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:    June 30, 2001
                                            -------------

[]       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
incorporation or organization)                       Identification Number)

3640 East Roeser Road
Phoenix, Arizona                                            85040
-----------------------------------------          --------------------------
(Address of principal executive offices)                    (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 June 30, 2001
------------------------------------         -------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                  36,382,546 SHARES



                                        1

<PAGE>



                          PART 1. FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

BASIS OF PRESENTATION

General

The accompanying unaudited financial statements have been prepared in accordance
with  the  instructions  to Form  10-QSB  and,  therefore,  do not  include  all
information  and footnotes  necessary for a complete  presentation  of financial
position,  results  of  operations,  cash  flows,  and  stockholders'  equity in
conformity  with generally  accepted  accounting  principles.  In the opinion of
management,  all adjustments considered necessary for a fair presentation of the
results of  operations  and  financial  position have been included and all such
adjustments  are of a normal  recurring  nature.  Operating  results for the six
months ended June 30, 2001 are not  necessarily  indicative  of the results that
can be expected for the year ending December 31, 2001.


                                        2

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                              June 30,                December 31,
                                                                                2001                      2000
                                                                       ----------------------    ----------------------
ASSETS                                                                       (Unaudited)                (Audited)
   CURRENT ASSETS
<S>                                                                    <C>                       <C>
     Cash in bank                                                      $              122,368    $              222,074
     Accounts receivable                                                              414,186                   568,670
     Receivables - Employees                                                           13,000                    15,500
     Deferred tax benefit                                                                   0                    14,500
     Prepaid expense                                                                   11,850                    11,850
     Inventory                                                                      1,148,198                   895,217
     Deferred interest expense                                                         42,875                    18,000
                                                                       ----------------------    ----------------------
                                                 TOTAL CURRENT ASSETS               1,752,477                 1,745,811

PROPERTY, PLANT & EQUIPMENT                                                           644,490                   620,250

OTHER ASSETS
     Deposits and other                                                                23,830                    98,971
     Goodwill                                                                       1,139,498                 1,181,702
     Deferred tax benefit                                                             196,000                   181,500
     Derritron Technology                                                           3,874,787                 3,919,324
                                                                       ----------------------    ----------------------
                                                   TOTAL OTHER ASSETS               5,234,115                 5,381,497
                                                                       ----------------------    ----------------------

                                                                       $            7,631,082    $            7,747,558
                                                                       ======================    ======================

LIABILITIES & EQUITY
   CURRENT LIABILITIES
     Accounts payable                                                  $               53,027    $               89,997
     Accrued expenses                                                                  65,940                    64,973
     Loans payable current portion                                                          0                     5,633
     Deposits                                                                               0                    21,561
                                                                       ----------------------    ----------------------
                                            TOTAL CURRENT LIABILITIES                 118,967                   182,164

   LONG-TERM LIABILITIES
     Note payable                                                                   1,376,087                 1,047,300
                                                                       ----------------------    ----------------------
                                                    TOTAL LIABILITIES               1,495,054                 1,229,464

   STOCKHOLDERS' EQUITY
     Common Stock $.001 par value:
       Authorized - 100,000,000 shares
       Issued and outstanding 36,382,546 shares
         (35,382,546 in 2000)                                                          36,383                    35,383
     Additional paid-in capital                                                     7,536,909                 7,148,409
     Retained earnings (deficit)                                                   (1,430,678)                 (659,112)
     Accumulated other comprehensive loss                                              (6,586)                   (6,586)
                                                                       ----------------------    ----------------------
                                           TOTAL STOCKHOLDERS' EQUITY               6,136,028                 6,518,094
                                                                       ----------------------    ----------------------

                                                                       $            7,631,082    $            7,747,558
                                                                       ======================    ======================
</TABLE>

See Notes to Unaudited Consolidated Financial Statements.

