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:    June 30, 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 West 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 6,095,640 shares of common stock outstanding at August 17, 2001.

The aggregate market value of voting stock held by non-affiliates of the Company
at August 17, 2001 was $346,349.

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

<PAGE>

                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


PART I.   FINANCIAL INFORMATION
-------------------------------

Item 1.  Financial Statements (Unaudited)
         <S>                                                                                             <C>

         Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000..................3

         Condensed Consolidated Statements of Operations for the three months ended
         June 30, 2001 and 2000, respectively.............................................................5

         Condensed Consolidated Statements of Operations for the six months ended
         June 30, 2001 and 2000, respectively.............................................................6

         Condensed Consolidated Statements of Cash Flows for the six months ended
         June 30, 2001 and 2000, respectively.............................................................7

         Notes to Condensed Consolidated Financial Statements.............................................9

Item 2.  Management's Discussion and Analysis or Plan of Operation.......................................14



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

Item 1.  Legal Proceedings...............................................................................20

Item 2.  Changes in Securities and Use of Proceeds.......................................................22

Item 6.  Exhibits and Reports on Form 8-K................................................................23
</TABLE>

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                      ASSETS
                                                                                        June 30,          December 31,
                                                                                          2001                2000
                                                                                     ---------------     -------------
                                                                                      (Unaudited)
<S>                                                                                  <C>                 <C>

CURRENT ASSETS:
    Cash and cash equivalents                                                        $      16,982       $     128,536
    Trade accounts receivable, net of allowance for doubtful accounts of $13,739
      and $56,800, at June 30, 2001 and December 31, 2000 respectively (note 2)            167,431             806,421
    Accounts receivable-other                                                              154,965                   -
    Inventories (note 2)                                                                 1,057,563           1,251,052
    Prepaid expenses and other                                                              90,164             101,096
    Net assets of discontinued operations                                                        -             178,873
                                                                                     -------------       -------------

                Total current assets                                                     1,487,105           2,465,978
                                                                                     -------------       -------------

PROPERTY AND EQUIPMENT, at cost:
    Building and improvements                                                            2,865,000           2,865,000
    Furniture, fixtures, and equipment                                                   2,967,591           2,965,150
                                                                                     -------------       -------------
                                                                                         5,832,591           5,830,150
    Less accumulated depreciation and amortization                                       2,499,773           2,274,813
                                                                                     -------------       -------------

                Net property and equipment                                               3,332,818           3,555,337

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLES, net (note 2)                                  129,173             150,128

DEFERRED LOAN COSTS, net of accumulated amortization of $66,646 and $56,001,
    respectively                                                                                 -              10,645

OTHER ASSETS                                                                                32,518              91,987
                                                                                     -------------       -------------

                                                                                     $   4,981,614       $   6,274,075
                                                                                     =============       =============

</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>


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

                                       LIABILITIES AND STOCKHOLDERS' (DEFECIT) EQUITY

                                                                                          June 30,          December 31,
                                                                                           2001                2000
                                                                                       -------------       -------------
                                                                                        (Unaudited)
<S>                                                                                     <C>                <C>

CURRENT LIABILITIES:
    Short-term note payable                                                             $    127,496       $     485,250
    Current portion of long-term debt                                                              -              81,175
    Current portion of capital lease obligations                                              65,349              71,848
    Accounts payable                                                                       1,414,322           1,369,958
    Notes payable-related party                                                              120,000                   -
    Accrued expenses                                                                         553,012             559,974
    Accrued advertising                                                                      262,844             365,000
    Accrued royalties payable                                                                173,992             105,127
    Net liabilities of discontinued operations                                                19,190                   -
                                                                                        ------------       -------------

              Total current liabilities                                                    2,736,205           3,038,332

DEFERRED GAIN ON SALE OF ASSET                                                               225,882             232,043

CAPITAL LEASE OBLIGATIONS, net of current portion                                          2,857,131           2,887,526
                                                                                        ------------       -------------

              Total liabilities                                                            5,819,218           6,157,901
                                                                                        ------------       -------------


STOCKHOLDERS' (DEFECIT) EQUITY (note 3):
    Common stock, $.01 par value; 100,000,000 shares authorized and 6,095,640 and
       5,745,640 shares outstanding at June 30, 2001 and December 31, 2000,
       respectively                                                                           60,956              57,456
    Additional paid-in capital                                                            10,341,949          10,320,949
    Accumulated deficit                                                                  (11,240,509)        (10,262,231)
                                                                                        ------------       -------------

