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, 1999             
                               -------------------------------------------------

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

For the transition period from ________________ to _______________

Commission File No.     33-55254-31

                                  UNIDYN, CORP.
        (Exact name of Small Business Issuer as specified in its charter)

         NEVADA                                          87-0438639          
(State or other jurisdiction of               (I.R.S. Employer Identificatio
 incorporation or organization)                           Number)


  8621 North Seventy Ninth Avenue
         Peoria, Arizona                                        85345        
(Address of principal executive offices)                      (Zip Code)


Issuer's telephone number, including area code     (602) 979-2800               

         Indicate  by check mark  whether  the 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 Issuer
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

         Indicate  the  number of  shares  outstanding  of each of the  Issuer's
classes of common stock, as of the latest practicable date.

              Class                           Outstanding as of March 31, 1999 
------------------------------------         ----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                32,000,000 SHARES





                                        1

<PAGE>



ITEM 1.           MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.

         THE  FOLLOWING  DISCUSSION  INCLUDES  FORWARD-LOOKING  STATEMENTS  WITH
RESPECT TO THE COMPANY'S FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER
MATERIALLY  FROM  THOSE  CURRENTLY   ANTICIPATED  AND  FROM  HISTORICAL  RESULTS
DEPENDING UPON A VARIETY OF FACTORS,  INCLUDING  THOSE DESCRIBED BELOW UNDER THE
SUB-HEADING,  "BUSINESS  RISKS." SEE ALSO THE  COMPANY'S  ANNUAL  REPORT ON FORM
10KSB FOR THE YEAR ENDED DECEMBER 31, 1998.

OVERVIEW
         The  Company  was  incorporated  in the  State of Utah in 1986 as Macaw
Capital, Inc. and was reincorporated in 1993 in the State of Nevada. In December
of 1997,  Macaw  Capital,  Inc.  acquired a portion  of the assets of  Universal
Dynamics,  Inc.,  a private  manufacturer  of  environmental  vibration  testing
equipment  formed in December  1989, and was renamed  UniDyn,  Corp. No material
relationship  exists  between  the  former  management  and  directors  of Macaw
Capital,  Inc. and the current management and directors of UniDyn, Corp. UniDyn,
Corp. shares are currently traded under the symbol UNDY on the NASDAQ Electronic
Bulletin Board System.

         The current company is in the business of providing  products involving
quality  control of  manufactured  electronics.  These  products  fall under two
categories,  A)  Vibration  Stress  Screening  (VSS) and B) Sterling  inspection
products for on-line printed circuit board inspection.

A) The  vibration  test  products  are used to check the  integrity  of  printed
circuit  boards and other  physical  items  eventually  used in  automotive  and
electronics.  This core business primarily consists of 1) the vibration hardware
or "shaker" unit which mechanically vibrates the test platform, 2) the vibration
control system which measures output and regulates shaker intensity,  and 3) the
amplifier unit which provides power to the shaker.  On the production  line, VSS
can identify latent defects not readily  identified through visual inspection or
during the  development  and  design  process.  Vibration  Stress  Screening  of
electronic  and  mechanical  components,  such as printed  circuit  boards saves
rework time during production, reduces warranty exposure and can enhance product
quality and longevity.  VSS is most effective in detecting  intermittent defects
such as loose connections,  broken parts, cracked traces, poor solder joints and
mechanical flaws.

         The Company  currently  markets its Vibration  Control  System  product
under the  NorthStar  brand and to other OEM's to be  repackaged  for use in the
aerospace,  automotive  and  semiconductor  industries.  The  Company  has  also
purchased a complete line of shaker and  amplifiers  known in the industry under
the trade name  "Derritron".  Derritron  has had a 30 year history in the shaker
business,  and is considered a premier  shaker  product.  This combined with the
Company's world class vibration  control system,  puts UniDyn in the position to
become a first tier provider of turn-key vibration test products.

