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, 2000
                                            ------------------

[]       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 Identification
incorporation or organization)                 Number)


         3640 East Roeser Road
         Phoenix, Arizona                                 85040
----------------------------------------         ---------------------------
(Address of principal executive offices)         (Zip Code)

         1216 South 1580 West, #A
         Orem, Utah                                            84058
-----------------------------------------------       --------------------------
(Former address of principal executive offices)       (former Zip Code)


Issuer's telephone number, including area code:       (602) 426-8634
                                                      --------------------------

         Indicate  by check mark  whether  the Issuer (1) has filed all  reports
required to be filed by Section  13or 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 September 30, 2000
------------------------------------       ------------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK               35,321,000 SHARES



                                        1

<PAGE>



                          PART 1. FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS



                                        2

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       September 30,              December 31,
                                                                           2000                       1999
                                                                  ----------------------     ---------------------
ASSETS                                                                  (Unaudited)                 (Audited)
   CURRENT ASSETS
<S>                                                               <C>                        <C>
     Cash in bank                                                 $              901,132     $             461,239
     Accounts receivable                                                         450,976                   431,857
     Stock subscription                                                                0                   207,000
     Deferred tax benefit                                                              0                    14,500
     Prepaid expense                                                              11,850                    11,850
     Receivable - employees                                                       20,500                         0
     Inventory                                                                   611,003                   333,551
     Deferred interest expense                                                    20,000                         0
                                                                  ----------------------     ---------------------

                                            TOTAL CURRENT ASSETS               2,015,461                 1,459,997

PROPERTY, PLANT & EQUIPMENT                                                      640,036                   560,642

OTHER ASSETS
     Deposits and other                                                           77,049                     8,184
     Goodwill (less amortization of $63,301)                                   1,202,804                 1,266,105
     Deferred tax benefit                                                        196,000                   181,500
     Derritron Technology (less amortization
       of $66,807)                                                             3,941,593                 4,008,400
                                                                  ----------------------     ---------------------
                                                                               5,417,446                 5,464,189
                                                                  ----------------------     ---------------------

                                                                  $            8,072,943     $           7,484,828
                                                                  ======================     =====================

LIABILITIES & EQUITY
   CURRENT LIABILITIES
     Accounts payable                                             $              197,575     $             290,485
     Accrued expenses                                                             44,547                    31,835
     Loans payable                                                                10,336                   314,680
     Deposits                                                                      3,292                    21,956
     Payable - related party                                                           0                   119,369
                                                                  ----------------------     ---------------------

                                       TOTAL CURRENT LIABILITIES                 255,750                   778,325

   LONG-TERM LIABILITIES
     Long-term debt and interest - related party                               1,032,300                         0
                                                                  ----------------------     ---------------------

                                               TOTAL LIABILITIES               1,288,050                   778,325

   STOCKHOLDERS' EQUITY
     Common Stock $.001 par value:
       Authorized - 100,000,000 shares
       Issued and outstanding 35,321,000 shares
         (34,700,000 in 1999)                                                     35,321                    34,700
     Additional paid-in capital                                                7,082,561                 6,558,382
     Retained earnings (deficit)                                                (326,403)                  120,007
     Accumulated other comprehensive loss                                         (6,586)                   (6,586)
                                                                  ----------------------     ---------------------

                                      TOTAL STOCKHOLDERS' EQUITY               6,784,893                 6,706,503
                                                                  ----------------------     ---------------------

                                                                  $            8,072,943     $           7,484,828
                                                                  ======================     =====================
</TABLE>


                                        3

<PAGE>



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



<TABLE>
<CAPTION>
                                                                           Three Months Ended               Nine Months Ended
                                                                              September 30,                   September 30,
                                                                          2000             1999           2000           1999
                                                                     ---------------  -------------  --------------  -------------
<S>                                                                  <C>              <C>            <C>             <C>
Net product sales                                                    $       508,619  $     446,480  $    2,030,650  $   1,199,973
Other sales                                                                  900,000              0         900,000              0
Cost of sales                                                               (226,482)      (126,979)       (945,214)      (340,891)
                                                                     ---------------  -------------  --------------  -------------

