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

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

For the transition period from ________________ to _______________

Commission File No.     33-55254-31
                    ---------------

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

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


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

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



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

         Indicate  by check mark  whether  the Issuer (1) has filed all  reports
required to be filed by Section  13or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for such shorter  period that the Issuer
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

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

                  Class                       Outstanding as of July 31, 2000
------------------------------------         -----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                   35,247,000 SHARES





<PAGE>



PART 1.  FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS






<PAGE>



                         UNIDYN, CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         June 30,                 December 31,
                                                                           2000                       1999
                                                                  ----------------------     ---------------------
ASSETS                                                                  (Unaudited)                 (Audited)
   CURRENT ASSETS
<S>                                                               <C>                        <C>
     Cash in bank                                                 $              323,814     $             461,239
     Accounts receivable                                                         733,593                   431,857
     Stock subscription                                                                0                   207,000
     Deferred tax benefit                                                         14,500                    14,500
     Prepaid expense                                                              13,750                    11,850
     Receivable - employees                                                       30,500                         0
     Inventory                                                                   396,382                   333,551
     Deferred interest expense                                                    22,000                         0
                                                                  ----------------------     ---------------------

                                            TOTAL CURRENT ASSETS               1,534,539                 1,459,997

PROPERTY, PLANT & EQUIPMENT                                                      679,682                   560,642

OTHER ASSETS
     Deposits and other                                                           42,349                     8,184
     Goodwill (less amortization of $42,200)                                   1,223,905                 1,266,105
     Deferred tax benefit                                                        181,500                   181,500
     Derritron Technology (less amortization
       of $44,538)                                                             3,963,862                 4,008,400
                                                                  ----------------------     ---------------------
                                                                               5,411,616                 5,464,189
                                                                  ----------------------     ---------------------

                                                                  $            7,625,837     $           7,484,828
                                                                  ======================     =====================

LIABILITIES & EQUITY
   CURRENT LIABILITIES
     Accounts payable                                             $               96,406     $             290,485
     Accrued expenses                                                             92,375                    31,835
     Loans payable                                                                16,575                   314,680
     Deposits                                                                      3,292                    21,956
     Payable - related party                                                      22,984                   119,369
                                                                  ----------------------     ---------------------

                                       TOTAL CURRENT LIABILITIES                 231,632                   778,325

   LONG-TERM LIABILITIES
     Long-term debt and interest - related party                               1,017,300                         0
                                                                  ----------------------     ---------------------

                                               TOTAL LIABILITIES               1,248,932                   778,325

   STOCKHOLDERS' EQUITY
       Common Stock $.001 par value:
       Authorized - 100,000,000 shares
       Issued and outstanding 35,237,000 shares
         (34,700,000 in 1999)                                                     35,237                    34,700
     Additional paid-in capital                                                6,991,896                 6,558,382
     Retained earnings (deficit)                                                (643,642)                  120,007
     Accumulated other comprehensive loss                                         (6,586)                   (6,586)
                                                                  ----------------------     ---------------------

                                      TOTAL STOCKHOLDERS' EQUITY               6,376,905                 6,706,503
                                                                  ----------------------     ---------------------

                                                                  $            7,625,837     $           7,484,828
                                                                  ======================     =====================
</TABLE>





<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,
                                                                           2000            1999           2000           1999
                                                                       -------------  -------------  --------------  -------------
<S>                                                                    <C>            <C>            <C>             <C>
Net sales                                                              $     823,385  $     352,293  $    1,522,031  $     753,493
Cost of sales                                                                377,754         92,324         718,732        213,912
                                                                       -------------  -------------  --------------  -------------

                                                         GROSS PROFIT        445,631        259,969         803,299        539,581

Other Income                                                                       0        101,565               0        101,565
General and administrative expenses                                         (735,403)      (237,117)     (1,566,948)      (554,172)
                                                                       -------------  -------------  --------------  -------------

                                                    NET INCOME (LOSS)
                                                  BEFORE INCOME TAXES       (289,772)       124,417        (763,649)        86,974

Income tax expense                                                                 0          6,059               0         10,623
                                                                       -------------  -------------  --------------  -------------

                                                    NET INCOME (LOSS)       (289,772)       118,358        (763,649)        76,351

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

                                    TOTAL COMPREHENSIVE INCOME (LOSS)  $    (289,772) $     118,358  $     (763,649) $      69,765
                                                                       =============  =============  ==============  =============

