<PAGE>   1
                10QSB.WPD U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 
     FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999.

                                       OR

[ ]  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: 0-11933


                                   AXCESS INC.
             (Exact name of registrant as specified in its charter)

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

3208 COMMANDER DRIVE, DALLAS, TEXAS                        75006
----------------------------------------                 ----------
(Address of principal executive offices)                 (Zip Code)

                                 (972) 407-6080
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Shares of common stock outstanding on May 1, 1999: 3,179,368. Shares of
non-voting common stock outstanding on May 1, 1999: 112,492.

Transitional Small Business Disclosure Format (Check One);  Yes [ ]    No [X]


<PAGE>   2

                          AXCESS INC. AND SUBSIDIARIES
                                TABLE OF CONTENTS

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

         Item 1.  Condensed Financial Statements:

                  Condensed Balance Sheets (Unaudited) at March 31, 1999
                  And December 31, 1998 ...............................................  1

                  Condensed Statements of Operations (Unaudited) for the Three
                  Months Ended March 31, 1999 and 1998 ................................  3

                  Condensed Statements of Cash Flows (Unaudited) for the Three
                  Months ended March 31, 1999 and 1998 ................................  4

                  Notes to Condensed Financial Statements (Unaudited) .................  5

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operation ............................................  8

PART II.  OTHER INFORMATION

         Item 2.  Changes in Securities ............................................... 13

         Item 6.  Exhibits and Reports on Form 8-K .................................... 13

SIGNATURES ............................................................................ 16
</TABLE>


<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          AXCESS INC. AND SUBSIDIARIES
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          March 31, 1999
                                                     Pro Forma                 December 31,
                                                     (Note 2)       Actual        1998
                                                     ----------   ----------   ----------
                                     ASSETS
<S>                                                  <C>          <C>          <C>       
Current assets:
  Cash and cash equivalents ......................   $  230,927   $  230,927   $1,575,429
  Note receivable from stockholder ...............      525,624          624    1,030,624
  Accounts receivable - trade ....................       51,838       51,838       30,987
  Inventory ......................................      540,376      540,376      256,216
  Prepaid expenses and other .....................      185,784      250,470      160,087
                                                     ----------   ----------   ----------
             Total current assets ................    1,534,549    1,074,235    3,053,343
                                                     ----------   ----------   ----------

  Net assets of discontinued operation ...........      690,557    2,755,810    3,186,253
  Property, plant & equipment, net ...............      563,925      601,858      574,499
  Note receivable from stockholder, long-term ....    4,000,000           --           --
  RFID technology ................................    1,628,189    1,628,189    1,714,449
  Deferred license fee ...........................           --      532,881      532,881
  Other assets ...................................        7,631      382,631        9,923
                                                     ----------   ----------   ----------
             Total assets ........................   $8,424,851   $6,975,604   $9,071,348
                                                     ==========   ==========   ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Convertible notes payable to stockholders ......   $  685,650   $1,795,650   $1,966,900
  Notes payable ..................................       89,640       89,640       90,882
  Accounts payable ...............................      778,703      755,190      466,940
  Dividends payable ..............................       65,285       65,285      481,339
  Other accrued liabilities ......................    1,734,662    2,209,662    1,985,002
                                                     ----------   ----------   ----------
           Total current liabilities .............    3,353,940    4,915,427    4,991,063
                                                     ----------   ----------   ----------

Notes payable, long term .........................      535,205      535,205      535,205
Notes payable to stockholder .....................      580,000    1,470,000    1,470,000
                                                     ----------   ----------   ----------
          Total liabilities ......................   $4,469,145   $6,920,632   $6,996,268
                                                     ----------   ----------   ----------
</TABLE>

                                                                     (Continued)

       See accompanying notes to unaudited condensed financial statements.



                                       1
<PAGE>   4

                          AXCESS INC. AND SUBSIDIARIES
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              March 31, 1999
                                                                                      Pro Forma                       December 31,
                                                                                       (Note 2)          Actual           1998
                                                                                      ------------    ------------    ------------
<S>                                                                                     <C>             <C>             <C>       
Stockholders' equity:
Convertible preferred stock:

     Series A: $26.00 stated value; 57,692 shares
     issued and outstanding in 1999 and 1998 ......................................   $  1,500,000    $  1,500,000    $  1,500,000

     Series B: $28.40 stated value; 52,817 shares
     issued and outstanding in 1999 and 1998 ......................................      1,500,000       1,500,000       1,500,000

     Series C: $30.20 stated value; 35,427 shares
     issued and outstanding in 1999 and 1998 ......................................      1,069,880       1,069,880       1,069,880

     Series I: $10,000.00 stated value; 623 shares
     issued and outstanding in 1999 and 1998 ......................................      6,230,000       6,230,000       6,230,000

     Series J:  $10,000.00 stated value; 1,688
     shares issued and outstanding in 1999 and 1998 ...............................     16,880,000      16,880,000      16,880,000

Common stock, $.01 par value, 6,250,000 shares authorized in 1999 and 2,837,500
     in 1998; 3,179,368 and 2,879,368 shares issued and outstanding in 1999
     and 1998 .....................................................................         31,794          31,794          28,794

