form 10-QSB includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended, which can be identified by the use of forward-looking terminology such
as, "may," "expect," "could," "plan," "seek," "anticipate," "estimate," or
"continue" or the negative thereof or other variations thereon or comparable
terminology.

     These forward-looking statements are subject to various risks and
uncertainties that could cause actual results to differ materially from those
referred to in the forward-looking statements and are made pursuant to the
"safe-harbor" provisions of the Private Securites Litigation Reform Act of
1995. These statements are made based on management's current expectations or
beliefs as well as assumptions made by, and information currently available to,
management.

     A variety of factors could cause actual results to differ materially from
those anticipated in the Company's forward-looking statements, including the
following factors: changes from anticipated levels of sales, future national or
regional economic and competitive conditions, changes in relationships with
customers, access to capital, difficulties in developing and marketing new
products, marketing existing products, and customer acceptance of existing and
new products. For a detailed discussion of these and other cautionary statements
and factors that could cause actual results to differ from the Company's
forward-looking statements, please refer to the Company's filings with the
Securities and Exchange Commission, especially "Item 1. Description of Business"
(including the "Risk Factors" section of Item 1) and "Item 6. Management's
Discussion and Analysis or Plan of Operation" of the Company's 2000 Annual
Report on Form 10-KSB.

     Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof. The
Company does not undertake any obligation to publicly revise these forward-
looking statements to reflect events or circumstances that arise after the date
hereof. Readers should carefully review the risk factors described in other
documents the Company files from time to time with the Securities and Exchange
Commission.

Results of Operations
-----------------------
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

     Sales and Gross Profit. Sales for the three months ended March 31, 2001
were $537,917 and $710,644 for the three months ended March 31, 2000, on which a
gross profit of $212,118 and $361,631 was realized, respectively.

     Radio frequency identification (RFID) product sales were $193,725 for the
three months ended March 31, 2001 and $132,428 for the three months ended March
31, 2000. Cost of sales were $123,719 for the three months ended March 31, 2001
and $86,985 for the three months ended March 31, 2000. As a result, gross
profits from RFID products were $70,006 for the three months ended March 31,
2001 and $45,443 for the three months ended March 31, 2000.

     Digital video product sales were $344,192 for the three months ended March
31, 2001 and $578,216 for the three months ended March 31, 2000. Cost of sales
were $202,080 for the three months ended March 31, 2001 and $262,028 for the
three months ended March 31, 2000. As a result gross profits from digital video
products were $142,112 for the three months ended March 31, 2001 and $316,188
for the three months ended March 31, 2000.

     Operating Expenses. Operating expenses were $2,562,736 for the three months
ended March 31, 2001 and $2,300,527 for the three months ended March 31, 2000.
This increase was due to an increase in research and development in connection
with new products and an increase in selling and marketing expenses.

     Research and development expenses were $712,075 for the three months ended
March 31, 2001 and $629,426 for the three months ended March 31, 2000. This
increase was due to an increase in research and development in connection with
the development of new products associated with both the RFID and digital video
technologies.

     Corporate general and administrative expenses were $601,531 for the three
months ended March 31, 2001 and $559,276 for the three months ended March 31,
2000. This increase is due to the investment relations firm that the Company
hired in the fourth quarter of 2000 through March 31, 2001.

     Selling and marketing expenses were $852,947 for the three months ended
March 31, 2001 and $718,895 for the three months ended March 31, 2000. The
Company increased its advertising and marketing expenses to expand product
awareness beyond the security industry.

    Other expenses, net. Other expenses, net, was $283,518 for the three months
ended March 31, 2001, compared to $196,883 for the three months ended March 31,
2000. Interest income was $2,172 lower during the three months ended

                                       7
<PAGE>

March 31, 2001, compared to the three months ended March 31, 2000. Interest
expense was $82,639 higher in the three months ended March 31, 2001 compared to
the three months ended March 31, 2000, reflecting an increase in the outstanding
balance of notes payable in 2001.

