<PAGE>


                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               FORM 10-QSB AMENDED

              [X]  Quarterly Report Pursuant To Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                      For Quarter Ended:  March 31, 1997
                       Commission file number:  0-12806


                         DYNATEC INTERNATIONAL, INC.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

                    UTAH                                 87-0367267
       -------------------------------               -------------------
       (State or other jurisdiction of               (I.R.S. Employer
        incorporation or organization)               Identification No.)

            1820 South 3594 West
             SALT LAKE CITY, UT                           84104
           ---------------------                        ----------
           (Address of principal                        (Zip Code)
             executive offices)

     Registrant's telephone number, including area code:  (801) 973-9500 

     Indicate by check mark whether the issuer (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 that 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
                          ---     ---

     The number of shares outstanding of the issuer's common stock as of 
April 30, 1997 were 2,224,104.   The aggregate market value of voting stock 
held by non affiliates of the Company at April 30, 1997 was $10,499,406.

Transitional small business disclosure format.  Yes     No X
                                                    ---   ---


<PAGE>

                        PART 1. - FINANCIAL INFORMATION

ITEM 1-FINANCIAL STATEMENTS
     Reference is made to the attached Unaudited Consolidated Financial
Statements for the first quarter ended March 31, 1997, and results of calendar
year 1996.  These Financial Statements are hereby incorporated by reference.
The information for the Company's first quarter ended March 31, 1997 and 1996
is unaudited, but in the opinion of management reflects all adjustments which
are necessary for a fair presentation of operations for such periods.








                                       2

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
     Total revenues for the first quarter of calendar year 1997 ending on March
31, 1997 were $2,554,618.  Total revenues for the first quarter of calendar
year 1996 ending on March 31, 1996 were $2,164,791.  This represents a $389,827
(18%) increase in revenues for the quarter ended March 31, 1997 compared to
March 31, 1996.  The telephone accessories products experienced a overall
increase in sales.  Specifically, the Softalk product experienced an increase
of $11,750 (3%) over the same period for the prior year while the Mini-Softalk
had an increase of $13,147 (14%).   The Twisstop product experienced an
increase of $57,910 (16%) as a result of increased sales to volume wholesalers.
Sales to wholesalers are expected to rise in fiscal year 1997.  TwistCord sales
decreased by $3,853 (6%).  The Universal Softalk registered a sales increase of
$2,831 (3%) for the three month period ending March 31, 1997 over the same
period for the prior calendar year.  The Universal Softalk is currently
marketed to AT&T on an exclusive basis.  The Softalk II product experienced
sales increases of $186,233 (69%).  The Company introduced the Value Pack
product in early 1996.  The Value Pack includes a Softalk II, TwistCord and
Twisstop in a retail package.  The Value Pack experienced sales of $4,486 in
the first quarter of 1997, a decrease of $1,185 (21%) over the same period of
the prior calendar year.  Hardware/Housewares products experienced an overall
increase in sales of $139,567 over the same period for the prior year
principally caused by a increase in Sofstop sales of $20,695 (37%), an increase
in Expand-A-Shelf sales of $35,209 (10%), and an increase in Mini Expand-A-
Shelf sales of $27,083 (88%). Several new home organization products were being
marketed in late 1996 and early 1997 including the Medicine Cabinet Organizer,
Drawer Organizer, Freedom Hanger, and Tote Bags.  These items experienced sales
of $119,796 collectively in the first quarter of calendar year 1997.  Various
other hardware/housewares products experienced sales decreases including; Cover-
Up $32,374 (32%), Hide It $926 (45%), Wedge $776 (2%), Mega Shelf $9,620 (7%),
and the Expandable Book Shelf $19,520 (59%). The miscellaneous product lines
decreased by $100,078 as the Company discontinued its sales efforts with Fuji
Film, and contract packaging for AT&T. The Company made the decision in 1996 to
discontinue its marketing efforts with the Fuji Novel line of dry cell
batteries.  Sales of the batteries have decreased by $44,628 over the three
month period of the previous year.  The management of the Company believes that
a great opportunity exists with the home organization products.  This is an
expanding market that the Company will be concentrating efforts on.  During
late 1996, the Company entered into the flashlight production and marketing
business with a high end line of flashlight products.  The Company has been
marketing several items under the Nordic Lites name and operating a plant in
Texas.  Management has also begun aggressively pursuing the production of
lights in the far east and expects to have product from such sources within the
next calendar quarter.  Such products will allow for higher margins and product
profitability.  At this time management is unsure of the future of the Texas
facility.  Sales during the first quarter of calendar year 1997 of flashlight
product amounted to $128,143.



                                      3

<PAGE>

     The Company experienced a net loss of $511,864 in the first quarter of
calendar year 1997.  For the first quarter of the prior year the company
experienced a net loss of $112,316.  The decrease in profitability is largely
due to the expenditure of significant research and development costs for a new
line of wired and wireless headsets, a new telecommunications product, and the
development of an overseas supplier of flashlight products.  The Company has
been a domestic producer of flashlights and operates a plant in Texas.  Such
operations have been unprofitable and the company is contemplating the closure
of said plant and the moving of production overseas.  Management believes that
the research and development expenses incurred will result in a line of new
products within the next six months.  Profitability also declined as a result
of plastics and labor increases.  The Company has also had to involve itself in
significant promotional work and travel in regards to the developmental product
lines.