Non-voting convertible common stock, $.01 par value, 112,500 shares authorized
     in 1999 and 1998; 112,492 shares issued and outstanding in 1999 and 1998;
     convertible into common stock on a shares for
     share basis ..................................................................          1,125           1,125           1,125

Paid-in capital ...................................................................     58,887,848      58,887,848      58,515,848
Accumulated deficit ...............................................................    (82,144,941)    (86,045,675)    (83,650,567)
                                                                                      ------------    ------------    ------------
                  Total stockholders' equity ......................................      3,955,706          54,972       2,075,080

                  Total liabilities and stockholders' equity ......................   $  8,424,851    $  6,975,604    $  9,071,348
                                                                                      ============    ============    ============
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements.



                                       2
<PAGE>   5

                          AXCESS INC. AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                   March 31,
                                                          --------------------------
                                                              1999           1998
                                                          -----------    -----------
<S>                                                       <C>            <C>        
Sales .................................................   $    40,523    $        --
Cost of sales .........................................        16,583             --
                                                          -----------    -----------
    Gross Profit ......................................        23,940             --

Expenses:
    Research and development ..........................       364,770      1,000,000
    Sales and marketing ...............................       698,157             --
    General & administrative ..........................       707,238        984,106
                                                          -----------    -----------

        Operating expenses ............................     1,770,165      1,984,106
                                                          -----------    -----------

        Loss from operations ..........................    (1,746,225)    (1,984,106)

Other income (expense):
    Interest income ...................................        12,068         31,023
    Interest expense ..................................       (94,951)      (249,921)
    Other & taxes .....................................        (2,054)        51,769
                                                          -----------    -----------
        Other income (expense), net ...................       (84,937)      (167,129)
                                                          -----------    -----------

        Loss from continuing operations ...............    (1,831,162)    (2,151,235)

Discontinued operations:
    Loss from operations ..............................            --     (1,171,073)
    Gain on disposal of discontinued operations .......            --             --
                                                          -----------    -----------
        Loss from discontinued operations .............            --     (1,171,073)
                                                          -----------    -----------
        Net loss ......................................    (1,831,162)    (3,322,308)

Preferred stock dividend requirements .................      (563,946)      (281,527)
                                                          -----------    -----------

Net loss applicable to common stock ...................   $(2,395,108)   $(3,603,835)
                                                          ===========    ===========

Basic and diluted net loss per share:
    Continuing operations .............................   $     (0.57)   $     (0.88)
    Discontinued operations ...........................   $        --    $     (0.48)
    Net loss ..........................................   $     (0.75)   $     (1.47)

Weighted average shares of common stock outstanding ...     3,188,529      2,445,727
                                                          ===========    ===========
</TABLE>

       See accompanying notes to unaudited condensed financial statements.



                                       3
<PAGE>   6

                          AXCESS INC. AND SUBSIDIARIES
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                         March 31,
                                                                                --------------------------
                                                                                    1999           1998
                                                                                -----------    -----------
<S>                                                                             <C>            <C>         
Cash flows from operating activities:
    Loss from continuing operations .........................................   $(1,831,162)   $(2,151,235)
    Adjustments to reconcile net loss to net cash used by
            operating activities:
Depreciation and amortization ...............................................       137,012        489,774
    Amortization of financing discount and issuance costs ...................            --         93,419
    Loss on sale of assets ..................................................        11,085             --
    Changes in operating assets and liabilities:
       Accounts receivable ..................................................       (20,851)            --
       Inventory ............................................................      (284,160)            --
       Prepaid expenses and other ...........................................       (90,383)        21,284
       Other assets .........................................................         2,292        (46,991)
       Accounts payable .....................................................       288,250       (300,259)
       Other liabilities ....................................................       274,660       (163,508)
                                                                                -----------    -----------
           Net cash used by operating activities ............................    (1,513,257)    (2,057,516)

Cash flow from investing activities:
    Capital expenditures ....................................................       (93,696)            --
    Proceeds from sale of assets ............................................         4,500             --
                                                                                -----------    -----------
                      Net cash used by investing activities .................       (89,196)            --

Cash flow from financing activities:
    Principal payments on financing agreements ..............................      (172,492)      (924,826)
    Net proceeds from issuance of common and preferred stock ................            --      2,947,783
                                                                                -----------    -----------
                      Net cash provided (used) by financing activities ......      (172,492)     2,022,957

                      Net cash provided (used) by discontinued operations ...       430,443       (947,167)
                                                                                -----------    -----------

                      Net decrease in cash and cash equivalents .............    (1,344,502)      (981,726)
Cash and cash equivalents, beginning of period ..............................     1,575,429      1,102,341
                                                                                -----------    -----------
Cash and cash equivalents, end of period ....................................   $   230,927    $   120,615
                                                                                ===========    ===========

Supplemental information:
     Cash paid during the year for interest .................................   $    31,652    $    20,375
     Restricted common stock issued in connection with
        Xerox settlement ....................................................   $        --    $   582,500
     Conversion feature, detachable warrants and restricted common stock
         issued in connection with notes payable to stockholders ............   $        --    $    93,419
     Conversion of accrued interest and current note payable to long-term
         note payable and deferred license fee ..............................   $        --    $ 1,694,958
     Conversion of accrued interest and dividends in satisfaction of
        note receivable form shareholder ....................................   $ 1,030,000    $        --
     Common stock issued to acquire XLV technology rights ...................   $   375,000    $        --
</TABLE>

       See accompanying notes to unaudited condensed financial statements.



