<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 the quarterly period ended September 30, 1996

/   /    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 
                                  ----------------------------------

                              UNIDYNE CORPORATION
                      (Exact name of small business issuer
                          as specified in its charter)

<TABLE>
<S>                                                                    <C>
DELAWARE                                                                     23-2154902
(State or other jurisdiction                                           (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>

                 118 PICKERING WAY, SUITE 104, EXTON, PA 19341
                    (Address of principal executive offices)

                                 (610) 363-8237
                          (Issuer's telephone number)

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

              APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.  
Yes        No 
    ------    ------

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 7,553,628 AS OF SEPTEMBER
30, 1996

Transitional Small Business Disclosure Format (check one ):  Yes      No  X  
                                                                 ----    ----
<PAGE>   2
                         PART I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS.

                              UNIDYNE CORPORATION
                                 BALANCE SHEETS
                                 (UNAUDITED)



<TABLE>
<CAPTION>
                                                                ASSETS
                                                                             
                                                                             September 30,      December 31,
                                                                                 1996               1995
                                                                                    (In thousands)
 <S>                                                                                <C>               <C>
                                                                                     
 Current assets:
   Cash                                                                                $227              $193
   Accounts receivable, net of allowance for doubtful
     accounts of $25 and $24, respectively                                            2,202             2,488
   Inventory                                                                          3,037             2,763
   Prepaid expenses                                                                      71                33
   Deferred income taxes                                                                159               159
                                                                                    -------           -------
                                                                                      5,696             5,636
                                                                                    -------            ------
 Property, plant and equipment                                                                        
   Land                                                                                 160               160
   Buildings                                                                          3,687             3,687
   Machinery and equipment                                                            6,000             5,862
                                                                                    -------           -------
   Accumulated depreciation                                                           9,847             9,709
                                                                                    (1,182)             (360)
                                                                                    -------           -------
                                                                                      8,665             9,349
                                                                                                      
   Investments                                                                          642               ---
   Due from affiliate                                                                   647                47
   Other assets                                                                         589               158
                                                                                    -------           -------
                                                                                    $16,239           $15,190
                                                                                    =======           =======
                                                                                                      
                                     LIABILITIES AND STOCKHOLDERS' EQUITY                             
                                                                                                      
 Current liabilities:                                                                                 
   Accounts payable                                                                  $1,275              $500
   Current portion of long-term debt                                                    413             1,543
   Short-term debt                                                                    1,850             1,860
   Accrued compensation                                                                 390               647
   Other accrued liabilities                                                            265               500
   Income taxes payable                                                                 228               138
                                                                                    -------           -------
                                                                                      4,421             5,188
                                                                                    -------           -------
                                                                                                      
 Long-term debt                                                                       2,088             2,399
 Note payable to EATON                                                                2,972             2,718
 Deferred income taxes                                                                   61                61
 Pension benefit obligations                                                          1,967             1,810
 Post retirement benefits other than pensions                                         3,168             2,955
                                                                                                      
 Stockholders' equity                                                                                 
   Common Stock                                                                           8                 7
   Additional paid-in capital                                                         1,218                 0
   Retained earnings                                                                    336                52
                                                                                    -------           -------
                                                                                      1,562                59
                                                                                    -------           -------
                                                                                    $16,239           $15,190
                                                                                    =======           =======
</TABLE>

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

                                      
                                     -2-
<PAGE>   3
                              UNIDYNE CORPORATION
                              STATEMENTS OF INCOME
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                               Three Months         One Month         Nine Months         One Month
                                                   Ended              Ended              Ended              Ended
                                               September 30,      September 30,      September 30,      September 30,
                                                   1996               1995               1996                1995
                                                   ----               ----               ----                ----

                                                               (in thousands, except per share data)
 <S>                                                <C>                <C>                 <C>                <C>
 Net Sales                                             $4,031             $1,668             $12,693             $1,668

 Costs and expenses
                                                                                                            
 Cost of products sold                                  2,649                921               7,880                921
 Selling and administrative expense                     1,259                446               3,336                446
 Research and development expense                         114                 83                 344                 83
                                                  -----------        -----------         -----------        -----------
                                                        4,022              1,450              11,560              1,450
                                                  -----------        -----------         -----------        -----------
                                                                                                            
