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

                                   FORM 10-QSB
(Mark One)

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

For the quarterly period ended              September 30, 1999
                               ----------------------------------------

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

For the transition period from ________________ to _______________

Commission File No.     33-55254-31

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

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


         1216 South 1580 West, #B
         Orem, Utah                                           84058
(Address of principal executive offices)                      (Zip Code)


Issuer's telephone number, including area code     (801) 434-7250

         8621 North Seventy Ninth Avenue
         Peoria, Arizona                               85345
------------------------------------------------------------------------
(Former Address)                                     (Zip Code)

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

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

             Class                         Outstanding as of September 30, 1999
------------------------------------       ------------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                 32,000,000 SHARES






                                        1

<PAGE>



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

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

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

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

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

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


                                        2

<PAGE>



         UniDyn's  flagship product is called  "Sterling".  The Sterling product
technology was completely acquired from Universal Dynamics in the second quarter
of 1998 after the patent search showed no prior art, and open for patent filing.
UniDyn is  currently  in the  process  of  filing  patents  on this new  testing
process.  The Company also has firm  commitments  with a large Japanese  company
with a 45 year history of  providing  various  products for the printed  circuit
board industry.

         The Company will  provide  Sterling  products to the  Japanese  company
under an exclusive,  five year OEM  arrangement  in Japan  estimated to be worth
over  $200,000,000.  The  quantity  is  estimated  to average  approximately  20
Sterling  units a month,  and relates to the initial  model  demands and various
production  options  required by the Japanese  customers.  The Company is in the
process of  engineering  the first of several  "Production  Models" for delivery
beginning in the first quarter of 2000. The Sterling  technique has already been
tested  successfully  at IBM and Delco  Electronics.  The  Company is  currently
structuring  additional  funding for Sterling product  development.  The Company
also has an agreement in place to purchase Avalon Manufacturing  Company for the
purpose  to  provide   engineering   support,   design   support,   and  initial
manufacturing commitments for Sterling.

         The Sterling process provides for completely  automated on-line quality
control  testing of printed  circuit  boards.  It is expected  that the Sterling
process can significantly reduce warranty liability for a variety of industries,
including   manufacturers  of  computers,   consumer  electronic  products,  and
aerospace and military systems,  by discovering  workmanship defects through the
manufacturing process. Currently the industry is experiencing a 4 to 7% warranty
return rate. Sterling is believed to be able to reduce this warranty repair rate
down to perhaps 1%.

         The  Company has also  disclosed  arrangements  involving  distribution
through  Singapore  for UniDyn  Company  products.  It is  estimated to be worth
approximately  $10,000,000 a year in product  shipments.  Arrangements  are also
currently being put into place for limited Sterling  distribution in Europe, and
Korea.  The Company is also arranging for a major OEM placement with a USA based
company.

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

         The Company also  entered into an agreement to acquire a 100%  interest
in the Derritron product of shakers and amplifiers, previously known as a United
Kingdom based  manufacturer  of vibration  shakers and  amplifiers.  The Company
completed that acquisition in the second quarter of 1998. With this acquisition,
the  Company  received  patents,   products,   manufacturing  equipment  and  an
established market presence internationally.  Derritron is currently 1 of only 4
shaker manufacturers  worldwide with a full range of electrodynamic shakers, and
has a full selection of shaker models.  The Company is in the process of looking
at a plant in California that will form the operations of the Derritron Products
Division  (DPD).  The  Company  would  like  to  have  this  division  beginning
operations in March 2000.

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

         Based on  funding,  the  Company is  looking  to expand its  operations
through a  strategic  acquisition  of  Avalon  Manufacturing  Company  that will
benefit the Sterling product  development.  The Company has sold its interest in
continuing  business  in  England  to focus  on  forming  businesses  in the USA
involving Sterling and Derritron products.