Net income (loss) per weighted average share                           $        (.01) $         .00  $         (.02) $         .00
                                                                       ============== =============  ==============  =============

Weighted average number of common shares used to
   compute net income (loss) per weighted average share                    35,155,475    32,000,000     34,985,636      32,000,000
                                                                        ============= ==============  =============  =============
</TABLE>





<PAGE>



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



<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                                        June 30,
                                                                                2000               1999
                                                                         -----------------   -----------------

OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>
   Net income (loss)                                                     $        (763,649)  $          76,351
   Adjustments to reconcile net income (loss) to cash
     provided (required) by operating activities:
       Gain on subsidiary                                                                0              (5,717)
       Depreciation and amortization                                               142,450              12,605
       Non-cash interest expense                                                    69,500                   0
       Deferred taxes                                                                    0               5,000
       Deferred interest                                                             2,000                   0
       Foreign currency translation                                                      0              (6,586)
   Changes in assets and liabilities:
       Accounts receivable                                                        (301,737)            (65,557)
       Inventory                                                                   (62,831)            (11,802)
       Prepaid expenses                                                             (1,900)              7,306
       Accounts payable                                                           (194,078)              6,674
       Accrued expenses                                                             58,340             (30,958)
       Payable - related party                                                     (30,500)             14,799
       Deposits                                                                    (52,828)                  0
       Income taxes payable                                                              0                 (50)
                                                                         -----------------   -----------------

                                           NET CASH PROVIDED (REQUIRED)
                                                BY OPERATING ACTIVITIES         (1,135,233)              2,065

INVESTING ACTIVITIES
   Purchase of equipment / cost adjustment                                        (174,753)                  0
   Loans                                                                                 0             (87,150)
                                                                         -----------------   -----------------

                                              NET CASH PROVIDED  (USED)
                                                BY INVESTING ACTIVITIES           (174,753)            (87,150)

FINANCING ACTIVITIES
   Sale of common stock                                                            617,051                   0
   Loan principal payments                                                        (394,490)                  0
   Loan proceeds                                                                   950,000                   0
   Cash remaining with former subsidiary                                                 0             (17,996)
                                                                         -----------------   -----------------

                           NET CASH PROVIDED (USED) BY
                                                   FINANCING ACTIVITIES          1,172,561             (17,996)
                                                                         -----------------   -----------------

                           INCREASE (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS           (137,425)           (103,081)

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

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $         323,814   $          35,855
                                                                         =================   =================

Cash paid for income taxes                                               $               0   $          11,870
Cash paid for interest                                                                 427                   0

</TABLE>




<PAGE>



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


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

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

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

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

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

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

         Revenue Recognition
         Revenue is recognized upon shipment of products.

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

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

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

         Stock Options
         The Company has elected to follow  Accounting  Principles Board Opinion
         No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
         interpretations  in accounting  for its future  employee  stock options
         rather than adopting the alternative fair value accounting provided for
         under Financial  Accounting Standards Board ("FASB") FASB Statement No.
         123, Accounting for Stock Based Compensation (SFAS123).

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

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

NOTE 2:  ORGANIZATION AND HISTORY
         The Company was incorporated under the laws of the State of Utah on May
         2, 1986 as Macaw  Capital,  Inc. On December 30, 1993,  the Company was
         reincorporated as a Nevada corporation. Effective December 3, 1997, the
         name was changed to UniDyn,  Corp. The Company  manufactures  and sells
         products that perform testing to assure product workmanship and quality
         of equipment used in the circuit board industry.

NOTE 3:  FORWARD STOCK SPLIT
         Effective  December  3,  1997,   pursuant  to  written  action  adopted
         unanimously   by  the  Board  of  Directors   and  a  majority  of  the
         shareholders,  the  Company  changed  its name to  UniDyn,  Corp.,  and
         approved an  eight-for-one  forward stock split on the Company's common
         stock as follows: each outstanding share was converted into eight




<PAGE>





         shares.  Before  the  change,  the  Company  was  authorized  to  issue
         100,000,000  shares of $.001 par value common stock;  after the forward
         stock split the Company continued to be authorized to issue 100,000,000
         shares of $.001 par  value  common  stock.  The  number of  outstanding
         shares of common stock affected by the forward split was 4,000,000. The
         number of issued and outstanding  shares of common stock of the Company
         after the forward stock split was 32,000,000.

