<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q


(Mark One)

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

               For the quarterly period ended December 31, 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 number: 1-9083

                             POLYPHASE CORPORATION
            (Exact name of registrant as specified in its charter)


                     Nevada                            23-2708876
          (State or other jurisdiction of          (I.R.S. Employer
          incorporation or organization)           Identification No.)


                            4800 Broadway, Suite A
                             Addison, Texas 75001
                   (Address of principal executive offices)

                                (972) 386-0101
             (Registrants's telephone number, including area code)


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

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

Common Stock, $.01 par value                            17,827,464
                                             -------------------------------
                                             Outstanding at February 8, 2001
<PAGE>

                             POLYPHASE CORPORATION
                                   FORM 10-Q
                        QUARTER ENDED DECEMBER 31, 2000

-------------------------------------------------------------------------------

                               TABLE OF CONTENTS
                               -----------------

PART I. FINANCIAL INFORMATION                                      Page No.
-----------------------------                                      --------

Item 1. Financial Statements

Consolidated Condensed Balance Sheets as of
  December 31, 2000 and September 30, 2000                                2

Consolidated Condensed Statements of
  Operations for the Three Months Ended
  December 31, 2000 and 1999                                              4

Consolidated Condensed Statements of
  Cash Flows for the Three Months Ended
  December 31, 2000 and 1999                                              5

Notes to Consolidated Condensed Financial Statements                      7

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations                          12

Item 3. Quantitative and Qualitative Disclosures about Market Risk       13

PART II - OTHER INFORMATION
---------------------------

Item 1. Legal Proceedings                                                14

Item 6. Exhibits and Reports on Form 8-K                                 14

Signature Page                                                           15

                                      -1-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS


                                    Assets
<TABLE>
<CAPTION>
                                                                       December 31,      September 30,
                                                                       ------------      -------------
                                                                            2000               2000
                                                                       ------------      -------------
                                                                       (Unaudited)
<S>                                                                    <C>               <C>
Current assets:
  Cash                                                                 $    808,218      $   1,522,347
  Receivables, net of allowance for doubtful accounts
   of $431,361 and $433,359
     Trade accounts                                                      19,908,198         20,399,265
     Current portion of sales contracts                                   3,772,608          4,145,318
     Notes                                                                4,093,786          3,642,112
  Inventories                                                            38,778,812         36,120,187
  Prepaid expenses and other                                              3,282,267          3,062,932
                                                                       ------------      -------------
          Total current assets                                           70,643,889         68,892,161
                                                                       ------------      -------------
Property and equipment:
  Land                                                                      432,000            432,000
  Buildings and improvements                                              3,805,682          3,792,009
  Machinery, equipment and other                                         12,570,094         11,986,465
                                                                       ------------      -------------
                                                                         16,807,776         16,210,474
  Less-Accumulated depreciation                                          (8,528,346)        (8,281,568)
                                                                       ------------      -------------
                                                                          8,279,430          7,928,906
                                                                       ------------      -------------
Other assets:
  Noncurrent receivables, net of allowance for
   doubtful accounts of $1,200,000
     Sales contracts                                                      1,924,593          2,094,718
     Related parties                                                      1,230,640          1,202,183
  Excess of cost over fair value of net assets of businesses
   acquired, net of accumulated amortization of $4,965,967
   and $4,687,461                                                        16,635,847         16,881,886
  Other intangible assets                                                 1,590,903          1,734,858
  Restricted cash                                                           621,613            633,124
  Assets held for sale                                                    1,926,264          1,926,264
  Other                                                                   3,446,770          3,338,653
                                                                       ------------      -------------
                                                                         27,376,630         27,811,686
                                                                       ------------      -------------
                                                                       $106,299,949      $ 104,632,753
                                                                       ============      =============
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                      -2-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
          CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (continued)



                     Liabilities and Stockholders' Equity

<TABLE>
<CAPTION>

                                                                       December 31,      September 30,
                                                                       ------------      -------------
                                                                           2000              2000
                                                                       ------------      -------------
                                                                        (Unaudited)
<S>                                                                   <C>                <C>
Current liabilities:
  Notes payable                                                        $  8,516,501       $  7,674,131
  Accounts payable                                                       15,629,263         14,903,684
  Accrued expenses and other                                              3,546,164          4,004,971
  Current maturities of long-term debt                                    3,547,429          3,891,579
                                                                       ------------      -------------
          Total current liabilities                                      31,239,357         30,474,365