              Net stockholders' (deficit) equity                                            (837,604)            116,174
                                                                                        ------------       -------------

Total Liabilities and Stockholders (Deficit) Equity                                     $  4,981,614       $   6,274,075
                                                                                        ============       =============
</TABLE>




     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>


                  DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                                                        Three months ended         Three months ended
                                                                           June 30, 2001              June 30, 2000
                                                                       ----------------------     ----------------------
                                                                             (Unaudited)                (Unaudited)

<S>                                                                    <C>                        <C>
PRODUCT SALES                                                          $      1,255,830           $      2,278,597
COST OF SALES                                                                  (678,182)                (1,414,563)
                                                                       ----------------           ----------------

       Gross Margin                                                             577,648                    864,034
                                                                       ----------------           ----------------

OPERATING COSTS AND EXPENSES:
    Selling expenses                                                            496,444                    780,849
    General and administrative                                                  478,358                    622,822
    Research and development                                                          -                     57,353
                                                                       ----------------           ----------------

       Total operating costs and expenses                                       974,802                  1,461,024
                                                                       ----------------           ----------------

          Operating loss from continuing operations                            (397,154)                  (596,990)
                                                                       ----------------           ----------------

OTHER INCOME (EXPENSE):
    Interest expense                                                           (125,311)                  (157,178)
    Equity in loss of affiliate (note 5)                                        (40,106)                         -
    Other income (expense)                                                      (55,165)                  (168,733)
                                                                       ----------------           ----------------

       Total other expense, net                                                (220,582)                  (325,911)
                                                                       ----------------           ----------------

          Loss from continuing operations before income tax benefit            (617,736)                  (922,901)
                                                                       ----------------           ----------------

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

          Loss from continuing operations                                      (617,736)                  (922,901)
                                                                       ----------------           ----------------

DISCONTINUED OPERATIONS:
    Income from operations of discontinued home storage and
       organization segment net of income tax                                         -                    110,223
                                                                       ----------------           ----------------

          Net loss                                                     $       (617,736)          $       (812,678)
                                                                       ================           ================

LOSS PER SHARE FROM CONTINUING OPERATIONS- BASIC AND DILUTED           $           (.11)          $           (.20)
                                                                       ================           ================

EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS- BASIC AND DILUTED     $              -           $            .03
                                                                       ================           ================

NET LOSS PER SHARE- BASIC AND DILUTED                                  $           (.11)          $           (.17)
                                                                       ================           ================

WEIGHTED AVERAGE SHARES-BASIC AND DILUTED                                     5,838,973                  4,707,459
                                                                       ================           ================
</TABLE>




     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

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

<TABLE>
<CAPTION>

                                                                         Six months ended           Six months ended
                                                                           June 30, 2001              June 30, 2000
                                                                       ------------------         ------------------
                                                                          (Unaudited)                (Unaudited)

<S>                                                                    <C>
PRODUCT SALES                                                          $      3,198,462           $      4,929,886
COST OF SALES                                                                (1,659,609)                (2,859,072)
                                                                       ----------------           ----------------

       Gross Margin                                                           1,538,853                  2,070,814
                                                                       ----------------           ----------------

OPERATING COSTS AND EXPENSES:
    Selling expenses                                                          1,096,235                  1,695,953
    General and administrative                                                1,054,847                  1,420,374
    Research and development                                                          -                    152,320
                                                                       ----------------           ----------------

       Total operating costs and expenses                                     2,151,082                  3,268,647
                                                                       ----------------           ----------------

          Operating loss from continuing operations                            (612,229)                (1,197,833)
                                                                       ----------------           ----------------

OTHER INCOME (EXPENSE):
    Interest expense                                                           (251,362)                  (292,398)
    Equity in loss of affiliate (note 5)                                        (59,582)                         -
    Other income (expense)                                                      (55,105)                  (167,156)
                                                                       ----------------           ----------------

       Total other expense, net                                                (366,049)                  (459,554)
                                                                       ----------------           ----------------

          Loss from continuing operations before income tax benefit            (978,278)                (1,657,387)

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

          Loss from continuing operations                                      (978,278)                (1,657,387)
                                                                       ----------------           ----------------