         The Company has also entered into an  agreement  Oct 1999,  to purchase
Avalon Manufacturing  Company. Once the acquisition is complete,  Avalon will be
positioned as the Avalon  Products  Division (APD) and have Sterling  mechanical
engineering and initial  production  responsibilities.  For this acquisition and
additional capital needs, the



                                        3

<PAGE>



Company  has  allocated  up  to  3,000,000   shares  to  be  placed  in  private
transactions. The Company would like to have this company in place by the end of
1999.

RESULTS OF OPERATIONS
         For the three months ending  September 30, 1999,  the Company posted an
income of $87,170 on revenues of $446,480  ($129,915  loss and $167,269  revenue
for the same period in 1998).  Substantially  all sales were  generated from the
NorthStar product.  NorthStar is composed of off the shelf items and has minimal
assembly requirements. This was the first full quarter of the Vibration Products
Division in Orem, Utah. The Directors are very pleased with the continual growth
of the VPD division as it forms some of the earlier  models that will be used in
the Company's 3 other divisions coming on-line.  (Avalon (APD), Derritron (DPD),
and the newly formed UniDyn Technology Division (UTD) )

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

         Cost of Goods Sold for the three months ended  September  30, 1999 were
$126,979  with a resultant  gross  profit of $319,501  ($84,256  and $83,013 for
1998).  Gross  margin for the period  ended  September  30, 1999 was 72% (50% in
1998). As new products are introduced,  including the Sterling Process, there is
significant  uncertainty  about  future gross  margins  relative to total sales.
Gross margin percentage is highly dependent upon product prices,  sales volumes,
materials cost and allocation of manufacturing  overhead which vary from product
to product. Management has estimated the Sterling product at a 50% gross margin.
That margin is expected to improve as the order  volume  increases  with product
demand.

         Selling,  General and  Administrative  costs for the three months ended
September  30, 1999 were  $183,151,  ($329,316 in 1998).  The Company  currently
leases a total of about 16 people in the United  States.  The  reduction  in G&A
expenses reflects management focus on engineering  development for Sterling, and
less on corporate overhead. Management also believes that by leasing its primary
workforce,  the Company  has  substantially  reduced  fixed  overhead  costs and
provided for a larger  free-cash  flow for the Company's  growth phase.  It also
allows for a better  benefit base through  managed 401K and health plans already
established in the employee leasing companies.

         For the nine months  ending  September  30,  1999,  the Company  posted
income of  $163,521 on revenues of  $1,199,973  ($92,600  income and  $1,418,998
revenue for the same  period in 1998).  Substantially  all sales were  generated
from the NorthStar product. NorthStar is composed of off the shelf items and has
minimal  assembly  requirements.  Included  in income  for the nine  months is a
$101,565  gain  from  the  sale  of the  Company's  European  subsidiary.  Sales
reduction  is the  result of the  Company  focusing  efforts on  "Morning  Star"
developments  for  NorthStar,   and  redirecting  efforts  toward  the  Sterling
Products.  Derritron  developments  will be mostly put on hold until  funding is
directed to it through outside funding, or through additional revenues generated
by "Morning Star" or Sterling.

         Cost of Goods Sold for the nine months  ended  September  30, 1999 were
$340,891  with a resultant  gross profit of $859,082  ($467,975 and $951,023 for
1998).  Gross  margin for the period  ended  September  30, 1999 was 72% (67% in
1998).  Until the new products are  delivered,  including the Sterling  Systems,
there is  significant  uncertainty  about  future  gross  margins.  Gross margin
percentage is highly  dependent upon product  prices,  sales volumes,  materials
cost and allocation of manufacturing  overhead.  The gross profit percent (%) is
up in 1999 due to the  Company  no longer  making  sales  through  its  European
subsidiary which had lower profit margins than the Company.

         Selling,  General and  Administrative  costs for the nine months  ended
September 30, 1999 were $737,323, ($1,075,661 in 1998).


