<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For Period Ended                 March 31, 1998
                ----------------------------------------------------------------

[ ]  Transition Report Pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934

For the transition period from         to
                              --------------------------------------------------

Commission File Number              00-23527
                      ----------------------------------------------------------

                                   eSoft, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              DELAWARE                                  84-0938960
     ---------------------------                --------------------------
       (State of Incorporation)                  (IRS Employer ID Number)

      5335 Sterling Dr. Suite C                 Boulder,  CO         80301
----------------------------------------        -----------------------------
(Address of principle executive offices)        (city) (state)     (zip code)

                                 (303) 440-1600
                -------------------------------------------------
                Registrant's telephone number including area code


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

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

                         YES                 NO  X
                            -----              -----

Transitional Small Business Disclosure format (check one):

                         YES                 NO  X
                            -----              -----

The number of shares outstanding of the Registrant's $0.01 par value common
stock on April 27, 1998 was 5,289,061.


<PAGE>   2
PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                                   eSOFT, INC.

                                 BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             DECEMBER 31,          MARCH 31,
                                                                 1997                1998
                                                             -----------         -----------
<S>                                                          <C>                 <C>
                                               ASSETS

CURRENT ASSETS
     Cash                                                    $   102,837         $ 1,187,297
     Receivables:
        Trade, net of allowance for doubtful accounts            199,832             625,468
        Subscriptions Receivable                                 200,000              50,000
     Inventories                                                  94,607             163,749
     Prepaid expense and other                                    24,799             115,991
     Note Receivables                                             20,000              64,400
     Deferred income taxes                                        18,000              18,000
                                                             -----------         -----------
                           Total current assets                  660,075           2,224,905
PROPERTY AND EQUIPMENT, AT COST:
     Computer equipment                                          119,544             136,868
     Furniture and equipment                                     143,157             184,788
                                                             -----------         -----------
                                                                 262,701             321,656
     Less accumulated depreciation                              (147,881)           (157,481)
                                                             -----------         -----------
                           Net property and equipment            114,820             164,175

CAPITALIZED SOFTWARE COSTS, NET OF AMORTIZATION                  651,470             662,599

OTHER ASSETS
     Deferred offering costs                                     280,896              27,488
     Other assets                                                 17,539               7,689

TOTAL ASSETS                                                 $ 1,724,800         $ 3,086,856
                                                             ===========         ===========
</TABLE>



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


                                       2
<PAGE>   3

                                   eSOFT, INC.

                                 BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,          MARCH 31,
                                                                     1997                1998
                                                              -----------         -----------
<S>                                                           <C>                 <C>
                                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Note Payable - bank                                      $    75,757         $    68,172
     Accounts payable                                             174,754             384,800
     Deferred revenue                                              46,622              43,494
     Accrued expenses and other                                    91,949             118,383
     Note Payable - related party - current                        20,000              20,000
                                                              -----------         -----------
                            Total current liabilities             409,082             634,849

     Deferred tax liability - net                                 180,000             180,000
     Convertible notes payable - related parties                  355,903                  --
                                                              -----------         -----------
                            Total liabilities                     944,985             814,849

STOCKHOLDERS= EQUITY
     Common stock, par value $.01 per share;
       authorized 50,000,000 shares; 2,433,158 and
         5,039,061 issued and outstanding December 31,
         1997 and March 31, 1998, respectively                     24,332              50,392
       Additional paid-in capital                               1,135,432           2,896,804
       Accumulated deficit                                       (379,949)           (675,189)
                                                              -----------         -----------
                            Total stockholders' equity            779,815           2,272,007

TOTAL LIABILITIES AND
    STOCKHOLDERS= EQUITY                                      $ 1,724,800         $ 3,086,856
                                                              ===========         ===========
</TABLE>



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


                                       3
<PAGE>   4

                                   eSOFT, INC.

