<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 March 31, 1997 or

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934

         For the transition period from _______________ to ________________

Commission file number     0-19143
                           -------

                              DYNAMOTION/ATI CORP.
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

         New York                                         93-1192354
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (IRS Employer Identification Number)
Incorporation or Organization)

                    1639 E. Edinger Ave., Santa Ana, CA 92705
                    -----------------------------------------
                    (Address of Principal Executive Offices)

                                 (714) 541-4818
                    -----------------------------------------
                (Issuer's Telephone Number, Including Area Code)


Indicate by a check mark whether the small business issuer (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   X    No   
                                      -----     -----
As of May 2, 1997, there were 3,174,253 shares outstanding of the issuer's
common stock, $.04 par value, 937,279 shares outstanding of the issuer's Class A
preferred stock, $.01 par value and 2,250,000 shares outstanding of the issuer's
Class B preferred stock, $.01 par value.



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                              DYNAMOTION/ATI CORP.


                                TABLE OF CONTENTS

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

              Item 1.    FINANCIAL STATEMENTS (Unaudited)

                         Balance Sheet - March 31, 1997                            3

                         Statements of Operations 
                           For the three months ended March 31, 1997 and 1996      4

                         Statements of Cash Flows
                           For the three months ended March 31 ,1997 and 1997      5

                         Notes to Financial Statements                             6

              Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
                         OF FINANCIAL CONDITION AND RESULTS
                         OF OPERATIONS                                             7

PART II       OTHER INFORMATION

              Item 1.    LEGAL PROCEEDINGS                                         9

              Item 6.    EXHIBITS AND REPORTS ON FORM 8-K                          9

SIGNATURES                                                                        10
</TABLE>



                                       2
<PAGE>   3
                              DYNAMOTION/ATI CORP.


PART I - Item 1.
                            Balance Sheet (Unaudited)
                                 March 31, 1997
                        (in 000's, except share amounts)

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                               <C>
CURRENT ASSETS:
   Trade accounts receivable, less allowance 
     for doubtful accounts of $82                                 $        1,659
   Inventories (Note 1)                                                    5,147
   Other receivables                                                         320
   Prepaid expenses and other current assets                                 111
   Note receivable - current                                                   -
                                                                  --------------
     TOTAL CURRENT ASSETS                                                  7,237

MACHINERY AND EQUIPMENT -
   Net of accumulated depreciation of $1,516                                 964

NOTE RECEIVABLE, long term net of allowance for
  doubtful accounts of $100                                                  145

PATENTS - Net of accumulated amortization of $1,185                        3,018
                                                                  --------------
                                                                  $       11,364
                                                                  ==============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
   Accounts payable                                               $        4,663
   Unfunded disbursements                                                    145
   Revolving credit facility                                               2,855
   Note payable to bank                                                    1,867
   Current maturities of long-term debt                                      774
   Accrued commissions                                                       901
   Accrued payroll and related expenses                                      577
   Customer deposits                                                         512
   Other current liabilities                                                 828
                                                                  --------------
     TOTAL CURRENT LIABILITIES                                            13,122

LONG-TERM DEBT (Note 2)                                                      196
                                                                  --------------


SHAREHOLDERS' DEFICIT:
   Convertible preferred stock, non-cumulative at
     $.44 per share, $.01 par value, liquidation preference 
     $5.50, authorized 2,062,500 shares, issued and outstanding 
     937,279 shares                                                            9
   Convertible Class B preferred stock, 8% cumulative, $.01 
     par value (liquidation preference $1.00 per share), 
     authorized 2,250,000, issued and outstanding 
     2,250,000 shares                                                         22
   Common stock, $.04 par value, authorized
     20,000,000 shares, issued and outstanding
     2,843,789 shares                                                        114
   Additional paid-in capital                                             17,690
   Common stock warrants                                                     270
   Accumulated deficit                                                   (20,059)
                                                                  --------------
     TOTAL SHAREHOLDERS' DEFICIT                                          (1,954)
                                                                  --------------
                                                                  $       11,364
                                                                  ==============
</TABLE>



                        SEE NOTES TO FINANCIAL STATEMENTS


                                       3
<PAGE>   4
                              DYNAMOTION/ATI CORP.