                                        4

<PAGE>



         For the nine  months  ending  September  30,  1999 the  majority of the
Company's  research was conducted at the Company's  Engineering  and Development
Center in Orem, Utah.  Substantial  research and development costs were incurred
by Universal  Dynamics for the development of the NorthStar and Sterling Process
products prior to the December,  1997 asset  purchase.  The Company's  NorthStar
manufacturing along with NorthStar engineering  development are both now located
together in Orem, Utah.

LIQUIDITY AND CAPITAL RESOURCES
         The Company is currently  seeking  additional  working  capital for the
Avalon acquisition,  and to meet its short term growth planning for the Sterling
system.  Management  believes,  although  there  can be no  assurance,  that the
Company will have sufficient cash needs for the next 12 months regardless of its
success in attracting  additional capital investment.  However,  management also
believes  that a lack of  additional  working  capital over the remainder of the
current  fiscal year would  substantially  curtail the  roll-out of the Sterling
Process  product line. As of September 30, 1999,  the Company has  approximately
$356,364 in working capital.

The company has  current  commitments  that will  increase  the working  capital
another $250,000 in the fourth quarter.  The Company is also looking to increase
the working capital with additional capital funding.

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.




                                        5

<PAGE>



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

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

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

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

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

ITEM 2.           LEGAL PROCEEDINGS

         Not applicable.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K
                  (a)      Exhibits
                           Financial statements as of September 30, 1999

                  (b)      Reports on Form 8-K
                           None


                                        6

<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.

                                     UNIDYN, CORP.



Dated:   November 12, 1999
                                     Ira Gentry, President and Director




                                        7

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       September 30,              December 31,
                                                                           1999                       1998
ASSETS                                                                  (Unaudited)                 (Audited)
                                                                  ----------------------     --------------------
     CURRENT ASSETS
<S>                                                               <C>                        <C>
         Cash in bank                                             $               48,904     $            138,936
         Accounts receivable                                                     381,703                  245,312
         Receivable - shareholder                                                 87,150                        0
         Deferred tax benefit                                                     14,500                   14,500
         Prepaid expense                                                               0                   17,564
         Inventory                                                                37,298                   34,173
                                                                  ----------------------     --------------------

                                      TOTAL CURRENT ASSETS                       569,555                  450,485

PROPERTY, PLANT & EQUIPMENT                                                       46,201                   95,287

OTHER ASSETS
         Deferred tax benefit                                                    185,500                  196,500
         Derritron Technology                                                  4,008,400                4,008,400
                                                                  ----------------------     --------------------
                                                                               4,193,900                4,204,900
                                                                  ----------------------     --------------------
                                                                  $            4,809,656     $          4,750,672
                                                                  ======================     ====================

LIABILITIES & EQUITY
     CURRENT LIABILITIES
         Accounts payable                                         $               69,722     $            173,138
         Accrued expenses                                                              0                   47,285
         Payable - related party                                                 105,469                   90,670
         Income taxes payable                                                     38,000                       50
                                                                  ----------------------     --------------------

                                 TOTAL CURRENT LIABILITIES                       213,191                  311,143

     STOCKHOLDERS' EQUITY
         Common Stock $.001 par value:
              Authorized - 100,000,000 shares
              Issued and outstanding
              32,000,000 shares                                                   32,000                   32,000
         Additional paid-in capital                                            4,341,832                4,341,832
         Retained earnings                                                       229,219                   65,697
         Accumulated other comprehensive loss                                     (6,586)                       0
                                                                  ----------------------     --------------------

                                TOTAL STOCKHOLDERS' EQUITY                     4,596,465                4,439,529
                                                                  ----------------------     --------------------

                                                                  $            4,809,656     $          4,750,672
                                                                  ======================     ====================

</TABLE>

                                       F-1

<PAGE>



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


<TABLE>
<CAPTION>
                                                               Three Months Ended                      Nine Months Ended
                                                                  September 30,                          September 30,
                                                            1999                1998               1999                1998
                                                     ------------------  -----------------   -----------------  ------------------
<S>                                                  <C>                 <C>                 <C>                <C>
Net sales                                            $          446,480  $         167,269   $       1,199,973  $        1,418,998
Cost of sales                                                   126,979             84,256             340,891             467,975
                                                     ------------------  -----------------   -----------------  ------------------