LIQUIDITY AND CAPITAL RESOURCES

     The ratio of current assets to current liabilities is .96 at March 31,
1997 as compared to .96 as of December 31, 1996 calendar year-end 1996 audit
date.  The current assets at March 31, 1997 were $3,271,517 compared to
$2,967,434 at December 31, 1996.  The current liabilities of the company at
March 31, 1997 were $3,417,992 compared to $3,088,908 at December 31, 1996.

     For the three month period ending March 31, 1997 the Company experienced a
decrease in their cash position of $178,657.  For the three month period ending
March 31, 1996 the company experienced an $18,817 increase in cash.

     The cash decrease for the three month period ending March 31, 1997 was a
result of cash being used by operating activities in excess of cash inflow from
operations of $612,622, cash being used to pay down net borrowings $39,212, and
cash being generated by investing activities $473,177.

     At March 31, 1997, the stockholders' equity was $2,632,418.  At December 
31, 1996 the stockholders' equity was $2,644,282.

                        PART II-OTHER INFORMATION

ITEM 3.   EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a)  Exhibit List.
     Exhibit 27-SDS

(b)  Reports on Form 8-K.
     None



                                      4

<PAGE>

                                 SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on the 15th day of May, 1997.



                                   DYNATEC INTERNATIONAL, INC.


                                   /s/ Donald M. Wood
                                   ----------------------------------------
                                   Donald M. Wood
                                   President-Chief Executive Officer


                                   /s/ David J. White
                                   ----------------------------------------
                                   David J. White,
                                   Vice-President - Chief Financial Officer
                                   (Principal Financial and Accounting Officer)







                                       5

<PAGE>


                  DYNATEC INTERNATIONAL, INC.

          UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                    March 31, 1997 and 1996

















                                       1

<PAGE>

                             C O N T E N T S

                                                                       Page

UNAUDITED CONSOLIDATED BALANCE SHEETS                                    3

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS                          5

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY     6

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS                          7

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS                     9

UNAUDITED CONSOLIDATED COSTS OF SALES (SCHEDULE 1)                      20

UNAUDITED CONSOLIDATED SELLING EXPENSES (SCHEDULE 2)                    21

UNAUDITED CONSOLIDATED GENERAL & ADMINISTRATIVE EXPENSES (SCHEDULE 3)   22



                                       2

<PAGE>

The information for the Company's first quarter ended March 31, 1997 is
unaudited, but in the opinion of management reflects all adjustments which are
necessary for a fair presentation of the results of operations for such period.
Results for interim periods should not be considered as indicative of results
for a full year.


                         DYNATEC INTERNATIONAL, INC.
                    UNAUDITED CONSOLIDATED BALANCE SHEETS
                    March 31, 1997 and December 31, 1996

                                                              Audited
                                                             Calendar
                                              Unaudited      Year-End
                                               March 31     December 31
                                                 1997          1996
                                             -----------    -----------
                ASSETS

CURRENT ASSETS
  Cash                                       $    61,488    $   240,145
Receivables
  Trade accounts-net                           1,511,895      1,125,750
  Employee advances                                  -              -
  Related parties  (Note 12)                      84,543        145,419
  Inventory (Note 2)                           1,407,947      1,256,440
  Prepaid expenses                               149,716        133,997
  Prepaid Income Tax                              46,160         46,160
  Trade Show Deposits                              9,117         15,617
  Unamortized debt issue costs                       651          3,906
                                             -----------    -----------
          TOTAL CURRENT ASSETS                 3,271,517      2,967,434

PROPERTY AND EQUIPMENT (Note 3)                4,651,027      4,673,999

OTHER ASSETS
  Deposits                                        52,645         22,355
  Deferred tax asset                              69,960         69,960
  Note receivable-related party (Note 12)        150,000        150,000
  License, patents and agreements (Note 4)       316,026        332,092
                                             -----------    -----------
          TOTAL OTHER ASSETS                     588,631        574,407
                                             -----------    -----------
          TOTAL ASSETS                       $ 8,511,175    $ 8,215,840
                                             -----------    -----------
                                             -----------    -----------


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


                                       3

<PAGE>


                         DYNATEC INTERNATIONAL, INC.
                    UNAUDITED CONSOLIDATED BALANCE SHEETS
                    March 31, 1997 and December 31, 1996

                                                                  Audited
                                                                 Calendar
                                                   Unaudited      Year-End
                                                    March 31     December 31
                                                       1997          1996
                                                   -----------   -----------
  LIABILITIES AND EQUITY

CURRENT LIABILITIES
  Short-term notes payable (Note 5)                $   850,507   $ 1,222,722
  Current portion of long-term debt (Note 6)         1,149,718       795,415
  Current portion of capital lease 
    obligations (Note 7)                                22,948        22,363
  Accounts payable                                     925,326       523,668
  Accrued expenses                                     426,827       489,552
  Accrued royalties - related parties (Note 12)         42,066        34,688
  Income taxes - current                                   600           500
                                                   -----------   -----------
          TOTAL CURRENT LIABILITIES                  3,417,992     3,088,908

LONG-TERM LIABILITIES
   Long-term debt (Note 6)                           2,378,560     2,393,052
   Capital lease obligations (Note 7)                   68,803        76,196
   Deferred income taxes                                13,402        13,402
                                                   -----------   -----------
          TOTAL LIABILITIES                          5,878,757     5,571,558