                                                      GROSS PROFIT         1,182,137        319,501       1,985,436        859,082

Other Income                                                                       0              0               0        101,565
General and administrative expenses                                         (864,898)      (183,151)     (2,431,846)      (737,323)
                                                                     ---------------  -------------  --------------  -------------

                                                 NET INCOME (LOSS)
                                               BEFORE INCOME TAXES           317,239        136,350        (446,410)       223,324

Income tax expense                                                                 0         49,180               0         59,803
                                                                     ---------------  -------------  --------------  -------------

                                                 NET INCOME (LOSS)           317,239         87,170        (446,410)       163,521

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

                                 TOTAL COMPREHENSIVE INCOME (LOSS)   $       317,239  $      87,170  $     (446,410) $     156,935
                                                                     ===============  =============  ==============  =============

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

Weighted average number of common shares
   used to compute net income (loss) per
   weighted average share                                                 35,307,804     32,000,000      35,093,809     32,000,000
                                                                     ===============  =============  ==============  =============
</TABLE>


                                        4

<PAGE>



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


<TABLE>
<CAPTION>
                                                                                    Nine Months Ended
                                                                                      September 30,
                                                                                2000               1999
                                                                         -----------------   -----------------

OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>
   Net income (loss)                                                     $        (446,410)  $         163,521
   Adjustments to reconcile net income (loss) to cash
     provided (required) by operating activities:
       Gain on subsidiary                                                                0              (5,717)
       Depreciation and amortization                                               219,193              15,493
       Non-cash interest expense                                                    84,500                   0
       Deferred taxes                                                                    0              11,000
       Deferred interest                                                             4,000                   0
       Foreign currency translation                                                      0              (6,586)
   Changes in assets and liabilities:
       Accounts receivable                                                         (19,119)           (190,580)
       Inventory                                                                  (277,452)             (3,125)
       Prepaid expenses                                                                  0               8,486
       Accounts payable                                                            (92,910)                831
       Accrued expenses                                                             10,511             (30,958)
       (Receivable) Payable - related party                                        (20,500)             14,799
       Deposits                                                                    (87,529)                  0
       Income taxes payable                                                              0              37,950
                                                                         -----------------   -----------------

                                           NET CASH PROVIDED (REQUIRED)
                                                BY OPERATING ACTIVITIES           (625,716)             15,114

INVESTING ACTIVITIES
   Purchase of equipment                                                          (168,479)                  0
   Loans                                                                                 0             (87,150)
                                                                         -----------------   -----------------

                                              NET CASH PROVIDED  (USED)
                                                BY INVESTING ACTIVITIES           (168,479)            (87,150)

FINANCING ACTIVITIES
   Sale of common stock                                                            707,801                   0
   Loan principal payments                                                        (423,713)                  0
   Loan proceeds                                                                   950,000                   0
   Cash remaining with former subsidiary                                                 0             (17,996)
                                                                         -----------------   -----------------

                                            NET CASH PROVIDED (USED) BY
                                                   FINANCING ACTIVITIES          1,234,088             (17,996)
                                                                         -----------------   -----------------

                                            INCREASE (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS            439,893             (90,032)

Cash and cash equivalents at beginning of year                                     461,239             138,936
                                                                         -----------------   -----------------

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $         901,132   $          48,904
                                                                         =================   =================

Cash paid for income taxes                                               $               0   $          11,772
Cash paid for interest                                                                 998                   0
</TABLE>


                                        5

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2000


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

         Principles of Consolidation
         The financial statements for September 30, 2000 contain the accounts of
         the  Company  and its  wholly-owned  subsidiaries  Derritron  Vibration
         Products and Avalon Manufacturing Company.

         The financial statements for September 30, 1999 contain the accounts of
         the Company and its former  wholly owned  subsidiary,  Unidyn  (Europe)
         Limited.

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

         Inventory
         Inventory  consists  of  products  held 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  collectibility 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 share  equivalent is computed by
         dividing net earnings  (loss) by the weighted  average number of 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 (SFAS123).