Long term debt, less current maturities                                  41,190,162         40,859,613
Note payable and accrued interest to related party                       21,147,219         20,746,384
Reserve for credit guarantees                                               621,613            633,124
                                                                       ------------      -------------
          Total liabilities                                              94,198,351         92,713,486
                                                                       ------------      -------------

Warrants to purchase common stock
  in subsidiary                                                           2,862,991          2,806,175

Stockholders' equity:
  Common stock, $.01 par value, authorized
    100,000,000 shares, issued and outstanding
    17,827,464 and 17,812,464 shares                                        178,275            178,125
  Paid-in capital                                                        27,612,146         27,650,734
  Accumulated deficit                                                   (18,551,814)       (18,715,767)
                                                                       ------------      -------------
          Total stockholders' equity                                      9,238,607          9,113,092
                                                                       ------------      -------------

                                                                       $106,299,949      $ 104,632,753
                                                                       ============      =============
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                      -3-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                          For the Three Months Ended
                                                                                 December 31,
                                                                       --------------------------------
                                                                            2000               1999
                                                                       -------------      -------------
<S>                                                                    <C>                <C>
Net revenues                                                           $  46,728,575      $  44,442,950

Cost of sales                                                             38,128,318         35,000,258
                                                                       -------------      -------------
Gross profit                                                               8,600,257          9,442,692

Selling, general and administrative expenses                               6,572,279          6,316,610
                                                                       -------------      -------------
Operating income                                                           2,027,978          3,126,082
                                                                       -------------      -------------
Other income (expenses):
 Interest expense                                                         (2,173,086)        (1,992,724)
 Interest income and other                                                   365,877            164,726
                                                                       -------------      -------------

          Total other income (expenses)                                   (1,807,209)        (1,827,998)
                                                                       -------------      -------------

Income before income taxes, income allocable to subsidiary
 warrant holder and extraordinary item                                       220,769          1,298,084

Income taxes                                                                    -               (18,741)

Income allocable to subsidiary warrant holder                                (56,816)              -
                                                                       -------------      -------------
Income before extraordinary item                                             163,953          1,279,343

Extraordinary item--early extinguishment of debt                                -            (1,290,431)
                                                                       -------------      -------------
Net income (loss)                                                            163,953            (11,088)

Gain on reacquired preferred stock                                              -               351,457
                                                                       -------------      -------------

Net income attributable to common stockholders                         $     163,953      $     340,369
                                                                       =============      =============
Net income (loss) per share - basic and diluted:
   Before extraordinary item                                           $         .01      $         .09
   Extraordinary item                                                              -               (.07)
                                                                       -------------      -------------

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

</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                      -4-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended
                                                                                 December 31,
                                                                       --------------------------------
                                                                            2000               1999
                                                                       -------------      -------------
<S>                                                                    <C>                <C>
Cash flow provided by (used in) operating activities:
  Net income (loss)                                                    $     163,953      $     (11,088)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
      Depreciation and amortization                                          834,048            855,192
      Provision for doubtful accounts                                         96,976             34,000
      Income allocable to subsidiary warrant holder                           56,816               -
      Extraordinary item                                                        -             1,290,431
  Changes in:
      Accounts and sales contracts receivable                                936,926         (1,578,258)
      Inventories                                                         (2,658,625)        (5,353,120)
      Prepaid expenses and other                                            (327,452)          (235,219)
      Accounts payable                                                       725,579          6,410,674
      Accrued expenses and other                                             (57,972)            95,457
                                                                       -------------      -------------

          Net cash provided by (used in)
            operating activities                                            (229,751)         1,508,069
                                                                       -------------      -------------

Cash flows provided by (used in)
  investing activities:
      Notes and other receivables                                           (451,674)           350,497
      Receivables from related parties                                       (28,457)            27,042
      Capital expenditures, net                                             (651,078)          (223,175)
                                                                       -------------      -------------