B)  UniDyn's  flagship  in new  products  is a product  called  "Sterling".  The
Sterling product was completely  acquired from Universal  Dynamics in the second
quarter of 1998 after the patent


                                        2

<PAGE>



search showed no prior art, and open for patent  filing.  UniDyn is currently in
the process of filing patents on this new testing process.  The Company also has
firm  commitments  with a  large  Japanese  company  with a 45 year  history  of
providing  various products for the printed circuit board industry.  The Company
will provide product to the Japanese  company under an exclusive OEM arrangement
in Japan.  The quantity will be  approximately  20 Sterling units a month during
the first year, and relating to the initial  discovered  demands of the Japanese
customer.  The Company is in the process of engineering a "Production Model" for
delivery  in 1999.  The  product  technique  is already  tested at IBM and Delco
Electronics. The Company is constructing the production model for delivery.

The Sterling process provides for completely  automated  on-line quality control
testing of printed circuit boards.  It is expected that the Sterling process can
significantly  reduce warranty liability for a variety of industries,  including
manufacturers  of computers,  consumer  electronic  products,  and aerospace and
military systems, by anticipating hidden defects.

OVERVIEW ACQUISITIONS
         To meet the  objectives  of its  business  plan and reach an economy of
scale in the short-term,  the Company has entered into several asset acquisition
agreements. In December of 1997, the Company closed a transaction with Universal
Dynamics,  Inc.  an Arizona  corporation,  for the  transfer  of certain  assets
including  equipment,   inventory,  accounts  receivable,   software  and  other
intangible  assets related to the NorthStar  vibration  control system business.
These  systems  are  Microsoft  Windows-based  and have been  integrated  in the
Company's proprietary control systems software.

         The Company also  entered into an agreement to acquire a 100%  interest
in the Derritron product of shakers and amplifiers, previously known as a United
Kingdom based  manufacturer  of vibration  shakers and  amplifiers.  The Company
completed that acquisition in the second quarter of 1998. With this acquisition,
the Company will  receive  patents,  products,  manufacturing  equipment  and an
established market presence internationally.  Derritron is currently 1 of only 4
shaker manufacturers  worldwide with a full range of electrodynamic shakers, and
has a full selection of shaker models.

         The Company also finished the  acquisition  of the  "Sterling"  product
rights from  Universal  Dynamics,  Inc., an Arizona  corporation,  in the second
quarter of 1998. This acquisition was completed after the "Sterling" process was
discovered clear on the patent search during the second quarter.

RESULTS OF OPERATIONS
         For the three months ending March 31, 1999,  the Company  posted a loss
of $42,007 on revenues of $401,200  ($165,895 earnings and $737,415 for the same
period in 1998).  Substantially  all sales  were  generated  from the  NorthStar
product.  NorthStar is composed of off the shelf items and has minimal  assembly
requirements.  The Company was  profitable  for the  quarter  ($36,553)  but its
subsidiary lost $78,560.



                                        3

<PAGE>



         Sales are  subject to  material  monthly  fluctuations  as the  Company
integrates  recent  acquisitions,  modifies  operations,  introduces new product
lines,  and modifies its existing  customer base. There can be no assurance that
the  Company  will  have  the  capital  resources   necessary  to  complete  the
introduction  of the Sterling  Process in a timely manner in accordance with the
Company's  business plan. The Company is currently involved with various funding
potentials for Sterling.

         Cost of Goods  Sold for the three  months  ended  March  31,  1999 were
$121,588  with a resultant  gross profit of $279,612  ($198,421 and $538,994 for
1998).  Gross  margin for the period ended March 31, 1999 was 70% (73% in 1998).
Until new products are  introduced,  including  the Sterling  Process,  there is
significant  uncertainty about future gross margins.  Gross margin percentage is
highly  dependent  upon  product  prices,  sales  volumes,  materials  cost  and
allocation of manufacturing overhead.