NOTE 4:  STERLING PATENT
         During the quarter ended June 30, 1998,  the Company  issued  6,416,000
         shares of restricted  common stock,  previously held as treasury stock,
         to acquire the rights to patent the  Sterling  Project  from  Universal
         Dynamics, Inc. The patent rights are being amortized over fifteen years
         for income tax purposes.  For financial statement  purposes,  the asset
         has no cost basis as it was acquired from  Universal,  a former related
         party.

         The Sterling  Project will allow the testing of printed  circuit boards
         and other general electronic  devices.  Sterling will allow electronics
         manufacturers to test the workmanship of their manufactured electronics
         and improve the estimated  projected life of the printed  circuit board
         or other items under test.  Estimates show that the manufacturer may be
         able to  reduce  the  warranty  return  rate  to 1  percent,  based  on
         workmanship   errors.   The  Sterling   equipment   will  quantify  the
         reliability of the manufactured part and indicate the workmanship areas
         of concern, even though the electronics passed functional testing.


NOTE 5:  DERRITRON TECHNOLOGY
         Effective  June 30,  1998,  the  Company  issued  14,576,000  shares of
         restricted common stock,  previously held as treasury stock, to acquire
         the business and associated  technology  known as Derritron.  Derritron
         was an established  business which  manufactured  vibration shakers and
         other  related  technology.  With  this  acquisition,  Unidyn  received
         patent,   products,  know  how,  drawings,  trade  name,  manufacturing
         equipment,  and an  established  market  presence  in England and other
         parts of Europe, Asia, South America,  India, and China This technology
         has the capacity to be fully  integrated  with the NorthStar  vibration
         control  systems  acquired from Universal  Dynamics.  The technology is
         being amortized over 15 years.

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

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

NOTE 7:  CONTINGENCIES

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




<PAGE>





ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

         THE  FOLLOWING  DISCUSSION  INCLUDES  FORWARD-LOOKING  STATEMENTS  WITH
RESPECT TO THE COMPANY'S FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER
MATERIALLY  FROM  THOSE  CURRENTLY   ANTICIPATED  AND  FROM  HISTORICAL  RESULTS
DEPENDING  UPON A VARIETY OF FACTORS.  SEE ALSO THE  COMPANY'S  ANNUAL REPORT ON
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1999.

OVERVIEW
         UniDyn,   Corp.   (referred  to  as  "UniDyn"  or  the  "Company")  was
incorporated  in the  State  of  Utah in 1986 as  Macaw  Capital,  Inc.  and was
reincorporated  in 1993 in the  State of  Nevada.  In  December  of 1997,  Macaw
Capital,  Inc. acquired a portion of the assets of Universal  Dynamics,  Inc., a
private  manufacturer of  environmental  vibration  testing  equipment formed in
December 1989, and was renamed UniDyn,  Corp. The Common Shares of UniDyn, Corp.
are currently traded on the NASDAQ OTCBB under the symbol "UNDY".

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

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

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

         In a production environment, the VSS test equipment can identify latent
defects  not  readily  recognizable  through  visual  inspection  or during  the
development  and design  process.  The use of on-line VSS testing for electronic
and mechanical  components,  such as printed circuit  boards,  saves rework time
during production, reduces warranty exposure and can enhance product quality and
longevity. VSS is most effective in detecting intermittent defects such as loose
connections,  broken parts,  cracked  traces,  poor solder joints and mechanical
flaws.

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

         The transfer of the NorthStar product into the Derritron  operations in
Riverside,  California  was completed  during the second quarter of 2000 and the
Company is currently  finalizing its pre-production  and commercial  development
efforts  for the  Sterling  Product  line  at its  Avalon  facility.  Management
anticipates that commercial production of the Sterling




<PAGE>





Product  line will be  undertaken  during 2000.  The  Sterling  Product has been
designed  as a  stand-alone  piece of  equipment  that will  provide for a fully
integrated,  on-line quality  control  testing of printed  circuit  boards.  The
Company  expects to offer the product  principally  on an OEM basis,  with first
introductions  anticipated  to be made  through a Japanese  consortium.  Initial
production  commitments are expected to increase to the rate of approximately 20
Sterling Units per month with production to be scaled and maintained,  initially
on  requirements  of  the  Japanese  consortium  and  subsequently  based  on  a
broader-based market of domestic and foreign customers.