                                        3

<PAGE>



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



<TABLE>
<CAPTION>
                                                                            Three Months Ended              Six Months Ended
                                                                                 June 30,                       June 30,
                                                                           2001            2000           2001           2000
                                                                       -------------  -------------  --------------  -------------
<S>                                                                    <C>            <C>            <C>             <C>
Net sales                                                              $     606,730  $     823,385  $    1,240,358  $   1,522,031
Cost of sales                                                                236,051        377,754         466,460        718,732
                                                                       -------------  -------------  --------------  -------------

                                                         GROSS PROFIT        370,679        445,631         773,897        803,299

General and administrative expenses                                         (779,023)      (735,403)     (1,545,464)    (1,566,948)
                                                                       -------------  -------------  --------------  -------------

                                                    NET INCOME (LOSS)
                                                  BEFORE INCOME TAXES       (408,344)      (289,772)       (771,566)      (763,649)

Income tax expense                                                                 0              0               0              0
                                                                       -------------  -------------  --------------  -------------

                                                    NET INCOME (LOSS)  $    (408,344) $    (289,772) $     (771,566) $    (763,649)
                                                                       =============  =============  ==============  =============

Basic & diluted net income (loss)
   per weighted average share                                          $       (0.01) $       (0.01) $        (0.02) $       (0.02)
                                                                       =============  ============== ==============  =============

Weighted average number of common shares used to
   compute net income (loss) per weighted average share                   36,241,242     35,155,475      35,382,546     35,819,010
                                                                       =============  =============  ==============  =============
</TABLE>


See Notes to Unaudited Consolidated Financial Statements.

                                        4

<PAGE>



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



<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                                        June 30,
                                                                                2001               2000
                                                                         -----------------   -----------------

OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>
   Net income (loss)                                                     $        (771,566)  $        (763,649)
   Adjustments to reconcile net income (loss) to cash
     provided (required) by operating activities:
       Depreciation and amortization                                               157,273             142,450
       Non-cash interest expense                                                    61,412              69,500
       Deferred interest                                                                 0               2,000
   Changes in assets and liabilities:
       Accounts receivable                                                         154,483            (301,737)
       Inventory                                                                  (252,981)            (62,831)
       Prepaid expenses                                                                  0              (1,900)
       Accounts payable                                                            (36,970)           (194,078)
       Accrued expenses                                                                966              58,340
       Payable - related party                                                       2,500             (30,500)
       Deposits                                                                     53,580             (52,828)
                                                                         -----------------   -----------------

                                           NET CASH PROVIDED (REQUIRED)
                                                BY OPERATING ACTIVITIES           (631,303)         (1,135,233)

INVESTING ACTIVITIES
   Purchase of equipment / cost adjustment                                         (94,771)           (174,753)
                                                                         -----------------   -----------------

                                              NET CASH PROVIDED  (USED)
                                                BY INVESTING ACTIVITIES            (94,771)           (174,753)

FINANCING ACTIVITIES
   Sale of common stock                                                            340,000             617,051
   Loan principal payments                                                          (5,632)           (394,490)
   Loan proceeds                                                                   292,000             950,000
                                                                         -----------------   -----------------

                                            NET CASH PROVIDED (USED) BY
                                                   FINANCING ACTIVITIES            626,368           1,172,561
                                                                         -----------------   -----------------

                                            INCREASE (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS            (99,706)           (137,425)

Cash and cash equivalents at beginning of year                                     222,074             461,239
                                                                         -----------------   -----------------

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $         122,368   $         323,814
                                                                         =================   =================

Cash paid for income taxes                                               $               0   $               0
Cash paid for interest                                                                   0                 427
</TABLE>


See Notes to Unaudited Consolidated Financial Statements.

                                        5

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2001


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 balance sheets for 2001 and 2000 contain the accounts of the Company and its
wholly owned  subsidiaries,  Avalon  Manufacturing  Co. and Derritron  Vibration
Products.

Dividend Policy
To date, the Company has not 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  value.  The June 30,  2001  inventory,
including finished goods, raw materials and works in process was $1,148,198.

