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

                                   FORM 10-QSB

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

         For the Quarterly Period Ended:    March 31, 2001


[    ]   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:    0-12806


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

                      UTAH                                   87-0367267
---------------------------------------------        --------------------------
(State or other jurisdiction of incorporation             (IRS employer
              or organization)                          identification no.)


           3820 Great Lakes Drive
            Salt Lake City, Utah                           84120
---------------------------------------                ----------------
(Address of principal executive offices)                 (Zip Code)


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

                                       N/A
            -------------------------------------------------------
            (Former name, former address and former fiscal year, if
                           changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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. X Yes No

The Company had 5,745,640 shares of common stock outstanding at May 2, 2001.

The aggregate market value of voting stock held by non-affiliates of the Company
at May 2, 2001 was $492,050.

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



<PAGE>



<TABLE>
<CAPTION>


                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES


                                TABLE OF CONTENTS



PART I.   FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

<S>                                                                                                       <C>
         Condensed Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000.................3

         Condensed Consolidated Statements of Operations for the three months ended
         March 31, 2001 and 2000, respectively............................................................5

         Condensed Consolidated Statements of Cash Flows for the three months ended
         March 31, 2001 and 2000, respectively............................................................6

         Notes to Condensed Consolidated Financial Statements.............................................8

Item 2.  Management's Discussion and Analysis or Plan of Operation.......................................12



PART II.   OTHER INFORMATION

Item 1.        Legal Proceedings..........................................................................17

Item 6.        Exhibits and Reports on Form 8-K...........................................................20
</TABLE>






                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.    Financial Statements

<TABLE>
<CAPTION>
                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                                                     March 31, 2001       December 31,
                                                                                                              2000
                                                                                     ---------------     ---------------
                                                                                     ---------------     ---------------
                                                                                      (Unaudited)
CURRENT ASSETS:
<S>                                                                                  <C>                 <C>
    Cash and cash equivalents                                                        $      12,047       $     128,536
    Trade accounts receivable, net of allowance for doubtful accounts of $54,297
       and $56,800, at March 31, 2001 and December 31, 2000 respectively                 1,092,286             806,421
    Inventories (note 2)                                                                 1,047,106           1,251,052
    Prepaid expenses and other
                                                                                            96,157             101,096
    Net assets of discontinued operations                                                                      178,873
                                                                                                 -
                                                                                     -------------       -------------

                Total current assets                                                     2,247,596           2,465,978
                                                                                     -------------       -------------

PROPERTY AND EQUIPMENT, at cost:
    Building and improvements                                                            2,865,000           2,865,000
    Furniture, fixtures, and equipment                                                   2,976,585           2,965,150
                                                                                      ------------       -------------
                                                                                         5,841,585           5,830,150
    Less accumulated depreciation and amortization                                       2,394,035           2,274,813
                                                                                     -------------       -------------

                Net property and equipment                                               3,447,550           3,555,337

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLES, net (note 2)                                   141,795            150,128

DEFERRED LOAN COSTS, net of accumulated amortization of $62,388 and $56,001,
    respectively                                                                              4,258
                                                                                                                10,645

OTHER ASSETS                                                                                 72,623             91,987
                                                                                     --------------      -------------

                                                                                     $    5,913,822      $   6,274,075
                                                                                     ==============      =============



</TABLE>





     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>



                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                      March 31, 2001      December 31, 2000
                                                                                     -----------------    ----------------
                                                                                     -----------------    ----------------
                                                                                       (Unaudited)
CURRENT LIABILITIES:
<S>                                                                                     <C>                 <C>
    Short-term note payable                                                             $    475,586        $     485,250
    Current portion of long-term debt                                                         60,550               81,175
    Current portion of capital lease obligations                                              73,172               71,848
    Accounts payable                                                                       1,340,477            1,369,958
    Note payable-related party                                                               150,000                    -
    Accrued expenses                                                                         560,501              559,974
    Accrued advertising                                                                      239,066              365,000
    Accrued royalties payable                                                                138,465              105,127
    Net liabilities of discontinued operations                                                21,190
                                                                                       -------------
                                                                                                                        -

              Total current liabilities                                                    3,059,007            3,038,332

DEFERRED GAIN ON SALE OF ASSET                                                               228,962              232,043

CAPITAL LEASE OBLIGATIONS, net of current portion                                          2,870,221            2,887,526
                                                                                       -------------        -------------

              Total liabilities                                                            6,158,190            6,157,901
                                                                                       -------------        -------------

STOCKHOLDERS' EQUITY :
    Common stock, $.01 par value; 100,000,000 shares authorized and 5,745,640
       shares outstanding at March 31, 2001 and December 31, 1999                             57,456               57,456
    Additional paid-in capital                                                            10,320,949           10,320,949
    Accumulated deficit                                                                  (10,622,773)         (10,262,231)
                                                                                       --------------       --------------

              Net stockholders' (deficit) equity                                            (244,368)             116,174
                                                                                     ----------------     ---------------

COMMITMENTS AND CONTINGENCIES                                                                      -                    -
                                                                                       $   5,913,822        $   6,274,075
                                                                                       =============        =============
</TABLE>

















     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>

                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                        Three months ended         Three months ended
                                                                          March 31, 2001             March 31, 2000
                                                                       ----------------------     ----------------------
                                                                       ----------------------     ----------------------
                                                                             (Unaudited)                (Unaudited)

<S>                                                                         <C>
PRODUCT SALES                                                                 1,942,632              $   2,651,289

COST OF SALES                                                                  (981,427)                (1,444,509)
                                                                            ------------             --------------

       Gross Margin                                                             961,205                  1,206,780
                                                                            ------------             --------------

OPERATING COSTS AND EXPENSES:
    Selling expenses                                                            599,791                    915,104
    General and administrative                                                  576,488                    797,553
    Research and development                                                          -                     94,966
                                                                            ------------             --------------

       Total operating costs and expenses                                     1,176,279                  1,807,623
                                                                            ------------             --------------

          Operating loss from continuing operations                            (215,074)                  (600,843)
                                                                            ------------             --------------

OTHER INCOME (EXPENSE):
    Interest expense                                                           (126,051)                  (135,219)
    Equity in loss of affiliate (note 4)                                        (19,477)                         -
    Other income                                                                     60                      1,577
                                                                            ------------             --------------

       Total other expense, net                                                (145,468)                  (133,642)
                                                                            ------------             --------------

          Loss from continuing operations before income tax benefit
                                                                               (360,542)                  (734,485)

INCOME TAX BENEFIT                                                                    -                          -
                                                                            ------------             --------------

          Loss from continuing operations                                      (360,542)                  (734,485)
                                                                            ------------             --------------

DISCONTINUED OPERATIONS:
    Income from operations of discontinued home storage and
       organization segment net of income tax                                          -                   225,695
                                                                            ------------             --------------

          Net loss                                                          $  (360,542)             $    (508,790)
                                                                            ============             ==============

LOSS PER SHARE FROM CONTINUING OPERATIONS- BASIC AND DILUTED
                                                                            $      (.06)             $        (.17)
                                                                            ============             ==============

EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS- BASIC AND DILUTED
                                                                            $          -             $         .05
                                                                            ============             ==============

NET LOSS PER SHARE- BASIC AND DILUTED                                       $      (.06)             $        (.12)
                                                                            ============             ==============

