<PAGE>   1
                                UNITED STATES
                                      
                      SECURITIES AND EXCHANGE COMMISSION
                                      
                            Washington, D.C. 20549
                                      
                                  ----------
                                      
                                 FORM 10-QSB

Mark One

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

           For Quarterly Period Ended December 31, 1998
                                       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 000-08193

                            SENSYS TECHNOLOGIES INC.
                 (FORMERLY KNOWN AS DAEDALUS ENTERPRISES, INC.)
                 ----------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                  38-1873250
                --------                                  ----------
    (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                     Identification No.)

               8419 Terminal Road, Newington, Virginia 22122-1430
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (703) 550-7000
                                                           --------------

           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, and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes  /X/          No 
                                   -----           ----

           As of February 3, 1999, there were 3,968,271 shares of the
Registrant's Common Stock, par value $.01 per share, outstanding.


<PAGE>   2


                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                                      INDEX

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

<TABLE>
<CAPTION>
                                                                                                              Pages
                                                                                                              -----

<S>                                                                                                           <C> 
Condensed Consolidated Balance Sheet at
        December 31, 1998 and September 30, 1998.......................................................         3-4

Condensed Consolidated Statement of Operations for the
        Three Months Ended December 31, 1998 and December 31, 1997....................................            5

Condensed Consolidated Statement of Stockholders' Equity for the
        Three Months Ended December 31, 1998...........................................................           6

Condensed Consolidated Statement of Cash Flows for the
        Three Months Ended December 31, 1998 and December 31, 1997....................................            7

Notes to Condensed Consolidated Financial Statements...................................................         8-9

Item 2.     Management's Discussion and Analysis of Results of
-------     Operations and Financial Condition.........................................................        9-11

PART II.  OTHER INFORMATION

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

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



                                       2

<PAGE>   3
                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

<TABLE>
<CAPTION>
                                                        December 31,       September 30,
                                                            1998               1998
                                                       -------------      --------------
                                                        (Unaudited)             *
<S>                                                     <C>                <C>        
CURRENT ASSETS
  Cash and cash equivalents                             $   178,000        $   112,000
  Accounts receivable                                     5,173,000          5,082,000
  Unbilled contract costs, net                            4,978,000          3,826,000
  Inventories  (Note 3)                                     488,000            536,000
  Deferred tax asset                                        295,000            288,000
  Other current assets                                      104,000             89,000
  Refundable and prepaid income taxes                       311,000            311,000
                                                        -----------        -----------

             TOTAL CURRENT ASSETS                        11,527,000         10,244,000

PROPERTY AND EQUIPMENT                                    1,609,000          1,647,000

OTHER ASSETS
  Deferred tax asset                                         83,000            236,000
  Costs in excess of net assets acquired                    717,000            782,000
  Property held for resale (Note 5)                               -          1,446,000
  Other assets                                               94,000             69,000
                                                        -----------        -----------

             TOTAL ASSETS                               $14,030,000        $14,424,000
                                                       =============      ==============
</TABLE>


*The year-end balance sheet data was summarized from audited financial
 statements, but does not include all disclosures required by generally accepted
 accounting principles.

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

                                       3


<PAGE>   4

                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED BALANCE SHEET, CONTINUED

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                        December 31,       September 30,
                                                            1998               1998
                                                       -------------      --------------
                                                        (Unaudited)             *
<S>                                                     <C>                <C>
CURRENT LIABILITIES
  Note payable - line of credit                         $ 1,611,000        $ 2,049,000
  Accounts payable                                        2,790,000          2,554,000
  Accrued salaries, benefits, and related expenses        1,292,000          1,199,000
  Deferred compensation                                     327,000            319,000
  Other accrued expenses                                    260,000            619,000
  Mortgage payable (Note 5)                                       -            220,000
  Capital leases                                             46,000             53,000
                                                        -----------        -----------

             TOTAL CURRENT LIABILITIES                    6,326,000          7,013,000

LONG-TERM LIABILITIES
    Capital leases                                          104,000            104,000
                                                       -------------      --------------

STOCKHOLDERS' EQUITY (Note 2)
  Common Stock, at December 31, 1998,
  $.01 par value, authorized 5,000,000
  shares; issued and outstanding 3,968,271
  shares; at September 30, 1998, $.01 par
  value, authorized 5,000,000 shares; issued
  and outstanding 3,961,271 shares                           40,000             40,000
  Additional capital                                      6,875,000          6,858,000
  Retained earnings                                         685,000            409,000
                                                       -------------      --------------
                                                          7,600,000          7,307,000
                                                       -------------      --------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $14,030,000        $14,424,000
                                                       =============      ==============
</TABLE>

*The year-end balance sheet data was summarized from audited financial
 statements, but does not include all disclosures required by generally accepted
 accounting principles.