Revenue Recognition
Revenue is recognized upon shipment of products.

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

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 per share
Earnings  per common and common  equivalent  share are  computed by dividing net
earnings by the weighted average common shares outstanding during each year.

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
may differ from these estimates.

Stock Options

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees"  (APB25) and related  interpretations
in  accounting   for  its  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).



                                        6

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                  June 30, 2001


NOTE 1:           SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)

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.

NOTE 2:           ORGANIZATION AND HISTORY

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 at the
Derritron  facility and equipment  for the circuit board  industry at the Avalon
facility.

NOTE 3:           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 costs are currently being amortized over fifteen years for
income tax purposes and 17 years for accounting  purposes,  and were recorded as
part of property, plant, and equipment.

NOTE 4:           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 currently  being amortized
over 15 years.

NOTE 5:           OPTIONS/WARRANTS

On February 8, 2001, the Company  granted 250,000 options to an employee as part
of an incentive package to join the Company.  The grant allowed for the purchase
of Common Stock at $0.85 per share,  based on the fair market value of the stock
at the grant date plus 15% in compliance  with the Company's stock options plan.
The options vest over the next five years and have a term of ten years.

On February 14, 2001,  the Company  re-priced a total of 1.5 million  previously
issued  options of its officers that allowed for the purchase of Common Stock at
$0.66 per share,  based on the fair market  value of the stock at the grant date
plus 15% in compliance  with the Company's  stock options plan.  The  previously
issued options allowed the officers to purchase Common Stock at $1.10 per share.


                                        7

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                  June 30, 2001


NOTE 5:           OPTIONS (continued)

On March 27, 2001, the Company  granted 5,000 options to an employee for meeting
project goals.  The grant allowed for the purchase of Common Stock at $0.455 per
share, based on the fair market value of the stock at the grant date plus 15% in
compliance with the Company's stock options plan. The options vest over the next
five years and have a term of ten years.

On April 13, 2001, the Company  issued 400,000  warrants for the purchase of the
Company's  common stock in connection  with a private  placement of 1,000,000 of
the Company's  restricted common stock. The warrants issued consisted of 200,000
warrants  exercisable  at $1.00 per share and 200,000  warrants  exercisable  at
$1.75 per share;  the  warrants  expire on  September  1, 2001 and March 1, 2002
respectively.


NOTE 6:           SEGMENT INFORMATION

For the three and six month periods ending June 30, 2001,  the Company's  Avalon
Subsidiary  had sales of $236,598 and  $343,180,  cost of goods sold of $100,129
and $124,785,  general and administrative expenses of $178,159 and $431,119, and
net loss of $41,689 and $212,724, respectively.

For the  three  and six  month  periods  ending  June 30,  2001,  the  Company's
Derritron  Subsidiary had sales of $370,132 and $897,178,  cost of goods sold of
$135,922  and  $341,675,  general and  administrative  expenses of $395,167  and
$741,164, and net loss of $160,957 and $185,661, respectively.

UniDyn's  corporate  division,  which  generates no income and incur's costs for
corporate  employees and corporate  overhead costs,  had costs for the three and
six  month  periods  ending  June  30,  2001  totaling  $205,697  and  $373,181,
respectively.

NOTE 7:           GOODWILL

Goodwill relates to the acquisition of Avalon and will be amortized over fifteen
years.  The Company  assigned  some of the excess  purchase  price to  property,
plant,  and equipment.  The Company  determined  there were no other  intangible
assets to record,  and thus  recorded  goodwill for the balance of the excess of
purchase price over net assets acquired.

NOTE 8:           NOTES PAYABLES

On March 17,  2000,  the  Company  obtained a loan from an  unrelated  party for
$1,000,000.  The loan  matures on March 17, 2003 and carries a 6% simple  annual
interest  rate with no principle or interest  payments due until the maturity of
the note.  The Company has  accrued for the  interest in the current  period and
increased  the  Company's   obligation   for   long-term   debt   appropriately.
Additionally,  the Company issued 150,000 Stock Purchase Warrants at an exercise
price of $2.77,  or 85% of the  market  price at date of issue.  The  difference
between market and issue was recorded as deferred interest with an adjustment to
additional  paid in capital.  The deferred  interest will be expensed,  as it is
amortized over the period of the loan.