WEIGHTED AVERAGE SHARES - BASIC AND DILUTED                                   5,745,640                  4,268,896
                                                                            ============             ==============


</TABLE>




     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>

                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                Three months ended         Three months ended
                                                                                  March 31, 2001             March 31, 2000
                                                                               ----------------------     ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                (Unaudited)                (Unaudited)
<S>                                                                                 <C>                   <C>
   Net loss                                                                         $  (360,542)          $
                                                                                                                  (508,790)
   Net income from discontinued operations                                                    -                   (225,695)
   Adjustments to reconcile net loss to net cash used in operating
     activities:
       Depreciation and amortization                                                    128,346                    145,958
       Amortization of deferred loan costs                                                6,387                      6,387
       Amortization of deferred gain on sale of assets                                   (3,081)                    (3,082)
       Forgiveness of liquidated damages related to convertible
           debenture (note 4)                                                                 -                    (13,523)
       Gain on sale of assets                                                               (60)                    (1,577)
       Provision for losses on accounts receivable                                       (2,503)                     7,190
       Changes in operating assets and liabilities:
               Trade accounts receivable                                               (283,362)                  (363,204)
               Inventories                                                              203,946                   (260,926)
               Prepaid expenses                                                           4,939                    159,987
               Other assets                                                              19,364                    (26,336)
               Accounts payable                                                         (29,481)                   646,461
               Accrued expenses                                                             527                    (11,241)
               Accrued advertising                                                     (125,934)                  (262,097)
               Accrued royalties                                                         33,338                      5,046
                                                                               ----------------           ----------------
            Net cash used in continuing operating activities                           (408,116)                  (705,442)
            Net cash provided by discontinued operating activities                      200,063                    451,390
                                                                               ----------------           ----------------
                  Net cash used in operating activities                                (208,053)                  (254,052)
                                                                               ----------------           ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from the sale of assets                                                      200                      2,600
  Purchase of property and equipment                                                    (12,366)                   (96,490)
                                                                               ----------------           ----------------
            Net cash used in continuing investing activities                            (12,166)                   (93,890)
            Net cash used in discontinued investing activities                                -                          -
                                                                               ----------------           ----------------
                  Net cash used in investing activities                                 (12,166)                   (93,890)
                                                                               ----------------           ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) on line of credit                                            (9,664)                   226,554
  Net payments on long-term debt                                                        (20,625)                   (20,625)
  Net principal payments on capital lease obligations                                   (15,981)                   (14,373)
  Net proceeds from related party note payable                                          150,000                          -
  Payment to retire convertible debenture                                                     -                 (1,500,000)
  Proceeds from the issuance of common stock related to private
      placement                                                                               -                  1,600,000
                                                                               ----------------           ----------------
           Net cash provided by continuing financing activities                         103,730                    291,556
           Net cash used in provided by  discontinued financing activities                    -                          -
                                                                               ----------------           ----------------
                  Net cash provided by financing activities                             103,730                    291,556
                                                                               ----------------           ----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (116,489)                   (56,386)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                    128,536                    244,755
                                                                               ----------------           ----------------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                   $       12,047            $       188,369
                                                                               ================           ================

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>


<TABLE>
<CAPTION>
                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)



                                                                            Three months ended        Three months ended
                                                                              March 31, 2001            March 31, 2000
                                                                           ----------------------    ----------------------
                                                                           ----------------------    ----------------------
                                                                                (Unaudited)               (Unaudited)
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
<S>                                                                               <C>                       <C>
    Cash paid for interest                                                        $ 123,793                 $ 144,492

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
    Property and equipment acquired under capital leases                                  -                     2,220

    Conversion of Convertible Debentures and accrued interest for
         common stock                                                                     -                   135,819

</TABLE>








     See accompanying notes to condensed consolidated financial statements.

                                       7
<PAGE>


                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1)      DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

         Dynatec  International,  Inc.,  a Utah  corporation  ("Dynatec"  or the
"Company"),  is a  manufacturer  and  distributor  of  consumer  products in the
following  major product  lines:  telecommunication  headsets and amplifiers and
telephone  accessories,  and flashlights.  Dynatec is located in Salt Lake City,
Utah.  The Company  conducts  most of its  operations  through its wholly  owned
subsidiaries:  Softalk,  Inc.,  SofTalk  Communications,  Inc., Arnco Marketing,
Inc., and Nordic  Technologies,  Inc. Unless  specified to the contrary  herein,
references  to  Dynatec  or  to  the  Company  refer  to  the  Company  and  its
subsidiaries on a consolidated basis.

         The Company's business follows seasonal trends. As a result the Company
experiences  its  highest  revenues in the fourth  quarter.  Because the Company
sells its products primarily to major retailers, the Company's sales performance
is significantly dependent on the performance of those retailers.

Basis of Presentation

         The accompanying  unaudited condensed consolidated financial statements
have been prepared by the Company in accordance  with the rules and  regulations
of the Securities and Exchange  Commission for Form 10-QSB, and accordingly,  do
not include all of the information and footnotes  required by generally accepted
accounting principles.  In the opinion of management,  these unaudited condensed
consolidated financial statements reflect all adjustments, which consist only of
normal  recurring  adjustments,  which  are  necessary  to  present  fairly  the
Company's financial  position,  results of operations and cash flows as of March
31,  2001,  and for the periods  presented  herein.  These  unaudited  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2000.

         The results of operations for the three months ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the remainder
of the year ending December 31, 2001.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventories

         Inventories,  consisting principally of telecommunication  headsets and
amplifiers  and  telephone  accessories,  flashlights,  and other  miscellaneous
products  as of  March  31,  2001  and  December  31,  2000,  respectively,  are
summarized as follows:

                                              March 31, 2001       December 31,
                                                                       2000
                                              ---------------     --------------
 Raw materials............................        $ 333,308            $423,667
 Work-in-Process..........................           61,911              65,390
 Finished Goods...........................          651,887             761,995
                                              ---------------     --------------
                                                 $1,047,106          $1,251,052
                                              ===============     ==============

Basic and Diluted Net Income (Loss) Per Common Share

         Basic net loss per common share is  calculated  based upon the weighted
average  number of common  shares  outstanding  during  the  periods  presented.
Diluted  loss per  common  share is the  amount of loss for the  period for each
share of common stock outstanding during the reporting period and for each share
that would have been outstanding  assuming the issuance of common shares for all
dilutive potential common shares outstanding during the period.

         In calculating  net loss per share for the three months ended March 31,
2001, and 2000,  warrants and options to purchase 593,250 and 775,750  potential
common shares, respectively, are not included in the computation of diluted


                                       8
<PAGE>


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(continued)

net loss per common share as their effect would have been anti-dilutive, thereby
decreasing the net loss per common share.