 Income from operations                                     9                218               1,133                218
                                                                                                            
 Interest expense                                         221                 83                 660                 83
                                                  -----------        -----------         -----------        -----------
                                                                                                            
 Income (loss) before income taxes                      (212)                135                 473                135
                                                                                                            
 Income tax provision (benefit)                          (85)                 54                 189                 54
                                                  -----------        -----------         -----------        -----------
                                                                                                            
 Net income (loss)                                     ($127)                $81                $284                $81
                                                  ===========        ===========         ===========        ===========
                                                                                                            
 Primary earnings (loss) per share                    ($0.02)              $0.01               $0.04              $0.01
                                                  -----------        -----------         -----------                   
                                                                                                            
 Weighted average number of Common                                                                          
  Stock and equivalents outstanding                 7,398,336          7,180,090           7,269,644          7,180,090
                                                  -----------        -----------         -----------        -----------
</TABLE>




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





                                      -3-
<PAGE>   4
                          EDDY CURRENT DRIVES DIVISION
        STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN DIVISION EQUITY
               FOR THE TWO AND EIGHT MONTHS ENDED AUGUST 31, 1995
                                 (IN THOUSANDS)
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                        Two Months            Eight Months
                                                           Ended                  Ended
                                                      August 31, 1995        August 31,1995
                                                      ---------------        --------------
 <S>                                                           <C>                     <C>
 Revenues                                                        $2,582                 $11,988
                                                           
 Expenses                                                  
                                                           
    Cost of products sold                                         1,900                   7,764
    Selling and administrative expense                              656                   3,219
    Research and development expense                                 58                     212
                                                           ------------         ---------------
                                                                  2,614                  11,195
                                                           ------------         ---------------

 Revenues in excess of (less than) expenses                        (32)                     793
                                                                                
 Net repayments of corporate advances                           (1,121)                   (988)
                                                                                
 Division Equity, beginning of period                           (4,192)                 (5,150)                               
                                                           ------------         ---------------
 Division Equity, end of period                                ($5,345)                ($5,345)
                                                           ============         ===============
</TABLE>



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





                                      -4-
<PAGE>   5
                              UNIDYNE CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                          Nine Months        One Month
                                                             Ended             Ended
                                                         September 30,     September 30,
                                                             1996              1995
                                                             ----              ----


 Cash flows from operating activities:                           (in thousands)
 <S>                                                            <C>               <C>
   Net income                                                      $284               $81
   Adjustments to reconcile net income to
      cash flows from operating activities
      Depreciation and amortization                                 855                99
      Changes in-
      Accounts receivable, net                                      286           (1,681)
      Inventories                                                 (274)               357
      Prepaid expenses and other assets                            (64)             (185)
      Accounts payable                                              775               882
      Accrued compensation                                           80               309
      Accrued expenses                                               20               269
      Other liabilities                                             624                76
                                                           ------------     -------------
 Net cash provided by operating activities                        2,586               207
                                                          -------------     -------------
                                                                            
                                                                            
 Cash flows for investing activities:                                       
   Purchase of property, plant and equipment                      (138)              (12)
                                                                            
                                                                            
 Cash flows from financing activities:                                      
   Net borrowings (repayments) on revolving loans                  (10)               163
   Net borrowings on subordinated debenture                         ---                50
   Issuance of Common Stock                                          75               ---
   Offering related costs                                         (438)               ---
   Principal payments on long-term debt                         (1,441)               (5)
   Advances to affiliate                                                              
                                                                  (600)               ---
                                                          -------------     -------------
                                                                            
 Net cash provided by (used for) financing                                          
   activities                                                   (2,414)               208
                                                          -------------     -------------
                                                                            
 Net increase in cash                                                34               403
                                                                            
 Cash, beginning of period                                          193                 2
                                                          -------------     -------------
 Cash, end of period                                               $227            $40505
                                                          =============     =============
 Cash paid for:                                    
 Interest                                                          $243              $--- 
                                                          =============     ============= 
 Income taxes                                                       100               --- 
                                                          =============     ============= 
</TABLE>