                      Statements of Operations (Unaudited)
                        (in 000's, except share amounts)

<TABLE>
<CAPTION>

                                                                                        Three Months Ended
                                                                               March 31, 1997            March 31, 1996
                                                                               --------------            --------------
<S>                                                                            <C>                       <C>
REVENUES                                                                        $       3,053             $       5,271

COSTS AND EXPENSES:
     Cost of sales                                                                      2,438                     3,773
Selling, general and administrative expenses                                              952                       881
     Research and development expenses                                                    448                       468
     Amortization of intangible assets                                                     81                        81
                                                                                -------------             -------------


         Total costs and expenses                                                       3,919                     5,203
                                                                                -------------             -------------

INCOME (LOSS) FROM OPERATIONS                                                            (866)                       68

     Interest expense, net                                                                188                       160
                                                                                -------------             -------------

LOSS BEFORE INCOME TAX                                                                 (1,054)                      (92)
                                                                                -------------             --------------

     Income tax expense                                                                     2                         -
                                                                                -------------             -------------

NET LOSS                                                                        $     (1,056)             $         (92)
                                                                                ------------              -------------

NET LOSS PER COMMON SHARE:  (Primary and Fully Diluted)

     Net loss                                                                   $       (.40)             $        (.04)
                                                                                ============              =============

WEIGHTED AVERAGE SHARES OUTSTANDING                                                2,841,599                  2,530,144
                                                                                ============              =============
</TABLE>



                        SEE NOTES TO FINANCIAL STATEMENTS


                                       4

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                              DYNAMOTION/ATI CORP.


                      Statements of Cash Flows (Unaudited)
                               (Amounts in 000's)
<TABLE>
<CAPTION>
                                                                                                  Three Months Ended
                                                                                          March 31,                March 31,
                                                                                             1997                     1996
                                                                                         -----------               --------
<S>                                                                                      <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
         Net loss                                                                         $  (1,056)               $    (92)

         Adjustments to reconcile net loss to net cash used in operating
            activities:
                Depreciation and amortization                                                   163                     171
         Other                                                                                  (63)                      -
         Changes in operating assets and liabilities:
                Decrease in accounts receivable                                               2,726                     593
                (Increase) decrease in inventories                                           (1,386)                    217
                Decrease in other receivables                                                   334                       -
                Increase in prepaid expenses and other assets                                   (48)                    (71)
                Increase (decrease) in accounts payable                                         501                    (514)
                Increase (decrease) in accrued expenses and other liabilities                  (148)                    180
                                                                                          ---------                --------

NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES                                              1,023                     484
                                                                                          ---------                --------

CASH FLOWS FROM INVESTING ACTIVITIES:
                  Capital expenditures                                                            -                     (73)
                                                                                          ---------                --------
NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES                                               -                     (73)

CASH FLOWS FROM FINANCING ACTIVITIES:
                Decrease in unfunded disbursements                                              (42)                    (32)
                Payments on revolving credit loan, net                                         (803)                 (2,072)
                Net proceeds from issuance of redeemable preferred stock                          -                   1,740
                Proceeds from note receivable                                                     -                       6
                Proceeds from note payable                                                        -                      47
                Principal payments on long-term debt                                           (178)                    (30)
                Payment of deferred financing fees                                                -                     (80)
                Proceeds from common stock issuance                                               -                      10
                                                                                          ---------                --------

NET CASH PROVIDED BY (USED) IN FINANCING ACTIVITIES                                          (1,023)                   (411)
                                                                                          ---------                --------

NET INCREASE (DECREASE) IN CASH                                                                   -                       -
CASH - Beginning of period                                                                        -                       -
                                                                                          ---------                --------

CASH - End of period                                                                      $       -                $      -
                                                                                          =========                ========

CASH PAID DURING THE PERIOD
         Interest                                                                         $     143                $    151
                                                                                          =========                ========
</TABLE>



                        SEE NOTES TO FINANCIAL STATEMENTS


                                       5
<PAGE>   6

                              DYNAMOTION/ATI CORP.

                    Notes to Financial Statements (Unaudited)
                             March 31, 1997 and 1996



1.       BASIS OF PRESENTATION

         These interim financial statements should be read in conjunction with
         the Company's Annual Report on Form 10-KSB/A for the year ended
         December 31, 1996.