Goodwill

         Goodwill  represents  the  excess of the  purchase  price over the fair
value of the net assets acquired from Transworld Products,  Inc. (Transworld) on
July 15, 1999. The goodwill is being  amortized  using the  straight-line  basis
over two years.  The balance as of March 31, 2001 and  December  31, 2000 was as
follows:

                                                 2001            2000
                                               ----------     -----------
                                               ----------     -----------
             Goodwill                           $ 34,306        $ 34,306
             Accumulated amortization             27,873          25,729
                                               ----------     -----------
                                               ----------     -----------
                                                $  6,433         $ 8,577
                                               ==========     ===========


(3)      BUSINESS SEGMENT INFORMATION

         Information as to the  operations of the Company in different  business
segments  is set forth below based on the nature of the  products  and  services
offered. Management evaluates performance based on several factors, of which the
primary  financial  measure is business segment operating income before non-cash
amortization of intangible  assets  ("EBITDA").  The accounting  policies of the
business  segments are the same as those described in the summary of significant
accounting policies.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED MARCH 31,
                                                      -----------------------------------------
REVENUES:                                                      2001                 2000
-----------------------------------------------------     ---------------     ------------------
Telecommunication Headsets and
<S>                                                         <C>                 <C>
   Amplifiers and Telephone Accessories..........           $ 1,714,000         $ 1,866,000
Flashlights......................................               201,000             588,000
Hardware/Houseware...............................                28,000             197,000
                                                          ---------------     ------------------
                                                          ---------------     ------------------

       Total.....................................           $ 1,943,000         $ 2,651,000
                                                          ===============     ==================

</TABLE>
<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED MARCH 31,
                                                      -----------------------------------------
OPERATING INCOME (LOSS):                                       2001                  2000
-----------------------------------------------------     ----------------      ----------------
Telecommunication Headsets and
<S>                                                         <C>                 <C>
   Amplifiers and Telephone Accessories..........           $  (64,000)         $  (137,000)
Flashlights......................................             (137,000)            (412,000)
Hardware/Houseware...............................              (14,000)             (52,000)
                                                          ----------------      ----------------
                                                          ----------------      ----------------

                                                            $ (215,000)         $  (601,000)
                                                          ================      ================
</TABLE>

                                       9

<PAGE>

(3)      BUSINESS SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED MARCH 31,
                                                      -----------------------------------------
DEPRECIATION AND AMORTIZATION (1):                             2001                 2000
-----------------------------------------------------     ----------------    ------------------
Telecommunication Headsets and
<S>                                                         <C>                 <C>
   Amplifiers and Telephone Accessories..........           $  113,000          $  103,000
Flashlights......................................               14,000              32,000
Hardware/Houseware...............................                1,000              11,000
Miscellaneous/Mass Market........................
                                                                     -                   -
                                                          ----------------    ------------------

       Total.....................................           $  128,000          $   146,000
                                                          ================    ==================

</TABLE>


(1) Amortization includes all amortization relating to goodwill, product license
rights, non-competes and purchased patents.

<TABLE>
<CAPTION>

Information as to the assets and capital expenditures of Dynatec International, Inc. is as follows:

                                                            MARCH 31,          DECEMBER 31, 2000
ASSETS:                                                        2001
----------------------------------------------------    ------------------    --------------------
Telecommunication Headsets and
<S>                                                       <C>                   <C>
   Amplifiers and Telephone Accessories..........         $  4,945,000          $  4,098,000
Flashlights......................................              682,000             1,111,000
Hardware/Houseware...............................              102,000               554,000
Discontinued operations..........................                    -               179,000
                                                        ------------------    --------------------
       Total assets for reportable segments......            5,729,000             5,942,000

Other assets.....................................               73,000                92,000
Deferred loan costs and other assets not
   allocated to segments.........................              112,000               240,000
                                                        ------------------    --------------------
       Consolidated total........................         $  5,914,000          $  6,274,000
                                                        ==================    ====================
</TABLE>
<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED MARCH 31,
                                                     ------------------------------------------
CAPITAL EXPENDITURES:                                          2001                  2000
----------------------------------------------------    ------------------    ------------------
Telecommunication Headsets and
<S>                                                        <C>                     <C>
   Amplifiers and Telephone Accessories..........          $    12,000             $   72,000
Flashlights......................................                    -                 21,000
Hardware/Houseware...............................          $         -                  5,000
                                                        ------------------    ------------------
       Total.....................................          $    12,000             $   98,000
                                                        ==================    ==================
</TABLE>


Information as to Dynatec International, Inc.'s operations in different
geographical areas is as follows:

                                                THREE MONTHS ENDED MARCH 31,
                                           -------------------------------------
REVENUES:                                           2001                 2000
------------------------------------------     -------------    ----------------
United States..........................     $    1,935,000      $    2,543,000
Other (1)..............................              8,000             108,000

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

       Total...........................     $    1,943,000      $    2,651,000
                                               =============    ================

(1) Includes Canada, Europe, and other miscellaneous.



                                       10
<PAGE>


(3)      BUSINESS SEGMENT INFORMATION (Continued)

                                                THREE MONTHS ENDED MARCH 31,
                                           -------------------------------------
OPERATING LOSS:                                2001                 2000
-------------------------------------  -----------------     -------------------

United States........................  $  (215,000)          $  (601,000)
                                       =================     ===================


                                           MARCH 31,           DECEMBER 31,
ASSETS:                                      2001                  2000
-------------------------------------  -----------------     -------------------
United States........................  $  5,638,000          $  5,978,000
Asia.................................       276,000               296,000
                                       -----------------     -------------------

       Total.........................  $  5,914,000          $  6,274,000
                                       =================     ===================






(4)      JOINT VENTURE

         In January 2001, the Company's  Nordic  Technologies,  Inc.  subsidiary
("Nordic") formed a joint venture called Nordic ASI, L.L.C. that is owned 50% by
Nordic and 50% by Sarkat International, L.L.C., a Utah limited liability company
that is owned, in part, by Reed Newbold,  who is a member of the Company's board
of directors. Nordic ASI was formed specifically to enable the Company to pursue
sales of its  flashlight  product line (and other  flashlights  and products not
then  offered by the  Company) in the  advertising,  specialty  and  promotional
market (the "ASI Market"). Prior to the formation of Nordic ASI, the Company was
not engaged directly in the ASI Market, although until the end of 2000, it was a
supplier of flashlight  products to one or more  companies  that sell in the ASI
Market. As its capital contribution,  the Company contributed rights to sell its
products in the ASI Market to Nordic ASI, and agreed to incur the administrative
expense  associated  with operating  Nordic ASI and marketing its products for a
period of two years.  For its  capital  contribution,  Sarkat  agreed to provide
$200,000  of  debt  financing  to  Nordic  ASI  to  enable  it to  start  up its
operations. Profits and losses of Nordic ASI will be allocated 70% to Nordic and
30% to Sarkat.  Nordic ASI obtained the $200,000 of debt  financing  provided by
Sarkat and has  commenced  its business of selling to the ASI Market by ordering
LED flashlights  provided by an unaffiliated  third party.  The Company believes
that,  given its current  financial  condition,  it could not have commenced any
sales effort in the ASI Market or supplemented  its product line for that market
absent the formation of the joint venture with Sarkat.


(5)      GOING CONCERN

         Based on current  operations,  the  Company  believes  that its present
sources of liquidity will not be adequate to meet its projected requirements for
working capital,  capital expenditures,  scheduled debt service requirements and
other general corporate purposes for the remainder of the year 2001. The Company
is currently pursuing additional sources of liquidity in the form of traditional
commercial credit, asset based lending or additional sales of the Company's debt
or equity  securities  to finance  its  ongoing  operations.  Additionally,  the
Company has entered into interim financing  transactions,  including $150,000 of
revolving unsecured credit provided by an entity affiliated with a member of the
Company's  board of  directors.  The Company  also is pursuing  other,  types of
commercial  and private  financing  which  could  involve  sales of  substantial
portions of the Company's accounts receivable,  sales of the Company's assets or
sales  of one or  more  operating  divisions.  The  Company's  sales  have  been
adversely  affected by the Company's  reduced  credit  availability  and lack of
access to other financing  because of its reduced ability to purchase product to
fill  existing  orders.  If  additional  financing  is not  obtained in the near
future,  the  Company  will  be  required  to  more  significantly  curtail  its
operations or seek protection under bankruptcy laws.