         Selling,  General and  Administrative  costs for the three months ended
March 31, 1999 were $317,055, ($332,049 in 1998). The Company currently leases a
total about 40 people in the United  States and the United  Kingdom.  Management
believes that by leasing its primary  workforce,  the Company has  substantially
limited fixed  overhead  costs and provided for a larger  free-cash flow for the
Company's growth phase. It also allows for a better benefit base through managed
401K and health plans already established in the employee leasing companies.

         For the  three  months  ending  March  31,  1999  the  majority  of the
Company's  research was conducted at the Company's  Engineering  and Development
Center in American Fork, Utah.  Substantial  research and development costs were
incurred by Universal Dynamics for the development of the NorthStar and Sterling
Process products prior to the December, 1997 asset purchase.

LIQUIDITY AND CAPITAL RESOURCES
         The Company is currently seeking additional working capital to meet its
short term growth planning including the acquisition of a potential supplier for
the Sterling system.  Management  believes,  although there can be no assurance,
that the  Company  will  have  sufficient  cash  needs  for the  next 12  months
regardless of its success in attracting additional capital investment.  However,
management  also  believes that a lack of  additional  working  capital over the
remainder of the current fiscal year would substantially curtail the roll-out of
the  Sterling  Process  product  line.  As of March 31,  1999,  the  Company has
approximately $103,050 in working capital.




                                        4

<PAGE>



NEW ACCOUNTING PRONOUNCEMENTS
         The Financial  Accounting  Standards  Board has adopted several notices
with regard to the treatment of interim financial  statements.  These issues are
presented in the Company's  interim  financial  statements.  As discussed in the
notes to the  interim  financial  statements,  the  implementation  of these new
pronouncements  is not  expected  to have a  material  effect  on the  financial
statements.

BUSINESS RISKS
         While  management  believes,  but there can be no  assurance,  that the
Company is sufficiently  capitalized to continue operations for the remainder of
the fiscal year,  management is currently seeking  additional capital investment
to fulfill  inventory  requirements and outstanding  purchase orders which could
have a material impact on short-term growth objectives.

         This  report  contains  a number of  forward-looking  statements  which
reflect the Company's  current views with respect to future events and financial
performance.  These forward-looking  statements are subject to certain risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical   results  or  those   anticipated.   In  this   report,   the  words
"anticipates",   "believes",   "expects",   "intends",   "future"   and  similar
expressions  identify  forward-looking  statements.  Readers  are  cautioned  to
consider the specific risk factors  described in the Company's  Annual Report on
Form 10-KSB for the year ended December 31, 1998 and not to place undue reliance
on the forward-looking  statements  contained herein, which speak only as of the
date hereof.  The Company  undertakes  no  obligation  to publicly  revise these
forward-looking  statements,  to reflect events or circumstances  that may arise
after the date hereof.

IMPACT OF THE YEAR 2000 ISSUE
         The "Year 2000 Problem" arose because many existing  computer  programs
use only  the last two  digits  to refer to a year.  Therefore,  these  computer
programs do not  properly  recognize a year that begins with "20" instead of the
familiar "19". If not corrected, many computer applications could fail or create
erroneous  results.  The extent of the potential impact of the Year 2000 Problem
is not yet  known,  and if not  timely  corrected,  it could  affect  the global
economy.

         Y2K Statement
         The  Company  has  verified  that  all  internal  software  used in the
operations  of the Company  and  related  developments  are Y2K  compliant.  The
Company  sees no risk at this  time  pertaining  to Y2K,  and  internal  company
operations.

         Products  currently  manufactured  by the  Company  have  also been Y2K
verified.  All  previous  Company  customers  have the ability to purchase  both
hardware  and  software  upgrades  from the  Company  which will  certify  their
products as Y2K compliant. The amount of needed hardware and software depends on
the associated production model in question.

ITEM 2. LEGAL PROCEEDINGS

         Not applicable.