         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.

         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.


                                        6

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
                               September 30, 2000

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
         reincorporated as a Nevada corporation. Effective December 3, 1997, the
         name was changed to UniDyn,  Corp. The Company  manufactures  and sells
         products that perform testing to assure product workmanship and quality
         of equipment used in the circuit board industry.

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   continued  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 was 32,000,000.

NOTE 4:  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 the rights to patent the  Sterling  Process  from  Universal
         Dynamics,  Inc. During the third quarter of 2000, a patent was filed on
         the Sterling Product Line process.  The associated  patent cost will be
         amortized  over fifteen  years for income tax purposes and 17 years for
         accounting purposes.

         The Sterling  process will allow the industry to use a  non-destructive
         thermal energy emissions analysis  technology that will reduce warranty
         returns  to  a  small   fraction   of  current   levels  and   increase
         productivity.  Industry data indicates that  electronics  manufacturers
         currently  experience  a 4  percent  to 7 percent  return  of  finished
         products  under  warranty.   The  Company  reports  that  the  Sterling
         technology  identifies  defects in materials  and assembly at levels of
         accuracy and resolution which have been previously  unattainable in any
         test procedures suitable for mass production environments. The Sterling
         equipment will quantify the  reliability of the  manufactured  part and
         indicate the workmanship areas of concern,  even though the electronics
         passed functional testing.

NOTE 5:  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 business and associated  technology  known as Derritron.  Derritron
         was an established business,  which manufactured  vibration shakers and
         other  related  technology.  With  this  acquisition,  Unidyn  received
         patent,   products,  know  how,  drawings,  trade  name,  manufacturing
         equipment,  and an  established  market  presence  in England and other
         parts of Europe, Asia, South America, India, and China. This technology
         has the capacity to be fully  integrated  with the NorthStar  vibration
         control  systems  acquired from Universal  Dynamics.  The technology is
         being amortized over 15 years.

NOTE 6:  OPTIONS
         On April 1,  2000,  as part of an  agreement  to  provide  the  Company
         investor  relations  and  corporate  communication  services,  Investor
         Relations  Group  (IRG) was issued  options to acquire  150,000  shares
         (75,000 are  exercisable  for two years and 75,000 are  exercisable for
         three  years) of  restricted  shares  assignable  to IRG  officers  and
         employees. The issued options have an exercise price of $2.99 per share
         based on the average  sale price of the  preceding  five  trading  days
         prior to April 1, 2000.

         In connection  with a $1 million loan  received by the Company,  during
         the first  quarter,  the lender was paid a loan fee of $50,000  and was
         granted  warrants to acquire  150,000 shares at an exercise price equal
         to 85% of the market price on the date of grant. The difference between
         the exercise price and the  calculated  fair market value of the shares
         issuable on exercise  of the options was  reported as interest  expense
         and amortized over the period of the loan.



                                        7

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
                               September 30, 2000

NOTE 6:  OPTIONS (continued)
         On July 31,  2000,  the Company  granted  100,000  options to a Company
         officer  and 50,000  options  to one of the  Company's  directors.  The
         grants  allowed  for the  purchase  of Common  Stock at $.89 per share,
         based on the fair  market  value of the  stock at the grant  date.  The
         options vest over the next 4 years and have a term of ten years.

NOTE 7:  CONTINGENCIES
         On June 7, 2000,  Unidyn Corp.  signed a letter of intent to purchase a
         commercial  building in  Phoenix,  Arizona to  relocate  the  Company's
         current Avalon division and to provide additional  facilities  required
         for  Avalon's  anticipated  growth  due to the  Sterling  Product.  The
         transaction  is  conditioned  on a  customary  due  diligence  and  the
         availability of financing, which is currently being sought.



                                        8

<PAGE>



ITEM 2.  MANAGEMENTS  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.  SEE ALSO THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
YEAR ENDED DECEMBER 31, 1999.

OVERVIEW

         UniDyn,   Corp.   (referred  to  as  "UniDyn"  or  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. The Common Shares of UniDyn, Corp.
are currently traded on the NASDAQ OTCBB under the symbol "UNDY".