STOCKHOLDERS' EQUITY
  Common stock, $.01 par value (Note 10)
    Authorized  100,000,000 shares
    Issued  2,224,104 shares at March 31, 1997
            1,974,104 shares at December 31, 1996       22,241        19,741
  Additional paid-in capital                         4,093,199     3,595,699
  Retained earnings                                 (1,483,022)     (971,158)
                                                   -----------   -----------
          TOTAL STOCKHOLDERS' EQUITY                 2,632,418     2,644,282
                                                   -----------   -----------

  TOTAL LIABILITIES & STOCKHOLDERS' EQUITY         $ 8,511,175   $ 8,215,840
                                                   -----------   -----------
                                                   -----------   -----------


                                      4

<PAGE>

                       DYNATEC INTERNATIONAL, INC.
              UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                    For the Three Month Periods Ended
                          March 31, 1997 and 1996

                                              Three Months     Three Months
                                             Ended March 31   Ended March 31
                                                  1997             1996
                                               ----------       ----------
SALES                                          $2,554,618       $2,164,791

COST OF SALES (Schedule 1)                      1,779,783        1,335,753
                                               ----------       ----------

GROSS PROFIT                                      774,835          829,038

OPERATING EXPENSES
  Selling expenses (Schedule 2)                   587,749          472,788
  Research & Development Expenses                 136,154            8,754
  General & Administrative (Schedule 2)           457,563          375,591
                                               ----------       ----------
    TOTAL EXPENSES                              1,181,466          857,133
                                               ----------       ----------
OPERATING INCOME/(LOSS)                          (406,631)         (28,095)
                                               ----------       ----------
OTHER INCOME/(EXPENSE)
  Interest Income                                   3,982            6,684
  Interest Expense                               (103,715)         (41,070)
  Consulting Income                                   -             16,667
  Loss from affiliate                                 -            (50,202)
  Bad Debts                                        (5,000)         (16,000)
                                               ----------       ----------
TOTAL OTHER INCOME/(EXPENSE)                     (104,733)         (83,921)
                                               ----------       ----------
Income/(loss) from
Continuing Operations                            (511,364)        (112,016)

INCOME TAX EXPENSE
  Income tax expense
   (Note 8)                                           500              300
                                               ----------       ----------
    NET INCOME/(LOSS)                          $ (511,864)      $ (112,316)
                                               ----------       ----------
                                               ----------       ----------
Earnings/(loss) per share:
 Continuing Operations                               (.23)            (.08)
                                               ----------       ----------
NET EARNINGS/
  (loss) PER SHARE                             $     (.23)      $     (.08)
                                               ----------       ----------
                                               ----------       ----------

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

                                     5
<PAGE>

                       DYNATEC INTERNATIONAL, INC.
    UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         For the Three Month Periods Ended March 31, 1997 and 1996



                                Three month period ending March 31, 1997
                                ----------------------------------------
                              Total                Additional
                              Shares     Common     Paid-In      Retained
                              Issued      Stock     Capital      Earnings
                             ---------   -------   ----------   -----------
BALANCE DECEMBER 31, 1996    1,974,104   $19,741   $3,595,699   $  (971,158)
Shares issued pursuant to
 Regulation S Offshore
 Stock offering                250,000     2,500      497,500           -
Net Income (March 31, 1997)        -         -            -        (511,864)
                             ---------   -------   ----------   -----------
                             ---------   -------   ----------   -----------
BALANCE MARCH 31, 1997       2,224,104   $22,241   $4,093,199   $(1,483,022)
                             ---------   -------   ----------   -----------
                             ---------   -------   ----------   -----------

                                Three month period ending March 31, 1996
                                ----------------------------------------
                              Total                Additional
                              Shares     Common     Paid-In     Retained
                              Issued      Stock     Capital     Earnings
                             ---------   -------   ----------   ---------
BALANCE DECEMBER 31, 1995    1,411,829   $14,118   $2,694,532   $  73,991

Shares issued for rights
 & non-compete                   3,153        32        6,631    (112,319)
Net Income (March 31, 1996)        -         -            -           -
                             ---------   -------   ----------   ---------
                             ---------   -------   ----------   ---------
BALANCE MARCH 31, 1996       1,414,982   $14,150   $2,701,163   $ (38,328)
                             ---------   -------   ----------   ---------
                             ---------   -------   ----------   ---------

The accompanying notes are an integral part of these financial statements

                                     6
<PAGE>

                        DYNATEC INTERNATIONAL, INC.
              UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
          For The Three Month Periods Ended March 31, 1997 and 1996

                    RECONCILIATION OF NET INCOME TO NET
                   CASH PROVIDED BY OPERATING ACTIVITIES

                                          March 31      March 31
                                             1997         1996
                                         -----------   -----------

