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

				FORM 10-QSB

(Mark One)
  X  	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934


For the Quarterly Period Ended September 30, 2001
       	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.

Commission File Number 33-13058-C

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

				SURGIDYNE, INC.
		(Name of small business issuer in its charter)


	Minnesota					58-1486040
	(State or other jurisdiction of			(I.R.S. Employer
	incorporation of organization)			Identification Number)

		9909 South Shore Drive, Minneapolis, MN  55441
		(Address of principal executive offices)

			  (763) 595-0665
			(Issuer's telephone number)




Check whether the issuer (1) 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 periods that the registrant was
required to file such reports), and  (2) has been subject to such
filing requirements for the past 90 days.     X    YES           NO

7,447,085 shares of Common Stock, no par value, outstanding at
		September 30, 2001

Transitional Small Business Disclosure Format.     YES     X   NO

<PAGE>

		PART I  -  FINANCIAL INFORMATION



ITEM  1.	FINANCIAL STATEMENTS


			SURGIDYNE, INC.



CONTENTS 						PAGE


FINANCIAL STATEMENTS
<TABLE>
	<S>						<C>
	Balance sheets					3
	Statements of operations			5
	Statements of cash flows			6
	Notes to financial statements			7
</TABLE>

<PAGE>


SURGIDYNE, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
				September 30,		December 31,
				2001 (unaudited)	2000
ASSETS
<S>				<C>			<C>

Current Assets
  Cash		    	 	 $    7,367		$  33,924
  Accounts receivable, less
    allowance for doubtful
    accounts of $4,200  	     65,759		   31,002
  Inventories (Note 2)  	     89,664               160,687
  Prepaid expenses (Note 5)          13,062		   50,548
       Total current assets         175,852               276,161


Furniture and Equipment,
    at cost (Note 3)	            353,917		  353,917
  Less accumulated depreciation
    and amortization		    332,295		  328,673
       Total furniture and equipment 21,622    		   25,244

Other Assets

Patents and trademarks,
   net of accumulated amortization
    of $19,512 in 2001 and $18,547
    in 2000			     3,873		   4,611
    Deposits			     3,529		   3,529
        Total other assets           7,402		   8,140

           Total assets 	$  204,876  	      $  309,545

</TABLE>
See Notes to Financial Statements.


<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS (continued)

<TABLE>
<CAPTION>
				September 30,		December 31,
				2001 (unaudited)	2000
LIABILITIES AND STOCKHOLDERS' EQUITY
<S>				  <C>			<C>

Current Liabilities
  Current Maturities of
    Capital Lease		  $    4,907		$    4,590
  Notes payable to officers
    and directors	               8,474	             8,474
  12% demand note payable	      11,646		    11,646
  Non-interest bearing
     demand note payable	      30,000		    35,546
  Accounts payable		      50,041		    33,582
  Accrued expenses		      58,076		    53,972
     Total current liabilities       163,144		   147,810


Capital lease obligation,
    less current maturities            6,786                10,504

Stockholders' Equity
  Series A Preferred stock,
    authorized 1,600,000 shares;
    $400,000 liquidation preference,
    1,600,000 shares Issued
    and outstanding		     400,000		   400,000
  Common stock, no par value;
    authorized 18,400,000 shares;
    Issued and outstanding
    7,447,085			   4,606,266		 4,606,266
    Accumulated deficit	          (4,971,320)		(4,855,035)

      Total stockholders' equity      34,946		   151,231

         Total liabilities and
          stockholders' equity   $   204,876	       $   309,545

</TABLE>
See Notes to Financial Statements
<PAGE>

SURGIDYNE, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
			Three months ended	    Nine months ended
		September 30	September 30	September 30	September 30
		   2001		   2000		    2001	   2000
<S>		<C>		<C>		<C>		<C>
Net sales	$ 121,156	$ 100,889	$  347,256	$ 344,927

Cost of goods
 sold	  	  108,926  	   95,031    	   274,558	  271,276
  Gross profit     12,230	    5,858 	    72,698 	   73,651