During  the first  quarter  of 2001,  the  Company  obtained  two loans  from an
unrelated party for $142,000 and $150,000,  respectively.  The first  promissory
note was issued on February 8, 2001 in the amount of $142,000.  The loan matures
on  February  8, 2004 and  carries  an 8% simple  annual  interest  rate with no
principle or interest  payments  due until the maturity of the note.  The second
promissory note was issued on March 28, 2001 in the amount of $150,000. The loan
matures on March 28,  2004  carries an 8% simple  annual  interest  rate with no
principle or interest  payments due until the note's  maturity.  The Company has
accrued for the  interest  in the current  period and  increased  the  Company's
obligation for long-term debt appropriately.


                                        8

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                  June 30, 2001


NOTE 9:           SUBSEQUENT EVENTS

The Company  continues  to evaluate  the  Sterling  Product  and  determine  its
marketability,  operating  modifications and the capital  requirements to pursue
the product.  As previously stated,  operating results suggest that the distinct
parameters  previously  observed may not be achievable on a consistent  basis in
the  current  Sterling  Product   configuration.   Based  on  the  reports,  the
introduction of a commercial product and the associated revenues will be delayed
and may not be realized. Depending on the determination of the previously stated
factors,  the Company's  direction may affect the amortization of the associated
intellectual properties.

                                        9

<PAGE>



ITEM 2.           MANAGEMENT'S 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, 2000.

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 then
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  specially  engineered  products.  The current  product  lines
include the vibration stress screening ("VSS") equipment  manufactured under the
Derritron  brand name and machinery for the  unpopulated  circuit board industry
under the Avalon brand name.

On  December  31,  1999,  the  Company   completed  the  acquisition  of  Avalon
Manufacturing Company, a private entity based in Phoenix,  Arizona, which offers
significant experience in providing the equipment for the manufacture of printed
circuit boards.  At the Avalon facility,  the Company is focusing on meeting the
needs of its current  customer base as well as  establishing  new and redesigned
products for its market.

The Company's  traditional  core business,  through its NorthStar brand and more
recently through the Derritron line, offers vibration testing and Vibration Test
Screening  products that are utilized 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 1) vibration hardware or "shaker" units which mechanically  vibrate 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
unit.  These  Vibration  Test  Screening  products are marketed  directly by the
Company under the trade name Derritron, and are also manufactured by the Company
on an OEM basis.  Through OEMs,  the products may be repackaged and sold for use
in the aerospace, automotive and semiconductor industries.

In a production  environment,  the Vibration  Test  Screening 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 may 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.

During 1999, the Derritron operations were reorganized; operations at a facility
in Riverside, California commenced on January 2, 2000 and the first shipments of
the Company's  Derritron products were made in the first quarter 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 consolidation
of the NorthStar product into the Derritron operations in Riverside,  California
was completed during the second quarter of 2000.

During 2000, the Company expended significant  resources into the startup of the
Derritron division in Riverside,  CA and for the development of products at both
the Derritron and Avalon Divisions. The Company's Derritron Division engineered,
designed,  and  produced  several  products  including:  VP-5,  VP- 30 and VP-50
Shakers, and power and logic modules for the Derritron amplifiers.

During 2000, the Company used its Avalon  facilities to work on the  development
of the Sterling Product Line, which has been designed as a stand-alone  piece of
equipment that would provide for a fully

                                       10

<PAGE>



integrated,  on-line quality  control  testing of printed  circuit  boards.  The
Sterling  Technology has patents pending in the United States and Taiwan;  which
protects  the  Company in the  targeted  worldwide  markets.  As a result of the
efforts made toward new product  developments,  the Company expended significant
resources toward research and development during the year 2000 and the first six
months of 2001 (see Research and Development section in the Company's Results of
Operations Section).