Net Income (loss)                          (511,864)   $ (112,316)
Adjustments to reconcile
 net (loss) to net cash
 provided by operating
 activities:
  Depreciation                              110,670        69,709
  Amortization                               16,067        25,442
  Provisions for losses
   on accounts receivable                   (14,577)       (3,899)
  Change in assets & liabilities:
    Decrease (increase) in
     accounts receivable                   (371,568)      274,153
    Decrease (increase) in
     Employee advances                          -           1,105
    Decrease (increase) in
     inventory                             (151,507)      (30,282)
    Decrease (increase) in
     prepaids                               (15,719)       33,750
    Decrease (increase) in
     trade show deposits                      6,500           -
    Decrease (increase) in
     deposits                               (30,290)      (11,283)
    Decrease (increase) in
     debt issue costs                         3,255         2,344
    Decrease (increase) in
     other assets                               -          (5,534)
    Increase (decrease) in
     royalties payable-
     related                                  7,378        24,260
    Increase (decrease) in
     accounts payable                       401,658       (54,306)
    Increase (decrease) in
     accrued expenses                       (62,725)      (95,058)
    Increase (decrease) in
     income tax payable                         100       (17,950)

     TOTAL ADJUSTMENTS                   $ (100,758)   $  212,451
                                         -----------   ----------
NET CASH PROVIDED
    (USED) BY OPERATING
    ACTIVITIES                           $ (612,622)   $  100,135
                                         -----------   ----------
                                         -----------   ----------


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


                                       7

<PAGE>

                       DYNATEC INTERNATIONAL, INC.
             UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
        For The Three Month Periods Ended March 31, 1997 and 1996

                                           March 31     March 31
                                             1997         1996
                                         -----------  -----------

CASH FLOWS FROM INVESTING
 ACTIVITIES:
  Received from related parties              60,876       13,121
  Stock issuance for rights
    and non-compete                             -          6,664
  Issuance of stock pursuant
    to Regulation S offering                500,000          -
  Capital expenditures                      (87,699)     (28,852)
  Minority Interest in affiliate                -         50,202
  Construction in Progress                      -       (373,197)
  Advances to affiliate                         -       (149,352)
                                         ----------   ----------

NET CASH PROVIDED (USED)
 BY INVESTING ACTIVITIES                    473,177     (481,414)

CASH FLOWS FROM FINANCING
 ACTIVITIES:
  Net borrowings (payments)
   under line of credit
   agreements                              (372,215)     100,000

  Net (payments) borrowings
   under capital lease
   obligations                               (6,808)      (4,712)
  Net (payments) borrowings
   on long-term debt                        339,811        4,111
  Net short-term (payments)
   borrowings                                   -            -
  Net borrowings (payments)
   on construction obligations                  -        300,697
                                         ----------   ----------
NET CASH (USED) BY
FINANCING ACTIVITIES                        (39,212)     400,096

NET INCREASE (DECREASE)
   IN CASH                                 (178,657)      18,817
  CASH AT BEGINNING OF
   PERIOD                                   240,145      318,923

  CASH AT END OF PERIOD                  $   61,488   $  337,740
                                         ----------   ----------
                                         ----------   ----------
CASH PAID FOR:
   Interest                                  93,587       40,059
   Income taxes                                 400       18,250

NON-CASH INVESTING AND
 FINANCING ACTIVITIES
   Issuance of stock for rights
     and non-compete agreement                  -          6,664
   Issuance of stock for capital            500,000          -
   Acquisition of property and
     equipment by accounts payable           87,699       28,852




                                       8

<PAGE>

                       DYNATEC INTERNATIONAL, INC.
          NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                         March 31, 1997 and 1996



NOTE 1   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
               Dynatec International, Inc. (the Company) was incorporated in 
               the State of Utah on January 29, 1981.  The Company and its 
               subsidiaries are principally engaged in the manufacture, 
               assembly and distribution of consumer products consisting 
               primarily of telephone accessories, hardware and housewares and
               other related products.

               PRINCIPLES OF CONSOLIDATION
               The consolidated financial statements include the accounts
               of the Company and its wholly-owned subsidiaries, Softalk,
               Inc., Arnco Marketing, Inc., Softalk Communications, Inc. and
               Nordic Technologies, Inc.  All significant intercompany accounts
               and transactions have been eliminated.

               Softalk Communications, Inc. was incorporated in the State
               of Utah on December 23, 1996 and is engaged in research and
               development of a telephone headset product.  Through March 31,
               1997, this subsidiary has incurred $89,898 of expenditures with
               respect to this product which have been reflected as research
               and development expenses in the accompanying consolidated
               financial statements.  The product is not yet in production and,
               accordingly, no related sales have occurred.  Softalk, Inc., has
               also been involved in research and development on various 
               products.  The total spent on such research and development was
               $46,256.

               Nordic Technologies, Inc. (Nordic) was incorporated in the
               State of Utah on October 25, 1996.  Effective December 1, 1996,
               Nordic and the Company entered into an agreement with unrelated
               parties to acquire certain assets and assume certain related
               liabilities in exchange for 550,000 shares of restricted common
               stock of the Company.  This acquisition has been accounted for
               using the purchase method.  The assets and liabilities were
               placed into Nordic and valued at the estimated market value of
               the Company's common stock which approximated fair market or
               replacement value of the acquired assets, net of the assumed
               liabilities.  These assets are being utilized to manufacture and
               assemble flashlight products.

               CONSOLIDATED FINANCIAL STATEMENT PRESENTATION
               Certain amounts in the consolidated financial statements of
               prior periods have been reclassified to be consistent with the
               current year presentation.



                                       9

<PAGE>

                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            March 31, 1997 and 1996


NOTE 1   -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               CHANGE OF REPORTING PERIOD
               The Company elected to change its year-end from June 30 to
               December 31, first effective for the period ended December 31,
               1995.