Operating expenses
  Research and
   development	    3,224	    2,823	    10,185	    8,541
  Sales and
   marketing	    8,534	    8,825	    25,849	   25,307
  General and
   administrative  34,737  	   59,768	   150,008	  158,845
  Total operating
    expenses       46,495	   71,416	   186,042	  192,693


   Operating loss (34,265)        (65,558)        (113,344)      (119,042)


Other Income (expense)
  Interest income      11	       97		37	    1,255
  Interest expense (1,199)         (1,334)	    (3,709)	   (3,953)
  Other	               39	       20	       730	       20

   Net loss    $  (35,414)     $  (66,775)      $ (116,286)   $  (121,720)


   Basic and
    diluted income
    (loss) per
    common share $   0.00        $   0.01        $   (0.02)     $   (0.02)

   Weighted average
    common shares
    outstanding-
    basic	7,447,085	7,017,085        7,447,085	7,017,085

   Weighted average
    common shares
    outstanding-
    diluted	7,447,085	7,017,085	 7,447,085	7,017,085

</TABLE>
See Notes to Financial Statements
<PAGE>


SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
					    Nine months ended
			    September 30, 2001		September 30, 2000
<S>				<C>			<C>
Cash Flows from Operating Activities

  Net loss			$ (116,286)		$  (121,721)
  Adjustments to reconcile
    net loss to net
   Cash used in operating
     activities:
    Depreciation and
      amortization		     4,360		      4,273
    Amortization of prepaid
      consulting expenses	    38,636		     30,908
    Changes in assets and
      liabilities:
      (Increase) decrease in:
       Accounts receivable	   (34,757)		     23,936
       Inventories		    71,023		      4,728
       Prepaid expenses		    (1,149) 		     17,782
      Increase (decrease) in:
        Accounts payable and
	 accrued expenses	    20,563		     (2,805)
      Net cash used in operating
        activities		   (17,610) 		    (42,899)

Cash Flows from Financing Activities
  Payments on capital lease
    obligation			    (3,401)		     (3,329)
    Payments on notes payable	    (5,546)		     (1,526)
      Net cash used in financing
        activities		    (8,947)		     (4,855)
      Decrease in cash		   (26,557)		    (47,754)

Cash:
  Beginning			    33,924 		     70,090
  Ending			$    7,367		 $   22,336

Supplemental Disclosures
   of Cash Flow Information
  Cash payments for interest    $    7,011                    1,309
  Equipment acquired under
    capital lease		$     -	                  $  19,491
  Warrant issued for
    consulting services (Note 5)$     -			  $  92,724

</TABLE>

See Notes to Financial Statements

<PAGE>
SURGIDYNE, INC.

NOTES TO FINANCIAL STATEMENTS (unaudited)


Note 1.	Financial Statements

The Balance Sheet as of September 30, 2001, the Statement of
Operations for the three and nine month periods ended September
30, 2001 and September 30, 2000, and the Statement of Cash
Flows for the nine month periods ended September 30, 2001
and September 30, 2000 have been prepared by the Company
without audit. In the opinion of management, all adjustments
(consisting solely of normal, recurring adjustments) necessary
to present fairly the financial position at September 30, 2001;
the results of operations for the three and nine month periods
ended September 30, 2001 and September 30, 2000 and the
statement of cash flows for the nine month periods ended
September 30, 2001 and September 30, 2000 have been made.
The Balance Sheet at December 31, 2000 has been taken from the
audited financial statements at that date. Results of operations
 for the interim periods are not necessarily indicative of
future financial conditions or operating results.  These
interim financial statements should be read in conjunction
with the Company's annual financial statements and related
notes there to included in the Company's form 10-KSB for
the year ended December 31, 2000.

