<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-QSB

  [X] Quarterly Report under Section 13 of the Securities Exchange Act of 1934

                     FOR THE QUARTER ENDED DECEMBER 31, 1998

                                       OR

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

              For the transition period from ________ to _________

                         COMMISSION FILE NUMBER 1-14004

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

           DELAWARE                                           04-3166089
(State or other jurisdiction of                             (IRS employer
 incorporation or organization)                          identification number)


                             2425 NORTH 55TH STREET
                                BOULDER, CO 80301
                    (Address of principal executive offices)


                                 (303) 447-1773
                           (Issuers telephone number)


   Check whether 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
                                   -----      -----
   State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

COMMON STOCK, $0.001 PAR VALUE                          2,948,135 COMMON SHARES
          (Class)                               OUTSTANDING AT FEBRUARY 9, 1999


            Transitional Small Business Disclosure Format Yes     No X
                                                             ---    ---
<PAGE>   2
                                 XENOMETRIX, INC
                                   FORM 10-QSB
                     FOR THE PERIOD ENDED DECEMBER 31, 1998

                                      INDEX


PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Item 1.  Financial Statements

<S>                                                                                                      <C>
         Balance Sheet - December 31, 1998................................................................Page 3

         Statement of Operations - Quarters ended December 31, 1998 and 1997..............................Page 4

         Statement of Cash Flows - Quarters ended December 31, 1998 and 1997..............................Page 5

         Notes to Financial Statements....................................................................Page 6

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



PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K.................................................................Page 12

Signatures................................................................................................Page 13
</TABLE>


                                       2
<PAGE>   3
Part One--Financial Information

                                XENOMETRIX, INC.
                                  Balance Sheet
                               December 31, 1998
                                   (Unaudited)

                                     Assets

<TABLE>
<CAPTION>
Current Assets:
<S>                                                                             <C>     
             Cash                                                               $     83,000
             Accounts receivable, net                                                 20,000
             Inventory                                                                20,000
             Prepaid insurance                                                        66,000
             Deposits and prepaid expense                                             29,000
                                                                                ------------
                            Total current assets                                     218,000

Property and equipment, net                                                          548,000
Patents, net                                                                         441,000
                                                                                ------------
                            Total assets                                        $  1,207,000
                                                                                ============
                        Liabilities and Stockholders' Equity

Current Liabilities:
             Accounts payable                                                   $    631,000
             Accrued salaries and wages                                              204,000
             Accrued interest payable                                                 38,000
             Other accrued liabilities                                               138,000
             Senior promissory notes, net of discount                              1,500,000
                                                                                ------------
                            Total current liabilities                              2,511,000
                                                                                ------------
Stockholders' Equity:
Preferred stock--$.001 par value; 5,000,000 shares authorized;
             no shares issued and outstanding                                             --
Common stock--$.001 par value; 20,000,000 shares authorized;
             2,948,000 shares issued and outstanding                                   3,000
Additional paid-in capital                                                        16,093,000
Accumulated deficit                                                              (17,400,000)
                                                                                ------------
                            Total stockholders' equity                            (1,304,000)
                                                                                ------------
                            Total liabilities and stockholders' equity          $  1,207,000
                                                                                ============
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>   4
                                XENOMETRIX, INC.
                             Statement of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                         Quarter Ended                   Six Months Ended
                                                          December 31,                      December 31,
                                                ------------------------------      ------------------------------
                                                    1998              1997              1998              1997
                                                ------------      ------------      ------------      ------------
<S>                                             <C>               <C>               <C>               <C>         
Revenue:
              Products and services             $    197,000      $    195,000      $    230,000      $    394,000
              Licensing revenue                      326,000                --           626,000                --
                                                ------------      ------------      ------------      ------------
              Total revenue                          523,000           195,000           856,000           394,000
                                                ------------      ------------      ------------      ------------
Cost of revenue:
              Cost of products and services          243,000           159,000           281,000           304,000
              Cost of licensing revenue               63,000                --           131,000                --
                                                ------------      ------------      ------------      ------------
              Total cost of revenue                  306,000           159,000           412,000           304,000
                                                ------------      ------------      ------------      ------------
                          Gross profit               217,000            36,000           444,000            90,000
                                                ------------      ------------      ------------      ------------
Research and development                             108,000           339,000           225,000           712,000
Selling, general and administrative                  328,000           519,000           723,000           984,000
                                                ------------      ------------      ------------      ------------
              Total operating expense                436,000           858,000           948,000         1,696,000
                                                ------------      ------------      ------------      ------------
Operating loss                                      (219,000)         (822,000)         (504,000)       (1,606,000)
              Interest expense, net                  (67,000)         (167,000)         (198,000)         (277,000)
                                                ------------      ------------      ------------      ------------
Net loss                                        $   (286,000)     $   (989,000)     $   (702,000)     $ (1,883,000)
                                                ============      ============      ============      ============