DISCONTINUED OPERATIONS:
    Income from operations of discontinued home storage and
       organization segment net of income tax                                         -                    335,918
                                                                       ----------------           ----------------

          Net loss                                                     $       (978,278)          $     (1,321,469)
                                                                       ================           ================

LOSS PER SHARE FROM CONTINUING OPERATIONS- BASIC AND DILUTED           $           (.17)          $           (.35)
                                                                       ================           ================

EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS- BASIC AND DILUTED     $              -           $            .07
                                                                       ================           ================

NET LOSS PER SHARE- BASIC AND DILUTED                                  $           (.17)          $           (.28)
                                                                       ================           ================

WEIGHTED AVERAGE SHARES - BASIC AND DILUTED                                   5,792,046                  4,707,459
                                                                       ================           ================

</TABLE>




     See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

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

                                                                                 Six months ended           Six months ended
                                                                                   June 30, 2001              June 30, 2000
                                                                               ----------------------     ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                (Unaudited)                (Unaudited)

<S>                                                                                 <C>                   <C>
   Net loss                                                                         $  (978,278)          $     (1,321,469)
   Net income from discontinued operations                                                    -                   (335,918)
   Adjustments to reconcile net loss to net cash used in operating
     activities:
       Depreciation and amortization                                                    246,705                    300,777
       Amortization of deferred loan costs                                               10,645                     12,774
       Amortization of deferred gain on sale of assets                                   (6,161)                    (6,160)
           Forgiveness of liquidated damages related to convertible debenture                 -                    (13,523)
       Non-cash interest expense on re-issuance of common stock shares                        -                    169,733
       Gain on sale of assets                                                           (16,334)                    (1,577)
       Provision for losses on accounts receivable                                      (43,061)                     8,073
       Changes in operating assets and liabilities:
               Trade accounts receivable                                                682,051                   (533,870)
               Accounts receivable-other                                               (154,965)                   (60,000)
               Inventories                                                              193,489                   (227,264)
               Prepaid expenses                                                          10,932                     38,864
               Other assets                                                              59,469                    (34,196)
               Accounts payable                                                          44,364                    538,040
               Accrued expenses                                                          17,538                        997
               Accrued advertising                                                     (102,156)                  (246,431)
               Accrued royalties                                                         68,865                      6,944
                                                                                    -----------           ----------------
            Net cash provided by (used in)  continuing operating activities              33,103                 (1,704,206)
            Net cash provided by discontinued operating activities                      198,063                    671,836
                                                                                    -----------           ----------------
                  Net cash provided by (used in) operating activities                   231,166                 (1,032,370)
                                                                                    -----------           ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from the sale of assets                                                   16,474                      2,600
  Purchase of property and equipment                                                     (3,371)                  (123,990)
                                                                                    -----------           ----------------
            Net cash provided by (used in) continuing investing activities               13,103                   (121,390)
            Net cash used in discontinued investing activities                                -                          -
                                                                                    -----------           ----------------
                  Net cash provided by (used in) investing activities                    13,103                   (121,390)
                                                                                    -----------           ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) on line of credit                                          (357,754)                    49,034
  Net payments on long-term debt                                                        (81,175)                   (41,250)
  Net principal payments on capital lease obligations                                   (36,894)                   (30,734)
  Proceeds from related party note payable                                              150,000                          -
  Payments on related party note payable                                                (30,000)
  Payment to retire convertible debenture                                                     -                 (1,500,000)
  Proceeds from the issuance of common stock related to private
      placement                                                                               -                  1,600,000
  Proceeds from common stock subscribed                                                       -                    700,000
  Proceeds from re-issuance of common stock                                                   -                    200,714
                                                                                    -----------           ----------------

           Net cash provided by (used in) continuing financing activities              (355,823)                   977,764
           Net cash provided by (used in) discontinued financing activities                   -                          -
                                                                                    -----------           ----------------

                  Net cash provided by (used in)  financing activities                 (355,823)                   977,764
                                                                                    -----------           ----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (111,554)                  (175,996)

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

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                      $    16,982           $         68,759
                                                                                    ===========           ================
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       7
<PAGE>

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

<TABLE>
<CAPTION>

                                                                               Six months ended          Six months ended
                                                                                  June 30, 2001             June 30, 2000
                                                                               -----------------         ------------------
                                                                                   (Unaudited)               (Unaudited)
<S>                                                                               <C>                       <C>