          Net cash provided by (used in)
            investing activities                                       $  (1,131,209)     $     154,364
                                                                       -------------      -------------
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                      -5-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (continued)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended
                                                                                 December 31,
                                                                       --------------------------------
                                                                            2000               1999
                                                                       -------------      -------------
<S>                                                                    <C>                <C>
Cash flows provided by (used in) financing activities:
   Net borrowings (principal payments ) on line
     of credit arrangements                                            $   1,002,864      $     855,171
   Borrowings on other notes payable and long-term debt                      185,205         28,000,000
   Principal payments on long-term debt                                     (502,800)          (867,486)
   Repayment of subordinated debt                                               -           (22,675,000)
   Exercise of common stock options                                            7,500               -
   Repurchase of stock purchase warrants                                     (45,938)              -
   Redemption of Overhill warrants                                              -            (3,700,000)
   Deferred financing costs                                                     -            (1,832,907)
   Repurchase of convertible preferred stock                                    -              (450,000)
                                                                       -------------      -------------
        Net cash provided by (used in)
          financing activities                                               646,831           (670,222)
                                                                       -------------      -------------

Net increase (decrease) in cash                                             (714,129)           992,211
Cash - beginning of period                                                 1,522,347            375,408
                                                                       -------------      -------------

Cash - end of period                                                   $     808,218      $   1,367,619
                                                                       =============      =============


Supplemental schedule of cash flow information:
  Cash paid during the period for:
    Interest                                                           $   1,486,676      $   1,667,989
    Income taxes                                                       $      50,000      $       5,000

</TABLE>

Supplemental schedule of noncash investing and financing activities:

In November 1999, in connection with the Overhill Farms refinancing, warrants
were issued having an estimated fair market value of $2,370,000.



                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                      -6-
<PAGE>

                    POLYPHASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Condensed Financial Statements
                               December 31, 2000



1.  NATURE OF BUSINESS

    Polyphase Corporation (the "Company" or "Polyphase") is a diversified
    holding company that, through its subsidiaries, operates in two industry
    segments: the food segment and the forestry segment. The food segment (the
    "Food Group"), which consists of the Company's wholly-owned subsidiary,
    Overhill Farms, Inc. ("Overhill"), produces high quality entrees, plated
    meals, meal components, soups, sauces and poultry, meat and fish
    specialities. The Company's ownership of Overhill is subject to warrants
    outstanding to purchase a minority position in Overhill. The forestry
    segment (the "Forestry Group"), which consists of the Company's wholly-owned
    subsidiary Texas Timberjack, Inc. ("Timberjack" or "TTI") and its majority-
    owned subsidiaries Southern Forest Products LLC ("SFP") and Wood Forest
    Products LLC ("WFP"), distributes, leases and provides financing for
    industrial and commercial timber equipment and is also engaged in certain
    related timber and sawmill operations.


2.  BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of the Company,
    its wholly-owned subsidiaries and its majority-owned subsidiaries. All
    material intercompany accounts and transactions are eliminated. Certain
    prior year amounts have been reclassified to conform to the current year
    presentation.

    The financial statements included herein have been prepared by the Company,
    without an audit, pursuant to the rules and regulations of the Securities
    and Exchange Commission. Certain information and footnote disclosures
    normally included in financial statements prepared in accordance with
    generally accepted accounting principles have been condensed or omitted
    pursuant to such rules and regulations. The Company believes that the
    disclosures are adequate to make the information presented not misleading.
    The information presented reflects all adjustments (consisting solely of
    normal recurring adjustments) which are, in the opinion of management,
    necessary for a fair statement of results for the interim periods when read
    in conjunction with the financial statements and the notes thereto included
    in the Company's latest financial statements filed as part of Form 10-K for
    the year ended September 30, 2000.

                                      -7-
<PAGE>

3.  INVENTORIES

    Inventories are summarized as follows:         December 31,   September 30,
                                                      2000            2000
                                                   ------------   ------------
          Finished goods                           $ 28,944,243   $ 26,179,043
          Raw materials                               9,844,306     10,091,144
          Inventory reserve                              (9,737)      (150,000)
                                                   ------------   ------------
               Total                               $ 38,778,812   $ 36,120,187
                                                   ============   ============

    As of December 31, 2000 and September 30, 2000, finished goods inventories
    consisted of approximately $10,763,000 and $9,655,000 in inventories at the
    Food Group, $17,253,000 and $15,690,000 in timber and logging related
    equipment, and $928,000 and $834,000 in finished wood products,
    respectively. As of December 31, 2000 and September 30, 2000, raw materials
    inventories consisted of approximately $9,015,000 and $9,289,000 in
    inventories at the Food Group and $829,000 and $802,000 in both unharvested
    and harvested but unprocessed timber, respectively.