Loss per common share-basic                     $      (0.10)     $      (0.34)     $      (0.24)     $      (0.64)
                                                ============      ============      ============      ============


Weighted average shares outstanding                2,948,000         2,948,000         2,948,000         2,948,000
                                                ============      ============      ============      ============
</TABLE>



The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>   5
                                XENOMETRIX, INC.
                             Statement of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                              December 31,
                                                                                     ------------------------------
                                                                                         1998              1997
                                                                                     ------------      ------------
<S>                                                                                  <C>               <C>          
Cash Flows from Operating Activities:
          Net  loss                                                                  $   (702,000)     $ (1,883,000)
          Adjustments to reconcile net loss to net cash
          used in operating activities:
                    Depreciation and amortization                                         184,000           176,000
                    Amortization of discount on senior promissory notes                   105,000           203,000
                    Changes in assets and liabilities:
                               Accounts receivable                                         95,000            63,000
                               Receivable from termination of operating lease                  --           115,000
                               Inventory                                                   35,000            16,000
                               Prepaid insurance                                          115,000           (54,000)
                               Deposits and prepaid expense                                23,000            57,000
                               Accounts payable and accrued liabilities                    66,000            72,000
                                                                                     ------------      ------------
                    Net cash used in operating activities                                 (79,000)       (1,235,000)
                                                                                     ------------      ------------

Cash Flows from Investing Activities:
          Capital expenditures                                                                 --           (10,000)
          Patent acquisition cost                                                        (179,000)          (39,000)
                                                                                     ------------      ------------
                    Net cash used in investing activities                                (179,000)          (49,000)
                                                                                     ------------      ------------

Cash Flows from Financing Activities:
          Proceeds from issuance senior promissory notes and warrants                          --           750,000
                                                                                     ------------      ------------
                    Net cash provided by financing activities                                  --           750,000
                                                                                     ------------      ------------

Net decrease in cash                                                                     (258,000)         (534,000)

Cash and cash equivalents at beginning of period                                          341,000           603,000
                                                                                     ------------      ------------

Cash and cash equivalents at end of period                                           $     83,000      $     69,000
                                                                                     ============      ============
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                       5

<PAGE>   6
                                XENOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE PERIOD ENDING DECEMBER 31, 1998
                                   (Unaudited)

1.  Basis of Presentation

The accompanying financial statements are unaudited. However, in the opinion of
management, the accompanying financial statements reflect all adjustments,
consisting of only normal recurring adjustments, necessary for fair
presentation. Interim results of operations are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the Xenometrix Annual Report on Form 10-KSB for the year ended
June 30, 1998.

Except for the historical information contained in this Form 10-QSB, this Form
contains forward-looking statements that involve risks and uncertainties.
Xenometrix's actual results could differ materially from those discussed in this
Report. Factors that could cause or contribute to such differences include, but
are not limited to, those discussed in this Report and any documents
incorporated herein by reference, as well as in the Xenometrix Annual Report on
Form 10-KSB for the year ended June 30, 1998.

2.  Senior Promissory Notes

Between June 20, 1997 and January 12, 1998, Xenometrix issued Senior promissory
notes, (the "Notes") in the total amount of $1,500,000 to serve as bridge
financing. The Notes are collateralized by a security interest in all of the
assets of the Company. The Notes were originally due March 25, 1998. The
maturity date on the Notes has been extended several times, most recently until
February 25, 1999, (see Note 5). The Notes bear interest at 12% per annum. In
the event of a sale of the Company prior to the maturity date, the Notes are due
at the closing of such sale. In connection with the issuance of these Notes,
Xenometrix issued warrants to purchase 499,995 shares of common stock. In
consideration for the extension of the due date on the Notes to February 25,
1999, the exercise price of the warrants was reduced to $0.125 per share and the
Company agreed to continue to pay 38.5% of all gross licensing revenues received
during the extension period to the Note holders, as payment against the accrued
interest and principal due on the Notes. In the event of default by the Company
on the Notes, the interest rate will increase to 18% per annum, the Note holders
will have the right to appoint a majority of the Board of Directors of the
Company and the Company's assets will be subject to foreclosure.