                                       4
<PAGE>   7

                          AXCESS INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)

(1)      CONDENSED FINANCIAL STATEMENTS

         The accompanying unaudited condensed 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 consolidated financial statements
         and notes thereto included in the company's Form 10-KSB for the year
         ended December 31, 1998. Certain reclassifications have been made to
         the prior period amounts in order to present the financial position and
         results of operations on a consistent basis. In the opinion of
         management, all adjustments, consisting only of normal recurring
         adjustments, necessary to present fairly the financial position at
         March 31, 1999, results of operations for the three month periods ended
         March 31, 1999 and 1998, and cash flows for the three months ended
         March 31, 1999 and 1998, have been made. The results of operations for
         any given three month period are not necessarily indicative of the
         results for the entire year.

         The company has restated its condensed financial statements for the
         three months ended March 31, 1998, to classify the imaging business and
         Lasertechnics Marking Corporation ("LMC") as discontinued operations.
         See Note 3 below.

(2)      MARCH 31, 1999 PRO FORMA BALANCE SHEET

         In April 1999, the company completed the sale of its LMC subsidiary and
         certain technology assets under development. See Note 3 below. Although
         the company entered into a definitive agreement to sell those assets in
         March 1999, generally accepted accounting principles for interim
         financial reporting prevent the company from reporting the aggregate
         $3.9 million gain realized by the company from the sale of LMC and the
         technology assets in its results of operations for quarter ended March
         31, 1999. Accordingly, instead of reporting the gain in its results of
         operations for the quarter during which the company entered into a
         definitive agreement, the company must report the gain in its results
         of operations for the quarter during which the company completed the
         transaction. The aggregate $3.9 million gain, therefore, will be
         included in the company's results of operations for the quarter ending
         June 30, 1999. Stockholders' equity of the company was $3,508,966 as of
         April 30, 1999, after giving effect to the transaction.

         Because the company completed the sale of LMC and the technology
         assets, as well as recognized the gain from that sale prior to filing
         this report on Form 10-QSB for the quarter ended March 31, 1999, the
         company has included a March 31, 1999, pro forma condensed balance
         sheet to reflect the completion of the sale transaction as if it had
         occurred during the period within which it entered into the definitive
         agreement.

(3)      DISCONTINUED OPERATIONS

         On October 21, 1998, the company's Board of Directors approved a plan
         to exit the imaging business as part of the strategy to redeploy and
         refocus the company's resources on its core RFID asset, vehicle and
         personnel tracking business. The sale of the imaging business was
         completed on December 15, 1998. The company reported a sales price of
         $500,000 and recorded a loss of $1,095,920 on the disposal in 1998. The
         remaining $690,557 of net assets of the discontinued 



                                       5
<PAGE>   8

                          AXCESS INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)


         imaging business consist primarily of receivables, which are recorded
         at net realizable value as of March 31, 1999. For the three months
         ended March 31, 1999 and 1998, the company recorded the following
         operating results. (There is no related income tax benefit or
         expense):

<TABLE>
<CAPTION>
                                              Three Months      Three Months
                                                  Ended            Ended
                                             March 31, 1999    March 31,1998
                                             --------------    -------------
<S>                                          <C>               <C>        
Sales                                            $    --        $   732,415
Costs and expenses                                                1,571,050
                                                 -------        -----------
Loss from discontinued operation                 $    --        $  (838,635)
                                                 =======        ===========
Loss per fully diluted share                     $    --        $     (0.34)
                                                 =======        ===========
</TABLE>

         In March 1999, the company entered into a definitive agreement to sell
         its LMC subsidiary to affiliates of Amphion Capital Management, a major
         stockholder of the company. The company's rights and interests in
         DataGlyph(TM) and the technology under development with XL Vision, Inc.
         were also included in the sale. The company received $0.5 million in
         cash, $2.0 million in debt cancellation, a $4.0 million note receivable
         due March 2002 (or 2004 under certain conditions), a $0.5 million
         demand note receivable and a warrant to purchase equity in the
         Amphion-controlled enterprise to which Amphion transferred those
         businesses and assets following the closing. The exercise price of the
         warrant is $2.50 per share, representing approximately 8% of that
         enterprise. If LMC is sold within two years of the closing, the company
         has the option to exchange its warrant for twenty percent of the excess
         profits (as defined in the definitive sale agreement) from any such
         sale.

         For the three months ended March 31, 1999 and 1998, the company
         recorded the following results of LMC, which have been reclassified to
         loss from discontinued operations for all periods presented. (There is
         no related income tax benefit or expense.)