4.  TAXES

    For the quarter ended December 31, 2000, the actual income tax expense
    attributable to income from continuing operations differed from the net
    amounts recorded by the Company. The Company's subsidiaries recorded a
    provision for income taxes of approximately $300,000, based upon their
    effective tax rates determined as if they were separate taxpayers; the
    Company then applied a like amount of its existing valuation allowance as a
    reduction of this amount, resulting in a net income tax provision for the
    quarter of zero. The Company continues to maintain a valuation allowance
    against a portion of its net deferred tax assets due to uncertainty with
    respect to the future recoverability of all such amounts.


5.  LONG-TERM DEBT

    In November 1999, Overhill refinanced substantially all its existing debt.
    The new facility amounted to $44 million, consisting of a $16 million line
    of credit provided by Union Bank of California, N.A. ("Union Bank"),
    together with $28 million in the form of a five-year term loan provided by
    Levine Leichtman Capital Partners II, L.P. ("LLCP").

    The line of credit with Union Bank expires in November 2002 and provides for
    borrowings limited to the lesser of $16 million or an amount determined by a
    defined borrowing base consisting of eligible receivables and inventories.
    Borrowings under the line bear interest at a rate, as selected by Overhill
    at the time of borrowing, of prime plus .25% or LIBOR plus 2.75%. The
    agreement contains various covenants including restrictions on capital
    expenditures, requirements to maintain specified net worth levels and debt
    service ratios, and generally prohibits loans, advances or dividends from
    Overhill to the Company and limits payments of taxes and other expenses to
    Polyphase to specified levels. The line of credit is guaranteed by the
    Company and collateralized by certain assets of Overhill and the Overhill
    common stock owned by Polyphase.

                                      -8-
<PAGE>

    The term loan with LLCP is a secured senior subordinated note bearing
    interest at 12% per annum, with interest payable monthly until maturity in
    October 2004. Principal payments in an amount equal to 50% of the excess
    cash flow, as defined, for Overhill's previous fiscal year are also payable
    annually commencing in January 2001. Voluntary principal payments are
    permitted after October 31, 2001, subject to certain prepayment penalties.
    The agreement contains various covenants including restrictions on capital
    expenditures, minimum EBITDA and net worth levels, and specified debt
    service and debt to equity ratios. In addition, the terms of the agreement
    restrict changes in control, generally prohibit loans, dividends or advances
    by Overhill to the Company and limit payments of taxes and other expenses to
    Polyphase to specified levels. The term loan with LLCP is guaranteed by the
    Company and collateralized by certain assets of Overhill. The agreement also
    requires Overhill to pay to LLCP, during each January, annual consulting
    fees of $180,000.

    In connection with the agreement, LLCP was issued warrants to purchase 17.5%
    of the common stock of Overhill, exercisable immediately at a nominal
    exercise price. During the first two years following the date of the
    agreement, Overhill has the right to repurchase 5% of Overhill's shares from
    LLCP for $3 million and/or to repurchase all 17.5% of the Overhill shares
    subject to the LLCP warrant within five days of the term loan being repaid
    at their then determined fair market value. If such shares are not
    purchased, LLCP will be entitled under the agreement to receive a cash
    payment of $500,000 from Overhill; such amount is being charged to expense
    over the term of the facility. At the date of issuance, the warrants granted
    to LLCP were estimated to have a fair value of $2.37 million.

    As a result of the transactions, Overhill repaid in full the $22.7 million
    senior subordinated notes and the $9.7 million balance of its revolving line
    of credit with previous lenders. Additionally, Overhill repurchased, for
    $3.7 million, the warrants held by a previous lender to purchase 30% of
    Overhill's common stock; the excess of such repurchase amount over the
    carrying value of the warrant amounted to approximately $2.3 million and was
    recorded as goodwill. In connection with the refinancing, Overhill was
    permitted to make a one-time advance of $1.25 million to Polyphase for
    working capital and other specified purposes. Overhill incurred costs and
    expenses in connection with the refinancing totaling approximately $1.9
    million, substantially all of which has been, or will be, paid to the
    lenders. The early extinguishment of the previous indebtedness resulted in
    an extraordinary loss of approximately $1.3 million (net of a $500,000
    refund for early payment of the senior subordinated notes) during the
    quarter ended December 31, 1999.