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS
                                                      ENDED
                                                     MARCH 31,
                                             1997                1998
                                          -----------         -----------
<S>                                       <C>                 <C>
REVENUES:                                 $   209,281         $   733,932

COST OF GOODS SOLD:                            63,377             273,744
                                          -----------         -----------
GROSS PROFIT                                  145,904             460,188

EXPENSES
  Sales and marketing expense                  23,915             317,126
  General & administrative expense            159,106             306,727
  Engineering Expense                              --              68,623
  Software amortization costs                      --              48,872
  Research and development                         --              13,372
                                          -----------         -----------
                                              183,021             754,720

OTHER INCOME (EXPENSE):
  Interest Income                                 644                   4
  Interest expense                             (6,305)               (712)
                                          -----------         -----------
                                               (5,661)               (708)

NET LOSS                                  ($   42,778)        ($  295,240)
                                          ===========         ===========

BASIC AND DILUTED INCOME (LOSS)
      PER COMMON SHARE:                   $     (0.03)        $     (0.09)
                                          ===========         ===========

WEIGHTED AVERAGE SHARES
OUTSTANDING                                 1,263,158           3,108,234
                                          ===========         ===========
</TABLE>



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


                                       4
<PAGE>   5

                                   eSOFT, INC.

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          FOR THE THREE MONTHS
                                                                              ENDED MARCH 31,

                                                                       1997                1998
                                                                    -----------         -----------
<S>                                                                 <C>                 <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net Income (loss) from operations                                 $   (42,778)        $  (295,240)
  Adjustments to reconcile to net cash provided by (used in)
  operating activities
      Depreciation & Software amortization                               39,913              58,473
      Provision for losses on accounts receivables                           --              14,070

  Changes in operating assets and liabilities: (Increase)
  decrease in:
      Accounts receivable - trade                                       (18,619)           (439,706)
      Inventories                                                         8,791             (69,142)
      Other assets                                                           --               9,850
      Prepaid expenses                                                       --             (91,192)

  Increase (decrease) in:
      Accounts payable                                                    4,406             210,046
      Accrued expenses                                                   (3,331)             26,434
      Deferred revenue                                                  (12,720)             (3,129)
                                                                    -----------         -----------
Net cash used in operating activities                                   (24,338)           (579,536)

CASH FLOW FROM INVESTING ACTIVITIES:
      Purchase of equipment                                                  --             (58,955)
      Capitalized software costs                                        (67,481)            (60,000)
      Notes receivable - related parties                                     --             (44,400)
                                                                    -----------         -----------
Net cash used in investing activities                                   (67,481)           (163,355)

CASH FLOW FROM FINANCING ACTIVITIES
      Principal (payments) on borrowings                                 92,809              (7,586)
      Deferred offering costs                                                --             253,408
      Conversion of promissory notes                                         --            (355,903)
      Proceeds from stock subscription                                       --             150,000
      Proceeds from sale of stock and conversion of note                     --           1,787,432
                                                                    -----------         -----------
  Net cash used in financing activities                                  92,809           1,821,351

INCREASE (DECREASE) IN CASH                                                 990           1,084,460

CASH: BEGINNING OF PERIOD                                                20,750             102,837
                                                                    -----------         -----------
CASH: END OF PERIOD                                                 $    21,740         $ 1,187,297
                                                                    ===========         ===========
</TABLE>



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


                                       5
<PAGE>   6




                                   eSOFT, INC.

                          NOTES TO FINANCIAL STATEMENTS

     1.   INTERIM FINANCIAL INFORMATION

          In the opinion of management, the accompanying unaudited consolidated
          financial statements contain all adjustments necessary to present
          fairly the financial position as of March 31, 1998 and December 31,
          1997 and the results of operations and statement of cash flows for the
          periods presented. The results of operations for the three month
          periods ending March 31, 1998 and 1997 are not necessarily indicative
          of results to be expected for the full year.

     2.   TRADE RECEIVABLES

          The following information summarizes trade receivables:

<TABLE>
<CAPTION>
                                            DECEMBER 31,         MARCH 31,
                                                1997                1998
                                            -----------         -----------
<S>                                         <C>                 <C>    
      Accounts Receivables                      247,832             687,539
Less allowance for doubtful accounts            (48,000)            (62,071)
                                            -----------         -----------
                                            $   199,832         $   625,468
                                            ===========         ===========
</TABLE>

          The Company has one customer that makes up 36% of the total
          receivables as of March 31, 1998 and 37% of total sales for the first
          quarter.