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
    Cash paid for interest                                                        $ 246,530                 $ 296,634

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
    Issuance of common stock pursuant to settlement agreement                        24,500                         -

    Building and equipment acquired under capital leases                                  -                     2,220

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

    Common stock subscription receivable                                                  -                    75,000


</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       8
<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 June
30,  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 six months  ended June 30, 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
         ------------------------------------------

Receivables sold with no recourse

         The Company has sold  portions of its trade  accounts  receivable  to a
financing  institution  with no  recourse.  The buyer  retains a portion  of the
amounts for which the receivables  were sold as reserves,  which are released to
the Company as payments are made by the Company's customers less a discount rate
of 1% of the gross face amount of each  account  purchased  if paid in the first
ten days and an  additional  .0556 of 1% per day  until the  account  is paid in
full.

Inventories

         Inventories,  consisting principally of telecommunication  headsets and
amplifiers  and  telephone  accessories,  flashlights,  and other  miscellaneous
products as of June 30, 2001 and December 31, 2000, respectively, are summarized
as follows:


                                                  June 30,        December 31,
                                                    2001             2000
                                               -----------        ------------

         Raw materials......................   $   279,338        $    423,667
         Work-in-Process....................        66,832              65,390
         Finished Goods.........................   711,393             761,995
                                               -----------        ------------

                                               $ 1,057,563        $  1,251,052
                                               ===========        ============




                                       9
<PAGE>
                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



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

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 six  months  ended June 30,
2001, and 2000,  warrants and options to purchase 787,750 and 766,750  potential
common shares, respectively,  are not included in the computation of diluted 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 June 30, 2001 and  December  31, 2000 was as
follows:

                                                 2001            2000
                                               ----------     -----------

             Goodwill                           $ 34,306        $ 34,306
             Accumulated amortization             34,306          25,729
                                               ----------     -----------
                                                $      -        $  8,577
                                               ==========     ===========

(3)      STOCKHOLDERS' EQUITY
         --------------------

         On June 7, 2001 the  Company  entered  into a  settlement  and  release
agreement  with  Grandur,  Inc.  ("Grandur").  As  consideration  for  Grandur's
execution and delivery of the agreement the Company  issued and  transferred  to
Grandur 350,000 shares of the Company's restricted common stock.

(4)      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>
                                                                    (Rounded)                             (Rounded)
                                                                THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                     JUNE 30,                             JUNE 30,
                                                         ---------------------------------     --------------------------------
REVENUES:                                                     2001              2000               2001              2000
-----------------------------------------------------    ---------------    --------------     --------------    --------------
<S>                                                          <C>               <C>                <C>               <C>

Telecommunication Headsets and Amplifiers and
     Telephone Accessories.......................            $1,130,000        $1,565,000         $2,844,000        $3,431,000
Flashlights......................................                84,000           517,000            285,000         1,105,000
Hardware/houseware...............................                42,000           197,000             69,000           394,000
                                                         ---------------    --------------     --------------    --------------

       Total.....................................            $1,256,000        $2,279,000         $3,198,000        $4,930,000
                                                         ===============    ==============     ==============    ==============
</TABLE>



                                       10
<PAGE>
                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(4)      BUSINESS SEGMENT INFORMATION (Continued)
         ---------------------------------------
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                                     JUNE 30,                              JUNE 30,
                                                         ---------------------------------     ---------------------------------
OPERATING LOSS:                                               2001              2000               2001               2000
-----------------------------------------------------    ---------------    --------------     --------------    ---------------
<S>                                                          <C>               <C>                <C>             <C>

Telecommunication Headsets and Amplifiers and
     Telephone Accessories.......................            $(264,000)        $(109,000)         $(328,000)      $  (246,000)
Flashlights......................................             (105,000)         (369,000)          (242,000)         (781,000)
Hardware/houseware...............................              (28,000)         (119,000)           (42,000)         (171,000)
                                                         ---------------    --------------     --------------    ---------------

       Total.....................................            $(397,000)        $(597,000)         $(612,000)      $(1,198,000)
                                                         ===============    ==============     ==============    ===============
</TABLE>
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                     JUNE 30,                             JUNE 30,
                                                         ---------------------------------     --------------------------------
DEPRECIATION AND AMORTIZATION (1):                            2001              2000               2001              2000
-----------------------------------------------------    ---------------    --------------     --------------    --------------
<S>                                                            <C>               <C>                <C>               <C>