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





                                      -5-
<PAGE>   6
                          EDDY CURRENT DRIVES DIVISION
                            STATEMENT OF CASH FLOWS
                   FOR THE EIGHT MONTHS ENDED AUGUST 31, 1995
                                 (IN THOUSANDS)


<TABLE>
<S>                                                                           <C>
Cash flows from operating activities:

   Revenues in excess of expenses                                              $793
   Adjustments to reconcile revenues in excess of expenses
      to cash flows from operating activities:
      Depreciation and amortization                                             457
      Changes in -
        Accounts receivable, net                                               (12)
        Inventories                                                             243
        Prepaid expenses and other assets                                     (381)
        Accounts payable                                                        239
        Accrued compensation                                                  (124)
        Accrued expenses                                                       (32)
        Other liabilities                                                     (325)
                                                                   ----------------
Net cash provided by operating activities                                       858
                                                                   ----------------

Cash flows for investing activities:
   Purchase of property, plant and equipment                                  (192)
   Proceeds on disposition of property, plant and equipment                     240
                                                                    ---------------
   Net cash provided by investing activities                                     48

Cash flows from financing activities:
  Net repayments of corporate advances                                        (988)
  Net inter-divisional advances                                                  63 
                                                                   ----------------

Net cash used for financing activities                                        (925)
                                                                   ----------------

Net decrease in cash                                                           (19)
                                                                                   
                                                                                   
Cash, beginning of period                                                        42
                                                                   ----------------

Cash, end of period                                                             $23
                                                                   ================
Supplemental disclosures of cash flow information:                  
                                                                               
Cash paid during the period for:                                                   
                                                                                   
    Interest                                                                   $ --   
                                                                   ================
    Income taxes                                                                 --
                                                                   ================

</TABLE>
   The accompanying notes are an integral part of these financial statements.





                                      -6-
<PAGE>   7
                              UNIDYNE CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1 - ORGANIZATION

         On September 2, 1996, Blue Jay Enterprises, Inc. ("Blue Jay")
completed the acquisition of all the issued and outstanding stock of United
Dynamatics, Inc. ("UDI"), a Delaware corporation, and certain assets of Capital
Idea, Inc., a Colorado corporation.  After the acquisition, Blue Jay changed
its name to UNIDYNE Corporation (the "Company").  The acquisition of UDI was
treated as a reverse acquisition for accounting purposes.  Accordingly, the
accompanying financial statements of the Company include amounts for periods
prior to the acquisition.

         On September 1, 1995, UDI acquired substantially all of the operating
assets of the Eddy Current Drives Division (the "Division") of Eaton
Corporation ("EATON").  Effective with the acquisition, the Division commenced
operations as Dynamatic Corporation ("Dynamatic"), a wholly-owned subsidiary of
UDI.

         Dynamatic manufactures specialized electric motors and variable speed
drives and controls utilizing the Eddy Current Drive operating principal to
control motor speed.  The variable speed drives are used in a variety of
products including stamping presses, pumps and special process equipment.
Dynamatic also manufactures engine dynamometers and transmission dynamometers
for a variety of large industrial customers, primarily in the automotive and
heavy equipment industries.  The Company employs approximately 125 persons at
facilities in Kenosha, Wisconsin and Exton, Pennsylvania.

NOTE 2 - BASIS OF PRESENTATION

         In the opinion of the management of the Company, the accompanying
consolidated financial statements reflect all adjustments (consisting only of
normally recurring accruals) which are necessary for a fair presentation of the
Company's results of operation and changes in financial position for the
interim periods presented.

NOTE 3 - INVESTMENTS

         In September 1996, the Company acquired a 9% interest in Maxwell
Dynamometer Systems, Inc. ("Maxwell"), a Delaware corporation, in exchange 
for 160,500 shares of the Company's common stock, par value $.001 per share 
(the "Common Stock").  The majority owner of the Company is also the majority 
owner of Maxwell.  Maxwell manufactures and installs customized dynamometer 
systems, primarily for trucks and buses.  Maxwell employs approximately 16 
persons at facilities in Exton, Pennsylvania.