     3.   NOTES PAYABLES:

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,   MARCH 31,
                                                                              1997         1998
                                                                          ------------   ---------
<S>                                                                       <C>            <C>
Notes Payables:

On January 3, 1997, the Company, borrowed $100,000 from a bank,
bearing interest at 12% per annum and was payable with monthly
installments of $3,325 with the balance due on April 3, 1998. On
April 5, 1998, the loan was extended to October 5, 1998 with monthly
installment payments of $3,325 and a final payment of $51,924 due 
October 5, 1998. The loan is collateralized by all assets of the 
Company                                                                     $75,757        $68,172
                                                                            =======        =======
 

Related Party:

Two notes payable on demand to an officer, director and stockholder
of the Company, interest payable monthly at 7% per annum, if the
note is not paid when declared due the note shall draw interest at
12%, unsecured                                                              $20,000        $20,000
                                                                            =======        =======
</TABLE>


                                       6
<PAGE>   7

                                   eSOFT, INC.

                          NOTES TO FINANCIAL STATEMENTS

     4.   EARNINGS PER SHARE

          Basic earnings (loss) per share is calculated by dividing the net
          income(loss) by the weighted average common shares outstanding during
          the period. For purposes of computing diluted earnings per share,
          dilutive securities are not included when the effect is antidilutive.

     5.   PLANNED PRIVATE PLACEMENT

          On March 25, 1998, the Company entered into an engagement letter with
          C. M. Oliver & Company Limited ("Agent"), the Agent for the Canadian
          Offering, that sets forth the terms of a proposed private placement of
          shares of the Company's Common Stock. The offering price provided for
          in the engagement letter is $4.25 per share and the Agent will receive
          compensation of 7.5% ($0.32 per share) of the gross proceeds. The
          Agent has agreed to use its reasonable best efforts to sell the
          offered shares with a minimum purchase per investor of $70,000, in
          British Columbia, Europe and other jurisdictions. The offering is
          proposed to be made pursuant to an exemption from the registration
          requirements of the Securities Act of 1933 under Regulation S for
          shares sold outside the U.S. and not to U.S. Persons. Shares may also
          be offered and sold in the U.S. or to U.S. Persons pursuant to
          exemptions from such registration under Regulation D. The engagement
          letter provides that the Company will file a registration statement
          under the Securities Act of 1933 to register all shares issued in the
          private placement for sale in the U.S., and to use its best efforts to
          cause such a registration statement to become effective within 180
          days of the closing of the private placement. The Company does not
          expect to complete the private placement until approximately the end
          of May 1998. There can be no assurance that the private placement will
          be effectively completed for all or any of the 1,200,000 shares
          offered.


                                       7
<PAGE>   8



                           FORWARD-LOOKING STATEMENTS

               Statements made in this Form 10-QSB that are not historical or
          current facts are "forward-looking statements" made pursuant to the
          safe harbor provisions of Section 27A of the, Securities Act of
          1993("The ACT") and Section 21E of the Securities Exchange Act of
          1934. These statement often can be identified by the use of terms such
          as "may," "will," "expect," "believes," "anticipate," "estimate,"
          "approximate" or "continue," or the negative thereof. The Company
          intends that such forward-looking statements be subject to the safe
          harbors for such statements. The Company wishes to caution readers not
          to place undue reliance on any such forward-looking statements, which
          speak only as of the date made. Any forward-looking statements
          represent management's best judgment as to what may occur in the
          future. However, forward-looking statements are subject to risks,
          uncertainties and important factors beyond the control of the Company
          that could cause actual results and events to differ materially from
          historical results of operations and events and those presently
          anticipated or projected. These factors include adverse economic
          conditions, entry of new and stronger competitors, inadequate capital,
          unexpected costs, failure to gain product approval in foreign
          countries and failure to capitalize upon access to new markets.
          Additional risks and uncertainties which may affect forward-looking
          statements about the Company's IPAD business and prospects include the
          possibility that a competitor will develop a more comprehensive or
          less expensive IPAD solution, delays in market awareness of eSoft and
          its products, possible delays in eSoft's marketing strategy, which
          could have an immediate and material adverse effect by placing eSoft
          behind its competitors. The Company disclaims any obligation
          subsequently to revise any forward-looking statements to reflect
          events or circumstances after the date of such statement or to reflect
          the occurrence of anticipated or unanticipated events.