         The  business of the Company is focused on  developing,  manufacturing,
assembling  and  distributing  specialized  engineering  products.  The  current
product  lines,  including  the vibration  stress  screening  ("VSS")  machinery
manufactured under the NorthStar and Derritron brands and the on-line inspection
products being  developed at the Avalon  facility as the Sterling  Product Line,
are directed  principally to testing  electronic  and mechanical  components and
providing on-line quality control testing for printed circuit boards. In January
2000,  the  Company  introduced  and  recognized  its  first  revenues  from the
Derritron  line of products and  anticipates  the first shipment of the Sterling
Product  Line in the  fourth  quarter  of 2000.  In  addition  to these  product
introductions,  the Company has established a license agreement for the Sterling
Product  Line in the  third  quarter.  The  Company  plans to  continue  seeking
additional  licensing  contracts  for the Sterling  Product  Line and  licensing
opportunities  for all its  products.  The Company  also plans to  maintain  its
emphasis on developing  and  distributing  specialized  engineering  and testing
products and consider ancillary technology  opportunities that capitalize on its
existing  capacity  as a  builder  of  manufacturing  equipment  as  well as its
engineering and testing capacities.

         On December 31, 1999, the Company  completed the  acquisition of Avalon
Manufacturing  Company,  a  private  entity  based  in  Phoenix,  Arizona,  with
significant experience in providing the equipment for the manufacture of printed
circuit  boards.  The  Company is  continuing  to focus on the  development  and
initial manufacturing of the Sterling Product line at the Avalon facility, which
is  expected  to ship in the  fourth  quarter of 2000.  The  Avalon  technology,
including  its automatic  board  handling  machinery,  will be integrated in the
Sterling production process. The availability of the Avalon facility, staff, and
assets has been an important  factor in allowing the Company to  accelerate  the
Sterling project and to attract engineers and other technical  personnel for the
project.

         The Company's  traditional  core business,  through its NorthStar brand
and more  recently  through the Derritron  and Avalon  lines,  offers  vibration
testing and VSS products that are used to check the integrity of printed circuit
boards and other  components for automotive and  electronics  applications.  The
NorthStar vibration control system uses a Microsoft(R)-based  Windows(R) product
acquired  in 1997,  which is fully  integrated  into the  Company's  proprietary
control system software  package.  The NorthStar and Derritron  products include
the vibration  hardware or "shaker"  units which  mechanically  vibrate the test
platform,  the  vibration  control  system which  measures  output and regulates
shaker  intensity,  and the amplifier  unit which  provides  power to the shaker
unit. The VSS products are marketed directly by the Company under the trade name
Derritron,  and are also manufactured by the Company on an OEM basis and offered
for repackaging and sale for use in the aerospace,  automotive and semiconductor
industries.


         In a production environment, the VSS test equipment can identify latent
defects  not  readily  recognizable  through  visual  inspection  or during  the
development  and design  process.  The use of on-line VSS testing for 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.

         Through 1999,  essentially all of the Company's  revenues came from its
NorthStar line. Early in 1998, the Company acquired the production, engineering,
patents,  drawings and intellectual property and other rights and assets for the
shaker and amplifiers,  which had been  manufactured in England for more than 30
years under the trade name Derritron.  At the time of the Company's  acquisition
of Derritron,  the  production of the Derritron  line had been  suspended by the
prior  owners.  During 1999,  the Derritron  operations  were  reorganized  at a
facility in Riverside, California;  operations at the plant commenced on January
2, 2000 and the first shipments of the Company's Derritron products were made in
the first quarter

                                        9

<PAGE>



of 2000.  During the end of the first  quarter  and in April  2000,  the Company
transferred  its NorthStar  production  to the  Riverside  facility to allow the
Company to offer turnkey vibration test products from its Riverside location.

