UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

         For the quarterly period ended:    March 31, 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 March 31, 2001
-------------------------------------         --------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                   35,382,546 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 three
months ended March 31, 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>
                                                                                  March 31,                December 31,
                                                                                    2001                       2000
                                                                           ----------------------    ----------------------
ASSETS                                                                          (Unaudited)                 (Audited)
           CURRENT ASSETS
<S>                                                                        <C>                       <C>
              Cash in bank                                                 $              144,179    $              222,074
              Accounts receivable                                                         454,460                   568,670
              Receivables - Employees                                                      18,750                    15,500
              Deferred tax benefit                                                              0                    14,500
              Deferred interest expense                                                    49,000                    18,000
              Prepaid expense                                                              11,850                    11,850
              Inventory                                                                 1,088,355                   895,217
                                                                           ----------------------    ----------------------

                                                     TOTAL CURRENT ASSETS               1,766,594                 1,745,811

PROPERTY, PLANT & EQUIPMENT                                                               648,661                   620,250

OTHER ASSETS
              Deposits and other                                                          120,608                    98,971
              Goodwill                                                                  1,160,600                 1,181,702
              Deferred tax benefit                                                        196,000                   181,500
              Derritron Technology                                                      3,897,055                 3,919,324
                                                                           ----------------------    ----------------------
                                                                                        5,374,263                 5,381,497
                                                                           ----------------------    ----------------------

                                                                           $            7,789,518    $            7,747,558
                                                                           ======================    ======================

LIABILITIES & EQUITY
           CURRENT LIABILITIES
              Accounts payable                                             $              148,279    $               89,997
              Accrued expenses                                                             58,596                    64,973
              Loans payable current portion                                                 2,497                     5,633
              Deposits                                                                     21,474                    21.561
                                                                           ----------------------    ----------------------

                                                TOTAL CURRENT LIABILITIES                 230,846                   182.164

           LONG-TERM LIABILITIES
              Note payable                                                              1,354,300                 1,047,300
                                                                           ----------------------    ----------------------

                                                        TOTAL LIABILITIES               1,585,146                 1,229,464

           STOCKHOLDERS' EQUITY
              Common Stock $.001 par value:
                Authorized - 100,000,000 shares
                Issued and outstanding 35,382,546 shares                                   35,383                    35,383
              Additional paid-in capital                                                7,197,909                 7,148,409
              Retained earnings (deficit)                                              (1,022,334)                 (659,112)
              Accumulated other comprehensive loss                                         (6,586)                   (6,586)
                                                                           ----------------------    ----------------------

                                               TOTAL STOCKHOLDERS' EQUITY               6,204,372                 6,518,097
                                                                           ----------------------    ----------------------

                                                                           $            7,789,518    $            7,747,558
                                                                           ======================    ======================
</TABLE>


                                        3

<PAGE>



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



<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                2001               2000
                                                                         -----------------   -----------------
<S>                                                                      <C>                 <C>
Net sales                                                                $         633,627   $         698,646
Cost of sales                                                                      230,409             340,978
                                                                         -----------------   -----------------

                                                           GROSS PROFIT            403,218             357,668

General and administrative expenses                                                766,440             831,545
                                                                         -----------------   -----------------

                                                      NET INCOME (LOSS)
                                                    BEFORE INCOME TAXES           (363,222)           (473,877)

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

                                                      NET INCOME (LOSS)  $        (363,222)  $        (473,877)
                                                                         =================   =================

Basic and diluted net income (loss) per
   weighted average share                                                $            (.01)  $            (.01)
                                                                         =================   =================

Weighted average number of common shares used to
   compute net income (loss) per weighted average share                         35,382,546          34,901,250
                                                                         =================   =================
</TABLE>


                                        4

<PAGE>



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



<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                                        March 31,
                                                                                2001               2000
                                                                         -----------------   -----------------

OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>
   Net income (loss)                                                     $        (363,222)  $        (473,877)
   Adjustments to reconcile net income (loss) to cash provided
     (required) by operating activities:
       Depreciation and amortization                                                77,902              58,026
       Non-cash interest expense                                                    34,447              54,500
       Deferred interest expense                                                   (18,500)                  0
   Changes in assets and liabilities:
       Accounts receivable                                                         114,209             (11,246)
       Inventory                                                                  (193,138)            (38,185)
       Accounts payable                                                             58,282             (82,780)
       Accrued expenses                                                             (3,823)               (259)
       Payable - related party                                                      (3,250)            (31,950)
       Deposits                                                                    (21,724)            (21,535)
                                                                         -----------------   -----------------

                                           NET CASH PROVIDED (REQUIRED)
                                                BY OPERATING ACTIVITIES           (318,817)           (547,306)

INVESTING ACTIVITIES
   Purchase of equipment / cost adjustment                                         (62,942)            (12,773)
                                                                         -----------------   -----------------

                                              NET CASH PROVIDED  (USED)
                                                BY INVESTING ACTIVITIES            (62,942)            (12,773)

FINANCING ACTIVITIES
   Sale of common stock                                                                  0             531,051
   Loan principal payments                                                          (3,136)           (314,680)
   Loan proceeds                                                                   307,000             950,000
                                                                         -----------------   -----------------

                                            NET CASH PROVIDED (USED) BY
                                                   FINANCING ACTIVITIES            303,864           1,166,371
                                                                         -----------------   -----------------

                                            INCREASE (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS            (77,895)            606,292

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

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $         144,179   $       1,067,531
                                                                         =================   =================

Cash paid for income taxes                                               $               0   $               0
Cash paid for interest                                                                   0                 427

</TABLE>


                                        5

<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                          FINANCIAL STATEMENTS For the
                          Quarter ending March 31, 2001


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Accounting Methods
The  Company  recognizes  income and  expenses  based on the  accrual  method of
accounting.

Principals of Consolidation
The 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 March 31,  2001  inventory,
including finished goods, raw materials and works in process was $1,088,355.

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).

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".


                                        6

<PAGE>



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 cost will be 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 being  amortized over 15
years.

NOTE 5:  OPTIONS

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.

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.

NOTE 6:   SEGMENT INFORMATION

For the three month  period  ending  March 31, 2001,  the  Company's  Avalon and
Derritron Subsidiaries had sales of $106,582 and $527,045, cost of goods sold of
$24,656 and  $205,753,  general  and  administrative  expenses  of $252,960  and
$345,997, and net loss of $171,035 and $24,704, respectively. UniDyn's corporate
division, which generates no income and incurs costs for corporate employees and
corporate overhead costs, had costs totaling $167,483 for the period.

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

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 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.

NOTE 9:   SUBSEQUENT EVENTS

Currently,  the Company is evaluating the Sterling Product.  The current 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.



                                        7

<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  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 (see Research and  Development  section in the
Company's Results of Operations Section).

Recent  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 is currently underway.

                                        8

<PAGE>



As of March 2001, the Company's  workforce  consisted of approximately 34 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 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 this 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 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 allow.

RESULTS OF OPERATIONS

For the quarter  ended March 31,  2001  compared to the quarter  ended March 31,
2000

For the three month period  ending March 31, 2001,  the Company  reported,  on a
consolidated  basis,  sales of $633,627 as compared to sales of $698,646 for the
same  quarter in 2000,  resulting  in a loss of  $363,222  for the three  months
ending  March 31, 2001 as compared to a loss of $473,877 for the same quarter in
2000. The gains were a result of continued revenue generation from the Company's
divisional  core  products.  During  the first  quarter,  the  Company  recorded
revenues of  approximately  $106,582 and $527,045 from the shipments,  services,
and  sales  generated  at the  Avalon  and  Derritron  facilities  respectively.
Avalon's sales revenues decreased  significantly from the first quarter 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.

The Derritron  Division's sales revenues increased over $158,000 compared to the
same period in 2000, due to 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
continue to 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.

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  internal
changes in facilities,  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,  which was  partially  offset by increased  part
sales.  A  continuation  of the  downturn  would have a long- term impact on the
Company's future results.