During the second  quarter of 2001,  evaluations of the Sterling  Product,  beta
site data and other testing results, as disclosed in the Company's May 7th press
release suggest that the distinct  parameters  previously  observed might not be
achievable on a consistent basis in the current Sterling Product  configuration.
Based  on  the  reports,  the  introduction  of a  commercial  product  and  its
associated  revenues are  expected to be delayed and may not be  realized.  At a
special meeting on May 5th, 2001, the Board of Directors  instructed  management
to continue to review the Sterling  Product to determine its  marketability  and
the capital  requirements  to pursue the product.  Subsequently,  management was
instructed  to  report  to the Board on  operating  modifications,  which may be
required if the Company  continues  or suspends  the  Sterling  Project.  In the
interim, the Board confirmed  management's intent to focus Company operations on
its  core  Derritron  Product  Line.  The  evaluation  of the  Sterling  Product
continues.

As of June 30, 2001,  the  Company's  workforce  consisted of  approximately  17
leased  personnel  all  located in the United  States.  In response to a general
decline in the circuit board and related  industries and the current  evaluation
of the  Sterling  Project,  the  Company  significantly  reduced the size of its
leased  workforce  during April and May and  continues to make efforts to reduce
costs.  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  packages and access to retirement  plans
which can be provided through the larger group status of a leasing  arrangement.
Management will continue to review the leasing structure as conditions require.

As  described  above,  the Company  has  acquired a  substantial  portion of its
technology and production assets through  arrangements  with third parties.  The
Company intends to continue to contemplate  strategic  alliances,  acquisitions,
and mergers to enhance and fund the  development  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 allow.

RESULTS OF OPERATIONS

For the quarter ended June 30, 2001 compared to the quarter ended June 30, 2000

For the three month period  ending June 30,  2001,  the Company  reported,  on a
consolidated  basis,  sales of $606,730 as compared to sales of $823,385 for the
same  quarter in 2000,  resulting  in a loss of  $408,344  for the three  months
ending June 30, 2001 as compared to a loss of $289,772  for the same  quarter in
2000.  The  revenues  were a result of  continued  revenue  generation  from the
Company's  divisional  core  products.  During the second  quarter,  the Company
recorded  revenues of  approximately  $236,598 and $370,132 from the  shipments,
services,  and equipment sales generated at the Avalon and Derritron  facilities
respectively.  Avalon and Derritron sales revenues decreased  significantly from
the  second  quarter  of 2000,  as the  result of an  overall  decline  in their
markets.  This market  decline  curtailed  many of the Company's  customers from
expending funds on capital equipment, which are the Company's core products.

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 our  modification
of  operations,  introduction  of new product  lines and shifts in the  existing
customer  base.  As a  builder  of  manufacturing  and  testing  equipment,  the
Company's sales revenues are also being directly affected by the general decline
in the circuit board and related  industries,  which the Company cannot control.
This general  industry decline is directly  affecting our operating  results and
has  translated  into a  reduction  in  the  Company's  sales  of  equipment.  A
continuation  or  worsening  of the  current  downturn  would  have a  long-term
material impact on the Company's future results.

Cost of Goods  Sold - For the three  months  ended June 30,  2001,  the costs of
goods sold were $236,051 with a gross profit margin of $370,679 on product sales
of $606,730 as compared to $377,754 of costs of goods sold and a $445,631  gross
profit  margin  on  product  sales  of  $823,385  for the same  period  of 2000,
resulting in gross profit margins for the three month period ended June 30, 2001
of 61% as compared to

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<PAGE>



a 54% gross margin for the same period in 2000.  Due to the general  decline and
delaying of capital  equipment  purchasing  by the  Company's  customers,  gross
margins were increased in the second quarter of 2001 as the Company's  customers
decided to service  and  replace  parts.  Service  and parts have  significantly
higher  margins  than  the  Company's  core  equipment   product  lines,   which
contributed to the increase in gross margins.