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

RESULTS OF OPERATIONS

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

         For the three months ending June 30, 2000, the Company  reported,  on a
consolidated  basis, a loss of $289,772 on revenues of $823,385 as compared to a
gain of  $118,358 on revenues  of  $352,293  for the same  quarter in 1999.  The
losses  resulted  from a  combination  of the  Company's  efforts  to bring  the
Derritron   facility  to  full   production  and  the  continuing   development,
engineering and other pre-production costs attributable to the Sterling Products
line. The Company recorded revenues of approximately  $447,640 and $375,745 from
the  shipments  and  services  earned at the  Derritron  and  Avalon  facilities
respectively.  Management  anticipates  that during the remainder of the current
fiscal year,  the Company  will move toward  customary  production  level costs,
revenues  and  expenses  as the  Derritron  production  expands,  the  NorthStar
production continues and the Sterling Product line is introduced.

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

         Cost of Goods Sold. For the three months ended June 30, 2000, the costs
of goods sold was $377,754 with a gross profit margin of $445,631 as compared to
$92,324 of costs of goods sold and a $259,969  gross  margin for the same period
of 1999,  resulting  in gross  margins for the three month period ended June 30,
2000 of 55% as compared to a 74% gross  margin for the same period in 1999 (when
the sales were primarily of the NorthStar product).  Management anticipates that
as its production expands and the product mix is diversified,  it will achieve a
blended gross margin of approximately  40-50% on its products,  including direct
labor and customary allocated  manufacturing  overhead.  However,  until the new
product lines have been  introduced,  and the Company has developed an operating
history,   there  is  significant   uncertainty   about  future  gross  margins,
particularly  since gross margins are highly dependent on product prices,  sales
volumes, materials cost and allocation of manufacturing overhead.

         Research and  Development.  For the three months  ending June 30, 2000,
the Company's  research and development  efforts were conducted at the Company's
Engineering and Development Centers in Orem, Utah and Phoenix, Arizona. Although
the  NorthStar  production  activities  have been  transferred  from Utah to the
Derritron facility in Riverside,  California,  research and development  efforts
will continue to be based in Utah and Arizona.  Research and  Development  costs
were  approximately  $254,916  for the three  months  ending  June 30,  2000,  a
significant  portion  of the  total  operations  at both the  Utah  and  Arizona
facilities,  and  were  recorded  as a  portion  of  the  selling,  general  and
administrative costs.

         Selling,  General and Administrative  Costs. For the three months ended
June 30, 2000,  selling,  general,  and administrative  costs were $735,403,  as
compared to $237,117 in the same  period of 1999.  The  significant  increase in
general and  administrative  cost was  attributed  to the  additional  staff and
facilities  needed for the Derritron  facility,  the cost of the efforts for the
development of the Sterling  Product line,  and  principally to the fact that to
date, the Company has included staff,  facilities,  and related  overhead of the
production managers,  engineers,  research and development efforts and the labor
and overhead costs in Orem, Utah and Riverside,  California as selling,  general
and  administrative  costs and has not  attributed  them to the direct  costs of
goods sold or the  research  and  development  efforts for the  various  product
lines.

For the six month  period  ended June 30, 2000  compared to the six month period
ended June 30, 1999

         For the six months  ending June 30, 2000,  the Company  reported,  on a
consolidated basis, a loss of $763,649




<PAGE>





on  revenues  of  $1,522,031  as  compared  to a gain of $69,765 on  revenues of
$753,493 for the same period in 1999. The losses  resulted from a combination of
the  investment,  which  the  Company  is  continuing  to make in  bringing  the
Derritron facility to full capacity and the continuing development,  engineering
and other  pre-production  costs attributable to the Sterling Products line. The
Company  recorded  revenues of  approximately  $816,290  and  $705,741  from the
shipments  and  services   earned  at  the   Derritron  and  Avalon   facilities
respectively.

         Cost of Goods Sold. For the six months ended June 30, 2000 the costs of
goods sold was $718,732  with a gross  profit  margin of $803,299 as compared to
$213,912 of costs of goods sold and a $539,581  gross margin for the same period
of 1999, resulting in gross margins for the six month period ended June 30, 2000
of 53% as compared  to a 72% gross  margin for the same period in 1999 (when the
sales were primarily of the NorthStar product).