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

               The primary market being pursued by the Company consists of small
          to medium size businesses. The Company believes these businesses
          increasingly find it beneficial to host their own Internet
          infrastructure rather than rely upon an Internet service provider for
          all of their Internet access and connectivity needs. A secondary
          market consists of Internet service providers which can benefit from
          the Company's IPAD integrated software and hardware product line. The
          Company believes that for most small to medium size businesses, high
          speed large diameter pipeline access to the Internet is sufficiently
          important that the businesses would continue to rely upon an Internet
          service provider in order to gain that advantage if it were not
          available in Internet connectivity products such as the Company's IPAD
          products. With new advancements in Internet software, however,
          individual companies, without a great deal of software expertise, can
          now assume many of the responsibilities and functions which heretofore
          have been carried out by Internet service providers on their behalf.
          This includes control over a router, firewall, remote access server, a
          web server, and mail server. Perhaps most importantly, rather than
          paying an Internet service



                                       8
<PAGE>   9

          provider substantial fees in order to offer individual e-mail
          addresses plus Internet access to each of many employees, the IPAD
          products can provide such services to a growing company and their
          employees in a much more cost effective manner.

               During the quarter the Company continued to expand its
          distribution channels both domestically and aboard. It is the
          intention of the Company to rely upon distributors, resellers and
          direct sales to disseminate its product line throughout the market. In
          the quarter the Company hired a Director of Marketing Communications,
          and has retained international sales agents for Europe, Latin America
          and Asia. Manufacturing and customer support capabilities have been
          put in place in Europe in the first quarter of 1998. A Vice President
          of Sales will be added in the second quarter of 1998.

               To assist in creating more customer awareness, the Company has
          committed resources to the marketing expenditures to develop product
          awareness in the forthcoming quarter. The Company will further expend
          approximately $80,000 for participation in trade shows. Through a
          combination of reliance upon third party distributors as well as upon
          direct sales, the Company believes that it can progressively establish
          a profile as a major industry participant.

               Management believes its aggressive pursuit of its distribution
          channels will have both short and long-term effects on its operations.
          Cash flow from operations is anticipated to be utilized for the
          continued expansion of its marketing channels and support of its
          extended receivables terms to its new customers. In addition to these
          near-term effects, the Company expects that these efforts will expand
          its installed base of IPADs and continue its growth path. However,
          with the aggressive market expansion the Company anticipates consuming
          working capital to meet this continued growth curve. The Company will
          continue to explore banking relationship to fund a portion of this
          growth through the use of working capital loans.

     LIQUIDITY AND CAPITAL RESOURCES

               During the quarter the Company completed a $390,000 private
          placement in February and March 1998 of 390,000 shares of the
          Company's common stock, all at a price of $1.00 per share to officers,
          directors, key employees and consultants of the Company. The Company
          accepted subscriptions for an additional 50,000 shares at a price of
          $1.00 which was collected in April 1998.

               In the quarter the Company converted the non interest bearing
          Note payable to related parties in the amount of $353,903 into 353,903
          shares of the Company's common stock price of $1.00 per share.

               In March 1998 the Company completed its initial public offering
          of 1,550,000 shares of the Company's common stock at an offering price
          of $1.00 per share. Additionally, the Agent was issued 110,000 shares
          of the Company's common stock in the Canadian Offering along with
          warrants to purchase 250,000 shares of the Company's common stock at a
          price of $1.00 for the first 12 months and at a price of $1.15 for the
          next 12 months. The agent subsequent to March 31, 1998 exercised its
          right to purchase 250,000 shares of common stock.

               Net proceeds to the Company for the above listed offerings was
          $1,401,000.