<TABLE>
<CAPTION>
                                                       Three Months      Three Months
                                                           Ended            Ended
                                                      March 31, 1999    March 31, 1998
                                                      --------------    --------------
         <S>                                              <C>            <C>
         Sales                                            $    --        $ 1,555,612
         Costs and expenses                                                1,888,050
                                                          -------        -----------
         Loss from discontinued operations                $    --        $  (332,438
                                                          =======        ===========
         Loss per fully diluted share                     $    --        $     (0.14)
                                                          =======        ===========
</TABLE>

(4)      RECENT ACCOUNTING PRONOUNCEMENT

         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 the fair
         value of a derivative depends on the 



                                       6
<PAGE>   9
                          AXCESS INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (UNAUDITED)


         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 is effective for all fiscal quarters of fiscal years beginning
         after June 15, 1999. The adoption of this statement is not expected to
         have a material impact on the company's financial statements and
         related disclosures.

(5)      ISSUANCE OF COMMON STOCK

         During the quarter ended March 31, 1999, a total of 300,000 shares of
         AXCESS common stock with a market value of $375,000 were issued in
         connection with the acquisition of the XLV technology rights, which
         were transferred to the buyer in connection with the sale of LMC
         described in Note 2.

(6)      CONTINGENCIES

         On February 28, 1996, an investor group filed suit against the company.
         This lawsuit arose out of the company's refusal to recognize the
         investor group's attempt to exercise an option to purchase 70,000
         shares of common stock at $9.00 per share. The option had been granted
         to the company's former President and CEO who attempted to transfer his
         option to an investor group on the last day of the option term in
         September 1995. On that same day, the investor group attempted to
         exercise the option. The company refused to recognize the attempted
         transfer of the option to the investor group on the primary grounds
         that the option was granted personally to the company's former
         President and CEO and the company believed that it was not transferable
         to third parties. The lawsuit sought monetary damages that the investor
         group alleged to be not less than $2,800,000. In March 1999, the
         plaintiffs, the company and other named defendants in the second
         lawsuit described above agreed to the principal terms under which both
         lawsuits would be settled and dismissed, with prejudice. Although the
         company anticipates consummating a settlement sometime during the
         second quarter of 1999, there can be no assurance, however, that the
         company will consummate any such settlement. The company has fully
         accrued the expected cost of the settlement as of March 31, 1999.

         The company is also involved in various other claims and lawsuits which
         are generally incidental to its business. The company is vigorously
         contesting all such matters and believes that their ultimate resolution
         will not have a material adverse effect on its financial position,
         results of operations or cash flows.



                                       7
<PAGE>   10

                          AXCESS INC. AND SUBSIDIARIES

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

In September 1998, the company acquired its active Radio Frequency
Identification (RFID) technology. The company determined this technology to be
its primary and core strategic focus, based on market demand, market size,
product differentiation, competitive environment and other factors.

On October 21, 1998, the company's Board of Directors approved a plan to exit
the imaging business as part of the strategy to redeploy and refocus the
company's resources on its core RFID asset, vehicle and personnel tracking
business. The sale of the imaging business was completed on December 15, 1998.
The company reported a sales price of $500,000 and recorded a loss of $1,095,920
on the disposal in 1998. As of March 31, 1999, the remaining $690,557 of net
assets of the discontinued imaging business consist primarily of receivables,
which are recorded at net realizable value.

In March 1999, the company entered into a definitive agreement to sell its
Lasertechnics Marking Corporation subsidiary ("LMC") to affiliates of Amphion
Capital Management, a major stockholder of the company. The company's rights and
interests in DataGlyph(TM) and the technology under development with XL Vision,
Inc. were also included in the sale. In April 1999 the company completed the
sale and received $0.5 million in cash, $2.0 million in debt cancellation, a
$4.0 million note receivable due March 2002 (or 2004 under certain conditions),
a $0.5 million demand note receivable and a warrant to purchase equity in the
Amphion-controlled enterprise to which Amphion will transfer these businesses
and assets with an exercise price of $2.50 per share, representing approximately
8% of that enterprise. If LMC is sold within two years of its purchase, the
company has the option to exchange its warrant for twenty percent of the defined
excess profits from any such sale. The gain on disposition totaled approximately
$3.9 million.

Although the company entered into a definitive agreement to sell LMC and the
technology assets in March 1999, generally accepted accounting principles for
interim financial reporting prevent the company from reporting the aggregate
$3.9 million gain realized by the company from the sale of those assets in its
results of operations for the quarter ended March 31, 1999. Accordingly, instead
of reporting the gain in its results of operations for the quarter during which
the company entered into a definitive agreement, the company must report the
gain in its results of operations for the quarter during which the company
completed the transaction. The aggregate $3.9 million gain, therefore, will be
included in the company's results of operations for the quarter ending June 30,
1999. Stockholders' equity of the company was $3,508,966 as of April 30, 1999,
after giving effect to the transaction.