         The accompanying unaudited financial statements reflect all adjustments
         which, in the opinion of management, are necessary for a fair
         presentation of the financial position and the results of operations
         for the interim periods presented. All such adjustments are of a
         normal, recurring nature. The results of the Company's operations for
         any interim period are not necessarily indicative of the results
         attained for a full fiscal year.

         Inventories

         Inventories are stated at the lower of cost or market. Cost is
         determined using the first-in, first-out method. Inventory balances at
         March 31, 1997, are as follows (in 000's):

<TABLE>
<S>                                         <C>
         Raw materials                      $        1,554
         Work-in-progress                            2,196
         Finished goods                              1,396
                                            --------------
                                            $        5,147
                                            ==============
</TABLE>


         Loss Per Common Share

         Loss per share is based on the weighted average number of common shares
         and common share equivalents outstanding during the period. Common
         share equivalents are excluded if their effect is anti-dilutive. The
         computation includes an accrual for preferred Class B stock dividends
         and accretion of stock issuance costs in 1997, and none for the first
         quarter of 1996, due to the Class B not being issued until the end of
         the first quarter of 1996. In February 1997, the FASB issued Statement
         No. 128, Earnings Per Share. Statement No. 128 established standards
         for computing and presenting earnings per share (EPS) and applies to
         entities with publicly held common stock or potential common stock.
         This Statement simplifies the standards for computing EPS previously
         found in APB Opinion No. 15, Earnings Per Share, and makes them
         comparable to international EPS standards. This statement is effective
         for financial statements issued for periods ending after December 15,
         1997, including interim periods; earlier application is not permitted.
         This Statement requires restatement of all prior-period EPS data
         presented, however, the Company believes that this Statement will not
         have a material effect on the Company's previously reported EPS.


2.       SUBSEQUENT EVENTS

         On April 4, 1997, warrants issued in connection with the issuance of
         Class B preferred stock, were exercised in full to purchase 330,302
         common stock shares at a purchase price of $1.0092 per share, or
         $333,341 in the aggregate. The proceeds were applied against the term
         loan portion of the credit facility.


                                       6
<PAGE>   7

                              DYNAMOTION/ATI CORP.


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

General

         This filing contains forward-looking statements which involve risks and
         uncertainties. Dynamotion/ATI Corp.'s ("Dynamotion" or the "Company")
         actual future results may differ significantly from the results
         discussed in the forward-looking statements. Factors that might cause a
         difference include, but are not limited to, product demand and the rate
         of market acceptance, the effect of economic conditions, the impact of
         competitive products and pricing, delays in product development,
         capacity and supply constraints or difficulties, general business and
         economic conditions, and other risks detailed in Dynamotion's
         Securities and Exchange Commission filings.

         During the first quarter of 1997, Dynamotion continued to incur
         substantial losses and cash flow drains from operations. At March 31,
         1997 current liabilities exceeded current assets by approximately $5.9
         million and total liabilities exceeded total assets by approximately $2
         million. Dynamotion is in default of its operating line of credit
         covenants, and as of March 31, 1997, had borrowed $4.7 million against
         its operating line of credit. As of March 31, 1997, Dynamotion is also
         $217,000 in arrears on payments on other notes payable and was past due
         on payments owed to vendors by $4.1 million. Certain vendors have
         placed Dynamotion on cash payment terms for purchases, and as of March
         31, 1997, seven vendors have filed lawsuits against Dynamotion in
         connection with efforts to collect amounts due to them. These
         conditions call into question the ability of Dynamotion to continue as
         a going concern.

         Dynamotion's management attributes Dynamotion's financial condition and
         recent losses to a number of factors. The losses in the past years have
         severely depleted Dynamotion's resources and as a result operating and
         financing costs have increased. Management's ability to efficiently
         schedule production, purchase materials in economic quantities,
         negotiate satisfactory pricing for the sale of its products, reorganize
         operating departments, etc., are limited. The costs of financing have
         increased both in terms of the stated rates and legal costs associated
         with agreements. Dynamotion's backlog has increased but management has
         not been able to increase production output. Several arrangements have
         been made to increase cash flow by accelerating payment dates of
         receivables at substantial discounts.

         Dynamotion's management has taken a number of actions to reduce
         operating expenses and losses. These include disposing of operations
         and product lines that did not fit with Dynamotion's long-term
         strategies and were producing losses, 30% reductions in work force in
         the second quarter of 1996 and replacements of senior management
         members in 1995 and 1996. While management has not quantified the
         amount of capital necessary for Dynamotion to continue as a going
         concern, Dynamotion would need $9 million to bring itself current with
         respect to recorded liabilities existing as of March 31, 1997. In
         addition, Dynamotion's operating expenses and production payroll
         approximate $500,000 per month.