                                       9
<PAGE>   10

     Cash Flow

               During the three months ended March 31, 1998, cash increased by
          $1,085,000. Adjustments to reconcile net loss resulted in an
          adjustment of the use of funds by $73,000 from depreciation,
          amortization of software costs and provision for loss on accounts
          receivables. Funds used in operating activities were ($580,000). Funds
          of $246,000 was provided from operating activities from an increase of
          $210,000 in accounts payables, $26,000 from an increase in accrued
          expenses, and a decrease of other assets of $10,000. Operating funds
          of $450,000 were used to finance the $440,000 increase in accounts
          receivables, $69,000 increases in inventories, and $91,000 increase in
          prepaids. Investments were made in capital equipment of ($59,000),
          capitalized software development costs ($60,000), an increase in notes
          receivables of ($44,000) for a total use of funds for investment
          activities of ($163,000), and a decrease of deferred revenue of
          ($3,000). Financing activities provided $1,827,000 of cash proceeds
          and conversion of debt. Cash in the amount of $1,787,000 was received
          during the period from the Company's IPO and private placement of
          2,516,000 shares of the Company's common stock. Principal payments and
          debt conversion on the Company's indebtedness reduced debt obligations
          by $363,000. The Company collected $200,000 of subscription
          receivables and had $50,000 of new subscriptions collected in April
          1998 for a net change of $150,000.  Deferred offering costs decrease
          by $253,408 from the completion of the Company's investing activities.

               The Company has no material commitments for external capital
          expenditures, however it will continue to capitalize software
          development costs consistent with its strategy of the development IPAD
          software for the market place.



                                       10
<PAGE>   11

      RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1998 COMPARED
                    TO THE THREE MONTHS ENDED MARCH 31, 1997

               Revenues increased by $525,000 or 251% to $734,000 in the 1998
          period versus revenue of $209,000 in the first quarter of 1997. The
          increase is associated with the continued expansion of the Company's
          sales effort of the IPAD product. The Company completed the roll out,
          in the first quarter of 1997 of the IPAD 2500 and in the fourth
          quarter of 1997 the IPAD 1200. This broadened product line along with
          the expanded sales and marketing efforts, both domestically and
          abroad, resulted in the Company posting significant sales growth.

               Gross profit margin in the current quarter was 63% of revenue
          ($460,000) compared to 70% ($146,000) for the three months ended March
          31, 1997. With a transition away from a software only company to a
          software and hardware company precipitated the gross margin decline.
          This in addition to the offering of higher discounts to customers with
          resale agreements requiring volume commitments has reduced gross
          profit margins by 7%. It is anticipated the margins will be maintained
          at this level through the remainder of the fiscal year.

               Selling, General and Administrative Expenses (SG&A) increased
          $572,000 or 312% from $183,000 in the 1997's first quarter to $755,000
          in the 1998 period. Sales expenses increased $293,000 from $24,000 in
          1997 to $317,000 in 1998. Significant increases are associated with
          the addition of sales and marketing personnel required to meet the
          ramp of the Company's anticipated sales growth rates. The Company
          added sales and marketing personnel along with marketing agents in
          Europe, Latin America, and Asia. General and administrative expense
          increased $177,000 or 136%, from $130,000 in the 1996 period compared
          to $307,000 currently. The increase in SG&A is attributed to the
          Company's overt plan to expand the Company's sales volume increases.
          The Company has maintained an average of 39.8% quarterly growth rate
          attributed to the expanded SG&A expenditures.

               Amortized software development costs total $49,000 for the
          period.

               Interest expense decreased $5,500 in the three months ended March
          31, 1998 from $6,300 in 1997 to $700 in 1998.

               Net Losses from operations was $295,000 for the three months
          ended March 31, 1997, compared to $43,000 loss for the same period in
          1997, an increase of $252,000. The net loss is associated with the
          increased SG & A necessary to maintain a continued growth path of
          39.8% quarterly growth rate in sales.

     IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

               The Financial Accounting Standards Board has recently issued
          Statements of Financial Accounting Standards that may affect the
          Company's financial statements as follows:

               In June 1997, the Financial Accounting Standards Board issued
          Statement of Financial Accounting Standards No. 130, Reporting
          Comprehensive Income (SFAS 130), which establishes standards for
          reporting and display of comprehensive income, its components and
          accumulated balances. Comprehensive income is defined to include all
          changes in equity except those resulting from investments by owners
          and distributions to owners. Among other disclosures, SFAS 130
          requires that


                                       11
<PAGE>   12

          all items that are required to be recognized under current accounting
          standards as components of comprehensive income be reported in a
          financial statement that is displayed with the same prominence as
          other financial statements.