                                       GROSS PROFIT             319,501             83,013             859,082             951,023

Other Income:
   Commissions                                                        0                  0                   0             212,900
   Gain on sale of subsidiary                                         0                  0             101,565                   0
                                                     ------------------  -----------------   -----------------  ------------------
                                                                      0                  0             101,565             212,900

Bad debts (adjustment)                                                0            (30,000)                  0                   0
Gain on disposal of net assets of Universal                           0            (11,388)                  0             (11,388)
General and administrative expenses                             183,151            329,316             737,323           1,075,661
                                                     ------------------  -----------------   -----------------  ------------------
                                                                183,151            287,928             737,323           1,064,273
                                                     ------------------  -----------------   -----------------  ------------------

                                  NET INCOME (LOSS)
                                BEFORE INCOME TAXES             136,350           (204,915)            223,324              99,650

Income tax expense (benefit)                                     49,180            (75,000)             59,803               7,050
                                                     ------------------  -----------------   -----------------  ------------------

                                  NET INCOME (LOSS)              87,170           (129,915)            163,521              92,600

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

                                TOTAL COMPREHENSIVE
                                      INCOME (LOSS)  $           87,170  $        (129,915)  $         156,935  $           92,600
                                                     ==================  =================   =================  ==================

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

Weighted average number of common
   shares used to compute net income
   (loss) per weighted average share                         32,000,000         32,000,000          32,000,000          26,762,667
                                                     ==================  =================   =================  ==================
</TABLE>


                                       F-2

<PAGE>



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



<TABLE>
<CAPTION>
                                                                                    Nine Months Ended
                                                                                      September 30,
                                                                                1999               1998
                                                                         -----------------   -----------------

OPERATING ACTIVITIES
<S>                                                                      <C>                 <C>
   Net income                                                            $         163,521   $          92,600
   Adjustments to reconcile net income to cash provided
     by operating activities:
       Depreciation                                                                 15,493               3,230
       Gain on Universal disposal                                                        0             (11,388)
       Bad debts                                                                         0              30,000
       Gain on subsidiary disposal                                                  (5,717)                  0
       Deferred taxes                                                               11,000            (276,000)
       Foreign currency translation                                                 (6,586)                  0
   Changes in assets and liabilities:
       Accounts receivable                                                        (190,580)             76,748
       Inventory                                                                    (3,125)              4,335
       Prepaid expenses                                                              8,486             (38,791)
       Accounts payable                                                                831              42,689
       Accrued expenses                                                            (30,958)                  0
       Payable - related party                                                      14,799                   0
       Income taxes payable                                                         37,950             263,000
                                                                         -----------------   -----------------

                                                      NET CASH PROVIDED
                                                BY OPERATING ACTIVITIES             15,114             186,423

INVESTING ACTIVITIES
   Loans                                                                           (87,150)            (28,325)
   Purchase of equipment                                                                 0             (91,119)
                                                                         -----------------   -----------------

                                                        NET CASH (USED)
                                                BY INVESTING ACTIVITIES            (87,150)           (119,444)

FINANCING ACTIVITIES
   Cash remaining with Universal                                                         0             (14,300)
   Cash remaining with former subsidiary                                           (17,996)                  0
   Loan principal payments                                                               0             (74,775)
                                                                         -----------------   -----------------


                                                     NET CASH (USED) BY
                                                   FINANCING ACTIVITIES            (17,996)            (89,075)
                                                                         -----------------   -----------------

                                                     (DECREASE) IN CASH
                                                   AND CASH EQUIVALENTS            (90,032)            (22,096)

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

                                              CASH AND CASH EQUIVALENTS
                                                       AT END OF PERIOD  $          48,904   $          82,426
                                                                         =================   =================

Cash paid for income taxes                                               $          11,772   $              50
Cash paid for interest                                                                   0               2,554
</TABLE>

SUPPLEMENTAL INFORMATION
During the nine months ended  September 30, 1998, the Company issued  14,576,000
shares of  restricted  common  stock for  Derritron  technology  with a value of
$4,008,400.  The value was based on a discounted value of free-trading  stock on
the date of issuance.