                                        5

<PAGE>



ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K
                  (a)      Exhibits
                           Financial statements as of March 31, 1999

                  (b)      Reports on Form 8-K
                           None


                                   SIGNATURES

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

                               UNIDYN, CORP.



Dated:   May 4, 1999                                                       
                               Ira Gentry, President and Director



                                        6

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         March 31,
                                                                           1999         
                                                                  ----------------------
ASSETS
     CURRENT ASSETS
<S>                                                               <C>                   
         Cash in bank                                             $              103,567
         Accounts receivable                                                     145,740
         Deferred tax benefit                                                     12,896
         Prepaid expense                                                          12,921
         Inventory                                                                34,500
                                                                  ----------------------

                                      TOTAL CURRENT ASSETS                       309,624

PROPERTY, PLANT & EQUIPMENT                                                       82,986

OTHER ASSETS
         Deferred tax benefit                                                    196,500
         Derrition Technology                                                  4,008,400
                                                                  ----------------------
                                                                               4,204,900
                                                                  ----------------------

                                                                  $            4,597,510
                                                                  ======================

LIABILITIES & EQUITY
     CURRENT LIABILITIES
         Accounts payable                                         $               84,778
         Accrued expenses                                                         16,327
         Payable - related party                                                 105,469
                                                                  ----------------------

                                 TOTAL CURRENT LIABILITIES                       206,574

     STOCKHOLDERS' EQUITY 
         Common Stock $.001 par value:
              Authorized - 100,000,000 shares
              Issued and outstanding
              32,000,000 shares                                                   32,000
         Additional paid-in capital                                            4,341,832
         Retained earnings                                                        23,690
         Accumulated other comprehensive loss                                     (6,586)
                                                                  ----------------------

                                TOTAL STOCKHOLDERS' EQUITY                     4,390,936
                                                                  ----------------------

                                                                  $            4,597,510
                                                                  ======================
</TABLE>


                                       F-1

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                1999               1998       
                                                                         -----------------   -----------------
<S>                                                                      <C>                 <C>              
Net sales                                                                $         401,200   $         737,415
Cost of sales                                                                      121,588             198,421
                                                                         -----------------   -----------------

                                                           GROSS PROFIT            279,612             538,994

Other Income                                                                             0              30,000

General and administrative expenses                                                317,055             332,049
                                                                         -----------------   -----------------
                                                                                   317,055             332,049
                                                                         -----------------   -----------------

                                                      NET INCOME (LOSS)
                                                    BEFORE INCOME TAXES            (37,443)            236,945

Income tax expense                                                                   4,564              71,050
                                                                         -----------------   -----------------

                                                      NET INCOME (LOSS)            (42,007)            165,895

OTHER COMPREHENSIVE LOSS
   Foreign currency translation adjustments                                         (6,586)                  0
                                                                         -----------------   -----------------

                                      TOTAL COMPREHENSIVE INCOME (LOSS)  $         (48,593)  $         165,895
                                                                         =================   =================

Net income (loss) per weighted average share                             $            (.00)  $             .01
                                                                         =================   =================

Weighted average number of common shares used to
   compute net income (loss) per weighted average share                         32,000,000          30,600,000
                                                                         =================   =================
</TABLE>


                                       F-2

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                1999               1998       
                                                                         -----------------   -----------------
OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>              
   Net income (loss)                                                     $         (42,007)  $         165,895
   Adjustments to reconcile net income (loss) to cash provided
     (required) by operating activities:
       Depreciation                                                                  3,602                 990
       Deferred taxes                                                                1,604                   0
       Foreign currency translation                                                 (6,586)                  0
   Changes in assets and liabilities:
       Accounts receivable                                                          99,572            (119,254)
       Inventory                                                                      (327)            (37,777)
       Prepaid expenses                                                              4,643              (1,492)
       Accounts payable                                                            (88,360)             13,677
       Accrued expenses                                                            (30,958)                  0
       Payable - related party                                                      14,799                   0
       Income taxes payable                                                            (50)             71,000
                                                                         -----------------   -----------------