3.  Earnings (Loss) Per Common Share

Effective for the quarter ended December 31, 1998, net loss per common share is
computed using the Financial Accounting Standards Board's Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share" (EPS). SFAS No. 128
establishes new standards for computing and presenting EPS and supercedes all
prior EPS guidance found in


                                       6
<PAGE>   7

APB Opinion 15. EPS for all prior periods has been restated to conform with the
requirements of SFAS No. 128.

Basic loss per common share is computed by dividing the net loss by the
weighted-average number of common shares outstanding during the period.

Diluted loss per share is computed using the treasury stock method, based upon
the weighted-average number of common shares, dilutive common stock equivalent
shares and the assumed conversion of any dilutive convertible securities
outstanding during the period. Because the inclusion of these common stock
equivalents and convertible securities would be anti-dilutive, they are excluded
from the Company's calculation of diluted loss per share.

4.  Recently Issued Accounting Standards

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131, which is effective for fiscal
years beginning after December 15, 1997, establishes new disclosure requirements
for operating segments, including products, services, geographic areas, and
major customers. The Company has adopted SFAS No. 131 for the 1999 fiscal year,
but does not expect the new accounting standard to have a material effect on the
Company's reported financial results.

5.  Subsequent Events

As of February 3, 1999, the Company granted seven non-exclusive licenses for its
gene expression profiling patents. In addition, the Company granted its first
non-exclusive license for the Company's proprietary automated Ames technology.
These licenses incorporate up-front fees and potential future revenues as well
as potential future business and research collaborations.

Ownership of the Company's principal patents is shared with Harvard University
and Xenometrix has an exclusive worldwide license to Harvard's portion of the
intellectual property. In the Company's September 30, 1998 Form 10-QSB, the
Company reported that it had received written notice of default from Harvard.
The Company cured the default.

Xenometrix completed a restructuring February 1, 1999, resulting in a reduction
of the Company's work force to four full time employees. Stephen J. Sullivan,
President and Chief Executive Officer resigned and will remain on the Board of
Directors as non-executive Chairman. Pauline Gee has been elected President and
Chief Scientific Officer. A substantial portion of the Company's occupied
premises was subleased to a biotechnology company effective November 1, 1998.
Management believes these changes will reduce future overhead significantly
while still allowing for the full production of its line of gene profiling and
mutagenicity kits, services of its Client Research Laboratory and future
sublicensing arrangements. The Company will also resume shipping mammalian gene
profiling kits.


                                       7
<PAGE>   8
ITEM 2.                         XENOMETRIX, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion of the results of operations and financial
condition should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Report. Except for the historical
information contained herein, this Report contains forward-looking statements
that involve risks and uncertainties. Xenometrix's actual results could differ
materially from those discussed in this Report. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in this Report and any documents incorporated herein by reference, as well as in
the Xenometrix Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998.

OVERVIEW

     The Company continues to focus on licensing of its intellectual property.
On January 22, 1998, the Company was granted a broad basic patent by the
European Patent Office covering most gene expression profiles resulting from the
exposure of eukaryotic cells (including human, animal and yeast cells) to
pharmaceutical compounds and other chemical entities. On September 22, 1998, the
United States Patent and Trademark Office issued a patent to the Company
covering similar claims in the United States. The Company's strategy to offer
non-exclusive licenses has resulted in fourteen agreements to date. The Company
continues to pursue broad business collaborations with parties whose current or
future business activities may be complementary to those of the Company.

     The Company serves the drug safety and chemical markets, and has been
focusing a significant portion of its effort and resources developing and
marketing its products and services to pharmaceutical companies for testing,
evaluation and optimization of their lead compounds. The timing and amount of
revenues from sales of products and services to the drug discovery and
development market and chemical markets cannot be predicted with certainty.
Similarly, the Company's ability to enter into license agreements and meaningful
collaborative arrangements with customers or other potential collaborators and
licensees cannot be predicted with a high degree of accuracy. Accordingly,
results of operations for any period may be unrelated to results of operations
for any other period and are likely to fluctuate sharply. In addition,
historical results should not be viewed as indicative of future operating
results.