Telecommunication Headsets and Amplifiers and
     Telephone Accessories.......................              $106,000          $104,000           $219,000          $207,000
Flashlights......................................                11,000            36,000             25,000            68,000
Hardware/houseware...............................                 1,000            15,000              2,000            26,000
                                                         ---------------    --------------     --------------    --------------

       Total.....................................              $118,000          $155,000           $246,000          $301,000
                                                         ===============    ==============     ==============    ==============
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                            JUNE 30,             DECEMBER 31,
ASSETS:                                                        2001                 2000
----------------------------------------------------    ---------------       -----------------
<S>                                                     <C>                   <C>

Telecommunication Headsets and Amplifiers and
   Telephone Accessories.........................       $     3,379,000       $       4,098,000
Flashlights......................................             1,025,000               1,111,000
Hardware/Houseware...............................               283,000                 554,000
Discontinued operations..........................                     -                 179,000
                                                        ---------------       -----------------
       Total assets for reportable segments......             4,687,000               5,942,000

Other assets.....................................                33,000                  92,000
Deferred loan costs and other assets not
   allocated to segments.........................               262,000                 240,000
                                                        ---------------       -----------------
       Consolidated total........................       $     4,982,000       $       6,274,000
                                                        ===============       =================
</TABLE>
<TABLE>
<CAPTION>


                                                                THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                     JUNE 30,                             JUNE 30,
                                                         ---------------------------------     --------------------------------
CAPITAL EXPENDITURES:                                         2001              2000               2001              2000
-----------------------------------------------------    ---------------    --------------     --------------    --------------
<S>                                                      <C>                  <C>              <C>                <C>

Telecommunication Headsets and
   Amplifiers and Telephone Accessories..........                     -       $    17,000      $     3,000        $     85,000

Flashlights......................................                     -             7,000                -              28,000

Hardware/Houseware...............................                     -             6,000                -              11,000

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

       Total.....................................        $            -       $    30,000      $     3,000        $    124,000
                                                         ==============       ===========      ===========        ============
</TABLE>



                                       11
<PAGE>
                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(4)      BUSINESS SEGMENT INFORMATION (Continued)
         ---------------------------------------

         Information  as to the Company's  operations in different  geographical
areas is as follows:
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                     JUNE 30,                             JUNE 30,
                                                         ---------------------------------     --------------------------------
REVENUES:                                                     2001              2000               2001              2000
-----------------------------------------------------    ---------------    --------------     --------------    --------------

<S>                                                          <C>               <C>                <C>               <C>
United States....................................            $1,235,000        $2,172,000         $3,169,000        $4,715,000
Other (1)........................................                21,000           107,000             29,000           215,000
                                                             ----------        ----------         ----------        ----------

       Total.....................................            $1,256,000        $2,279,000         $3,198,000        $4,930,000
                                                             ==========        ==========         ==========        ==========
</TABLE>

(1)      Includes Canada, Europe and other miscellaneous.

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                     JUNE 30,                             JUNE 30,
                                                         ---------------------------------     --------------------------------
OPERATING LOSS:                                               2001              2000               2001              2000
-----------------------------------------------------    ---------------    --------------     --------------    --------------

<S>                                                           <C>               <C>                <C>             <C>
United States....................................             (397,000)         (597,000)          (612,000)       (1,198,000)
                                                         ===============    ==============     ==============    ==============
</TABLE>

                                               JUNE 30, 2001        DECEMBER 31,
ASSETS:                                                                  2000
------------------------------------------     ----------------    -------------
United States..........................        $  4,724,000        $  5,978,000
Asia...................................             257,000             296,000
                                               ----------------    -------------

       Total...........................        $  4,981,000        $  6,274,000
                                               ================    =============

(5)      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.


(6)      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 or additional sales of the Company's debt or equity securities
to finance its ongoing  operations.  Additionally,  the Company has entered into

                                       12
<PAGE>
                 DYNATEC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(6)      GOING CONCERN-(continued)
         ------------------------

interim financing transactions, including $120,000 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 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.  On
August 14, 2001 due to cash flow  constraints  the Company reduced its workforce
by  approximately  60%.  This  reduction  in force  will  adversely  affect  the
Company's  ability 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.