NOTE 4 - DUE FROM AFFILIATE

         During 1996, the Company advanced Maxwell $600,000.  The advances were
used to fund operations of Maxwell relating to joint efforts between the
Company and Maxwell in sales to the emissions testing market.

NOTE 5 - OTHER ASSETS

         In 1996, the Company incurred approximately $438,000 in professional
fees relating to a proposed offering of the Company's Common Stock.





                                      -7-
<PAGE>   8
                              UNIDYNE CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 6 - EQUITY

         In September 1996, the Company established a stock option plan for
certain management and directors, pursuant to which the Company issued 700,000
options.  The Company issued 154,538 shares of its Common Stock upon exercise
of a portion of the options in exchange for accrued salaries and fees totalling
$502,250.   Common Stock, at December 31, 1995, has been restated to reflect
the acquisition of 100% of the outstanding common stock of UDI by Blue Jay.


NOTE 7 - SUBSEQUENT EVENTS

         In November 1996, the Company and EATON agreed to amend the agreement 
pursuant to which UDI purchased the assets of the Division from EATON (the 
"Amendment").  Pursuant to the Amendment, the Company has been relieved of its 
obligation to make $4.5 million in note payments.  The present value of such 
payments is carried on the balance sheet at $2,972,000 as of September 30, 
1996.  In exchange, the Company will issue up to 800,000 shares of its Common 
Stock to EATON.  The Amendment is contingent upon the Company's refinancing 
of the mortgage held by EATON on the Company's operating facilities.  The 
transaction is expected to close on or before December 15, 1996.

NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS

         In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 ("SFAS 123") "Accounting
for Stock-Based Compensation."  The Company will implement the disclosure
requirements of SFAS 123 as required.




                                      -8-
<PAGE>   9
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         All amounts used herein are in thousands.

         Effective September 1, 1995, UDI acquired substantially all the assets
of the Division.  The foregoing financial statements of the Company reflect
the results of operations since the acquisition.

RESULTS OF OPERATIONS

         During the three-month period ended September 30, 1996, the Company
had sales of $4,031, compared to sales of $4,250 during the three-month period
ended September 30, 1995.  During the three-month period ended September 30,
1996, the Company's costs of sales was $2,649, or 65.7%, compared with
$2,821, or 66.4%, during the three-month period ended September 30, 1995.

         During the three-month period ended September 30, 1996, the Company
had selling and administrative expenses and interest expense, respectively, of
$1,259, or 31.2%, of sales and $221, or 5.5%, of sales.  Selling and
administrative expense reflects approximately $200 of non-recurring charges
relative to the acquisition of UDI during the three-month period ended
September 30, 1996.

         During the nine-month period ended September 30, 1996, the Company had
sales of $12,693, a decrease of $963, or 7.1%, compared with sales of $13,656
in the nine-month period ended September 30, 1995.  During the nine-month
period ended September 30, 1996, the Company had cost of sales of $7,880, or
62.1% to sales, a decrease of $805, or 9.3%, compared with costs of sales of
$8,685, or 63.6% to sales in the nine-month period ended September 30, 1995.

         During the nine-month period ended September 30, 1996, the Company had
selling and administrative expense and interest expense, respectively, of
$3,336, or 26.3%, to sales and $660, or 5.2%, to sales.  Selling and
administrative expense reflects approximately $300 of non-recurring charges
relative to the acquisition of UDI in the nine-month period ended September 30,
1996.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its operating requirements, capital
expenditures and expenses associated with the acquisition of UDI through cash
flows from operations and financing arrangements.

         At September 30, 1996, the Company's working capital was approximately
$1,275, compared to working capital of approximately $448 at December 31, 1995.
This increase is principally due to cash payments which reduced the current
portion of debt, the exchange of accrued salaries and fees for shares of the
Company's Common Stock, and was partially offset by an increase in accounts
payable.  At September 30, 1996, the Company had approximately $100 available
under its existing line-of-credit arrangements.







                                      -9-
<PAGE>   10
                          PART II.  OTHER INFORMATION

Item 2.  CHANGES IN SECURITIES.