         The market for Dynamotion's products is characterized by rapidly
         changing technology and evolving industry standards. Accordingly,
         Dynamotion believes that its ability to operate profitably depends on
         developing and manufacturing new products and product enhancements. As
         a result, existing products have short commercial lives and are not
         expected to generate significant revenues after the first few years of
         commercial production unless new products incorporating the technology
         are developed. Dynamotion must therefore continually devote substantial
         resources to research and development. Dynamotion's ability to realize
         the value of its in-process research and development investments
         depends on obtaining sufficient capital to complete development and
         bring these products to market.

         The primary plan of Dynamotion's management to increase its chances for
         survival is a planned merger. Dynamotion executed a merger agreement
         with Electro Scientific Industries ("ESI") in January 1997. This
         agreement is subject to approval by Dynamotion's shareholders at a
         special shareholder's meeting scheduled for May 23, 1997. Under certain
         conditions, if management elects not to complete this merger and
         Dynamotion subsequently merges with any other party within one year, it
         will owe ESI a $1 million termination fee.

         Dynamotion's management is not currently pursuing other mergers or
         other sources of capital. If the ESI merger is not consummated,
         Dynamotion's financial position may be such that other sources of
         capital will not be 


                                       7



<PAGE>   8
                              DYNAMOTION/ATI CORP.


         available to it. Management believes there is substantial doubt about
         Dynamotion's ability to survive without additional financing. If
         Dynamotion is unable to continue to operate and is forced to liquidate
         its assets, it may not recover the assets' recorded amounts.

         As noted above, the value of Dynamotion's in-process research and
         development depends on its ability to obtain additional financing.
         Because Dynamotion has no current plans to obtain additional financing
         other than pursuing the merger with ESI, there is no assurance that
         Dynamotion's in-process research and development will ever result in
         commercially viable products. In addition to financial uncertainties,
         the results of Dynamotion's in-process research and development are
         subject to uncertainties related to technological feasibility and
         market conditions, among other things. If Dynamotion's research and
         development efforts are successful, this will have a material adverse
         effect on Dynamotion's future operating results and financial
         condition.

Results of Operations

         Total revenues for the quarter ended March 31, 1997 were $3.1 million,
         compared to total revenues of $5.3 million for the corresponding period
         in 1996. Total machine revenues for the 1997 quarter were $2.6 million,
         compared to $4.3 million for the corresponding period in 1996. The
         machine revenue decrease of 40% is primarily attributable to two
         issues. First, Dynamotion has experienced difficulty obtaining
         commitments from potential buyers of its product due to its financial
         condition, however, management expects that the proposed merger with
         ESI will address this issue. During the first quarter of 1997, one
         customer accounted for approximately 75% of Dynamotion's machine
         revenues. Orders from this customer did not take place under formal
         contracts but rather took place on the basis of multiple purchase
         orders. Under a purchase order relationship, there is no assurance that
         the customer will issue additional purchase orders in the future. The
         second issue is the sale of the ATI router product line in August 1996
         which accounted for approximately 16% or $688,000 of machine revenue
         for the comparable period in 1996. Dynamotion sold its router product
         line to enable the Company to focus resources on Dynamotion's higher
         margin, more technologically advanced products. Field service revenue,
         which includes parts sales and repairs and maintenance sales decreased
         to $500,000 from $1,000,000 for the corresponding period in 1996. The
         drop in field service revenue is also attributable to the sale of the
         ATI router product line which accounted for approximately $500,000 in
         field service revenue for the corresponding period in 1996.

         Cost of sales for the quarter ended March 31, 1997 was $2.4 million, or
         80% of revenues, compared to $3.8 million, or 72% of revenues, for the
         corresponding period in 1996. During 1996, management had undertaken
         several cost reduction strategies in order to achieve better margins at
         reduced sales levels. However, the drop in machine production and field
         service activity was so significant that the cost reductions which were
         achieved were not able to reflect a decrease in the cost of sales
         percentage. Decreasing the cost of sales percentage in the future is
         contingent upon product mixes, prices, increased volume and improved
         manufacturing efficiencies after the proposed merger with ESI.