     As of February 11, 1999 the Company has cash of approximately $572,000. The
Company estimates that its current resources together with projected collections
on accounts receivable from customers will be sufficient to meet its operating
needs through approximately June 1, 1999. Xenometrix is currently in discussions
with several companies regarding licensing of the Company's U. S. and European
gene profiling patents, and is hopeful that additional revenue from these
licenses will be sufficient to fund the Company's operating needs for the next
few months. The Company subleased a portion of its facilities to 



                                       8
<PAGE>   9
another biotechnology company, which enabled the Company to retain its modern,
state-of-the-art facility while reducing its monthly expenditures.

     The Company also has $1,500,000 of bridge notes that are due February 25,
1999, subject to further extension. The Company believes that it can obtain a
further extension of the due date of the Notes because a substantial portion of
the licensing revenue generated will go towards paying down the principal.
However, the continued presence of the debt and the periodic need to obtain
additional extensions on the maturity date of the bridge note fueled uncertainty
over the Company's prospects for survival. This uncertainty has been a potential
obstacle to continued licensing as well as to developing strategic partners. The
actions taken in recent months are designed to strengthen the Company's
prospects for successful operation and reduce concerns over the Company's
survival.

RESULTS OF OPERATIONS

COMPARISON OF QUARTERS ENDED DECEMBER, 1998 AND 1997

     Revenue. For the quarter ended December 31, 1998, revenue increased 168% to
$333,000 from $195,000 reported in the comparable quarter of the prior year. The
increase was attributable to revenue from up-front licensing fees relating to
the Company's issued gene expression profiling patents in the United States and
Europe. Sales of products and service revenue from the Company's client research
laboratory increased to $197,000 from $195,000 reported in the prior year.
However, a substantial portion of the contract work on a client research
laboratory for a major international pharmaceutical company that is evaluating
the Company's technology was completed in the previous quarter for 1998. In
accordance with the Company's past practices, the revenue and costs associated
with performing this work were recognized in the quarter ended December 31, 1998
when the work was completed.

     Gross Profit. For the quarter ended December 31, 1998, gross profit
increased to $217,000 from $36,000 reported in the prior year. The increase in
gross profit was due to the large portion of total revenue from licensing fees.
The cost of licensing revenue was $63,000, representing royalties due to Harvard
University under the Company's existing licensing agreement and a portion of the
amortization of the costs associated with the patents. Gross profit margins on
revenue from sales of products and services were -23% in the current fiscal
year, primarily due to fixed manufacturing costs being spread over a relatively
low revenue base.

     Research and Development Expenses (R&D). R&D expenses for the quarter ended
December 31, 1998 decreased 68% to $108,000 from $339,000 reported in the same
quarter of the prior year. This decrease was primarily attributable to reduced
headcount in the R&D department and personnel costs in the R&D department being
allocated to the cost of products and services sold and allocated to deferred
costs associated with client research laboratory work in progress. Laboratory
supplies expense and most other expenses in the R&D department were also down in
the current quarter, compared to the comparable quarter


                                       9
<PAGE>   10

of the prior year. In addition, in the quarter ended December 31, 1997,
personnel costs from other departments were allocated to the R&D department, as
scientists from these areas assisted with research and product development
projects.

     Selling, General and Administrative Expenses (SG&A). For the quarter ended
December 31, 1998, SG&A expenses were $328,000, down 37% from $519,000 in the
prior year. This decrease was primarily attributable to lower business
development, legal, finance, accounting and administrative costs resulting from
personnel reductions in February 1998 and lower Board of Directors costs
associated with reducing the size of the Board and replacing cash compensation
to Board members with increased stock option grants. These cost savings were
partially offset by higher costs for directors and officers liability insurance.

     Interest Expense, Net. During the quarter ended December 31, 1998, the
Company incurred net interest expense of $67,000 compared to $167,000 in the
comparable quarter of the prior fiscal year. The net interest expense incurred
in the prior year quarter included interest accrued on the Notes at the stated
interest rate and the amortization of the values attributable to the warrants
issued in conjunction with the Notes up to September 25, 1998. The interest rate
on the Notes remains at 12% per annum and Xenometrix will continue to pay 38.5%
of gross licensing revenues received during the extension period to the Note
holders as payment against the outstanding interest and principal due on the
Notes. In the event of a sale of the Company prior to February 25, 1999, the
Notes will be due at the closing of such sale.