                                       11
<PAGE>



 ITEM  2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

         The  following  table sets forth,  for the periods  indicated,  certain
information  relating  to the  operations  of the Company  expressed  in dollars
(rounded)  and  percentage  changes  from  period to  period.  Data in the table
reflects  the  consolidated  results of the Company for the three  months  ended
March 31, 2001 and 2000, respectively.  As supplemental  information,  the table
also segregates the Company's revenues by product line type.

                                           (ROUNDED)
                                     For the Three Months
                                             Ended
                                   --------------------------
                                                                %OF
                                                                CHG
                                                               FROM
                                                               2000
                                     MARCH 31,   MARCH 31,      TO
                                      2001         2000        2001
                                     ---------   --------      ----
  Unaudited Statement of
  Operations Data:
         Product sales.............   $1,943,000  $2,651,000  (26.7)%

         Cost of sales.............      982,000   1,444,000  (32.0)
                                      ----------  ----------

                 Gross margin......      961,000   1,207,000  (20.4)
                                      ----------  ----------

  Operating Costs and Expenses:
         Selling expenses..........      600,000     915,000  (34.4)

         General and administrative      576,000     798,000  (27.8)

         Research and development..            -      95,000 (100.0)
                                      ----------  ----------

                 Total operating
                 costs and
                 expenses..........    1,176,000   1,808,000  (35.0)
                                      ----------  ----------
  Other Income (Expense), net:
         Interest expense..........    (127,000)   (135,000)   (5.9)

         Equity in loss of              (19,000)          -       -
         affiliate.................
         Other income..............           -       2,000  (100.0)
                                      ----------  ----------
         Total other income
        (expense)..................    (146,000)   (133,000)    9.8

         Loss from continuing          (361,000)   (734,000)  (50.8)
         operations................

  Discontinued Operations:
      Income from discontinued
      operations                              -     225,000  (100.0)
                                      ----------  ----------

         Net loss..................  $ (361,000) $ (509,000)  (29.1)
                                     =========== ===========

  Unaudited Supplemental Information:

  Revenue by product line type:
      Telecommunication headsets
      and amplifiers and
      telephone accessories.......  $ 1,714,000 $ 1,866,000      (8.1)
      Flashlights..................      201,000     588,000    (65.8)
      Hardware/houseware...........       28,000     197,000    (85.8)
                                      ----------  ----------
          Total product               $1,943,000 $ 2,651,000    (26.7)
          sales and other..........   ========== ===========




Following are explanations of significant period-to-period changes for the three
months ended March 31, 2001 and 2000:

Revenues

         Total Product  Sales.  Total product  sales  decreased by $708,000,  or
26.7%,  from  $2,651,000 to $1,943,000 for the three months ended March 31, 2001
compared to the three months ended March 31, 2000.

         Telecommunication  Headsets and Amplifiers  and Telephone  Accessories.
Telecommunication  headsets  and  amplifiers  and  telephone  accessories  sales
decreased $152,000,  or 8.1%, from $1,866,000 to $1,714,000 for the three months


                                       12
<PAGE>

ended March 31, 2001  compared to the three months  ended March 31,  2000.  This
decrease is primarily  related to decreases in sales of the  Company's  shoulder
rest products of $251,000,  and telephone  headsets and  amplifiers of $162,000.
These sales decreases were partially  attributable to the Company's inability to
acquire product to fill existing orders because of decreased credit availability
and a lack of alternate capital resources. The decrease was offset in part by an
increase of $202,000 in the  Company's  Twisstop  products  and $59,000 in other
telephone  accessory  products.  Overall  gross  margins for this  product  line
decreased to 53.7% from 57.4% for the three months ended March 31, 2001 compared
to the three months ended March 31, 2000, as a result of the sales mix.

         Flashlights.  Flashlight  revenues  decreased  $387,000,  or 65.8% from
$588,000 to $201,000 for the three  months ended March 31, 2001  compared to the
three months ended March 31, 2000. This decrease was primarily the result of the
company's  decision to move its flashlight  manufacturing  to a different  Asian
supplier  causing  some short term delays in the  delivery of product and to the
Company's decreased credit availability and lack of alternate capital resources.
Overall  gross  margins for products in this  category  increased  from 14.9% to
18.6% for the three months ended March 31, 2001 when compared to March 31, 2000,
as a result of a decrease in material  costs of the  products due to a change in
the manufacturer.

         Houseware/Hardware.  Houseware/hardware revenues decreased $169,000, or
85.8%,  from  $197,000  to $28,000  for the three  months  ended  March 31, 2001
compared to the three  months  ended March 31,  2000.  The decrease is primarily
attributable to the loss of the Company's main customer in the doorstops product
line as a result of an increase in the Company's pricing.  Overall gross margins
for products in this category increased from 24.8% to 40.3% for the three months
ended March 31, 2001  compared to March 31, 2000, as a result of the increase in
pricing.


Operating Costs and Expenses

         Selling Expenses.  Selling expenses decreased $315,000,  or 34.4%, from
$915,000 to $600,000 for the three  months ended March 31, 2001  compared to the
three months ended March 31, 2000. This decrease is due in part to a decrease in
salaries for sales personnel of $61,000 due to a reduction in force of the sales
support  staff,  as well as  decreases  in  commissions  paid to  outside  sales
representatives of $65,000, travel related expenses of $48,000,  consulting fees
of $47,000, freight expenses of $45,000 and royalties of $21,000.

         General  and  Administrative   Expenses.   General  and  administrative
expenses decreased  $222,000,  or 27.8%, from $798,000 to $576,000 for the three
months  ended March 31, 2001  compared to the three months ended March 31, 2000.
The decrease in general and administrative  expenses was primarily the result of
a decrease of $50,000 in salaries paid as a result of the  Company's  August 11,
2000 reduction in force,  as well as a decrease in legal and accounting  fees of
$52,000,  consulting fees of $41,000,  office and computer  supplies of $25,000,
employee  recruitment  and  education  expenses  of  $19,000,  and a decrease of
$18,000 in travel related expenses.

         Research and Development.  Research and development  expenses decreased
by  $95,000,  from  $95,000 to -0- for the three  months  ended  March 31,  2001
compared to the three months ended March 31,  2000.  The decrease was  primarily
attributable to the completion in 2000 of the Company's research and development
efforts  associated  with the Company's  flashlight line to improve the function
and appearance of the products.

         Total Operating Costs and Expenses.  Total operating costs and expenses
decreased by $632,000,  or 35.0%,  from  $1,808,000 to $1,176,000  for the three
months  ended March 31, 2001  compared to the three months ended March 31, 2000,
for the reasons discussed above.

         Interest  Expense.  Interest expense  decreased  $8,000,  or 5.9%, from
$135,000 to $127,000 for the three  months ended March 31, 2001  compared to the
three months ended March 31, 2000.  This decrease is primarily the result of the
Company's  reduction  in  interest  expenses  related  to its  revolving  credit
facility. These decreases were offset in part by an increase in interest expense
related to the Company's  joint venture and  financing  arrangement  with Sarkat
International,   LLC  (see  note  4  to  the  condensed  consolidated  financial
statements).