Because the company completed the sale of LMC and the technology assets, as well
as recognized the gain from that sale prior to filing this report on Form 10-QSB
for the quarter ended March 31, 1999, the company has included a March 31, 1999,
pro forma condensed balance sheet to reflect the completion of the sale
transaction as if it occurred during the period within which it entered into the
definitive agreement.

The company's March 31, 1998 financial statements have been restated to account
for the imaging business and LMC as discontinued operations.

RESULTS OF OPERATIONS

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

Sales and Gross Profit. Sales applicable to the businesses of the company's
discontinued operations are not included in the company's sales for any period
presented in the company's results of operations.



                                       8
<PAGE>   11
                          AXCESS INC. AND SUBSIDIARIES


Although the RFID technology acquired in September 1998 had been in development
and use for some time, significant modifications and enhancements were and are
necessary for its successful commercialization, manufacture and distribution in
volume. Sales and marketing efforts were launched in the fourth quarter of 1998.
Through March 31, 1999, the company had not yet shipped a significant volume of
RFID systems. Orders accepted during the period will be realized as sales when
the systems have been manufactured and shipped to the customer.

As a result, the company reported no sales or gross profit in the three months
ended March 31, 1998. Sales for the three months ended March 31, 1999 were
$40,523, on which the company realized a gross profit of $23,940.

Operating Expenses. Operating expenses were $1,770,165 and $1,984,106 for the
three months ended March 31, 1999 and 1998, respectively.

Corporate general and administrative expenses were $707,238 and $984,106 for the
three months ended March 31, 1999 and 1998, respectively. The higher expense in
the quarter ended March 31, 1998 is attributable primarily to legal, printing
and accounting costs associated with the special shareholder meeting held in
March 1998.

Research and development expenses for the three months ended March 31, 1999 of
$364,770 represents RFID product development cost. For the three months ended
March 31, 1998, research and development expenses of $1,000,000 consisted of new
product development costs associated with the Technology Development Agreement
with XL Vision, Inc.

Selling and marketing expenses were $698,157 in the quarter ended March 31,
1999. No selling and marketing expenses were incurred in the first quarter of
1998 because the company's continuing operations were not initiated until
September 1998.

Other income (expense), net was ($84,937) for the three months ended March 31,
1999 and 1998, respectively. Interest expense was $154,970 lower in the three
months ended March 31, 1999 compared to the three months ended March 31, 1998,
reflecting the lower amount of notes payable outstanding during 1999.

Loss from Continuing Operations was $1,831,162 for the three months ended March
31, 1999, compared to $2,151,235 for the same period in 1998, an improvement of
$320,073. The primary elements of this variance were declines in operating
expenses during 1999 of $213,941 and interest expense of $154,970.

Loss from Discontinued Operations was $0 and $1,171,073 for the three months
ended March 31, 1999 and 1998, respectively. The loss in 1998 consists of the
loss from the operations of both LMC and the imaging business. See Note 3 to
Notes to Condensed Financial Statements.



                                       9
<PAGE>   12
                          AXCESS INC. AND SUBSIDIARIES


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 short-term bridge loans from
stockholders to meet its working capital needs.

The company's ongoing businesses continued to generate operating losses in 1999,
as the company was continuing its development and enhancement activities related
to the RFID technology and had not yet shipped a significant volume of RFID
systems. 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
anticipates that its existing working capital resources and revenues from
operations will not be adequate to satisfy its funding requirements in 1999. The
company is continuing discussions with a number of existing and potential
corporate, strategic and institutional investors. 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. The
company's actual funding needs will also depend on the successful development
and commercialization of the RFID systems and other unanticipated expenditures,
none of which can be predicted with certainty. There can be no assurance that
the company will acquire the additional funding it needs to fully pursue its
business objectives. If the company's losses continue, the company may have to
obtain sufficient funds to meet its cash requirements through strategic or other
financial transactions with compatible entities having the resources to support
its programs, the sale of securities or other financing arrangements, or it will
be required to curtail its programs or seek a merger partner. Any additional
funding may be on terms which 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.

YEAR 2000 COMPLIANCE

The company's management recognizes the need to ensure that its operations and
relationships with vendors, customers and other third parties will not be
adversely impacted by the Year 2000 issue. The Year 2000 problem is a result of
computer programs being written using two digits rather than four to define the
applicable year. Based on its assessment, the company determined a portion of
its software and certain hardware will require modification or replacement so
that those systems will properly utilize dates beyond December 31, 1999. The
company's assessment indicated that its significant information technology
systems would not be affected.

The company has also established a program to review its product line of RFID
systems and identify date-sensitive inventory and the level of Year 2000
compliance of its RFID systems. This program is to ensure that customers receive
systems that are Year 2000 compliant, or at a minimum, are made aware of systems
that are not compliant. The company also depends on the systems of its
suppliers, manufacturers and customers. Consequently, the company is in the
process of receiving adequate assurances from its suppliers, manufacturers and
customers that those systems and the components on which the company relies are
or will be Year 2000 compliant before the end of 1999.

To the extent possible, the company will develop and implement contingency plans
designed to allow continued operations in the event of failure of the company's
or third party systems to by Year 2000 compliant. These contingency plans have
substantially been completed, and are expected to be completed and implemented
by the end of 1999.