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, the Company
has developed an operating history,  and the related economic factors stabilize,
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 month period ending June 30, 2001, the
Company's  research and development  efforts were conducted at all the Company's
locations.   Research  and  Development  costs  were   approximately   $242,796,
consisting of purchased materials, outside consulting and leased employee costs,
for the three month period ending June 30, 2001.  Research and Development costs
are a significant portion of the total operations and were recorded as a portion
of the selling,  general and  administrative  costs. The Company's  research and
development  efforts   constituted  31%  of  the  total  selling,   general  and
administrative  costs for the quarter  ending June 30, 2001.  During the current
evaluation  period  of the  Sterling  Product  Line,  management  anticipates  a
significant decrease in research and development costs.

Selling,  General and Administrative Costs - For the three months ended June 30,
2001, selling,  general, and administrative costs were $779,023,  as compared to
$735,403 in the same period of 2000, a $43,620 increase.  A significant  portion
of the Company's selling,  general,  and administrative  costs were research and
development efforts. (see "Research and Development" section above)

For the six month  Period  ended June 30, 2001  compared to the six month Period
ended June 30, 2000

For the six month  period  ending  June 30,  2001,  the Company  reported,  on a
consolidated  basis,  sales of $1,240,358 as compared to sales of $1,522,031 for
the same six month  Period in 2000,  resulting in a loss of $771,566 for the six
months  ending June 30, 2001 as compared to a loss of $763,649  for the same six
month Period in 2000. The revenues were a result of continued revenue generation
from the Company's divisional core products.  During the first six month Period,
the Company recorded  revenues of  approximately  $343,180 and $897,178 from the
shipments,  services, and sales generated at the Avalon and Derritron facilities
respectively. Avalon's sales revenues decreased significantly from the first six
month Period of 2000,  as the result of an overall  decline in the circuit board
market.  This market decline curtailed many of Avalon's customers from expending
funds on capital equipment, which are Avalon's core products.

In spite of an the overall economic  downturn being  experienced  throughout the
equipment  sector and the  resulting  decreases the Company  experienced  in the
second quarter,  the Derritron  Division's sales revenues increased over $80,000
compared to the same period in 2000,  due to previous gains in the first quarter
and  continued  NorthStar  controller  sales,  new  product  introductions,  and
increased  service  revenues.  Management  anticipates  that during the next six
month  period,  the  Derritron  Division's  sales  revenues will increase as its
current innovative products,  including power and logic modules and VP-5, VP-30,
and VP- 50 shakers,  gain  acceptance  in the  marketplace  and  additional  new
products,  including  the VP-200 and slave  logic  modules,  are  developed  and
marketed.  However, a continuation or worsening of the current economic downturn
would have a long-term material impact on the Company's future results.

Cost of Goods Sold - For the six months ended June 30, 2001,  the costs of goods
sold were  $466,460  with a gross profit  margin of $773,897 on product sales of
$1,240,358  as compared to $718,732 of costs of goods sold and a $803,299  gross
profit  margin  on  product  sales of  $1,522,031  for the same  period of 2000,
resulting in gross  profit  margins for the six month period ended June 30, 2001
of 62% as compared to a 53% gross margin for the same period in 2000. Due to the
general  decline and delaying of capital  equipment  purchasing by the Company's
customers,  gross  margins were  increased  in the first  quarter of 2001 as the
Company's customers decided to service and replace equipment parts.  Service and
parts have  significantly  higher  margins  than the  Company's  core  equipment
product lines.

Research and  Development - For the six month period  ending June 30, 2001,  the
Company's  research and development  efforts were conducted at all the Company's
locations. Research and Development costs were

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<PAGE>



approximately  $479,174,  consisting of purchased materials,  outside consulting
and leased  employee  costs,  for the six month  period  ending  June 30,  2001.
Research and Development costs are a significant portion of the total operations
and were recorded as a portion of the selling, general and administrative costs.
The Company's  research and  development  efforts  constituted  31% of the total
selling,  general and administrative  costs for the six month Period ending June
30, 2001.  During the current  evaluation  period of the Sterling  Product Line,
management anticipates a significant decrease in research and development costs.