         The transfer of the NorthStar product into the Derritron  operations in
Riverside,  California  was completed  during the second quarter of 2000 and the
Company is currently  finalizing its pre-production  and commercial  development
efforts for the  Sterling  Product  line at its Avalon  facility.  The  Sterling
Product has been designed as a stand-alone  piece of equipment that will provide
for a fully  integrated,  on- line quality  control  testing of printed  circuit
boards.  During the third  quarter  the Company  announced  the filing of a U.S.
patent on its breakthrough  "Sterling" technology.  Because of the patent filing
and  continued  success  with the  development  of the  Sterling  Product  line,
management  anticipates that commercial  production of the Sterling Product line
will be undertaken  during the fourth  quarter of 2000.  The Company  expects to
offer the product  principally  on an OEM basis and licensing  opportunities  to
third parties when appropriate.  Initial production  commitments are expected to
increase  to the  rate  of  approximately  20  Sterling  Units  per  month  with
production  to be  scaled  and  maintained,  initially  on  requirements  of the
Japanese  consortium and subsequently on a broader-based  market of domestic and
foreign customers.

         As described  above,  to date,  the Company has acquired a  substantial
portion of its technology and its production  assets through  arrangements  with
third  parties.   The  Company   intends  to  continue  to  consider   strategic
acquisitions  and  to  use  its  expanding  internal  product   development  and
production  capacity  to enhance  the assets  acquired  from third  parties.  In
addition,  the Company will  continue to develop new  equipment  and  technology
internally  as  circumstances  warrant and as capital  resources  and  technical
talent are available.

RESULTS OF OPERATIONS

         For the quarter ended  September 30, 2000 compared to the quarter ended
September 30, 1999

         For the three months ending  September 30, 2000, the Company  reported,
on a  consolidated  basis,  sales of $1,408,619 as compared to sales of $446,480
for the same  quarter in 1999,  resulting  in a gain of  $317,239  for the three
months  ending  September 30, 2000 as compared to a gain of $87,170 for the same
quarter in 1999. The gains were a result of continued  revenue  generation  from
the Company's  divisional  core  businesses and additional  revenues of $900,000
generated by the first third party licensing  agreement for the Sterling Product
Line.  During the third quarter,  the Company recorded revenues of approximately
$325,048 and $1,083,571 from the shipments, services and license agreement sales
generated  at the  Derritron  and  Avalon  facilities  respectively.  Management
anticipates that during the next six month period,  the Company will move toward
customary  production  level  costs and  expenses,  while  Derritron  production
expands,  the  NorthStar  production  continues,  the  Sterling  Product line is
introduced, and further Sterling Product licensing agreements are pursued.

         While the Company's  product lines are not subject to inherent seasonal
shifts,  with the  relatively  low level of sales of the  Company's  products to
date,  the Company's  sales have been  sensitive to small shifts in revenues and
production  which have resulted in material monthly  fluctuations.  In addition,
the  Company's  results to date have been  impacted by the  financial  effect of
acquisitions, changes in facilities, modification of operations, introduction of
new product lines and shifts in the existing customer base.

         Cost of Goods Sold - For the three months ended September 30, 2000, the
costs of goods sold were  $226,482  with a gross  profit  margin of  $282,137 on
product  sales of  $508,619 as compared to $126,979 of costs of goods sold and a
$319,501 gross profit margin on product sales of $446,480 for the same period of
1999,  resulting  in gross  profit  margins  for the three  month  period  ended
September  30, 2000 of 55% as compared to a 72% gross margin for the same period
in 1999 (when the sales were  primarily of the  NorthStar  product).  Management
anticipates  that as its production  expands and the product mix is diversified,
it will achieve a blended gross margin of approximately  40-50% on its products,
including direct labor and customary allocated manufacturing overhead.  However,
until the new product lines have been introduced,  and the Company has developed
an  operating  history,  there is  significant  uncertainty  about  future gross
margins,  particularly  since  gross  margins  are highly  dependent  on product
prices, sales volumes, materials cost and allocation of manufacturing overhead.