                                      -9-
<PAGE>

6.  EARNINGS PER SHARE

    The following table sets forth the computations of basic and diluted
    earnings per share:


                                                     For the Three Months Ended
                                                             December 31,
                                                     --------------------------
                                                         2000           1999
                                                     -----------    -----------
    Numerator:
     Income before extraordinary item                $   163,953    $ 1,279,343
     Gain on reacquired preferred stock                     -           351,457
                                                     -----------    -----------
                                                         163,953      1,630,800

     Extraordinary item                                     -        (1,290,431)
                                                     -----------    -----------

     Net income attributable to common stockholders  $   163,953    $   340,369
                                                     ===========    ===========

    Denominator:
     Denominator for basic earnings
      per share - weighted average shares             17,823,387     17,812,464
                                                     -----------    -----------
     Effect of dilutive securities:
      Convertible preferred stock                           -         1,075,853
      Stock options                                       50,290           -
      Warrants                                              -              -
                                                     -----------    -----------
         Dilutive potential common shares                 50,290      1,075,853
                                                     -----------    -----------

    Denominator for diluted earnings per share        17,873,677     18,888,317
                                                     ===========    ===========

    Net income per share - basic and diluted:

      Before extraordinary item                      $       .01    $       .09

      Extraordinary item                                      -            (.07)
                                                     -----------    -----------

         Net income per share                        $       .01    $       .02
                                                     ===========    ===========


                                      -10-
<PAGE>

7.  STOCKHOLDERS' EQUITY

    Stock Options-

    During the three months ended December 31, 2000, options to purchase 15,000
    shares at an exercise price of $.50 per share were exercised.


    Warrants-

    During the three months ended December 31, 2000, the Company repurchased
    warrants covering 210,000 shares exercisable at $1.125 per share for total
    consideration of approximately $46,000.


    Convertible Preferred Stock-

    During November 1999, the Company and Infinity Investors Limited, the holder
    of a series of the Company's preferred stock, entered into an agreement
    whereby, among other things, the Company agreed to repurchase all remaining
    preferred stock owned by Infinity, including all accrued but unpaid
    dividends, for $450,000 cash, and Infinity agreed to the dismissal of all
    litigation against the Company with respect to various matters related to
    its ownership of the preferred stock. As a result of the settlement, the
    Company recorded a gain of approximately $351,000, related to the difference
    in the carrying value of the preferred stock plus the accrued dividends and
    the settlement amount. Such amount was accounted for by recording a
    reduction of the Company's accumulated deficit during the quarter ended
    December 31, 1999.

                                      -11-
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION  AND ANALYSIS

Statements contained in this Form 10-Q that are not historical facts, including,
but not limited to, any projections contained herein, are forward-looking
statements and involve a number of risks and uncertainties. The actual results
of the future events described in such forward-looking statements in this Form
10-Q could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to differ
materially are: adverse economic conditions, industry competition and other
competitive factors, government regulation and possible future litigation.

Results of Operations

Revenues for the three months ended December 31, 2000 increased $2,286,000 (5%)
to $46,729,000 from $44,443,000 during the three months ended December 31, 1999.
The increase in revenues is primarily attributable to continued sales gains by
Overhill. Gross profits decreased $843,000 to $8,600,000 in the current year
from $9,443,000 in the prior year, due in part to a decrease in gross margins
rates to 18.4% in the current quarter as compared to 21.2% in the first quarter
of fiscal 2000. During the period, operating income decreased to $2,028,000 in
fiscal 2001 from $3,126,000 in fiscal 2000.

Consolidated net income before extraordinary item for the three months ended
December 31, 2000 decreased to $164,000 from $1,279,000 during the three months
ended December 31, 1999. After the effect in the prior year of an extraordinary
expense of $1,290,000 related to the early extinguishment of debt in connection
with major refinancing by Overhill, and a gain of $351,000 on the reacquisition
of preferred stock, net income attributable to common stockholders decreased to
$164,000 ($.01 per share) in fiscal 2001 from $340,000 ($.02 per share) in
fiscal 2000.

The Food Group's revenues increased $4,316,000 (13%) to $38,478,000 for the
three months ended December 31, 2000, as compared to $34,162,000 for the three
months ended December 31, 1999. Gross profits decreased $421,000 (6%) to
$6,646,000, compared to $7,067,000 in the prior year, due primarily to startup
expenses related to the recently acquired Chicago Brothers operations and
increased energy costs in Overhill's California based facilities. Operating
income decreased $686,000 to $2,151,000 in the current period, compared to
$2,837,000 for the same period in fiscal 2000.