Selling,  General and  Administrative  Costs - For the six months ended June 30,
2001, selling, general, and administrative costs were $1,545,464, as compared to
$1,566,948 in the same period of 2000.  The $21,484  decrease in fixed  selling,
general  and  administrative  expenses,  is  a  direct  result  of  management's
continuing  effort  to  reduce  fixed  overhead  costs.   Management   primarily
accomplished  this through cost  reductions in payroll and related costs,  these
reductions were offset by increases in research & development  costs, which were
a significant  portion of the Company's  selling,  general,  and  administrative
costs. (see "Research and Development" section above)

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, the Company had a total cash availability of $122,368 compared
to $222,074  available as of December 31,  2000, a $99,706  decrease.  Until the
determination  of the  Sterling  Product in May 2001,  the Company  continued to
expend  significant  cash  towards the  purchasing  of equipment  and  resources
necessary for the  development  of the Sterling and Derritron  Product Lines and
preparing  the Company for the  anticipated  growth in operations as a result of
the introductions of additional  products.  During the first six month period of
2001,  the Company  obtained two loans from an unrelated  party for $142,000 and
$150,000, respectively. (See Note 9: Notes Payable).

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 anticipated expansion
of Derritron's product line.

While the Company  believes  that  additional  capital will be needed for growth
plans of the Company, management believes that the working capital now available
to it along with funds generated from  operations,  the possible  disposition of
selected  assets and the economies  realized from  reductions in the work force,
will  allow it to meet  capital  requirements  for the next 12  months,  even if
substantial  additional  working  capital  does not become  available.  However,
management  also  realizes  that due to the Company's  limited  working  capital
reserves, a continuation or worsening of the current worldwide economic downturn
would have a material  impact on the Company's  future  results and may create a
going concern issue for the Company.

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.

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.


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<PAGE>


ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

On April 13, 2001,  the Company  issued  1,000,000  shares of restricted  common
stock for  $340,000.  As an additional  incentive to the  investor,  the Company
issued  400,000  warrants for the purchase of the Company's  common  stock.  The
issued warrants consisted of 200,000 warrants exercisable at $1.00 per share and
200,000  warrants  exercisable  at $1.75  per  share;  the  warrants  expire  on
September 1, 2001 and March 1, 2002 respectively. 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.  The  transaction  was
undertaken to an investor as a private  placement  without any public  offering.
The investor  was  accredited  and had a prior  business  relationship  with the
Company.  The issuances was made in reliance on the exemption from  registration
provided by rule 506 of Regulation D.

In connection with obtaining a loan from an unrelated  party, the Company issued
150,000 Stock  Purchase  Warrants at an exercise  price of $2.77,  or 85% of the
market price at date of issue.  The  difference  between  market price and issue
price was recorded as deferred interest with an adjustment to additional paid in
capital.  The deferred  interest will be expensed,  as it is amortized  over the
period of the loan.

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

On May 5, 2001, the Board of Directors  held a special  meeting as the result of
an evaluation of the Sterling Product Line, which indicated that the project was
experiencing  environmental  production  inconsistencies.  After a review of the
available  information,  the  Board  concluded  that the  state  of the  project
warranted  immediate public disclosure while the Company continued reviewing the
project to  determine  its status and to consider  the future  direction  of the
project.  In the discussion,  Ira Gentry,  CEO and Chairman,  disagreed with the
Board's  assessment  of the status of the Sterling  Product,  but  indicated his
desire  to defer to the  Board's  views.  Mr.  Gentry  voluntarily  resigned  as
Chairman and CEO at the meeting.  The  Sterling  product  review is currently in
process.

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:   August 14, 2001            /s/ John Provazek
                                    ----------------------------
                                    John Provazek, CEO
                                    UniDyn, Corp.


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