     Net Loss. For the quarter ended December 31, 1998, the net loss decreased
to $286,000 or $0.10 per share from the net loss of $989,000 or $0.34 per share,
reported for the comparable quarter of 1997.

IMPACT OF YEAR 2000 ISSUES

     The Year 2000 issue is related to computer software utilizing two digits
rather than four to define the appropriate year. As a result, any of the
Company's computer programs or any of the Company's suppliers or vendors that
have date sensitive software may incur system failures or generate incorrect
data if "00" is recognized as 1900 rather than 2000.

     The Company has evaluated the proprietary software used to facilitate
performing, analyzing and interpreting the results of its assays, and the
proprietary software used in conjunction with its bioinformatics data base, and
found them to appropriately address the date issues associated with the year
2000. The Company believes that all dates in its proprietary software are stored
with either a minimum of four digits for the year or as a text string, thereby
preventing inappropriate sequencing of date sensitive information. While the
Company believes that its proprietary software will not produce any material
problems, erroneous calculations or degradation of performance as a result of
Year 2000 issues, users are advised that the Company's software must be run on
Year 2000 compliant platforms.


                                       10
<PAGE>   11
     The Company plans to verify whether its major suppliers, service providers
and financial institutions are Year 2000 compliant, however there can be no
assurance that the systems and networks of its key suppliers and customers will
not be affected by Year 2000 issues, which could have an adverse effect on the
Company's business, operating results and financial condition. The Company
believes, based upon the evaluations performed upon its proprietary software and
the claims of Year 2000 compliance made by the providers of non-proprietary
software used by the Company, that the impact of Year 2000 will not be material.
However, to the extent the Company or third parties upon which it relies do not
timely achieve Year 2000 readiness, the Company's results of operations may be
adversely affected.

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1998, the Company had cash of $83,000. During the three
month period ended December 31, 1998, $79,000 was used to fund Xenometrix'
operations, $179,000 was invested in patents, and there were no cash resources
generated from or used for financing activities.

     As of February 11, 1998, the Company had cash of approximately $572,000
compared with $341,000 at June 30, 1998. The Company estimates that its current
resources together with projected collections on accounts receivable from
customers will be sufficient to meet its operating needs through approximately
June 1, 19998. The Company has granted eight non-exclusive licenses and the
Company is currently in discussions with several companies regarding licensing
of the Company's U. S. and European gene profiling patents, and is hopeful that
additional revenue from these licenses will be sufficient to fund the Company's
operating needs for the next few months.

     A substantial portion of the Company's occupied premises was subleased to a
biotechnology company effective November 1, 1998. Management believes these
changes will reduce future overhead significantly while still allowing for the
full production of its line of gene profiling and mutagenicity kits, services of
its Client Research Laboratory and future sublicensing arrangements. The Company
will also resume shipping mammalian gene profiling kits. The Company's work
force has been reduced to four full time employees.

     The Company believes that it is unlikely that it can generate sufficient
licensing revenue and revenue from products and services to fund the Company's
operations and pay off the Notes on the maturity date. The Company believes that
it can obtain a further extension of the due date of the Notes because a
substantial portion of the licensing revenue generated will go towards paying
down the principal. However, the continued presence of the debt and the periodic
need to obtain additional extensions on the maturity date of the bridge note
fueled uncertainty over the Company's prospects for survival. Accordingly, it is
seeking strategic partnerships that may satisfy all of these needs, including
but not limited to, the sale of the Company.

                                       11
<PAGE>   12
                           PART II--OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.


(a)  Exhibits

          27.1  Summary Financial Information Schedule


(b)  Reports on Form 8-K


          On February 10, 1998, Registrant filed a Form 8-K reporting that it
          had restructured its operations on February 3, 1999, with changes to
          the Company's management and board of directors and the Company's
          execution of eight license agreements.


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




                                       12

<PAGE>   13
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf.

                                XENOMETRIX, INC.



                          /s/ Pauline Gee

February 16, 1999         Pauline Gee
                          President, Chief Scientific Officer






                                       13
<PAGE>   14
                                EXHIBIT INDEX


<TABLE>
<CAPTION>
  EXHIBIT                    
    NO.                      DESCRIPTION
-----------                  -----------
<S>               <C>
27.1              Summary Financial Information Schedule
</TABLE>