         Equity in loss of affiliate.  Equity in loss of affiliate  decreased by
$19,000 from -0- to $(19,000) for the three months ended March 31, 2001 compared
to the three months ended March 31, 2000.  This decrease is  attributable to the
Company's  joint  venture  with  Sarkat  International,  LLC (see  note 4 to the
condensed consolidated financial statements).

                                       13
<PAGE>

         Other  Income/expense.  Other income (expense)  decreased $2,000,  from
$2,000 to -0- for the three  months  ended March 31, 2001  compared to the three
months ended March 31, 2000.  The decrease is due to a gain on sale of assets of
$2,000 that occurred in the three months ended March 31, 2000.

         Discontinued operations.  Income from discontinued operations decreased
$225,000  from $225,000 to -0 for the three months ended March 31, 2001 compared
to the three months ended March 31, 2000.  This decrease is  attributable to the
sale of the assets of the  Company's  Neat Things!  (TM) home  organization  and
storage product line in November 2000.

         Net loss. The net loss decreased by $148,000,  or 29.1%, from a loss of
$509,000  to a loss of  $361,000  for the three  months  ended  March  31,  2001
compared to the three  months ended March 31, 2000 due to a  combination  of the
factors described above.

Liquidity and Capital Resources

         General

         The Company's  principal  sources of liquidity  historically  have been
cash flows  from  operations,  cash on hand and  borrowing  under the  Company's
existing  secured  revolving  credit  facility.  On May 27,  1998,  the  Company
obtained  its  secured  revolving  credit  facility  from a  regional  financing
institution for up to $5,000,000,  bearing  interest at a rate of prime plus one
percent,  with interest  payable monthly.  In previous  amendments to the credit
agreement the maximum line was decreased to $2,200,000 and the interest rate was
increased to a rate of prime plus five percent. The Company's assets,  including
accounts  receivable  and  inventories,  secure  the credit  facility.  The note
underlying  the revolving  credit line is due May 26, 2001. On April 5, 2001 the
Company and its lending institution entered into a Tenth Amendment to the Credit
Agreement (the "Tenth  Amendment").  Pursuant to this amendment the maximum line
decreased from $2,200,000 to $600,000. Notwithstanding the extent of the maximum
borrowing  under the note,  the covenants of the  agreement  limit the Company's
borrowing  availability  based on percentages of current  inventory and accounts
receivable.  Under the terms of the loan  agreement,  the Company is required to
maintain  financial  covenants and ratios,  including book net worth, net income
and debt  service  coverage.  As of March 31, 2001 the Company was in default of
certain of these financial covenants.  Although the Company's secured lender has
not indicated its intention to  accelerate  payment of the  outstanding  balance
payable  under the note  because of such  defaults,  it has informed the Company
will not extend the payment  deadline for the note,  nor will the lender  extend
additional credit to the Company.  The Company is therefore attempting to locate
an alternate source of commercial lending.

         In February  2001,  and due to  decreases  in the  Company's  operating
capital and borrowing availability, the Company entered into a relationship with
Sarkat International,  LLC ("Sarkat"), a limited liability company that is owned
in part by Reed Newbold,  who  currently is a member of the  Company's  board of
directors.  In  connection  with this  arrangement,  Sarkat  agreed  to  provide
unsecured,  revolving debt financing to Softalk, Inc. or Softalk Communications,
Inc., each a subsidiary of the Company, in the aggregate amount of $150,000.  In
exchange  for each  advance of funds by Sarkat,  the Company (or its  subsidiary
directly  receiving  such  funds) is  obligated  to repay the  principal  amount
advanced,  plus  interest  calculated on a daily basis at the annual rate of the
greater of eight and  one-half  percent or the actual rate of  interest  paid by
Sarkat to obtain such funds, plus a "lender's premium" of 12.5% of the principal
amount  advanced.  Such borrowed funds are disbursed by direct payment by Sarkat
to the Company's supplier,  who then ships product to the Company,  which allows
the Company to service  pending orders from its customers.  Principal,  interest
and lender's  premiums  payable to Sarkat,  to the extent paid, have been repaid
out of loan  advances  from the  Company's  secured  lender  when the  Company's
accounts receivable  borrowing base increases as result of the sales facilitated
by the  Sarkat  loans.  The  Company's  secured  lender  has  consented  to this
mechanism.  As of May 2, 2001,  the Company  owes Sarkat  $150,000 in  principal
$2,493 in interest and $5,625 in lenders  premium.  Sarkat has been paid $27,619
in lender's premiums.  The principal and interest are due 180 days from the date
of the  advance.  Debt  financing on similar or terms more  preferential  to the
Company was not available to the Company at the time.



                                       14
<PAGE>

         March 31, 2001 Compared to December 31, 2000

         As of March 31,  2001 the  Company  had  liquid  assets  (cash and cash
equivalents and trade accounts receivable) of $1,104,000,  an increase of 18.1%,
or $169,000,  from  December  31, 2000 when liquid  assets were  $935,000.  Cash
decreased  $116,000,  or 90.6%,  to $12,000 at March 31,  2001 from  $128,000 at
December 31, 2000.  The decrease in cash was primarily the result of the Company
utilizing its  revolving  credit  facility,  under which "draws" are made by the
Company to fund capital expenditures, purchase inventory and for general-purpose
use. After a draw is made a corresponding  payable is setup, when collections of
outstanding  accounts  receivable are made the monies collected,  are swept, the
next day, and re-applied against  outstanding  draws. Trade accounts  receivable
increased  $286,000,  or 35.5%, to $1,092,000 at March 31, 2001 from $806,000 at
December 31, 2000.  This increase is primarily the result of increased  sales in
March 2001.

         Current assets  decreased by $218,000,  or 8.8%, to $2,248,000 at March
31, 2001 from  $2,466,000 at December 31, 2000.  This decrease was primarily the
result of a  decrease  in cash of  $116,000,  discussed  above,  a  decrease  in
inventory by $204,000 primarily due to the Company's efforts to reduce inventory
levels to a one month's  supply,  and a decrease  in net assets of  discontinued
operations  of  $179,000  due to the sale of the  assets of the  Company's  Neat
Things! (TM) home organization and storage product line. The decrease in current
assets  was  offset in part by an  increase  in trade  accounts  receivable,  as
discussed above.

         Long-term  assets decreased  $142,000,  or 3.7%, to $3,666,000 at March
31, 2001 from  $3,808,000 at December 31, 2000.  This decrease was primarily the
result  of  recurring  depreciation  expense  on  property  and  equipment,  and
amortization of deferred loan costs, and other intangibles.

         Current  liabilities  increased by $21,000,  or 0.7%,  to $3,059,000 at
March 31, 2001 from $3,038,000 at December 31, 2000. This increase was primarily
due to an increase of $150,000 in note payable-related  party as a result of the
Company's  February  2001  agreement  with  Sarkat,  and an  increase in accrued
royalties  of  $54,000.  These  increases  were  offset in part by a decrease in
accrued  advertising  of  $126,000,  trade  accounts  payable of $29,000 and the
current portion of long term debt of $21,000.

         The Company's working capital deficit increased by $239,000,  or 41.8%,
to  ($811,000) at March 31, 2001 from  ($572,000) at December 31, 2000,  for the
reasons described above.