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


                                       4
<PAGE>   5

                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                 December 31,
                                                           1998                1997
                                                       -------------      --------------
                                                        (Unaudited)         (Unaudited)
<S>                                                     <C>                <C>
REVENUE
  Contract revenue                                      $ 6,022,000        $ 5,837,000

COSTS AND EXPENSES
  Cost of revenues                                        4,630,000          5,135,000
  General and administrative expenses                       890,000            710,000
                                                       -------------      --------------

             Total costs and expenses                     5,520,000          5,845,000
                                                       -------------      --------------

INCOME (LOSS) FROM OPERATIONS                               502,000             (8,000)

OTHER EXPENSES
  Interest expense, net                                     (46,000)          (103,000)
                                                       -------------      --------------

INCOME (LOSS) BEFORE INCOME TAXES                           456,000           (111,000)

INCOME TAX (PROVISION) BENEFIT                             (180,000)            42,000
                                                       -------------      --------------

NET INCOME (LOSS)                                       $   276,000        $   (69,000)
                                                       =============      ==============
PER SHARE AMOUNT (Note 6)
  Basic and diluted earnings (loss) per share           $      0.07        $     (0.04)
                                                       =============      ==============
</TABLE>

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

                                       5
<PAGE>   6
                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Additional                          Total
                                      Common          Paid-in          Retained        Stockholders'
                                      Stock           Capital          Earnings          Equity
                                   ------------     ------------     ------------    --------------
<S>                                <C>               <C>              <C>             <C>
BALANCE AT SEPTEMBER 30, 1998       $   40,000       $6,858,000       $  409,000       $7,307,000

Net income                                   -                -          276,000          276,000
Exercise of stock options                    -           17,000                -           17,000
                                   ------------     ------------     ------------    --------------

BALANCE AT DECEMBER 31, 1998        $   40,000       $6,875,000       $  685,000       $7,600,000
                                   ============     ============     ============    ==============
</TABLE>

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

                                       6

<PAGE>   7
                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                  December 31,
                                                           1998               1997
                                                       -------------      --------------
                                                        (Unaudited)        (Unaudited)

<S>                                                     <C>                <C>
Net cash used by operating activities                   $  (630,000)       $  (253,000)
                                                       -------------      --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition expenses, net of cash acquired                       -            (19,000)
 Net acquisitions of property and equipment                (102,000)           (18,000)
 Proceeds from disposal of property held for sale         1,446,000                  -
                                                       -------------      --------------

 Net cash provided (used) by investing activities       $ 1,344,000        $   (37,000)
                                                       -------------      --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (payments) proceeds under line of credit          $  (438,000)       $   298,000
  Principal payments on mortgage debt                      (220,000)                 -
  Principal payments on capital lease obligations            (7,000)           (29,000)
  Proceeds of stock option exercises                         17,000                  -
                                                       -------------      --------------

 Net cash (used) provided by financing activities         (648,000)           269,000
                                                       -------------      --------------

Net increase (decrease) in cash and cash equivalents         66,000            (21,000)
Cash and cash equivalents, beginning of year                112,000            140,000
                                                       -------------      --------------

Cash and cash equivalents, end of year                  $   178,000        $   119,000
                                                       =============      ==============

Supplemental disclosure of cash flow information:

    Cash paid for interest                              $    42,000        $   100,000
                                                        ===========        ===========
</TABLE>



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


                                       7

<PAGE>   8

                    SENSYS TECHNOLOGIES INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information for commercial and industrial companies and with the
instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. Operating results
for the three month period ended December 31, 1998 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 1999. Intercompany accounts and transactions have been eliminated
in consolidation. For further information, refer to Sensys Technologies Inc.'s
Annual Report on Form 10-KSB for the year ended September 30, 1998.

2.     ACQUISITION

On June 9, 1998, Daedalus Enterprises, Inc. ("DEI") merged with S. T. Research
Corporation ("STR"). In connection with the merger, DEI changed its name to
Sensys Technologies Inc. (the "Company"). While DEI was the legal acquiror, the
merger was accounted for as a reverse acquisition purchase whereby STR was
deemed to have acquired DEI for financial reporting purposes. Consistent with
the reverse acquisition accounting treatment, the historical financial
statements presented for periods prior to the merger date are the financial
statements of STR except for stockholders' equity which has been retroactively
restated for the equivalent number of shares of the legal acquiror. An
adjustment has also been made to adjust the par value of the outstanding shares
with an offset to additional paid-in capital. Because of the accounting
treatment herein described, the financial statements differ from the
consolidated financial statements of DEI as previously reported. The operations
of DEI have been included in the financial statements from the date of the
merger. In connection with the merger, the Company changed its fiscal year-end
from July 31 to September 30.