               The accompanying consolidated financial statements present
               the results of operations, changes in stockholders' equity and
               cash flows for the three months ended March 31, 1997 and 1996.

               CASH AND CASH EQUIVALENTS
               For purposes of financial statement presentation, the
               Company considers all highly liquid investments with a maturity
               of three months or less, from the date of purchase, to be cash
               equivalents.

               ACCOUNTS RECEIVABLE
               Accounts receivable are reflected net of allowance for
               doubtful accounts in the accompanying consolidated financial
               statements.  These amounts were determined to be $14,423 and
               $29,000 at March 31, 1997 and December 31, 1996 respectively.

               INVENTORY
               Inventory is recorded in the Company's subsidiaries Softalk, 
               Inc. and Nordic Technologies, Inc. at the lower of cost, 
               (last-in, first-out) or market.

               PROPERTY AND EQUIPMENT
               Property and equipment are stated at cost with depreciation
               computed on the straight line method.  Property and equipment
               are depreciated over the following estimated useful lives:

                    Capital Leases                5-7 years
                    Machinery and Equipment       5-10 years
                    Office Equipment              5-7 years
                    Signs                         5-7 years
                    Vehicles                      5 years

               UNAMORTIZED DEBT ISSUE COSTS
               Unamortized debt issue costs represent costs associated
               with borrowings and are amortized using the straight-line method
               over the life of the respective debt issue.


                                      10

<PAGE>

                  DYNATEC INTERNATIONAL, INC AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            March 31, 1997 and 1996


NOTE 1  -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               INCOME TAXES
               The Company and its subsidiaries file a consolidated Federal 
               income tax return.  Income taxes are provided for the tax effects
               of transactions reported in the consolidated financial statements
               and consist of taxes currently due plus deferred taxes.  Deferred
               taxes are recognized for differences between the basis of assets
               and liabilities for financial statement and income tax purposes.

               The differences relate primarily to depreciable assets and
               intangible assets, which use different methods and lives for
               depreciation and amortization for financial statement and income
               tax purposes, and inventory differences between financial
               statement and income tax reporting.  The deferred tax assets and
               liabilities represent the future tax consequences of those
               differences, which will either be taxable or deductible when the
               assets and liabilities are recovered or settled.

               NET INCOME (LOSS) PER SHARE
               Net income (loss) per share is calculated using a weighted 
               average of common stock.  Stock options issued are not considered
               to be common stock equivalents for purposes of calculating net 
               income (loss) per share as they are anti-dilutive.

               CASH FLOWS
               For purposes of reporting cash flows, cash and cash equivalents
               include cash on hand and cash on deposit with banks.

               REVENUE RECOGNITION
               Revenue is recognized on an accrual basis when goods are shipped
               to a customer.

               FORWARD STOCK SPLIT
               On November 12, 1996, the shareholders and board of directors 
               authorized the Company to forward split its shares of common 
               stock on a 1 1/2 shares for 1 share basis.  All references to 
               shares outstanding and net income (loss) per share have been 
               restated on a retroactive basis to reflect this forward stock 
               split.



                                      11

<PAGE>

                  DYNATEC INTERNATIONAL, INC AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            March 31, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         CONCENTRATIONS OF CREDIT RISK

         Financial instruments which potentially subject the Company
         to concentrations of credit risk consist principally of trade
         receivables.  The Company provides credit to its customers in
         the normal course of business.  However, the Company performs
         ongoing credit evaluations of its customers and maintains
         allowances for potential credit losses.  Concentrations of
         credit risk with respect to trade receivables is limited due to
         the Company's large number of customers and their dispersion
         across many geographies.

         The Company places its temporary cash investments with high
         quality financial institutions.  At times such investments may
         be in excess of the FDIC insurance limit.  At December 31, 1996,
         the Company had bank deposits in excess of federally insured
         limits.

         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 and liabilities and disclosure of contingent assets and
         liabilities at the date of the financial statements and the
         reported amounts of revenue and expenses during the reporting
         period.  Actual results could differ from those estimates.

NOTE 2 - INVENTORY

         Inventory as of March 31, 1997 and December 31, 1996 is
         summarized as follows:

                                      March 31      December 31
                                        1997           1996
                                     ----------     ----------
               Raw                   $  771,822     $  583,138
               Finished                 636,125        673,302
                                     ----------     ----------
                                     $1,407,947     $1,256,440
                                     ----------     ----------
                                     ----------     ----------

         Dynatec inventories are stated at the lower of cost or market,
         cost being determined using the last-in, first-out (LIFO)
         method.

         The current cost of inventories exceeded the carrying amount by
         approximately $2,000 at March 31, 1997.

                                     12
<PAGE>

                         DYNATEC INTERNATIONAL, INC.
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           March 31, 1997 and 1996


NOTE 3 -       PROPERTY AND EQUIPMENT
               Property and equipment as of March 31, 1997 and December 31,
               1996 are detailed in the following summary:

                                          March 31     December 31
                                            1997           1996
                                        -----------    -----------
   Equipment                            $ 3,012,189    $ 2,977,130
   Office equipment & furniture             310,582        301,114
   Signs & Show booths                       21,901         17,198
   Vehicles                                  65,588         65,588
   Capital leases                            82,357         91,857
   Land                                     626,153        626,153
   Building & Improvements                2,214,144      2,214,144
                                        -----------    -----------
                                        $ 6,332,914    $ 6,293,184

   Less Accumulated Depreciation         (1,681,887)    (1,619,185)
                                        -----------    -----------
   Net Property & Equipment             $ 4,651,027    $ 4,673,999
                                        -----------    -----------
                                        -----------    -----------

         Depreciation expense is computed principally on the straight line
         method in amounts sufficient to write off the cost of depreciable
         assets over their estimated useful lives. Depreciation for the three
         months ended March 31, 1997 amounted to $110,670 ($69,709 for March
         31, 1996).