Note 2.	Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
		   September 30,	December 31,
		      2001		  2000
<S>		     <C>		<C>
Component parts and
  subassemblies      $ 31,882		$ 75,780
Work in process	       13,283		  17,617
Finished goods	       54,499		  77,290
Less obsolescence
  reserve	      (10,000)		 (10,000)

		     $ 89,664		$160,687
</TABLE>

Note 3. 	Furniture and Equipment
Furniture and equipment consisted of the following:
<TABLE>
<CAPTIOM>
		   September 30,	December 31,
		      2001		   2000
<S>		     <C>		<C>
Furniture, fixtures
and equipment	     $  252,235		$  252,235
Tooling and molds       101,152		   101,152
		     $  353,917		$  353,917
</TABLE>

Note 4.	Basic and Diluted Income (Loss) Per Share

Because the Company has incurred a loss in all periods
presented the inclusion of potential common shares in
the calculation of diluted loss per share would have
an anti-dilutive effect. Therefore, Basic and Diluted
loss per share amounts are the same all periods presented.

Note 5.   Consulting Agreement

On June 2, 2000, the Company retained Equity Securities
Investments, Inc. (the Consultant) to advise and assist
the Company in evaluating strategic opportunities
including a possible sale or merger. However, there
can be no assurance that these activities will result
in a proposal acceptable to the Company or that any
transaction will be completed.

The consulting agreement had a term of one year and
provided the Consultant with a warrant to purchase
600,000 shares of Company common stock at a price of
$0.17 per share. The warrant issued was fully exercisable
and vested on the date of issuance. The Company valued
this warrant using the Black-Scholes pricing model,
which resulted in a value of approximately $93,000.
The expense was recognized over the term of the
agreement, which expired in June 2001, and approximately
$38,600 has been reflected as an operating expense
for the nine-month period ended September 30, 2001.

Note 6. Recently Issued Accounting Standards

In July 2001 FAS 141, Business Combinations, and FAS 142
Goodwill and Other Intangible Assets, were issued. These
pronouncements provide that all business combinations
initiated after June 30, 2001 be accounted for using
the purchase method and that goodwill be reviewed for
impairment rather than amortized, beginning on January
1, 2002. The Company does not believe that the adoption
of these pronouncements will have a material effect on
its financial statements. Any business combination
transactions in the future would be accounted for under
this new guidance.

In September 2001, the FASB issued Statement 143, Asset
Retirement Obligations. This Statement addresses
financial accounting and reporting for obligation
associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The
Statement will be effective for the Company's fiscal
year ending December 2003. The Company does not
believe that the adoption of this pronouncement
will have a material effect on its financial statements.

In August 2001, the FASB issued Statement 144, Accounting
for Impairment or Disposal of Long-Lived Assets. This
Statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets.
The Statement will be effective for the Company's
fiscal year ending December 2002. The Company does
not believe that the adoption of this pronouncement
will have a material effect on its financial statements.

Note 7. Liquidity

During the nine months ended September 30, 2001, the
Company's working capital fell to $12,708, a reduction
of over $115,000. During the same period, the Company
sustained a net loss of approximately $116,000.
During the past year the Company has been attempting
to find a suitable merger partner. However, during
the quarter ended September 30, 2001, it became
increasingly clear to management that the best, if
not only, opportunity for the Company to pay off its
creditors and maintain its corporate structure is to
affect an outright sale of its operating assets. The
Company has negotiated what management believes to
be a fair offer from another medical products company.
A purchase agreement has been signed by both parties,
subject to shareholder approval, to sell substantially
all of its operating assets to this third party. After
the sale, if it occurs, the company estimates it will
have enough cash to pay off certain of the liabilities
that would not be assumed by the purchaser and after
which would be left with a small cash balance. This
cash would be used by the Company to maintain its
capital structure and seek a business combination or
other transaction. The company would be left with no
other operating assets and as a result would have no
sales or other operating activities. However, there
can be no assurance that shareholder approval for the
asset sale can be obtained. Accordingly, if such
approval is not obtained or if for other reasons
the sale does not occur, the company could be forced
to curtail operations and or consider filing for
bankruptcy. The financial statements do not contain
any adjustments that might arise if the Company
ceases to be a going concern. See Management's
Discussion and Analysis for further information.