         On September 3, 1996, the Company filed an Amended and Restated
Certificate of Incorporation (the "Certificate") with the Delaware Secretary of
State.  Among other items, the Certificate created a class of preferred stock,
par value $10.00 per share, of which 20,000,000 shares are authorized and none
are issued.  In the event that the Company's preferred stock is issued, rights
of the holders of the Company's common stock, par value $.001 per share,
would become subordinated to those of the holders of the preferred stock.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         On September 2, 1996, Robert M. Bernstein, as holder of approximately
51.9% of the outstanding common stock of the Company, executed a Written
Consent in lieu of Special Meeting of the Shareholders (the "Written Consent").
The matters determined in the Written Consent were disclosed in the Information
Statement and the Company's Form 8-K, filed with the Commission on September 9,
1996, which are hereby incorporated by reference.

         Pursuant to the Written Consent, Robert M. Bernstein and Harvey
Kravetz were elected as directors of the Company.  Mr.  Bernstein and Mr.
Kravetz resigned from the Board of Directors on September 2, 1996.

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

<TABLE>
<CAPTION>
         (a)     Exhibit No.                                Description
                 ----------                                 -----------
                 <S>              <C>
                 3.1              Amended and Restated Certificate of Incorporation of the Company.*

                 3.2              Amended and Restated Bylaws of the Company.*

                 10.1             First Amended Purchase and Sale Agreement, dated July 31, 1996, among Robert M. Bernstein, Blue
                                  Jay Enterprises, Inc. and certain shareholders of UDI.*

                 10.2             Second Amendment to Purchase and Sale Agreement, dated September 2, 1996, among Robert M.
                                  Bernstein, Blue Jay Enterprises, Inc. and certain shareholders of UDI.*

                 10.3             Second Amended Purchase and Sale Agreement, dated September 2, 1996, among Robert M. Bernstein,
                                  Blue Jay Enterprises, Inc. and Capital Idea, Inc.*

                 16.1             Letter of Jones, Jensen & Co.*

                 19.1             Section 14(c) Information Statement, dated August 12, 1996.**
</TABLE>





                                      -10-
<PAGE>   11
<TABLE>
                 <S>              <C>
                 19.2             Form 8-K, dated September 13, 1996.**

                 19.3             Form 8-K/A, dated September 17, 1996.**

                 27.1             Financial Data Schedule.**
</TABLE>

-----------------------------
*        Filed previously and incorporated herein by reference.
**       Filed herewith.


         (b)     The Company filed a Report on Form 8-K on June 7, 1996.  Item
                 5 of such Form 8-K reported on the Company's execution of
                 agreements to purchase all of the issued and outstanding
                 Common Stock of UDI and certain other assets.

         (c)     The Company filed a Report on Form 8-K on September 9, 1996.
                 Item 4 of such Form 8-K reported on the Change in Registrant's
                 Certifying Accountants.  Item 5 of such Form 8-K reported on
                 the Company's amendment of its Certificate of Incorporation
                 and By-laws.  The Company filed a Report on Form 8-K/A on
                 September 17, 1996 amending the Form 8-K.

         (d)     The Company filed a Report on Form 8-K on September 13, 1996.
                 Item 1 of such Form 8-K reported on the Changes in Control of
                 Registrant.  Item 2 of such Form 8-K reported on the
                 Acquisition or Disposition of Assets.  The Company filed a
                 Report on Form 8-K/A on November 14, 1996 providing financial
                 information relating to the Assets acquired.





                                      -11-
<PAGE>   12
                                   SIGNATURES

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

                                   UNIDYNE CORPORATION
                                   
                                   
                                   
Date: November 14, 1996             /s/ C. Eugene Hutcheson                
                                   --------------------------------------------
                                   C. Eugene Hutcheson, Chairman
                                   and Chief Executive Officer



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



Date: November 14, 1996             /s/ C. Eugene Hutcheson 
                                   --------------------------------------------
                                   C. Eugene Hutcheson, Chairman, Chief 
                                   Executive Officer and President
                                   
                                   
Date: November 14, 1996             /s/ Timothy Flynn       
                                   --------------------------------------------
                                   Timothy Flynn, Vice President and Assistant
                                   Treasurer
                                   
Date: November 14, 1996             /s/ Charlotte Doremus   
                                   --------------------------------------------
                                   Charlotte Doremus, Secretary and Treasurer





                                      -12-