3.  INVENTORIES

Inventories are valued at the lower of cost or market using the first-in,
first-out method and consisted of the following:

<TABLE>
<CAPTION>
                                         December 31,                     September 30,
                                             1998                              1998
                                         ------------                     -------------
<S>                                         <C>                              <C>       
       Materials                            $  97,000                        $   94,000
       Work in process                        391,000                           442,000
                                         ------------                     -------------
                                            $ 488,000                        $  536,000
                                         ============                     =============
</TABLE>


4.     STOCK OPTIONS

On October 5, 1998, the Compensation Committee of the Board of Directors
approved the award of 414,000 options at a fair value price of $3.00 per share.

                                       8
<PAGE>   9

5.     PROPERTY HELD FOR SALE

At September 30, 1998, property held for sale consisted of land and a building
acquired in connection with the merger with DEI. On December 1, 1998, the
Company sold the property for cash of approximately $1,575,000, with net
proceeds of approximately $1,446,000 of which approximately $220,000 was used to
pay off the existing mortgage balance. Under terms of the sales agreement, the
Company is leasing approximately fifty percent of the facility for five years
with a five year option. The annual rental approximates $112,000 for each of the
next five years for an aggregate amount of $560,000.

6.     EARNINGS (LOSS) PER SHARE

The computation of net earnings (loss) per share is based on the weighted
average number of shares of common stock outstanding during the periods
presented. The weighted average number of shares used in the basic earnings per
share calculation was 3,968,271 and 1,867,383 for the three month periods ended
December 31, 1998 and 1997, respectively. The weighted average number of shares
used in the diluted earnings per share calculation was 4,142,348 and 1,867,383
for the three month periods ended December 31, 1998 and 1997, respectively.

7.     NEW ACCOUNTING PRONOUNCEMENTS

On June 15, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes a new
model for accounting for derivatives and hedging. The new standard requires
enhanced disclosure of accounting policies for derivative financial instruments
and derivative commodity instruments in the footnotes to the financial
statements. In addition, the standard expands disclosure requirements to include
quantitative and qualitative information about market risk inherent in market
risk sensitive instruments.

The Company will adopt SFAS No. 133 effective October 1, 1999. The Company
believes that the adoption of this statement will not have a material effect on
the Company's consolidated financial position or results of operations.

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

The following discussion provides information which management believes is
relevant to an assessment and understanding of the Company's operations and
financial condition. This discussion should be read in conjunction with the
condensed consolidated financial statements and accompanying notes.

On June 9, 1998, Daedalus Enterprises, Inc. ("DEI") merged with S. T. Research
Corporation ("STR"). In connection with the merger, DEI changed its name to
Sensys Technologies Inc. (the "Company"). The merger was accounted for as a
reverse acquisition purchase whereby STR was deemed to have acquired DEI for
financial reporting purposes. Consistent with the reverse acquisition accounting
treatment, the historical financial statements presented for periods prior to
the merger date are the financial statements of STR except for stockholders'
equity which has been retroactively restated for the equivalent number of
shares of the legal acquiror. An adjustment has also been made to adjust the
par value of the outstanding shares with an offset to additional paid-in
capital. Because of the accounting treatment herein described, the financial
statements differ from the consolidated financial statements of DEI as
previously reported. The operations of DEI have been included in the financial
statements from the date of the merger. In connection with the merger, the
Company changed its fiscal year-end from July 31 to September 30.




                                       9
<PAGE>   10


RESULTS OF OPERATIONS

Revenue for the three months ended December 31, 1998 was $6,022,000 compared to
$5,837,000 for the three months ended December 31, 1997, resulting in a $185,000
or a 3.2% increase. The increase was the result of additional revenues of
$440,000 from the former DEI operations offset by a slight reduction in the
continuing business revenues, primarily as a result of the Company's fiscal 1998
restructuring program.

The total amount of contracts in backlog as of December 31, 1998 and 1997 was
$19,565,000 and $21,900,000, respectively, including both the uncompleted
portion of contracts in progress and contracts awarded but not yet started. The
majority of the backlog at December 31, 1998 is expected to be completed within
a year.

Cost of revenue, as a percentage of revenue, decreased from 88.0% for the three
months ended December 31, 1997 to 76.9% for the three months ended December 31,
1998. The decrease was the result of a reduction in loss and low margin
contracts resulting from the aforementioned restructuring program and improved
margins on production contracts. The Company attributes this improvement to its
efforts to focus on its more profitable core business.

For the three months ended December 31, 1998, general and administrative
expenses increased from $710,000 to $890,000 or a 25.4% increase. The increase
was the result of increased salaries and benefits of $75,000, increased bid and
proposal expense of $62,000, and an increase in general and administrative costs
associated with the operation of the former DEI operations of approximately
$60,000, offset by a reduction in bad debt expense of $29,000.