         Selling, general and administrative expenses for the quarter ended
         March 31, 1997 were $952,000, or 31% of revenues, compared to $881,000,
         or 17% of revenues for the corresponding period in 1996. Selling,
         general and administrative expenses increased 8% in absolute dollars
         from the corresponding period in 1996, primarily due to a $240,000
         increase in professional fees as a result of the merger agreement
         proposed in Dynamotion's proxy statement. However, this increase was
         partially offset by a $72,000 decrease in salaries and wages due to
         work force reductions in 1996. Additionally, the Company recognized
         over a $100,000 gain in extinguishment of debt with trade vendors.

         Interest expense increased to $188,000 for the quarter ended March 31,
         1997, compared to $160,000 for the corresponding period in 1996
         primarily due to various penalties and interest charges incurred for
         delinquent payments due to various vendors.

         For the reasons set forth above, the Company incurred a net loss for
         the quarter ended March 31, 1997, of $1,056, compared to a net loss of
         $92,000 for the comparable period in 1996.


                                       8
<PAGE>   9
                              DYNAMOTION/ATI CORP.


Liquidity and Capital Resources

         As of March 31, 1997, Dynamotion's outstanding indebtedness under the
         revolving credit facility and term loan decreased to $4.8 million from
         $5.6 million, on December 31, 1996. The $800,000 decrease in the bank
         debt level is primarily due to the receipt of several large outstanding
         trade receivables. As of March 31, 1997, Dynamotion had approximately
         $893,000 of availability provided by the revolving credit facility. As
         of March 31, 1997, and through the date of this filing, Dynamotion is
         in violation of substantially all of the financial loan covenants
         related to the credit facility. Although no assurances can be given,
         management believes that IBJ Schroder Bank and Trust Company will not
         attempt to accelerate payment on the credit facility in the near term.
         If a default is declared and demand is made for payment, Dynamotion
         would not be able to meet such demand.

         On April 4, 1997, warrants issued in connection with the issuance of
         Class B preferred stock, were exercised in full to purchase 330,302
         common stock shares at a purchase price of $1.0092 per share, or
         $333,341 in the aggregate. The proceeds were applied against the term
         loan portion of the credit facility.

         Dynamotion's management believes that substantial additional capital
         resources are necessary for Dynamotion to continue as a going concern.
         If Dynamotion is unable to continue to operate and is forced to
         liquidate its assets, it may not recover the assets' recorded amounts.
         The primary plan of Dynamotion's management to increase its chances for
         survival is a planned merger. Dynamotion executed a merger agreement
         with ESI in January 1997. This agreement is subject to approval by
         Dynamotion's shareholders at a special shareholders meeting scheduled
         for May 23, 1997. Dynamotion's management is not currently pursuing
         other mergers or other sources of capital. If the merger with ESI is
         not consummated, Dynamotion's financial position may be such that other
         sources of capital may not be available to it. Management believes
         there is substantial doubt about the Company's ability to survive
         without additional financing.



PART II  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

         The Company filed a claim dated October 1, 1995, in arbitration against
         Roku-Roku Sangyo, Ltd, (Case No. 75-T-199-00314-95) for breach of a
         license agreement. On April 4,1997, the Company received notice that
         Dynamotion was successful in its claim and is entitled to an award of
         approximately $1.3 million in damages. The Company currently has a
         lawsuit pending against Roku-Roku to enforce the judgment.

Item 5.  OTHER INFORMATION

         On May 12, 1997, the Company was notified that its securities will be
         delisted from the Boston Stock Exchange effective May 15, 1997, due to
         non-compliance with minimum equity requirements.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  27.     Financial data schedule.

         (b)      Reports on Form 8-K

         A report on Form 8-K was filed on February 4, 1997 related to the
         Company's signing of a merger agreement dated January 24, 1997 with
         Electro Scientific Industries, Inc.


                                       9
<PAGE>   10

                              DYNAMOTION/ATI CORP.


                                   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.


                                                DYNAMOTION/ATI CORP.



Date:  May 13, 1997                             By:  /s/ Jon R. Hopper
       ------------                                  -------------------------
                                                     Jon R. Hopper
                                                     President,
                                                     Chief Executive Officer, 
                                                     Chief Financial Officer 
                                                     and Director


                                       10