         Rental expense charged to operations for the three month periods
         ending March 31, 1997 and 1996 is summarized below:

                                     03-31-97    03-31-96
                                     --------    --------
         Gross rental expense         $19,901     $35,165

NOTE 4 - LICENSE, PATENTS AND AGREEMENTS
         These agreements represent amounts paid for the rights to
         manufacture, produce, sell and market various products. In March
         1995, the Company purchased the rights and customer list for the
         doorstop product line from All R Prodx, Inc. for $100,000.  In
         addition, a five year non-competition agreement was entered into with
         All R Prodx, Inc. and its shareholder for $150,000.  The majority of
         said costs are associated with agreements for the telephone accessory
         lines.  Such costs are amortized on the straight-line method in
         amounts sufficient to write off the costs over their estimated
         economic  lives.  Most of these rights are non-exclusive.
         Amortization for the three months ended March 31, 1997 amounted to
         $16,067 ($25,442 for 1996).

                                     13
<PAGE>

                       DYNATEC INTERNATIONAL, INC.
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         March 31, 1997 and 1996

NOTE 5 - SHORT-TERM NOTES PAYABLE

         Short-term notes payable as of March 31, 1997 and December 31, 1996,
         are detailed in the following summary:

         The short-term note payable consists of a revolving line-of-credit
         with a bank up to $1,500,000 bearing interest at a rate 1.0% over
         prime, with interest payable monthly.  The note is secured by
         accounts receivable, inventory and equipment and is personally
         guaranteed by the chief executive officer of the Company who is also
         a director.  The note is due April 30, 1997.  As of March 31, 1997
         and December 31, 1996, the outstanding balance of this revolving line-
         of-credit note payable was $850,507 and $1,222,722 respectively.

         Under the terms of the aforementioned bank line-of-credit, the
         Company is required to maintain certain financial covenants and
         ratios.  The bank may withdraw the lines-of-credit upon default by
         the Company of various provisions in the line-of-credit agreement.
         At March 31, 1997 the Company had a ratio of current assets to
         current liabilities of .96 to 1 which is not in compliance with the
         provisions requiring a ration of no less than 1.5 to 1.

         Pertinent data regarding aggregate short-term borrowings as of March
         31, 1997 and December 31, 1996 is as follows:

                                                   March 31
                                                     1997           1996
                                                  ----------     ----------
             Maximum outstanding                  $1,176,976     $1,453,340
             Average outstanding                     985,019      1,038,877
             Weighted average interest rate             9.25%          9.27%

                                     14

<PAGE>

                          DYNATEC INTERNATIONAL, INC.
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         March 31, 1997 and 1996

NOTE 6 -  LONG-TERM DEBT
          Long-term notes payable as of March 31, 1997 and December 31, 1996,
          are detailed in the following summary:

                                                        March 31   December 31
                                                         1997         1996
                                                        -------    -----------

          Revolving line of credit up to $1,000,000
           payable to a bank, interest at prime
           plus 1.0% until April 30, 1997;
           secured by machinery & equipment
           amortized over 60 months.                    989,918      620,552
          Note payable to a company due in
           quarterly installments of $15,908
           with interest at 8.0% due
           December 1996.                                   -         15,596
          Note payable to a company due in
           a lump sum of $25,000;
           due March 1997 or sooner
           based on product sales; interest at
           8% unsecured.                                 25,000       25,000
          Note payable to a company;
           due in annual installments of
           $79,560 plus interest at 7%
           beginning December 31, 1997;
           unsecured.                                   238,680      238,680
          Note payable to a financial
           institution; due in monthly
           installments of $455 for
           60 months through November
           2001 with interest at 8.92%;
           secured by a vehicle.                         20,778       21,958
          Note payable to an unrelated company;
           due in monthly installments of
           $1,160 plus accrued interest for
           72 months through December 2002
           with interest at 7.9%; secured by
           machinery & equipment.                        78,920       82,400


                                      15

<PAGE>

                            DYNATEC INTERNATIONAL, INC.
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             March 31, 1997 and 1996

NOTE 6  - LONG-TERM DEBT (CONTINUED)

                                                        March 31   December 31
                                                         1997         1996
                                                        -------    -----------

          Note payable to a bank; due in
           monthly installments of $10,234 for
           300 months through November 2021
           with interest at 9.25%; secured by an
           office and warehouse building and
           related land and personal guarantees
           and real estate of the Company's CEO
           who is also a director.                    1,191,044    1,194,602
          Note payable to the small business
           administration; due in monthly
           installments of $8,541 for 240 months
           with interest at 7.31% through August
           2016; secured by an office and warehouse
           building, land and personal guarantees
           of the Company's CEO who is also
           a director.                                  983,938      989,679