                                       10
<PAGE>   13
                          AXCESS INC. AND SUBSIDIARIES


Management of the company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. The company does not believe the
costs related to the Year 2000 program will be material to its financial
position or results of operation. Since the RFID based software and hardware
were recently developed and were developed with Year 2000 compliance awareness,
Year 2000 compliance is less significant to the company's business than is the
case for other businesses.

Management expects to complete its program without incurring any significant
incremental expenditures utilizing internal resources. However, the company has
not yet completed all necessary phases of the Year 2000 program. Further, the
failure of the company or third parties upon which the company relies to
identify Year 2000 issues and successfully and timely resolve them could then
have a material adverse impact on the operations of the company.

SHARES ELIGIBLE FOR FUTURE SALE; CONVERTIBLE SECURITIES AND WARRANTS

Future sales of the company's common stock in the public market by existing
stockholders, warrant holders and holders of convertible securities subsequent
to the date hereof could adversely affect the market price of the common stock.
At March 31, 1999, an aggregate of approximately 1,700,000 shares of common
stock were outstanding and freely tradeable without restriction under the
Securities Act. In addition, up to 767,000 shares were eligible for resale in
accordance with the manner of sale and volume limitations of Rule 144
promulgated under the Securities Act.

Approximately 2,300,000 shares of common stock have been reserved for issuance
upon the exercise of outstanding convertible securities and warrants. As of
March 31, 1999, there were 57,692, 52,817, 35,427, 623 and 1,688 shares of
Series A, B, C, I and J convertible preferred stock outstanding, respectively.
Each share of Series A, B and C convertible preferred stock is convertible at
any time, at the option of the holder, into one share of common stock. The
conversion price for the Series I and Series J shares is $4.00 per share. See
"Recent Sale of Unregistered Securities" in the company's Form 10-KSB for the
year ended December 31, 1998.

There are also currently 584,431 warrants outstanding to acquire the same number
of shares of common stock, as well as $535,000 of indebtedness, convertible into
common stock at $5.00 per share.

In addition, approximately 1,050,000 shares of common stock have been reserved
for issuance to key employees, officers, directors and consultants pursuant to
the company's benefit plans. As of March 31, 1999, there were 772,391 options
outstanding.

OTHER

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

Caution Regarding Forward-Looking Statements. The company occasionally makes
forward-looking statements concerning its plans, goals, product and service
offerings, and anticipated financial performance. These forward-looking
statements may generally be identified by introductions such as "outlook" for an
upcoming period of time, or words and phrases such as "should", "expect",
"hope", "plans", "projected", "believes", "forward-looking" (or variants of
those words and phrases) or similar language indicating the expression of an
opinion or view concerning the future.



                                       11
<PAGE>   14
                          AXCESS INC. AND SUBSIDIARIES


These forward-looking statements are subject to risks and uncertainties based on
a number of factors and actual results or events may differ materially from
those anticipated by such forward-looking statements. These factors include, but
are not limited to: the ability to raise capital; the growth rate of the
company's revenue and market share; the consummation of new, and the
non-termination of existing, relationships with customers and suppliers; the
company's ability to effectively manage its business functions while growing the
company's business in a rapidly changing environment; the ability of the company
to adapt and expand its services in such an environment; the effective and
efficient development of new products; the quality of the company's plans and
strategies; and the ability of the company to execute such plans and strategies.

Forward-looking statements concerning the company's expected revenue or earnings
levels are subject to many additional uncertainties applicable to competitors
generally and to general economic conditions over which the company has no
control. The company does not plan to generally publicly update prior
forward-looking statements for unanticipated events or otherwise and,
accordingly, prior forward-looking statements should not be considered to be
"fresh" simply because the company has not made additional comments on those
forward-looking statements. See "Cautionary Statements" in the company's Form
10-KSB for the year ended December 31, 1998.



                                       12

<PAGE>   15
                          AXCESS INC. AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 2.     CHANGES IN SECURITIES.

During the first quarter of 1999, the company issued unregistered securities in
connection with the transaction described below.

The issuance of common stock was exempt from the registration requirements of
the Securities Act of 1933, 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 certificate.

The company issued 300,000 shares of restricted common stock to XL Vision, Inc.
on February 1, 1999, in connection with the exercise of the company's assignment
right under the terms of an Intellectual Property Transfer Agreement by and
between the company and XL Vision, Inc.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

         3.1    --Certificate of Incorporation of the company. Incorporated
                herein by reference to Exhibit 3.1 to the company's Registration
                Statement on Form S-1 (Registration No. 2-80946).

         3.2    --By-laws of AXCESS. Incorporated herein by reference to Exhibit
                3.2 to the company's Registration Statement on Form S-1
                (Registration No. 2-80946).

         3.3    --First Amendment to Certificate of Incorporation of the company
                dated June 6, 1986. Incorporated herein by reference to Exhibit
                3.3 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1987.