         The Company used cash of $408,000 from continuing  operating activities
during  the three  months  ended  March 31,  2001,  primarily  from the net loss
incurred  during the  period,  an increase in trade  accounts  receivable  and a
decrease in accrued advertising, offset in part by decreased inventory levels.

         The Company used net cash of $12,000 in investing activities during the
three  months  ended March 31,  2000,  primarily  for capital  expenditures  for
property and equipment.

         The Company  provided  net cash of $104,000 from  financing  activities
during  the three  months  ended  March 31,  2001  primarily  as a result of the
proceeds from the related party note payable, offset in part by payments made on
the  Company's  revolving  line-of-credit,  long-term  debt  and  capital  lease
obligations during the period.

         Based on current  operations,  the  Company  believes  that its present
sources of liquidity will not be adequate to meet its projected requirements for
working capital,  capital expenditures,  scheduled debt service requirements and
other general corporate purposes for the remainder of the year 2001. The Company
is currently pursuing additional sources of liquidity in the form of traditional
commercial credit, asset based lending or additional sales of the Company's debt
or equity  securities  to finance  its  ongoing  operations.  Additionally,  the
Company has entered into interim financing  transactions,  including $150,000 of
revolving unsecured credit provided by an entity affiliated with a member of the
Company's  board of  directors.  The  Company  also is  pursuing  other types of
commercial  and private  financing  which  could  involve  sales of  substantial
portions of the Company's accounts receivable,  sales of the Company's assets or
sales of one or more  operating  divisions.  The  Company's  sales and financial
condition  have  been  adversely   affected  by  the  Company's  reduced  credit
availability  and lack of access to alternate  financing  because of its reduced
ability to purchase product to fill existing orders. If additional  financing is
not  obtained  in the  near  future,  the  Company  will  be  required  to  more
significantly curtail its operations or seek protection under bankruptcy laws.



                                       15
<PAGE>

Seasonality

         The Company's business is seasonal.  The Company typically  experiences
its highest  sales volume in the fourth  quarter of each year as a result of the
retail environment in which most of its customers conduct business.  Because the
Company sells its products  primarily to major  retailers,  the Company's  sales
performance is  significantly  dependent on the performance of those  retailers.
Accordingly,  the fourth quarter is a key  determinate to overall  profitability
for the year.

Forward Looking Statements

         The  foregoing  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations contains certain forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section  21E of the  Securities  Exchange  Act of 1934,  as  amended,  which are
intended to be covered by the safe harbors created thereby. Although the Company
believes  that  the  assumptions   underlying  the  forward-looking   statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore,  there can be no assurance that the  forward-looking  statements will
prove to be accurate.  Factors  that could cause  actual  results to differ from
results discussed in forward-looking statements include, but are not limited to,
potential  increases in inventory costs,  competition,  the Company's ability to
obtain  additional  working  capital to fund future  growth and any of the risks
described  in the  Company's  Annual  Report on Form  10-KSB  for the year ended
December 31, 2000.



                                       16
<PAGE>


                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         On  February  8, 2001,  the Company  waived  service of a summons  with
respect to a complaint filed in the U.S.  District court in the District of Utah
by K&S  Flashlight,  Inc.  ("K&S"),  a Taiwan  company  that  was the  Company's
flashlight supplier from 1998 through 2000. The lawsuit names as defendants both
Dynatec and its subsidiary,  Nordic Technologies,  Inc. The lawsuit alleges that
the Company owes K&S in excess of $100,000 for the Company's  alleged failure to
pay amounts due to K&S for  flashlight  products  shipped during 2000, and seeks
damages in an unspecified  amount.  The Company has filed its answer and intends
to vigorously defend the lawsuit.

         On August 4, 2000,  the  Company  filed  suit (the  "Utah WAC  Action")
against WAC Research,  Inc., a Utah corporation  ("WAC"), in Utah state court in
Salt Lake City,  Utah.  WAC is a corporation  at least fifty percent of which is
owned by  Donald M. Wood  ("Wood"),  the  Company's  former  Chairman  and Chief
Executive  Officer.  The  dispute  with WAC  arose  out of a series  of  royalty
agreements  between the Company and WAC dated in 1990 and 1998 that purported to
obligate the Company to pay  perpetual  royalties to WAC on sales of products in
the Company's  telephone  accessories product line. In return for this perpetual
royalty  (which the Company paid for  approximately  10 years) WAC  purported to
assign and grant to the  Company the  intellectual  property  rights  underlying
certain of the Company's Softalk products.  At the times the WAC agreements were
negotiated,  Wood controlled  both WAC and the Company.  The Company amended its
complaint  in the Utah WAC Action on August 29,  2000 and on October  19,  2000.
After the Company was unable to negotiate a settlement of its disputes with WAC,
and after WAC filed its own  complaint  in state court in Phoenix,  Arizona (the
"Arizona WAC Action") on October 6, 2000, the Company served process in the Utah
WAC Action. The Company's  complaint in the Utah WAC Action, as amended to date,
seeks the court's  declaration that no further royalties are owed by the Company
to WAC because, among other reasons, (i) WAC never had any interest in or to any
of the intellectual  property rights  underlying the Company's Softalk products,
(ii) WAC breached its  representations  and  warranties  of ownership as to such
intellectual  property rights as set forth in the WAC agreements,  (iii) patents
covering certain of the key products in the Company's  Softalk product line have
expired,  and such products are not otherwise covered by enforceable  copyrights
or other  intellectual  property  rights,  (iv) the Company  owns all  trademark
rights with  respect to its Softalk  products,  (v) WAC has no right to continue
forcing the Company to pay royalties under expired  patents,  (vi) WAC's ongoing
attempts to enforce the WAC royalty  agreements  constitute  patent misuse,  and
(vii) as a consequence of WAC's patent misuse,  WAC is liable to the Company for
royalties paid under a 1998 agreement between WAC and the Company. The complaint
in the Utah WAC Action  also  includes  claims for damages  stemming  from WAC's
alleged  patent  misuse,   failure  of  consideration,   unjust  enrichment  and
additional declaratory relief. WAC's complaint in the Arizona WAC Action alleges
that WAC made unspecified loans to the Company that were never repaid,  and that
the  Company  is in  breach of its  royalty  payment  obligations  under the WAC
royalty agreements.  In the Arizona WAC Action, WAC sought declaratory  judgment
that the  Company  is  required  prospectively  to pay  royalties  under the WAC
agreements and for money damages in the amount of $308,841. The Company moved to
dismiss the Arizona WAC Action for lack of  jurisdiction  or, in the alternative
to stay the Arizona WAC Action  pending a resolution of the Utah WAC Action.  On
February 26,  2001,  the court in the Arizona WAC Action  granted the  Company's
motion to dismiss  that  action.  On March 27,  2001,  WAC filed a  counterclaim
against the Company in the Utah WAC Action.  This  counterclaim  asserts  claims
that are  identical to those that were asserted by WAC in the Arizona WAC Action
before it was dismissed.  The Utah WAC Action is still pending,  and the Company
intends to vigorously prosecute it.