     Loss from Continuing Operations. Loss from continuing operations was
$2,634,136 for the three months ended March 31, 2001, compared to a loss of
$2,135,779 for the same period in 2000.

     Preferred Stock dividend requirements. Preferred Stock dividend
requirements were $2,249,028 for the three months ended March 31, 2001 and
$700,020 for the three months ended March 31, 2000. The increase was due to the
beneficial conversion costs of $1,321,903 related to the conversion of the
VennWorks demand note payable and the payment of preferred stock dividends.

Liquidity and Capital Resources

     Since inception, the Company has utilized the proceeds from a number of
public and private sales of its equity securities, the exercise of options and
warrants and, more recently, convertible debt and demand notes from stockholders
to meet its working capital needs.

     The Company entered into a 9.0% convertible note with VennWorks. During the
three months ended March 31, 2001, the Company borrowed $1,925,000 under this
note. The principal outstanding under this note may be converted into securities
of the Company at the option of VennWorks. The borrowings are unsecured and are
due and payable on demand by VennWorks. On March 30, 2001, VennWorks elected to
convert $2,000,000 of borrowings into 200 shares of Series 2000 Preferred Stock
(see Note 3 above), leaving a balance of $16,106 under the note outstanding at
March 31, 2001. From April 1, 2001 through April 27, 2001, the Company borrowed
an additional $400,000 under this note.

     The Company's business plan for 2001 is predicated principally upon the
successful marketing of its RFID and digital video products. The Company
anticipates that its existing working capital resources and revenues from
operations will not be adequate to satisfy its funding requirements in 2001.

     The Company's future working capital requirements will depend upon many
factors, including the extent and timing of the Company's product sales, the
Company's operating results and the status of competitive products. The
Company's actual funding needs will depend on numerous factors, including actual
expenditures and revenues generated from its operations compared to its business
plan. If the Company's losses continue, the Company will have to obtain funds to
meet its cash requirements through business alliances, such as strategic or
financial transactions with third parties, the sale of securities or other
financing arrangements, or the Company may be required to curtail its operations
or seek a merger partner. Any additional funding may be on terms that are
unfavorable to the Company or disadvantageous to existing stockholders. In
addition, no assurance may be given that the Company will be successful in
raising additional funds or entering into business alliances.

     The Company is actively seeking investors to raise additional capital. For
the three months ended March 31, 2001, VennWorks provided $1,925,000 of
additional working capital through loans under demand notes. However, no
assurance can be given that such funding will continue, and VennWorks has the
right to call the balance of the demand notes at any time. The Company does not
have the ability to satisfy such a demand, if made.

Other

    Inflation. Inflation has not had, and is not expected to have, a material
impact on the operations and financial condition of the Company.

                                       8
<PAGE>

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

     None.

Item 2. Changes in Securities.

     During the first quarter of 2001, the Company issued unregistered
securities in connection with the issuance of preferred stock dividends
described below. The issuance of preferred stock was exempt from the
registration requirements of the Securities Act, as amended by virtue of Section
4(2) thereof, as a transaction not involving a public offering and an
appropriate restrictive legend was affixed to the certificates.

     The holders of Series I Preferred Stock, Series J Preferred Stock, Series
1999 Voting Preferred Stock, and Series 2000 Non-Voting Preferred Stock are
entitled to receive semi-annual dividends on each such share at the annual rate
of 8% of the original issue price of each share payable in arrears, when, as and
if declared by the Company's board of directors, in cash or additional shares of
preferred stock.