         3.4    --Second Amendment to Certificate of Incorporation of the
                company dated May 27, 1987. Incorporated herein by reference to
                Exhibit 3.4 to the company's Annual Report on Form 10-KSB for
                the year ended December 31, 1987.

         3.5    --Third Amendment to Certificate of Incorporation of the company
                dated November 11, 1994. Incorporated herein by reference to
                Exhibit 4.4 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.6    --Fourth Amendment to Certificate of Incorporation of the
                company dated July 28, 1995. Incorporated herein by reference to
                Exhibit 4.5 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.7    --Fifth Amendment to Certificate of Incorporation of the company
                dated June 17, 1997. Incorporated herein by reference to Exhibit
                4.6 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.8    --Sixth Amendment to Certificate of Incorporation of the company
                dated March 31, 1998. Incorporated herein by reference to
                Exhibit 99.1 to the company's Report on Form 8-K dated April 13,
                1998.



                                       13
<PAGE>   16
                          AXCESS INC. AND SUBSIDIARIES


         3.9    --Seventh Amendment to Certificate of Incorporation of the
                company dated March 31, 1998. Incorporated herein by reference
                to Exhibit 99.2 to the company's Report on Form 8-K dated April
                13, 1998.

         3.10   --Eighth Amendment to Certificate of Incorporation of the
                company dated April 9, 1998. Incorporated herein by reference to
                Exhibit 99.3 to the company's Report on Form 8-K dated April 13,
                1998.

         4.1    --Certificate of Designation of the company's Series A, B and C
                Preferred Stock, dated December 27, 1995. Incorporated herein by
                reference to Exhibit 4.7 to the company's Registration Statement
                on Form S-3 (Registration No. 333-10665).

         4.2    --Certificate of Designation of the company's Series I Preferred
                Stock. Incorporated herein by reference to Exhibit 4.2 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         4.3    --Certificate of Designation of the company's Series J Preferred
                Stock. Incorporated herein by reference to Exhibit 4.3 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         10.1   --1991 Incentive Stock Option Plan, dated August 14, 1991.
                Incorporated herein by reference to Exhibit 10.10 to
                Lasertechnics' Annual Report on Form 10-KSB for the year ended
                December 31, 1991.

         10.2   --Purchase of common stock and Convertible Note Agreement
                between the company and J.P. Morgan Investment Corporation,
                dated July 8, 1994. Incorporated herein by reference to Exhibit
                10.19 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1994.

         10.3   --Note Purchase Agreement dated June 25, 1998, by and among the
                company, J.P. Morgan Investment Corporation and Wolfensohn
                Associates L.P. Incorporated by reference to Exhibit 10.15 to
                the company's Quarterly Report on Form 10-QSB for the period
                ended September 30, 1998.

         10.4   --Amendment to Notes and Note Purchase Agreement dated December
                31, 1998, by and among the company, Antiope Partners L.L.C. and
                J.P. Morgan Investment Corporation. Incorporated herein by
                reference to Exhibit 10.16 to Amendment No. 1 to the company's
                Annual Report on Form 10-KSB for the year ended December 31,
                1997.

         10.5   --Series H Preferred Stock Purchase Agreement dated December 29,
                1997, by and among the company and Amphion Ventures L.P.
                Incorporated herein by reference to Exhibit 10.17 to Amendment
                No. 1 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1997.

         10.6   --Preferred Stock Purchase Agreement dated October 21, 1998 by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.8 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998. 



                                       14
<PAGE>   17

                          AXCESS INC. AND SUBSIDIARIES

         10.7   --Form of Warrant to purchase shares of the company's common
                stock issued to Antiope Partners L.L.C. and Amphion Ventures
                L.P. Incorporated herein by reference to Exhibit 10.20 to
                Amendment No. 1 to the company's Annual Report on Form 10-KSB
                for the year ended December 31, 1997.

         10.8   --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.12 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.

         10.9   --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and Antiope Partners L.L.C. Incorporated
                herein by reference to Exhibit 10.13 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.

         10.10  --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and J.P. Morgan Investment Corporation.
                Incorporated herein by reference to Exhibit 10.14 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         10.11  --Stock and Asset Purchase Agreement dated March 30, 1999, by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.15 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.

         27.1   --Financial Data Schedule.*

         27.2   --Restated Financial Data Schedule.*

    ----------------
     *Filed herewith.


     B.  REPORTS ON FORM 8-K

     None.



                                       15
<PAGE>   18

                                   SIGNATURES

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

                                             AXCESS, INC.


Date: May 14, 1999                           By: /s/ Danny G. Hair
                                                --------------------------------
                                                Danny G. Hair, Executive Vice 
                                                President, Chief Financial 
                                                Officer and Secretary
                                                (Principal Accounting and 
                                                Financial Officer)



                                       16

<PAGE>   19

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                            DESCRIPTION
       -------                           -----------
       <S>      <C>                                                               
         3.1    --Certificate of Incorporation of the company. Incorporated
                herein by reference to Exhibit 3.1 to the company's Registration
                Statement on Form S-1 (Registration No. 2-80946).