          Total long-term debt                        3,528,278    3,188,467
          Less:  current portion                     (1,149,718)    (795,415)
                                                    -----------  -----------
          Total long-term debt excluding
           current portion                          $ 2,378,560  $ 2,393,052
                                                    -----------  -----------
                                                    -----------  -----------

            Aggregate maturities are as follows:

          Year ending March 31, 1998           $357,800
                                1999            336,273
                                2000            337,803
                                2001            264,875
                                2002            267,095
                                Later         1,964,432
                                            -----------
          Total long-term debt              $ 3,528,278
                                            -----------
                                            -----------


                                      16

<PAGE>

                       DYNATEC INTERNATIONAL, INC.
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         March 31, 1997 and 1996


NOTE 7  - LEASES
          All non-cancelable leases with an initial term greater than one year
          have been categorized as capital or operating leases in conformity
          with the definitions in Financial Accounting Standards Board
          Statement No. 13, "Accounting for Leases".

          The following analysis represents property under capital lease at
          March 31, 1997 and December 31, 1996.
                                              March 31       December 31
                                                1997            1996
                                             ---------       -----------

          Equipment                          $  82,357        $  91,857
          Less:  Accumulated depreciation       (8,687)          (5,211)
                                             ---------        ---------
          Net property under capital lease   $  73,670        $  86,646
                                             ---------        ---------
                                             ---------        ---------

          At March 31, 1997, the Company is liable under the terms of non-
          cancelable leases for the following minimum lease commitments:

                                           Capital            Operating
                                            Leases             Leases
                                          ----------         ----------

          Year Ended March 31:
               1998                           30,477             29,561
               1999                           30,477             10,330
               2000                           22,549              2,287
               2001                           14,918                -
               2002                            6,216
          Later years                            -                  -

          Total minimum lease payments    $  104,637         $   42,178
          Less:  Interest                    (12,886)        ----------
                                          ----------         ----------

          Present value of net minimum
           lease payments                 $   91,751
          Less:  Current portion             (22,948)
                                          ---------- 
          Capital lease obligations
               payable long-term          $   68,803 
                                          ---------- 
                                          ---------- 




                                      17

<PAGE>

                          DYNATEC INTERNATIONAL, INC.
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                            March 31, 1997 and 1996

NOTE 8 -  INCOME TAX EXPENSE

          The provisions for taxes on earnings from continuing operations
          consisted of the following:

                                  03-31-97  03-31-96
                                  --------  --------
          Current
              Federal               $ -       $ -
              State                  500       300
                                    ----      ----
                                     500       300
                                    ----      ----
                                    ----      ----

NOTE 9 -  MAJOR CUSTOMERS

          Sales to major customers for the three months ended March 31, 1997
          are summarized as follows:

                                           Percent of
                               Sales      Company Wide
          Customer            Dollars       Revenues
          --------            -------       --------
          United Stationers   316,287          12%

NOTE 10 - COMMON STOCK

          On March 11, 1997, at a regularly scheduled meeting, the Board
          of Directors approved a regulation S offering of its company stock.
          The stock was made available to foreign investors at $2.00 per share.
          The offering is for a maximum of 500,000 shares.  The bid price of
          the shares at March 11, 1997 was $3.87 per share.  Due to the thinly
          traded nature of the stock, and the fact that it is being offered to
          foreign investors it is routinely offered at a discount from the bid
          price.

NOTE 11 - STOCK OPTION PLAN

          In 1996 and 1992, the Company stockholders approved Incentive
          Stock Options Plans for the benefit of the officers and employees of
          the Company and its subsidiaries.  Options to issue a total of
          117,000 shares of the Company's common stock were authorized, granted
          and exercised pursuant to these plans prior to December 31, 1995 at
          prices ranging from $1.00 to $1.38 per share, taking into account all
          reverse and forward splits of the Company's common stock.  In
          November 1996, the stockholders of the Company approved an additional
          Incentive Stock Option Plan for the benefit of the officers and
          employees of the Company and its subsidiaries.

          The November 12, 1996 plan authorizes the officers and directors
          of the Company to grant for a period of up to 10 years, options to
          issue 300,000 shares of the Company's common stock, taking into
          consideration the 1 1/2 for 1 stock split, at a price equal to market
          value as of the date the option is granted.  Options granted are for
          five years and are exercisable upon issuance.  As of March 31, 1997,
          200,000 options have been granted pursuant to this plan.

                                     18
<PAGE>

                       DYNATEC INTERNATIONAL, INC.
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         March 31, 1997 and 1996

NOTE 12 - RELATED PARTY TRANSACTIONS

          The Company's subsidiary, Softalk, Inc. maintains a royalty
          agreement for patent and trade-mark rights on telephone accessories
          from WAC Research, a Utah corporation.  Don Wood, CEO and director of
          the Company is the beneficial owner of one-half of WAC Research.

          During 1995, the Company sold all rights and interest in various
          products to WAC Research for $150,000 in the form of a demand note
          bearing 8% interest.  Inventory was also sold at cost for
          $38,441 at June 30, 1995.

          WAC Research has at various times been involved in assisting Dynatec
          financially. During the first quarter of 1997, Mr. Wood voluntarily
          and retroactively reduced his annual compensation by $100,000.

          The outstanding balance due from related parties at March 31, 1997
          is $234,543. Management is currently negotiating with WAC to retire
          the outstanding balance.