Interest expense decreased from $103,000 for the three months ended December 31,
1997 to $46,000 for the three months ended December 31, 1998 or a 55.3%
decrease. The decrease was principally the result of lower average borrowings
outstanding under the Company's line of credit and mortgage note.

Income tax expense consists of federal and state income tax. The Company's
effective tax rate was 39.5% for the three months ended December 31, 1998,
compared to an effective tax rate of 37.8% for the three months ended December
31, 1997. The principal cause of the change is non-deductible goodwill
amortization in 1998 recorded in association with the Company's merger with DEI.

Net income of $276,000 for the three months ended December 31, 1998 increased
$345,000 from a loss of $69,000 for the three months ended December 31, 1997.
The increase was the result of the items discussed above.

LIQUIDITY AND SOURCES OF CAPITAL

Cash flows used by operating activities were $630,000 for the three months ended
December 31, 1998. This was principally the result of a $1,152,000 increase in
unbilled accounts receivable relative to the initiation of new production
contracts offset in part by net income of $276,000 and other changes in working
capital.

Cash flows provided from investing activities was $1,344,000 for the three
months ended December 31, 1998. The property held for sale was sold on December
1, 1998 for net proceeds of $1,446,000. Acquisitions of property for the three
months ended December 31, 1998 were $102,000. The Company anticipates that it
will continue to incur capital expenditures at this approximate rate through
the end of the fourth quarter of fiscal 1999.

                                       10
<PAGE>   11

Net cash used by financing activities was $648,000 for the three months ended
December 31, 1998. The mortgage on the property held for sale was paid in the
amount of $220,000 and $438,000 was used to pay down the line of credit using
the proceeds from the December 1, 1998 sale of the property held for sale. The
Company's existing line of credit expires on February 28, 1999. Management is in
the process of negotiating a new credit facility, however, no assurances can be
made that such an agreement will be consummated. The Company believes that its
existing funds, amounts generated by operations, and amounts available for
borrowing under its line of credit will be sufficient to meet its working
capital needs through fiscal 1999.

NEW ACCOUNTING PRONOUNCEMENTS

On June 15, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes a new
model for accounting for derivatives and hedging. The new standard requires
enhanced disclosure of accounting policies for derivative financial instruments
and derivative commodity instruments in the footnotes to the financial
statements. In addition, the standard expands disclosure requirements to
include quantitative and qualitative information about market risk inherent in
market risk sensitive instruments.

The Company will adopt SFAS No. 133 effective October 1,1999. The Company
believes that the adoption of this statement will not have a material effect on
the Company's consolidated financial position or results of operations.

IMPLICATIONS OF YEAR 2000

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
internal business systems, facilities and products that have software, whether
installed or embedded, may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including among, other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. In addition, disruptions in the economy generally resulting
from Year 2000 issues could have a material adverse affect on the Company.

The Company began its assessment of the implications of the Year 2000 issue
during March 1998, by developing plans and a program to address the potential
impact of the Year 2000 on its internal business systems, facilities and
products which might include embedded software. The Company has substantially
completed its review of each of these areas for potential Year 2000 impact.
Based on current information, the Company believes there are no material
operational problems or expenses related to the Year 2000 problem. Certain
versions of the Company's products require modifications and it appears there
may be opportunities to sell upgrades to its customer base. The Company does not
believe that it has any contingent liabilities associated with any products it
has previously manufactured which may not be Year 2000 fully compliant. Detailed
implementation plans are in place for the required modifications or
replacements. Products currently in production have been determined to be Year
2000 compliant and require no remediation. While initial assessments of Year
2000 implications are substantially complete, the Company plans to continually
re-assess its software-embedded products and operational software applications
to insure Year 2000 compliance. In addition, the Company has gathered
information about the Year 2000 compliance status of its significant suppliers,
vendors and subcontractors and continues to monitor their compliance. There have
been no significant compliance issues identified. The Year 2000 review process
and progress are monitored on a regular basis by a special task group of
management. There appears to be no material financial risk to the Company.

The Company has contingency plans for certain critical applications. Such plans
include, among other actions, manual workarounds, increasing inventories and
adjusting staffing strategies.



                                       11
<PAGE>   12

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

   27                 Financial Data Schedule




                                       12
<PAGE>   13

                                   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 officers thereunto duly authorized.

                                    SENSYS TECHNOLOGIES INC.

February 16, 1999                   By:   /s/S. Kent Rockwell
                                       ---------------------------
                                             S. Kent Rockwell
                                          Chief Executive Officer

                                    By:   /s/Robert R. Bower
                                       ---------------------------
                                          Robert R. Bower
                                      Chief Financial Officer & Treasurer


                                       13