         3.2    --By-laws of AXCESS. Incorporated herein by reference to Exhibit
                3.2 to the company's Registration Statement on Form S-1
                (Registration No. 2-80946).

         3.3    --First Amendment to Certificate of Incorporation of the company
                dated June 6, 1986. Incorporated herein by reference to Exhibit
                3.3 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1987.

         3.4    --Second Amendment to Certificate of Incorporation of the
                company dated May 27, 1987. Incorporated herein by reference to
                Exhibit 3.4 to the company's Annual Report on Form 10-KSB for
                the year ended December 31, 1987.

         3.5    --Third Amendment to Certificate of Incorporation of the company
                dated November 11, 1994. Incorporated herein by reference to
                Exhibit 4.4 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.6    --Fourth Amendment to Certificate of Incorporation of the
                company dated July 28, 1995. Incorporated herein by reference to
                Exhibit 4.5 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.7    --Fifth Amendment to Certificate of Incorporation of the company
                dated June 17, 1997. Incorporated herein by reference to Exhibit
                4.6 to the company's Registration Statement on Form S-3
                (Registration No. 333-10665).

         3.8    --Sixth Amendment to Certificate of Incorporation of the company
                dated March 31, 1998. Incorporated herein by reference to
                Exhibit 99.1 to the company's Report on Form 8-K dated April 13,
                1998.

         3.9    --Seventh Amendment to Certificate of Incorporation of the
                company dated March 31, 1998. Incorporated herein by reference
                to Exhibit 99.2 to the company's Report on Form 8-K dated April
                13, 1998.

         3.10   --Eighth Amendment to Certificate of Incorporation of the
                company dated April 9, 1998. Incorporated herein by reference to
                Exhibit 99.3 to the company's Report on Form 8-K dated April 13,
                1998.

         4.1    --Certificate of Designation of the company's Series A, B and C
                Preferred Stock, dated December 27, 1995. Incorporated herein by
                reference to Exhibit 4.7 to the company's Registration Statement
                on Form S-3 (Registration No. 333-10665).
</TABLE>

<PAGE>   20
<TABLE>
<S>             <C>
         4.2    --Certificate of Designation of the company's Series I Preferred
                Stock. Incorporated herein by reference to Exhibit 4.2 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         4.3    --Certificate of Designation of the company's Series J Preferred
                Stock. Incorporated herein by reference to Exhibit 4.3 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         10.1   --1991 Incentive Stock Option Plan, dated August 14, 1991.
                Incorporated herein by reference to Exhibit 10.10 to
                Lasertechnics' Annual Report on Form 10-KSB for the year ended
                December 31, 1991.

         10.2   --Purchase of common stock and Convertible Note Agreement
                between the company and J.P. Morgan Investment Corporation,
                dated July 8, 1994. Incorporated herein by reference to Exhibit
                10.19 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1994.

         10.3   --Note Purchase Agreement dated June 25, 1998, by and among the
                company, J.P. Morgan Investment Corporation and Wolfensohn
                Associates L.P. Incorporated by reference to Exhibit 10.15 to
                the company's Quarterly Report on Form 10-QSB for the period
                ended September 30, 1998.

         10.4   --Amendment to Notes and Note Purchase Agreement dated December
                31, 1998, by and among the company, Antiope Partners L.L.C. and
                J.P. Morgan Investment Corporation. Incorporated herein by
                reference to Exhibit 10.16 to Amendment No. 1 to the company's
                Annual Report on Form 10-KSB for the year ended December 31,
                1997.

         10.5   --Series H Preferred Stock Purchase Agreement dated December 29,
                1997, by and among the company and Amphion Ventures L.P.
                Incorporated herein by reference to Exhibit 10.17 to Amendment
                No. 1 to the company's Annual Report on Form 10-KSB for the year
                ended December 31, 1997.

         10.6   --Preferred Stock Purchase Agreement dated October 21, 1998 by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.8 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998. 

         10.7   --Form of Warrant to purchase shares of the company's common
                stock issued to Antiope Partners L.L.C. and Amphion Ventures
                L.P. Incorporated herein by reference to Exhibit 10.20 to
                Amendment No. 1 to the company's Annual Report on Form 10-KSB
                for the year ended December 31, 1997.

         10.8   --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.12 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.

         10.9   --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and Antiope Partners L.L.C. Incorporated
                herein by reference to Exhibit 10.13 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.
</TABLE>

<PAGE>   21
<TABLE>
<S>             <C>
         10.10  --Note Payable Conversion Agreement dated December 31, 1998, by
                and between the company and J.P. Morgan Investment Corporation.
                Incorporated herein by reference to Exhibit 10.14 to the
                company's Annual Report on Form 10-KSB for the year ended
                December 31, 1998.

         10.11  --Stock and Asset Purchase Agreement dated March 30, 1999, by
                and between the company and Amphion Ventures L.P. Incorporated
                herein by reference to Exhibit 10.15 to the company's Annual
                Report on Form 10-KSB for the year ended December 31, 1998.

         27.1   --Financial Data Schedule.*

         27.2   --Restated Financial Data Schedule.*
</TABLE>

* Filed herewith