         In February 1999, Mag Instrument,  Inc., a manufacturer and distributor
of flashlights  and one of the Company's  competitors  ("Mag"),  filed a lawsuit
against the Company's  subsidiary,  Nordic  Technologies,  Inc.  ("Nordic"),  of
infringing  certain of Mag's patents and committing false advertising and unfair
competition.  The lawsuit was filed in the U.S.  District  Court for the Central
District of  California.  The Company and Mag  attempted to settle that lawsuit,
and  entered  into an  agreement  whereby  the  lawsuit  was  dismissed  without
prejudice, with Mag having the express right to refile the complaint in the same
court and venue. No settlement was ever reached.  On October 30, 2000, Mag filed


                                       17
<PAGE>

a new complaint in the same federal  district court that it subsequently  served
on the Company.  The new Mag  complaint  alleges that Nordic has  infringed  two
patents  and  related  trademarks  owned by Mag,  and also has engaged in unfair
competition  arising out of Nordic's alleged use of a flashlight  design that is
confusingly  similar  to the  shape,  style  and  overall  appearance  of  Mag's
miniature  "AA" light,  all in  violation of various  provisions  of federal and
California state law. Mag seeks unspecified money damages,  punitive damages and
injunctive relief. The Company does not believe that any of Nordic's  flashlight
products  have  infringed  any  patents or  trademarks  of Mag,  and  intends to
vigorously defend the suit.

         On May 4, 2000, Grandur, Inc., a Taiwan corporation  ("Grandur"),  sued
the Company in the United States  District Court for the District of New Jersey.
The summons and complaint were served on the Company in Salt Lake City,  Utah on
May  12,  2000.   The  complaint   alleges  that  the  Company  has  breached  a
manufacturing  agreement  between the Company and Grandur  pursuant to which the
Company  is  alleged  to  have a  minimum  annual  purchase  requirement  and an
exclusive  manufacturing  arrangement  with Grandur for the  Company's  Twisstop
product.  The complaint further alleges that Grandur is entitled to recover,  in
addition to such damages as may be proved at trial,  liquidated  damages per the
terms of the  contract in the amount of  $500,000.  Grandur and the Company have
entered into an oral agreement to settle this  litigation and are making efforts
to memorialize  their  agreement.  On February 6, 2001,  Grandur and the Company
reported the terms as their  settlement to the court.  On February 7, 2001,  the
court entered an order  conditionally  dismissing  the lawsuit  subject to being
reopened if the  settlement is not  consummated.  In the event the settlement is
not consummated, the Company intends to vigorously defend the lawsuit.

         In February 2000,  Merrill Lynch & Co., Inc. ("Merrill Lynch") notified
the Company that American  Stock  Transfer & Trust Co., New York,  New York, the
Company's  stock  transfer  agent  ("AST"),   had  confiscated   three  separate
certificates  purporting  to represent a total of 208,000  shares of  restricted
common stock issued in the name of an entity affiliated with Donald M. Wood, the
Company's  former Chairman and Chief  Executive  Officer.  AST confiscated  such
certificates because they were not then shown as valid certificates representing
the  Company's   issued  and   outstanding   common  stock.   Based  on  further
investigation  by AST, the Company believes that its former stock transfer agent
had  transferred the shares  represented by such  certificates to third parties,
but had not received the original  certificates  representing such shares at the
time of those transfers.  Nor did the former transfer agent obtain documentation
indicating that such certificates had been lost, stolen or destroyed. In January
2000,   several  years  after  the  shares   represented  by  such  certificates
purportedly had been  transferred,  the original  certificates  were tendered to
Merrill  Lynch  with  instruction  to  sell  the  shares   represented  by  such
certificates.  Merrill Lynch then sold such shares and tendered the certificates
to AST for transfer,  at which time AST confiscated the  certificates.  On March
28, 2000, the Company  received a letter from counsel for Merrill Lynch. In that
letter,  Merrill  Lynch  advised  the  Company of its  intention  to enforce its
clients'  rights to compel the Company to recognize  the transfers of the shares
represented by the certificates tendered to it in January 2000 under the Uniform
Commercial  Code as  adopted by the State of Utah.  The  Company  complied  with
Merrill Lynch's  demand.  The net effect of this action was that the Company was
required to recognize as having been previously  issued 208,000 shares of common
stock that were not then shown as being issued and  outstanding on the books and
records of the Company.  On March 29, 2000,  the Company filed a lawsuit in Utah
state court  against Mr.  Wood,  WAC  Research,  Inc.  ("WAC") and Muito Bem Ltd
Partnership  ("Muito  Bem"),  Alpha Tech Stock  Transfer  & Trust  Company,  the
Company's former stock transfer agent ("Alpha Tech"). Both WAC and Muito Bem are
entities affiliated with Wood. The case sought damages from all defendants,  and
specifically  asked the court to award to the Company the  proceeds of the sales
by WAC  and/or  Muito  Bem of the  shares  that the  Company  was  compelled  to
reinstate  on the  basis  that  those  entities  and their  principals  had been
unjustly enriched. In a settlement, dated April 12, 2000, among Wood, WAC, Muito
Bem,  Merrill Lynch and the Company,  the Company received cash in the amount of
$200,714,  in  exchange  for which it released  its claims for  further  damages
against Wood,  WAC,  Muito Bem and Merrill Lynch.  The Company's  claims against
Alpha Tech are still pending.

         On  December 7, 1999,  Donald M. Wood,  the former  Chairman  and Chief
Executive  Officer of the  Company,  and the Stith Law Office  (Wood's  personal
legal counsel) filed a lawsuit in the District Court of Salt Lake County,  State
of Utah (Case No. 990912153).  In that lawsuit, Wood and Stith asserted that the
Company has  breached a  Settlement  Agreement  executed by the Company and Wood
upon Wood's  resignation as the Company's  Chairman and Chief Executive Officer,
effective  as of January 14,  1999.  The lawsuit  includes  claims for breach of


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<PAGE>

contract,  fraud and  intentional  infliction of emotional  distress,  and seeks
money damages and punitive  damages in the aggregate  amount of  $1,162,246.  On
February 7, 2000, the Company filed its answer to the Wood litigation,  in which
the Company asserted that its payment obligations under the Settlement Agreement
were excused by repeated breaches by Wood of various covenants of the Settlement
Agreement.  Simultaneously,  the Company filed a  counterclaim  against Wood for
money damages  incurred by the Company as a result of Wood's various breaches of
the  Settlement  Agreement.  The Company also  simultaneously  filed  motions to
dismiss the fraud and intentional  infliction of emotional  distress claims. The
Company's  management  believes the Wood litigation is without merit and intends
to vigorously defend.

         On March 19, 1999,  Alpha Tech Stock  Transfer  Company  ("Alpha Tech")
filed a lawsuit against the Company in Utah state court in Salt Lake City, Utah.
Alpha Tech was the Company's stock transfer agent for a period of  approximately
ten years  until the  Company  terminated  its  relationship  with Alpha Tech in
January 1999 and instructed  Alpha Tech to transfer the Company's stock transfer
records to American Stock  Transfer,  New York, New York. The complaint  alleges
that the Company breached its service contract with Alpha Tech by failing to pay
$132,165 to Alpha Tech for transfer  agent services  rendered and  reimbursement
for  legal  expenses  incurred  by Alpha  Tech.  Alpha  Tech  never  served  the
complaint;  the Company  learned about the complaint  through an unrelated third
party. In March 2000, Alpha Tech refiled essentially the same complaint, thereby
commencing  another  lawsuit  against the Company.  The March 2000  complaint is
virtually  identical  to the March 1999  complaint.  In April 2000,  the Company
accepted  service of  process,  and has filed a motion to dismiss the March 2000
complaint. The Company disputes the claims of Alpha Tech's complaint and intends
to vigorously defend this action.