         Research and Development.  For the six months ending June 30, 2000, the
Company's  research  and  development  costs  were  approximately   $444,477,  a
significant  portion  of the  total  operations  at both the  Utah  and  Arizona
facilities  and  were  recorded  as  a  portion  of  the  selling,  general  and
administrative costs.

         Selling,  General and  Administrative  Costs.  For the six months ended
June 30, 2000, selling,  general, and administrative  costs were $1,566,948,  as
compared to $554,172 in the same  period of 1999.  The  significant  increase in
general and  administrative  cost was  attributed  to the  additional  staff and
facilities needed to establish the Derritron  facility,  the cost of the efforts
for the  development of the Sterling  Product line, and  principally to the fact
that to date, the Company has included staff,  facilities,  and related overhead
of the production managers,  engineers, research and development efforts and the
labor and overhead  costs in Orem,  Utah and  Riverside,  California as selling,
general and administrative costs and has not attributed them to the direct costs
of goods sold or the research and  development  efforts for the various  product
lines. The Company expects Selling,  General and Administrative  costs to remain
at the current level until additional production capacity is needed or the costs
are directly allocated to product lines or research and development.

         The Company's  workforce consists of 38 leased personnel all located in
the United States.  Management  believes that by leasing its primary  workforce,
the Company has controlled its fixed overhead costs and has been able to provide
its staff with advantages of improved  benefits package and access to retirement
plans  which  can be  provided  through  the  larger  group  status of a leasing
arrangement.  Management will continue to review this  structure,  as conditions
require.

         LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2000, the Company had a total cash availability of $323,814
compared to $461,239  available as of December  31,  1999, a $137,245  decrease.
During the second  quarter of 2000, the Company issued 134,500 Common Shares for
net cash  received  of  $86,000  of which  all were  issued on the  exercise  of
previously outstanding warrants. (See Item 2 below).

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

         NEW ACCOUNTING PRONOUNCEMENTS

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




<PAGE>






         YEAR 2000 STATEMENT

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

FORWARD-LOOKING STATEMENTS

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

PART 2.  OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

         During the quarter  ended June 30,  2000,  warrants  were  exercised at
$.60,  $1.20,  and $1.25 per share from which cash of $ 75,750,  $ 1,500,  and $
8,750 were received for 126,250,  1,250,  and 7,000 shares of restricted  common
stock  respectively,  resulting in net proceeds to the Company of $ 86,000.  The
proceeds were used to meet  Unidyn's  operational  needs and to provide  further
capital for direct cost related to the development of the Sterling Product Line.
The  transactions  were  undertaken  as private  placements  without  any public
offering to institutions and investors, including current shareholders, who were
accredited investors or had a prior business  relationship with the Company. The
issuances were made in reliance on the exemption from  registration  provided by
rule 506 of Regulation D.

ITEM 3.           DEFAULT UPON SENIOR SECURITIES

         Not applicable.

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

         Unidyn  Corp.  held an  annual  business  meeting  on  June 6,  2000 in
Phoenix,  Arizona. During that meeting the shareholders approved the adoption of
a stock  option  plan ("2000  Incentive  Plan") by a vote of  17,129,705  Common
shares in favor, with 24,700 shares voting against the proposal and 650,600 such
shares  abstaining.  The plan provides for, among other things,  the issuance to
its employees of qualified and  non-qualified  stock options and incentive stock
options and to its directors and consultants non-qualified stock options.

 In addition to the approval of the "2000 Incentive  Plan",  Ira Gentry,  Donald
Leaver, John Provazek and William Leonard were elected as directors by a vote of
17,603,185  Common  Shares in favor,  9,000 Common Shares  opposed,  and 192,820
Common Shares abstaining.

ITEM 5.           OTHER INFORMATION

It has come to the Company's  attention that the "Security  Ownership of Certain
Beneficial Owners and Management"  section of the 1998 Form 10KSB filed on April
16, 1999, had erroneously  reported that Mearns Assurance Corp. owned 14,576,000
shares of Unidyn's outstanding common stock, however the correct ownership




<PAGE>





as of March  1999 was  approximately  1,400,000,  or  approximately  4.5% of the
Company's  outstanding Common Stock. The ownership of common shares was properly
reported on the Company's 1999 Form 10KSB filed on April 13, 2000.


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, 2000
                                    -----------------------------------
                                    Ira Gentry, President and Director