Revenues for the Forestry Group for the three months ended December 31, 2000
decreased $2,031,000 (19.8%) to $8,250,000 from $10,281,000 for the three months
ended December 31, 1999. Operating income for the same period decreased $287,000
to $51,000 for the three months ended December 31, 2000 from $338,000 for the
three months ended December 31, 1999. These decreases in revenues and operating
results are due to a continued softness in the East Texas timber market,
affecting the Texas Timberjack core equipment business as well as its sawmill
operations, which is expected to continue at least through the next fiscal
quarter.

                                      -12-
<PAGE>

Liquidity and Capital Resources

During the three months ended December 31, 2000, the Company's operating
activities resulted in a use of cash of approximately $230,000, compared to cash
provided of $1,508,000 during the comparable period in the previous year. The
use of cash during the current year is related primarily to increases in
inventories by both Overhill and Texas Timberjack.

During the three months ended December 31, 2000, the Company's investing
activities resulted in a use of cash of approximately $1,131,000, compared to
cash provided of $154,000 during the comparable period in the previous year. The
Company's use of cash resulted primarily from increases in notes receivable by
Texas Timberjack and from capital expenditures by both operating units.

During the three months ended December 31, 2000, the Company's financing
activities resulted in cash provided of approximately $647,000, compared to a
use of cash of approximately $670,000 in the comparable period in the previous
year. The cash provided resulted primarily from additional borrowings under
Timberjack's lines of credit, utilized primarily for increases in its
inventories and notes receivable and for reductions in its term loan.

The Company believes that funds available to it from operations and existing
capital resources will be adequate for its capital requirements for the next
twelve months.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's interest expense is affected by changes in prime and LIBOR-based
lending rates as a result of its various line of credit arrangements. If these
market rates increase by an average of 1% in fiscal 2001, the Company's interest
expense would increase by approximately $250,000 based on the outstanding line
of credit balances at December 31, 2000.

The Company does not own, nor does it have an interest in any other market risk
sensitive instruments.

                                      -13-
<PAGE>

                          PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

During fiscal 1997, five substantially identical complaints were filed in the
United States District Court for the District of Nevada against the Company and
certain of its current and past officers and directors. The complaints each
sought certification as a class action and asserted liability based on alleged
misrepresentations that the plaintiffs claimed resulted in the market price of
the Company's stock being artificially inflated. Without certifying the cases as
class actions, the District Court consolidated the cases into a single action.

In March 2000, the District Court dismissed the plaintiffs' claims against one
of the Company's officers and directors and restricted the plaintiffs from
pursuing a number of their claims against the other defendants. The Court also
granted the remaining defendants leave to file motions for summary judgment.
Motions for summary judgment were thereafter filed, pointing out that there was
no evidence to support the plaintiffs' claims. In November 2000, in a lengthy
decision addressing the plaintiffs' claims against each of the remaining
defendants, the District Court granted the motions for summary judgment, thereby
disposing of all of the claims asserted by the plaintiffs. The decision in these
suits, which the Company maintained all along were without merit, remains
subject to appeal by the plaintiffs.

The Company and its subsidiaries are involved in certain legal actions and
claims arising in the ordinary course of business. Management believes (based on
the advice of legal counsel) that such litigation and claims will be resolved
without material effect on the Company's financial condition, results of
operations or cash flows.


Item 6.  Exhibits and Reports on Form 8-K.

    (a)   Exhibits

          27.1    Financial Data Schedule


    (b)   Reports on Form 8-K - No reports on Form 8-K were filed during the
          quarter ended December 31, 1999.

                                      -14-
<PAGE>

                                  SIGNATURES


In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                                  POLYPHASE CORPORATION
                                                  (Registrant)


Date: February 12, 2000                           By: /s/ James Rudis
                                                      ----------------------
                                                  James Rudis
                                                  Chairman, President and
                                                  Chief Executive Officer



Date: February 12, 2000                           By: /s/ William E. Shatley
                                                      ----------------------
                                                  William E. Shatley
                                                  Senior Vice President and
                                                  Chief Financial Officer

                                      -15-
<PAGE>

                               INDEX TO EXHIBITS



         Exhibit No.                                Exhibit
         -----------                        -----------------------

            27.1                            Financial Data Schedule