         Research and  Development - For the three months  ending  September 30,
2000,  the  Company's  research and  development  efforts were  conducted at the
Company's  Engineering  and  Development  Centers  in  American  Fork,  Utah and
Phoenix,  Arizona.  Although  the  NorthStar  production  activities  have  been
transferred  from  Utah to the  Derritron  facility  in  Riverside,  California,
research and development  efforts will continue to be based in Utah and Arizona.
Research  and  Development  costs were  approximately  $275,373,  consisting  of
purchased  materials  and leased  employee  costs,  for the three months  ending
September  30, 2000, a significant  portion of the total  operations at both the
Utah and Arizona  facilities,  and were  recorded  as a portion of the  selling,
general and administrative costs. The Company's research

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<PAGE>



and  development  efforts  constituted  32% of the total  selling,  general  and
administrative cost for the quarter ending September 30, 2000.

         Selling,  General and Administrative Costs - For the three months ended
September 30, 2000, selling, general, and administrative costs were $864,898, as
compared to $183,151 in the same  period of 1999.  The  significant  increase in
general and  administrative  cost was  attributed  to the  additional  staff and
facilities  needed for the Derritron  facility,  the cost of the efforts for the
development of the Sterling and Derritron  Product lines, and principally to the
fact that to date,  the  Company has  included  staff,  facilities,  and related
overhead of the production managers, engineers, research and development efforts
(see "Research and Development"  section above) and the labor and overhead costs
in  American  Fork,  Utah and  Riverside,  California  as  selling,  general and
administrative  costs and has not  attributed  them to the direct costs of goods
sold or the research and development efforts for the various product lines.

         For the nine month period ended September 30, 2000 compared to the nine
         month period ended September 30, 1999

         For the nine months ending September 30, 2000, the Company reported, on
a  consolidated  basis, a loss of $446,410 on revenues of $2,930,650 as compared
to a gain of $156,935 on revenues of $1,199,973 for the same period in 1999. The
increase  in  revenue  was a result of  continued  revenue  generation  from the
Company's  divisional  core  businesses  and $900,000  generated by the Avalon's
divisions  first  licensing of the Sterling  Product Line. The Company  recorded
revenues of  approximately  $1,122,772  and  $1,807,878  from the  shipments and
services  earned at the  Derritron  and Avalon  facilities  respectively.  These
increases in revenues were offset by the  combination of the  investment,  which
the Company is  continuing  to make in bringing the  Derritron  facility to full
capacity and the continuing  development,  engineering and other  pre-production
costs attributable to the Sterling Products line.

         Cost of Goods Sold - For the nine months ended  September  30, 2000 the
costs of goods sold was $945,214  with a gross profit  margin of  $1,085,436  as
compared to $340,891 of costs of goods sold and a $859,082  gross profit  margin
for the same  period of 1999,  resulting  in gross  profit  margins for the nine
month period ended  September  30, 2000 of 53% as compared to a 72% gross profit
margin  for the same  period  in 1999  (when  the sales  were  primarily  of the
NorthStar product).

         Research and  Development  - For the nine months  ending  September 30,
2000, the Company's research and development costs were approximately  $719,849,
a  significant  portion  of the total  operations  at both the Utah and  Arizona
facilities  and  were  recorded  as  a  portion  of  the  selling,  general  and
administrative costs. The Company's research and development efforts constituted
30% of the total  selling,  general and  administrative  cost for the nine month
period ending September 30, 2000.

         Selling,  General and Administrative  Costs - For the nine months ended
September 30, 2000, selling,  general, and administrative costs were $2,431,846,
as compared to $737,323 in the same period of 1999. The significant  increase in
general and  administrative  cost was  attributed  to the  additional  staff and
facilities needed to establish the Derritron  facility,  the cost of the efforts
for the  development of the Sterling  Product line, and  principally to the fact
that to date, the Company has included staff,  facilities,  and related overhead
of the production managers,  engineers, research and development efforts and the
labor and overhead  costs in American Fork,  Utah and  Riverside,  California as
selling,  general and  administrative  costs and has not attributed  them to the
direct  costs of goods sold or the  research  and  development  efforts  for the
various product lines. The Company expects Selling,  General and  Administrative
costs to remain at the current  level until  additional  production  capacity is
needed or the costs are  directly  allocated  to product  lines or research  and
development.