                                       F-3

<PAGE>



                          UNIDYN, CORP. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999


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

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

                  The  financial  statements  for September 30, 1998 contain the
                  accounts  of  the  Company  and   Universal   Dynamics,   Inc.
                  ("Universal").  Universal  could be considered an entity under
                  common  control as at one time,  the  President of the Company
                  and the president of Universal were the same person.  Also the
                  Company  issued  common  stock to  Universal  to  acquire  the
                  NorthStar  operations from  Universal.  NorthStar is currently
                  the main line of business  for the  Company.  All  significant
                  intercompany    transactions    have   been    eliminated   on
                  consolidation.

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

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

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

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

                  Revenue Recognition
                  Revenue is recognized upon shipment of products.

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

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

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

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

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


                                       F-4

<PAGE>
                          UNIDYN, CORP. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                               September 30, 1999

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

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

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

NOTE 4:           1998 EVENTS

                  STERLING PATENT
                  During the  quarter  ended  September  30,  1998,  the Company
                  issued 6,416,000 shares of restricted common stock, previously
                  held as treasury  stock,  to acquire a patent on the  Sterling
                  Project  from  Universal.  The patent will be  amortized  over
                  fifteen years.  The Sterling Project will allow the testing of
                  printed circuit  boards.  Sterling will estimate the projected
                  life of each solder  connection on the printed  circuit board,
                  which will quantify the reliability of the manufactured  part.
                  The Company expects to have a working  production model by the
                  end of 1999 with sales expected in the second quarter of 2000.

                  DERRITRON TECHNOLOGY
                  Effective  September 30, 1998, the Company  issued  14,576,000
                  shares of restricted common stock, previously held as treasury
                  stock,  to acquire  the  technology.  The  technology  will be
                  amortized over five years. The Company will need to spend some
                  money to upgrade the  technology and expects sales to begin in
                  2000. With this  acquisition,  the Company  receives  patents,
                  products,  manufacturing  equipment, and an established market
                  presence in England and other parts of Europe.

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

NOTE 6:           SALE OF SUBSIDIARY
                  Effective  April 1, 1999,  the Company sold its  subsidiary to
                  its largest shareholder for $185,933.  $98,783 is reflected in
                  accounts receivable representing uncollected sales made to the
                  former  subsidiary  and $87,150 is reflected  as  receivable -
                  shareholder.  The Company  collected  the $185,933 in October,
                  1999. No operations  for the  subsidiary  after March 31, 1999
                  are reflected in the statement of operations.

NOTE 7:           WARRANTS AND OPTIONS

                  The Company granted warrants to an investment advisory firm to
                  purchase  150,000 shares of the Company's common stock at $.50
                  per share after  September 3, 1998. On September 3, 1998,  the
                  exercise price was above market price for the Company's stock.

                                       F-5

<PAGE>


                          UNIDYN, CORP. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                               September 30, 1999

NOTE 7:           WARRANTS AND OPTIONS (continued)

                  The  Company  has  granted   100,000  options  each  to  three
                  directors to purchase stock at $.16 per share (market price on
                  grant  date).  The options  vest 20% on April 1, 1999,  20% on
                  April 1, 2000, 20% on April 1, 2001, and 40% on April 1, 2002.
                  The term of the options is ten years.

                  The  Company  has  granted  350,000  options to its  technical
                  employees to purchase stock at $.16 per share (market price on
                  grant date).  The options  have the same  vesting  schedule as
                  described  above and have a term of ten years.  The  technical
                  employees plan can grant a total of 750,000  options under the
                  plan.




                                       F-6