               Also, in June 1997, FASB issued SFAS No. 131, "Disclosures about
          Segments of an Enterprise and Related Information" which supersedes
          SFAS No. 14, "Financial Reporting for Segments of a Business
          Enterprise." SFAS No. 131 establishes standards for the way that
          public companies report information about operating segments in annual
          financial statements and requires reporting of selected information
          about operating segments in interim financial statements issued to the
          public. It also establishes standards for disclosures regarding
          products and services, geographic areas and major customers. SFAS No.
          131 defines operating segments as components of a company about which
          separate financial information is available that is evaluated
          regularly by the chief operating decision maker in deciding how to
          allocate resources and in assessing performance.

               SFAS 130 and 131 are effective for financial statements for
          periods beginning after December 15, 1997 and requires comparative
          information for earlier years to be restated. Because of the recent
          issuance of the standards, management has been unable to fully
          evaluate the impact, if any, the standards may have on future
          financial statement disclosures. Results of operations and financial
          position, however, will be unaffected by implementation of these
          standards.

               In October 1997, Statement of Position 97-2, Software Revenue
          Recognition (SOP 97-2) was issued. The SOP provides guidance on when
          revenue should be recognized and in what amounts licensing, selling,
          leasing, or otherwise marketing computer software. SOP 97-2 is
          effective for transactions entered into in fiscal years after December
          15, 1997. Because of the recent issuance of the SOP, management has
          been unable to fully evaluate the impact, if any, the SOP may have on
          future financial statement disclosure.

               In February 1998, the FASB issued SFAS No. 132, "Employer's
          Disclosures about Pensions and Other Postretirement Benefits" which
          standardizes the disclosure requirements for pensions and other
          postretirement benefits and requires additional information on changes
          in the benefit obligations and fair values of plan assets that will
          facilitate financial analysis. SFAS No. 132 is effective for years
          beginning after December 15, 1997 and requires comparative information
          for earlier years to be restated, unless such information is not
          readily available. Management believes the adoption of this statement
          will have no material impact on the Company's financial statements.



                                       12
<PAGE>   13


PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings

              Not applicable

     Item 2.  Changes in Securities

              SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
              On March 16, 1998 the Registrant completed its Initial Public
              Offering (IPO), on the Vancouver Stock Exchange, of 1,550,000
              shares of its common stock at a price of US $1.00 per share for a
              total offering of US $1,550,000. The offering was underwritten by
              C.M. Oliver & Company Ltd.(The "Agent") and was made pursuant to
              the requirements of Regulation S under the Securities Act of 1933
              (The "Act") to non US Persons. The shares offered were therefore
              exempt from registration under the Act. The net cash proceeds to
              the Registrant from the Canadian Offering were approximately US
              $1,158,250 after payment of US $116,750 commissions to the Agent
              (7.5% of the offering price). The Company granted to the Agent for
              the Canadian Offering a non-transferable warrant (the "Agent's
              Warrant") to acquire up to 250,000 shares of Common Stock. The
              Agent's Warrant is exercisable at $1.00 per share until March 16,
              1999, and thereafter at $1.15 per share until March 16, 2000.

         Item 3.  Defaults Upon Senior Securities

                           Not applicable

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

         Not applicable

     Item 5.  Other Information

              Not applicable

     Item 6.  Exhibits and Reports on Form 8-K

              a)  Exhibits

                  27       Financial Data Schedule.

              b) Reports on From 8-K.
                 During the quarter covered by this report, the Company filed
                 the following reports on Form 8-K.

                 Form 8-K dated March 30, 1997 reporting the completion of the
                 Initial Public Offering on the Vancouver Stock Exchange. No
                 financial statements were required.



                                       13
<PAGE>   14

                                   SIGNATURES

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

                                        eSoft, Inc.
                                        (Registrant)



Date: April 28, 1998                    /s/ Regis Frank
     -------------------------          ----------------------------------------
                                        Regis A. Frank
                                        President, Chief Operating Officer


Date: April 28, 1998                    /s/ Thomas Tennessen
     -------------------------          ----------------------------------------
                                        Thomas Tennessen
                                        Chief Financial Officer and Principal
                                        Financial and Accounting Officer


                                       14
<PAGE>   15
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>

EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
<S>            <C>

27             Financial Data Schedule.

</TABLE>