         As of  September  30, 2000,  the  Company's  workforce  consisted of 34
leased personnel all located in the United States.  Management  believes that by
leasing its primary  workforce,  the Company has  controlled  its fixed overhead
costs and has been  able to  provide  its  staff  with  advantages  of  improved
benefits  package and access to retirement  plans which can be provided  through
the larger group status of a leasing  arrangement.  Management  will continue to
review this structure, as conditions require.

LIQUIDITY AND CAPITAL RESOURCES

         At September  30, 2000,  the Company had a total cash  availability  of
$901,132  compared to $461,239  available  as of December  31,  1999, a $439,893
increase.  During the third quarter of 2000, the Company issued 84,000 shares of
Common Shares of which 64,000 were issued on the exercise of previously  granted
options and 20,000 were options  issued to and  exercised by a Company  officer,
and recorded as  compensation  in accordance  with APB 25. The net cash received
was $74,550. (See Item 2 below).



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<PAGE>



         During the first nine months of 2000  compared to the first nine months
of 1999,  the Company  shifted a  significant  portion of its assets  toward the
purchasing  of  equipment  and  resources  necessary to the  development  of the
Sterling  Product Line and preparing the Company for the  anticipated  growth in
operations  as a result of the Sterling  Product  Line.  The Company  intends to
continue to seek additional  working capital to meet its operating  requirements
and  to  provide  further  capital  for  expansion,   acquisition  of  strategic
technologies  and direct  costs  related  to the  introduction  of the  Sterling
Product line. While, the Company believes that additional capital will be needed
to  maintain  the growth  plans of the  Company,  management  believes  that the
working  capital now available to it along with funds  generated from operations
will be sufficient to meet capital  requirements  for the next 12 months even if
substantial additional working capital does not become available.

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.

YEAR 2000 STATEMENT

         The  Company  has  verified  that  all  internal  software  used in the
operations of the Company and related developments are Year 2000 compliant.  The
Company sees no risk at this time pertaining to Year 2000, and internal  Company
operations.  Products currently  manufactured by the Company have also been Year
2000 verified.  All previous Company customers have the ability to purchase both
hardware  and software  upgrades  from the  Company,  which will  certify  their
products as Year 2000  compliant.  The amount of needed  hardware  and  software
depends on the associated production model in question.

FORWARD-LOOKING STATEMENTS

         Safe Harbor statement under the Private  Securities  Litigation  Reform
Act of 1995: Except for historical  information  contained  herein,  the matters
discussed in this filing are  forward-looking  statements that involve risks and
uncertainties,  including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations,  markets, products
and prices and other factors discussed in the Company's various filings with the
Securities and Exchange Commission.

                            PART 2. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         During the third  quarter of 2000,  the Company  issued  84,000  Common
Shares;  64,000 were issued on the exercise of previously  granted options,  and
20,000 were issued on options granted to and exercised by a Company officer, and
recorded as  compensation in accordance with APB 25. Of the 64,000 Common Shares
issued,  5,000 were on the exercise of options by a former  employee at $.16 per
share and 59,000 were through the exercise of warrants exercised by shareholders
that were a result of a private  placement  that was done in the 4th  quarter of
1999 at $1.25  per  share.  As a  result  of the  exercise  of the  options  and
warrants,  cash of $800 and $73,750 was received respectively,  resulting in net
proceeds to the  Company of $74,550.  The  proceeds  were used to meet  Unidyn's
operational  needs and to provide further capital for direct cost related to the
development of the Sterling  Product Line. The $1.25 warrants were the result of
a private placement in the fourth quarter of 1999 to institutional investors and
individual  accredited  investors,  including current  shareholders  without any
public  offering.  The  issuances  were made in reliance on the  exemption  from
registration provided by Rule 506 of Regulation D.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

         Not applicable.

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

         Not applicable.

ITEM 5.  OTHER INFORMATION

         Not applicable.

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<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         (a)      Exhibits
                  None
         (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:   October 13, 2000      /s/  Ira Gentry
                               --------------------------------------------
                               Ira Gentry, CEO, President


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