NOTE 13 - CONTINGENCIES

          The Company known as P.I.E. Nationwide, Inc. filed a Chapter 7
          bankruptcy petition prior to June 1992.  On June 19, 1992 the trustee
          of the estate of Olympia Holding Corporation formerly known as P.I.E.
          Nationwide, Inc. filed suit in the United States Bankruptcy Court
          Middle District of Florida, Jacksonville Division against the
          Company.  The plaintiff claims that P.I.E. improperly undercharged
          the Company for freight and therefore, claims the Company owes P.I.E.
          approximately $4,500.  The Company is representing itself and expects
          to prevail.

NOTE 14 - NON-QUALIFIED STOCK OPTIONS

          The board of directors of the Company authorized during 1996 the
          granting of stock options which are tied to the profitability of the
          Company and based upon minimum years of employment.  A total of
          840,000 shares at a strike price of $2.00 per share were authorized.
          Employment must continue through the year 2001, the Company must be
          profitable three out of the four years commencing January 1, 1998.

          The board of directors also authorized 537,500 shares to Muito
          Bem at $2.00 for consideration of all knowledge, trade secrets and a
          continuing non-compete, regarding the telephone headset product line,
          as well as personal real estate pledged as collateral on Company
          debts.

          In addition, WAC Research, Inc., is authorized to receive
          200,000 shares at a strike price of $2.00 per share for past
          forgiveness and the reduction of royalties as well as the assumption
          of Company travel liabilities and the purchasing of questionable
          assets from the Company as a financial assistance to the Company.

                                     19
<PAGE>

                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                            SUPPLEMENTAL SCHEDULES
              For the Three Months Ended March 31, 1997 and 1996

                                                                     Schedule 1

                     UNAUDITED CONSOLIDATED COST OF SALES

                                            March 31       March 31
                                              1997           1996
                                          -----------    -----------
                                           (3 months)     (3 months)
COST OF GOODS MANUFACTURED

     Beginning inventory - raw materials   $  583,138     $  390,490
     Raw materials purchased                1,252,467        884,820
     Freight                                   65,098         61,207
     Depreciation                              87,013         47,069
     Labor                                    266,233        137,825
     Repairs and maintenance                    4,565          6,994
     Miscellaneous direct                      25,295         15,597
     Engineering, other                        28,984           -
     Less: ending inventory -
      raw materials                          (771,822)      (379,950)
                                          -----------    -----------
        TOTAL COST OF GOODS MANUFACTURED    1,540,971      1,164,052
                                          -----------    -----------
                                          -----------    -----------
COST OF FINISHED GOODS

     Beginning inventory-finished goods       673,302        866,690
     Purchases                                115,628        130,313
     Amortization                              15,942         25,317
     Less: ending inventory - finished
      goods                                  (636,125)      (907,512)
                                          -----------    -----------
        TOTAL COST OF FINISHED GOODS          168,747        114,808
                                          -----------    -----------
ROYALTIES                                      70,065         56,893
                                          -----------    -----------
        TOTAL COST OF SALES               $ 1,779,783    $ 1,335,753
                                          -----------    -----------
                                          -----------    -----------

                                     20

<PAGE>

                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                            SUPPLEMENTARY SCHEDULES
              For the Three Months Ended March 31, 1997 and 1996


                    UNAUDITED CONSOLIDATED SELLING EXPENSES

                                                                   Schedule 2

                                         March 31      March 31
                                           1997          1996
                                        ----------     ---------
                                        (3 Months)     (3 Months)

     Advertising                          $ 87,543       $ 34,895
     Commissions                           126,128        133,394
     Depreciation - selling                  4,590         12,230
     Freight                               102,521         89,236
     Miscellaneous                           4,565          1,208
     Promotions & Literature                61,868         41,384
     Salaries - sales                      126,947        115,145
     Travel and entertainment               73,587         45,296
                                         ---------      ---------
        TOTAL SELLING EXPENSES           $ 587,749      $ 472,788
                                         ---------      ---------
                                         ---------      ---------



                                      21

<PAGE>

                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                            SUPPLEMENTARY SCHEDULES
              For the Three Months Ended March 31, 1997 and 1996


       UNAUDITED CONSOLIDATED GENERAL AND ADMINISTRATIVE EXPENSES

                                                                    Schedule 3

                                    March 31       March 31
                                      1997           1996
                                   ----------     ----------
                                   (3 months)     (3 months)

Amortization                       $      125      $     125
Automobile                                 75            -
Bank Charges                            4,128          1,951
Consulting                             12,690            -
Corporate expense                      63,767         46,376
Depreciation - office                  19,067         10,410
Dues and subscriptions                  1,366            225
Insurance                              68,097         46,782
Janitorial                              1,778          1,227
Legal and accounting                   32,776         35,308
Miscellaneous                           2,201          4,308
Office expense                         34,735         17,085
Payroll taxes                          53,459         45,156
Rent                                   19,901         35,165
Repairs and maintenance                 2,455          2,897
Salaries - office                      97,359        100,291
Taxes                                   8,390          2,902
Telephone                              22,069         12,614
Utilities                              13,125         12,769
                                   ----------     ----------
      TOTAL GENERAL AND
        ADMINISTRATIVE EXPENSES    $  457,563     $  375,591
                                   ----------     ----------
                                   ----------     ----------






                                      22