<PAGE>

ITEM 2.		Management's Discussion and
              Analysis or Plan of Operations

Results of Operations - 2001 compared to 2000

Sales.  Sales for the first nine months of fiscal year
2001 were $347,256 compared to $344,927 in fiscal 2000.
While international and domestic wound drainage product
sales continued their decline, their sales losses were
offset by an increase in OEM sales including significant
sales to one customer that had not purchased any product
for several years. Sales for the three months ended
September 2001 were $121,156 compared to $100,889 for
three months ended September 30, 2000. Fifty percent of
this increase was due to sales to this same OEM customer,
with the balance being due to modest increases in
international sales being partially offset by sales
losses in domestic sales. There can be no assurance
that OEM sales will continue at their current level.

Gross Profit. Gross profit, expressed as a percentage
of sales, for the nine months ended September 2001 were
comparable to the gross profits for the first nine
months of 2000. While gross profits for the three month
period ended September 30 2001 were higher than the
gross profits for the same period of 2000, they were
still only about 50% of average for recent years. The
overall low margins are primarily attributed to the
low through put in production, combined with higher
purchase prices, which are the result of continued
low levels of sales of the wound drainage devices.

Operating Expenses.  Operating expenses remained
essentially flat at $186,042 for the nine-month
period ended September 30, 2001 versus $192,693
for the same period in 2000.  The operating expenses
for the three months ended September 2001 were
$46,495 compared to $71,414 for the same period
in 2000. This reduction of $24,921 is primarily
due to the expiration of the monthly expense of
$7782 for the amortization of the consulting
agreement signed in June 2000 and ended June 2001.
(See Note 5)

Liquidity and Capital Resources

At September 30, 2001 the Company had working capital
of $12,708 compared to $128,251 at December 31, 2000.

The net cash used in operating activities for the
first nine months of 2001 was $17,611, primarily
due to the net loss of $116,286, which was partially
offset by depreciation and amortization of $42,995
and a net positive change in working capital components
of $55,680. This positive change in working capital
components for cash flow purposes is primarily the
result of a reduction in inventory along with an
increase in accounts payable.

During the past year the Company has been attempting
to find a suitable merger candidate or buyer. However,
during the quarter ended September 30, 2001, it became
increasingly clear to management that the best, if not
only, opportunity for the Company to pay off its
creditors and maintain its corporate structure is
to affect an outright sale of its operating assets.
During this period, the Company had what it believes
to be a fair offer for purchase of the operating
assets of the Company by another medical products
company. The Company is preparing to obtain shareholder
approval to sell substantially all its operating assets
to a third party. However, there can be no assurance
that shareholder approval for the asset sale can be
obtained. Accordingly, if such approval is not
obtained or if for other reasons the sale does not
occur, the company could be forced to curtail
operations and or consider filing for bankruptcy.

Consulting Agreement: As stated in Note 5 of the
interim financial statements, on June 2, 2000, the
Company retained Equity Securities Investments,
Inc. (the Consultant) to advise and assist the
Company in evaluating strategic opportunities
including a possible sale or merger.  The agreement
with the Consultant has not been terminated. However,
in the past 18 months, the Consultant has not been
able to identify any acceptable potential merger
candidates or potential buyers for the Company.

Seasonality: The Company is not subject to any
significant seasonal factors.

Market Risk and Impact of Inflation: We do not
believe that we have any significant risks related
to interest rate fluctuations. We also believe
that inflation has not had a material impact on
our results of operations. We cannot assure you
that future inflation will not have an adverse
impact on our operations results and financial
condition.

Forward-looking statement

This document includes forward-looking statements
based on current expectations.  Actual results may
differ materially.  These forward-looking statements
involve a numbers of risks and uncertainties.

<PAGE>
PART III.	OTHER INFORMATION


ITEM 6.	Exhibits and Reports on Form 8-K


(b) Reports on Form 8-K

No reports on Form 8-K were filled during the three
month period ended September 30, 2001.



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



                SIGNATURES

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


SURGIDYNE, INC.
   (Registrant)



Date:  November 13, 2001  	/s/ Theodore Johnson
				By: Theodore Johnson
				chairman of the Board