     Each share of Series I Preferred Stock and Series J Preferred Stock is
convertible in whole or in part at any time at the option of the holder into
shares of voting or non-voting common stock of the Company, respectively, equal
to the quotient of (a) the aggregate original issue price of $10,000 per share
divided by (b) the conversion price of $4.00 per share. The Series I Preferred
Stock and the Series J Preferred Stock are both subject to the optional
redemption at any time by the Company, in whole or in part, at a redemption
price per share equal to the $10,000 stated value, plus any accrued, but unpaid
dividends thereon. The Company's optional right of redemption is subject to each
Series I Preferred Stock or Series J Preferred Stock holder's right to convert
such preferred stock into voting or non-voting common stock, as the case may be,
within 10 business days after the Company's notice of redemption. The Series I
Preferred Stock and the Series J Preferred Stock are also subject to the
mandatory conversion by the Company into shares of the Company's voting or non-
voting common stock, as the case may be, if the closing bid price of the
Company's common stock on the NASDAQ SmallCap Market is at least $10.00 per
share for a period of at least 90 consecutive trading days.

     Each share of Series 1999 and Series 2000 Preferred Stock is convertible in
whole or in part at any time at the option of the holder into a number of shares
of voting or non-voting common stock of the Company, as the case may be, equal
to the quotient of (a) the aggregate original issue price of $10,000 per share
divided by (b) the conversion price of $2.50 or $3.50, respectively. The Series
1999 Preferred Stock and the Series 2000 Preferred Stock are both subject to the
optional redemption at any time by the Company, in whole or in part, at a
redemption price per share equal to the $10,000 stated value, plus any accrued,
but unpaid dividends thereon. The Company's optional right of redemption is
subject to each Series 1999 Preferred Stock or Series 2000 Preferred Stock
holder's right to convert such preferred stock into voting or non-voting common
stock, as the case may be, within 10 business days after the Company's notice of
redemption.

     The Series 1999 Preferred Stock and the Series 2000 Preferred Stock are
also subject to the mandatory conversion by the Company into shares of the
Company's voting or non-voting common stock, as the case may be, if (a) the
closing bid price of the Company's common stock on the NASDAQ SmallCap Market is
at least $7.50 per share for a period of at least 20 consecutive trading days
and (b) the trading volume of the common stock on the NASDAQ SmallCap Market is
at least 50,000 shares per day as measured by NASDAQ during each of such 20
consecutive trading days.

     On March 30, 2001, the Company issued (a) 14 shares of Series I Preferred
Stock to holders thereof as payment in full for the $137,524 of accrued, but
unpaid dividends of the Series I Preferred Stock as of such date, (b) 40 shares
of Series J Preferred Stock to holders thereof as payment in full for the
$398,368 of accrued, but unpaid dividends of the Series J Preferred Stock as of
such date, (c) 3 shares of Series 1999 Voting Preferred Stock to holders thereof
as payment in full for the $27,971 of accrued, but unpaid dividends of the
Series 1999 Voting Preferred Stock as of such date, and (d) 25 shares of Series
2000 Non-Voting Preferred Stock to the holders thereof as payment in full for
the $247,337 of accrued, but unpaid dividends of the Series 2000 Non-Voting
Preferred Stock as of such date.

                                       9
<PAGE>

Item 3. Defaults Upon Senior Securities.

     None.

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 No.    Description
               -----------    ------------

                  10.1        Amended Schedule of Advances to the Demand Note
                              dated as of January 12, 2001, executed by the
                              Company payable to incuVest LLC in the principal
                              amount of $264,000 (the Demand Note is
                              incorporated herein by reference to Exhibit 10.32
                              to the Company's Annual Report on Form 10-KSB for
                              the year ended December 31, 2000).


     (b)  Reports on Form 8-K:

               None.

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<PAGE>

                                  SIGNATURES

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

                           AXCESS INC.,
                           Registrant

                           /S/ ALLAN GRIEBENOW
                           -----------------------------------------------------
                           Allan Griebenow Director, President and
                           Chief Executive Officer (Principal Executive Officer)

                           /S/ JAMES R. CRAIG
                           -----------------------------------------------------
                           James R. Craig
                           Chief Financial Officer and Secretary
                           (Principal Accounting and Financial Officer)

May 14, 2001

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