         On April 27,  1998,  the  Enforcement  Division of the  Securities  and
Exchange Commission notified the Company that the SEC was anticipating filing an
administrative  proceeding  in the latter  part of  calendar  year 1998  against
various individuals and entities who had engaged in transactions with a Canadian
corporation. The SEC Enforcement Division further indicated that the Company may
be named as a defendant in such administrative action. In July 1998, the Company
submitted a Wells  Submission  to clarify why, in the Company's  estimation,  it
should  not be named  in the  administrative  proceeding,  if any.  The  Company
suggested  in  the  Wells  Submission  that  it  should  not  be  named  in  any
administrative  proceeding  because the Company never consummated  either of the
two  transactions  with  the  subject  Canadian  company  that the  Company  was
considering,  and the Company received no consideration in connection with those
aborted  transactions.  Moreover,  the  Company  believes  that its  conduct  in
connection  with those proposed but aborted  transactions  met applicable  legal
requirements. As of December 31, 2000, the Company had received no response from
the Enforcement  Division about whether the SEC plans to name the Company in any
administrative action.

         In addition,  the Company has previously  disclosed  that, in the first
quarter of 1999, it was informed of an investigation by the Enforcement Division
of  the  Securities  and  Exchange   Commission.   The  Company   believes  this
investigation  concerns  certain trading  activity in the Company's common stock
and other transactions involving the Company's securities,  however, the Company
has not been  informed of the specifics of such  investigation.  The Company has
cooperated  fully with these  administrative  proceedings.  The  Company  had no
contract from the Enforcement  Division regarding this investigation  during the
entirety of 2000.

         On  February  12,  1998,  Fuji  Corporation  filed  a  claim  with  the
International  Trade  Commission  seeking  a  cease  and  desist  order  against
approximately  30  entities.  Fuji sought to enlist the aid of the U.S.  Customs
Department  in  preventing  the  importation  of  single-use  cameras  which are
manufactured by any of the defendant  entities and which infringe the patents of
Fuji. The Company does not manufacture  single-use  cameras,  but previously has
distributed  single-use  cameras,  which have been  refurbished  and reloaded in
Mainland China. The Company was therefore  involved in the Fuji proceeding.  The
Company  engaged  intellectual  property  counsel and  vigorously  defended  its
position until December 1998,  when the Company sold its remaining  inventory of
single-use  cameras  to  another  entity.  In  connection  with that  sale,  any
liability of the Company in connection with the Fuji  proceeding,  including the
costs of further  defending  the action,  were  assumed by the  purchaser of the
Company's  single-use camera  inventory,  although the Company nominally remains
part of that litigation.

         The  Company is  involved  in various  other  claims and legal  actions
arising in the ordinary  course of business.  In the opinion of management,  the
ultimate  disposition  of these other  matters will not have a material  adverse
effect on the Company's operations or financial condition.




                                       19
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

(a)    Exhibits

         No.      Description

         10.1     Convertible Debenture and Equity Line of Credit Agreement
                  between the Company and five investors dated as of May 28,
                  1998. (Incorporated by reference from Current Report on Form
                  8-K filed by the Company with the SEC on June 8, 1998).

         10.2     Form of Convertible Debentures issued in May 1998.
                  (Incorporated by reference from Current Report on Form 8-K
                  filed by the Company with the SEC on June 8, 1998).

         10.3     Form of A Warrants issued in conjunction with Convertible
                  Debentures. (Incorporated by reference from Current Report on
                  Form 8-K filed by the Company with the SEC on June 8, 1998).

         10.4     Form of B Warrants issued in conjunction with Convertible
                  Debentures. (Incorporated by reference from Current Report on
                  Form 8-K filed by the Company with the SEC on June 8, 1998).

         10.5     Registration Rights Agreement entered into with the holders of
                  Convertible Debentures. (Incorporated by reference from
                  Current Report on Form 8-K filed by the Company with the SEC
                  on June 8, 1998).

         10.6     Modification Agreement between the Company and the holders of
                  Convertible Debentures, dated as of June 25, 1999.
                  (Incorporated by reference from Quarterly Report on Form
                  10-QSB for the period ended June 30, 1999).

         10.7     Amendment to Modification Agreement between the Company and
                  the holders of Convertible Debentures, dated as of November
                  12, 1999. (Incorporated by reference from Quarterly Report on
                  Form 10-QSB for the period ended September 30, 1999.)

         10.8     Convertible Debenture Retirement Agreement between the Company
                  and the holders of the Convertible Debentures, dated as of
                  February 1, 2000. (Incorporated by reference from Annual
                  Report on Form 10-KSB for the year ended December 31, 1999.)

         10.9     Stock Purchase Agreement between the Company and seven
                  investors, dated as of February 11, 2000. (Incorporated by
                  reference from Annual Report on Form 10-KSB for the year ended
                  December 31, 1999.)

         10.10    Employment Agreement between the Company and Frederick W.
                  Volcansek, dated as of February 5, 1999. (Incorporated by
                  reference from Annual Report on Form 10-KSB for the year ended
                  December 31, 1998).

         10.11    Employment Agreement between the Company and Lloyd M. Taggart,
                  dated as of June 22, 1999. (Incorporated by reference from
                  Quarterly Report on Form 10-QSB for the period ended September
                  30, 1999.)

         10.12    Commercial Lease between the Company and FRE III Corporation,
                  a California corporation, dated as of November 4, 1999.
                  (Incorporated by reference from Quarterly Report on Form
                  10-QSB for the period ended September 30, 1999.)

         10.13    Commercial Real Estate Purchase Contract between the Company
                  and Darwin Datwyler dated as of July 16, 1999, as amended
                  through November 4, 1999. (Incorporated by reference from
                  Quarterly Report on Form 10-QSB for the period ended September
                  30, 1999.)

                                       20
<PAGE>

         10.14    Stock Purchase Agreement between the Company and three
                  investors, dated as of May 18, 2000. (Incorporated by
                  reference from Quarterly Report on Form 10-QSB for the period
                  ended June 30, 2000).

         10.15    Asset Purchase Agreement dated November 22, 2000, by and among
                  Dynatec International, Inc., and Expandable Home Organizers,
                  Inc., a California corporation (Incorporated by reference from
                  Current Report on Form 8-K dated as of November 22, 2000).

         10.16    Form of Promissory Note in favor of Sarkat International,
                  L.L.C. (Incorporated by reference from Annual Report on Form
                  10-KSB for the year ended December 31, 2000).

         10.17    Articles of Organization of Nordic ASI, L.L.C. (Incorporated
                  by reference from Annual Report on Form 10-KSB for the year
                  ended December 31, 2000)

         10.18    Operating Agreement of Nordic ASI, L.L.C. (Incorporated by
                  reference from Annual Report on Form 10-KSB for the year ended
                  December 31, 2000)

(b)    Forms 8-K

None




                                       21
<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 thereunto duly authorized.


DYNATEC INTERNATIONAL, INC.



  /s/ Frederick W. Volcansek, Sr.                    May 14, 2001
--------------------------------------------         ------------
Frederick W. Volcansek, Sr.                                    Date
Chairman & CEO



  /s/ Mark W. Sperry                                 May 14, 2001
--------------------------------------------         ------------
Mark W. Sperry                                                Date
Vice President & Chief Accounting Officer



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