Cost of Goods Sold - For the three  months  ended March 31,  2001,  the costs of
goods sold were $230,409 with a gross profit margin of $403,218 on product sales
of $633,627 as compared to $340,978 of costs of goods sold and a $357,668  gross
profit  margin  on  product  sales  of  $698,646  for the same  period  of 2000,
resulting  in gross  profit  margins for the three month  period ended March 31,
2001 of 64% as compared to a 51% gross  margin for the same period in 2000.  Due
to the decline of capital  equipment  purchasing  in the  Company's  industries,
gross  margins were  increased in the first  quarter of 2001 as service and part
revenues increased,  which typically have significantly  higher margins than the
Company's  core  equipment  product lines.  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 costs
and allocation of manufacturing overhead.

Research and Development - For the three month period ending March 31, 2001, the
Company's  research and development  efforts were conducted at all the Company's
locations.   Research  and  Development  costs  were   approximately   $189,561,
consisting of purchased materials, outside consulting and leased employee costs,
for the three month period ending March 31, 2001, 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
25% of the total  selling,  general  and  administrative  costs for the  quarter
ending March 31, 2001.

Selling, General and Administrative Costs - For the three months ended March 31,
2001, selling,  general, and administrative costs were $766,440,  as compared to
$831,545 in the same period of 2000. The 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. A significant  portion of the Company's
selling,  general,  and  administrative  costs  were  research  and  development
efforts. (see "Research and Development" section above)


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<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

At March 31,  2001,  the  Company  had a total  cash  availability  of  $144,179
compared to $222,074  available as of December  31,  2000,  a $77,895  decrease.
During  the  first  three  months  of 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  quarter of 2001,  the
company  obtained two loans from an unrelated  party for $142,000 and  $150,000,
respectively.  (See Note 8: 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 to maintain
the growth plans of the Company,  management  believes that the working  capital
now available to it along with funds generated from operations and the economies
realized  from a reduced  operations  force will be  sufficient  to meet capital
requirements  for the next 12 months,  even if  substantial  additional  working
capital  does not become  available  and the  commercial  level of the  Sterling
Product is not realized.

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.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not applicable.

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 a
recent 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 (See attached May 7, 2001 press release.)

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
           (a)      Exhibits
                    May 7, 2001 Press Release
           (b)      Reports on Form 8-K
                    None



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<PAGE>



                                   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.





Dated:   May 15, 2001             /s/ Brian D. Young
                                  -----------------------
                                  Brian D. Young, CFO
                                  UniDyn, Corp.



                                       11

<PAGE>


Monday May 7, 9:40 am Eastern Time
Press Release

UniDyn Corp.  Reports Delays in Sterling Project:  Ira Gentry Resigns as CEO and
Chairman  PHOENIX--(BUSINESS  WIRE)--May  7,  2001--UniDyn  Corp.  (OTC.BB:UNDY)
reported  that its Board of Directors  met on  Saturday,  May 5, to consider the
status of the Sterling Project.

John Provazek,  Director and Chief Operating Officer,  stated,  "Dr. Don Leaver,
Director and Vice  President of Software  Development,  advised the Board on the
evaluations conducted over the past week of the Sterling Product, beta site data
and testing results. The 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."

In the discussion,  Ira Gentry, Chief Executive Officer and Chairman,  disagreed
with the Board's  assessment.  Gentry  indicated that, "I believe we are further
along with the Sterling  Product,  but will defer to the Board's views to assure
prompt  communication  with our  shareholders  and a full review of the Sterling
Line." Gentry voluntarily resigned as Chairman and CEO at the meeting.

Provazek added, "The Board accepted Ira Gentry's resignation.  We appreciate his
willingness  to work with the Company  through the  transition  period.  We will
continue  to focus on the core  Derritron  and  Avalon  Product  lines  while we
evaluate the Sterling Project."

For information contact Provazek at 602/426-8634

Statements about the Company's  future  expectations and all other statements in
this press release other than historical facts are "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933,  Section 21E of
the Securities  Exchange Act of 1934, and as that term is defined in the Private
Litigation Reform Act of 1995.

The Company intends that such forward-looking  statements be subject to the safe
harbors created thereby.  Since these statements involve risks and uncertainties
and are subject to change at any time,  the Company's  actual results may differ
materially from expected results.

Contact:
         UniDyn Corp., Phoenix
         John Provazek, 602/426-8634



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