                                           NET CASH PROVIDED (REQUIRED)
                                                BY OPERATING ACTIVITIES            (44,068)             93,039

INVESTING ACTIVITIES
   Loans                                                                                 0             (61,000)
   Purchase of equipment / cost adjustment                                           8,699                   0
                                                                         -----------------   -----------------

                                              NET CASH PROVIDED  (USED)
                                                BY INVESTING ACTIVITIES              8,699             (61,000)

FINANCING ACTIVITIES
   Line of credit repayments                                                             0             (35,000)
   Repayments - related parties                                                          0                   0
   Loan principal payments                                                               0             (74,775)
   Loan proceeds                                                                         0              78,500
                                                                         -----------------   -----------------

                                                     NET CASH (USED) BY
                                                   FINANCING ACTIVITIES                  0             (31,275)
                                                                         -----------------   -----------------

                                            INCREASE (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS            (35,369)                764

Cash and cash equivalents at beginning of year                                     138,936             104,522
                                                                         -----------------   -----------------

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $         103,567   $         105,286
                                                                         =================   =================

Cash paid for income taxes                                               $           2,960   $              50
Cash paid for interest                                                                   0               1,370
</TABLE>



                                       F-3

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999


NOTE 1:           SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
                  Accounting Methods
                  The  Company  recognizes  income  and  expenses  based  on the
                  accrual method of accounting.

                  Principals of Consolidation
                  The  financial  statements  for March  31,  1999  contain  the
                  accounts  of the  Company  and  its  wholly-owned  subsidiary,
                  Unidyn (Europe) Limited.

                  The  financial  statements  for March  31,  1998  contain  the
                  accounts  of  the  Company  and   Universal   Dynamics,   Inc.
                  ("Universal").  Universal  could be considered an entity under
                  common  control as at one time,  the  President of the Company
                  and the president of Universal were the same person.  Also the
                  Company  issued  common  stock to  Universal  to  acquire  the
                  NorthStar  operations from  Universal.  NorthStar is currently
                  the main line of business  for the  Company.  All  significant
                  intercompany    transactions    have   been    eliminated   on
                  consolidation.

                  Dividend Policy
                  The Company has not yet adopted any policy  regarding  payment
                  of dividends in cash.

                  Organization Costs
                  The Company amortized its organization  costs over a five year
                  period.

                  Inventory
                  Inventory  consists  of items for  resale and is valued at the
                  lower of cost (first-in, first-out basis) or market.

                  Allowance for Uncollectible Accounts
                  The Company provides an allowance for  uncollectible  accounts
                  based upon prior experience and management's assessment of the
                  collectability of existing accounts.

                  Revenue Recognition
                  Revenue is recognized upon shipment of products.

                  Cash and Cash Equivalents
                  For financial  statement  purposes,  the Company considers all
                  highly liquid  investments with an original  maturity of three
                  months or less when purchased to be cash equivalents.

                  Earnings (loss) per share
                  Earnings  or loss per common and  common  equivalent  share is
                  computed  by  dividing  net  earnings  (loss) by the  weighted
                  average common shares outstanding during each period.

                  Estimates
                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make  estimates  and  assumptions  that affect the reported
                  amounts of assets, liabilities,  revenues, and expenses during
                  the reporting period.  Estimates also affect the disclosure of
                  contingent assets and liabilities at the date of the financial
                  statements.  Actual results could differ from these estimates.
                  Such  estimates  of  significant  accounting  sensitivity  are
                  allowance for doubtful accounts.

                  Stock Options
                  The Company has elected to follow Accounting  Principles Board
                  Opinion No. 25,  "Accounting  for Stock  Issued to  Employees"
                  (APB 25) and related  interpretations  in  accounting  for its
                  future   employee  stock  options  rather  than  adopting  the
                  alternative fair value accounting provided for under Financial
                  Accounting  Standards  Board  ("FASB") FASB Statement No. 123,
                  Accounting for Stock Based Compensation (SFAS 123).

                  Income Taxes
                  The Company records the income tax effect of transactions in
                  the  same  year  that  the   transactions   enter  into  the
                  determination of income, regardless of when the transactions
                  are recognized for tax purposes. Tax credits are recorded in
                  the year realized.


                                       F-4

<PAGE>


                          UNIDYN, CORP. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 March 31, 1999

NOTE 1:           SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
                  Income Taxes (continued)
                  In February,  1992, the Financial  Accounting  Standards Board
                  adopted Statement of Financial  Accounting  Standards No. 109,
                  Accounting for Income Taxes,  which  supersedes  substantially
                  all  existing  authoritative  literature  for  accounting  for
                  income taxes and requires deferred tax balances to be adjusted
                  to  reflect  the tax rates in effect  when those  amounts  are
                  expected to become  payable or  refundable.  The Statement was
                  applied in the Company's  financial  statements for the fiscal
                  year commencing January 1, 1993.

NOTE 2:           ORGANIZATION AND HISTORY
                  The  Company was  incorporated  under the laws of the State of
                  Utah on May 2, 1986 as Macaw  Capital,  Inc. On  December  30,
                  1993,  the Company was  dissolved  as a Utah  corporation  and
                  reincorporated as a Nevada  corporation.  On December 3, 1997,
                  the name was changed to UniDyn, Corp. The Company manufactures
                  and sells computer  products that perform vibration testing to
                  assure product stability.

NOTE 3:           FORWARD STOCK SPLIT
                  Effective December 3, 1997, pursuant to written action adopted
                  unanimously  by the Board of  Directors  and a majority of the
                  shareholders,  the Company changed its name to UniDyn,  Corp.,
                  and  approved  an  eight-for-one  forward  stock  split on the
                  Company's common stock as follows:  each outstanding share was
                  converted  into eight shares.  Before the change,  the Company
                  was authorized to issue 100,000,000  shares of $.001 par value
                  common stock;  after the forward stock split the Company shall
                  continue to be authorized to issue 100,000,000 shares of $.001
                  par value common stock.  The number of  outstanding  shares of
                  common stock affected by the forward split was 4,000,000.  The
                  number of issued and outstanding shares of common stock of the
                  Company after the forward stock split is 32,000,000.

NOTE 4:           1998 EVENTS

                  STERLING PATENT
                  During the quarter  ended June 30,  1998,  the Company  issued
                  6,416,000 shares of restricted  common stock,  previously held
                  as treasury stock, to acquire a patent on the Sterling Project
                  from  Universal.  The patent will be  amortized  over  fifteen
                  years.  The Sterling Project will allow the testing of printed
                  circuit  boards.  Sterling will estimate the projected life of
                  each solder  connection on the printed  circuit  board,  which
                  will quantify the  reliability of the  manufactured  part. The
                  Company expects to have a working  production model by the end
                  of 1998 with sales expected in the second quarter of 1999.

                  DERRITRON TECHNOLOGY
                  Effective June 30, 1998, the Company issued  14,576,000 shares
                  of restricted common stock, previously held as treasury stock,
                  to acquire the  technology.  The technology  will be amortized
                  over five years.  The Company will need to spend some money to
                  upgrade the technology and expects sales to begin in the third
                  quarter of 1999. With this  acquisition,  the Company receives
                  patents, products, manufacturing equipment, and an established
                  market presence in England and other parts of Europe.

NOTE 5:           SEGMENT INFORMATION
                  The Company's subsidiary had sales in Europe of $36,145,  cost
                  of sales of $23,926,  general and  administrative  expenses of
                  $90,779, and a net loss of $78,560.  Included in cost of sales
                  is $16,533 paid to the Company for inventory to sell.



                                       F-5