(7)      SUBSEQUENT EVENTS
         -----------------

         On July 12, 2001 the Company executed a convertible debenture agreement
(the  "Convertible  Debenture").  Under the convertible  debenture,  the Company
issued a  convertible  debenture in the aggregate  principal  amount of $250,000
plus interest at a rate per annum equal to six percent, with interest being paid
quarterly  as of  January 1,  April 1, July 1, and  October 1 of each year.  The
principal  amount of the debenture is  convertible at any time into common stock
in the Company at a price of $0.07 per share, which was the closing bid price of
the  Company's  common stock on July 12, 2001,  as quoted on the OTC  Electronic
Bulletin  Board.  If after three years the debenture has not been converted into
shares of the Company's common stock or redeemed or called for redemption by the
Company  the  debenture  shall  automatically  convert  into  a  two-year  fully
amortizing term loan.



                                       13
<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 and  six-month
periods ended June 30, 2001 and 2000, respectively. As supplemental information,
the table also segregates the Company's revenues by product line type.

<TABLE>
<CAPTION>

                                                (Rounded)                            (Rounded)
                                        For the Three Months Ended           For the Six Months Ended
                                    ----------------------------------- ------------------------------------
                                                                % OF                                 % OF
                                                                CHG                                   CHG
                                                                FROM                                 FROM
                                        JUNE 30,     JUNE 30,   2000 TO     JUNE 30,    JUNE 30,     2000 TO
                                          2001        2000      2001          2001        2000       2001
                                        --------    ---------   -------     --------    --------     --------
<S>                                   <C>         <C>          <C>        <C>         <C>          <C>

Unaudited Statement of Operations
Data:
       Product sales.............     $1,256,000  $2,279,000   (44.9)%    $3,198,000  $ 4,930,000    (35.1)%
       Cost of sales.............        678,000   1,415,000    (52.1)     1,660,000    2,859,000    (41.9)
                                      ----------  ----------              ----------  -----------
               Gross margin......        578,000     864,000    (33.1)     1,538,000    2,071,000     (25.7)
                                      ----------  ----------              ----------  -----------

Operating Costs and Expenses:
       Selling expenses..........        497,000     781,000    (36.4)     1,096,000    1,696,000     (35.4)
       General and administrative        478,000     623,000    (23.3)     1,055,000    1,421,000     (25.8)
       Research and development..              -      57,000   (100.0)             -      152,000    (100.0)
                                      ----------  ----------              ----------  -----------

          Total operating costs and
          Expenses................       975,000   1,461,000    (33.3)     2,151,000    3,269,000     (34.2)
                                      ----------  ----------              ----------  -----------

Other Income (Expense), net:
       Interest expense..........       (125,000)   (157,000)   (20.4)      (251,000)    (292,000)    (14.0)
       Equity in loss of affiliate       (40,000)          -        -        (59,000)           -         -
       Other income (expense)....        (56,000)   (169,000)   (66.9)       (55,000)    (167,000)    (67.1)
                                      ----------  ----------              ----------  -----------

         Total other income
        (expense)................       (221,000)   (326,000)   (32.2)      (365,000)    (459,000)    (20.5)

       Loss from continuing
       operations................       (618,000)   (923,000)   (33.0)      (978,000)  (1,657,000)    (41.0)

Discontinued Operations:
    Income from discontinued
    operations                                 -     110,000   (100.0)             -      336,000    (100.0)
                                      ----------  ----------              ----------  -----------

       Net loss..................     $ (618,000) $ (813,000)   (24.0)%   $ (978,000  $(1,321,000)    (26.0)%
                                      ==========  ==========              ==========  ===========

Unaudited Supplemental Information:

Revenue by product line type:
    Telecommunication headsets and
          amplifiers and telephone
          accessories.............    $1,130,000  $1,565,000    (27.8)%   $2,844,000  $ 3,431,000     (17.1)%
     Flashlights..................        84,000     517,000    (83.8)       285,000    1,105,000     (74.2)
    Hardware/houseware............        42,000     197,000    (78.7)        69,000      394,000     (82.5)
                                      ----------  ----------              ----------  -----------

          Total product sales.....    $1,256,000  $2,279,000    (44.9)%   $3,198,000  $ 4,930,000     (35.1)%
                                      ==========  ==========              ==========  ===========
</TABLE>


The following are explanations of significant  period-to-period  changes for the
three months ended June 30, 2001 and 2000:

Revenues

         Total Product Sales.  Total product sales  decreased by $1,023,000,  or
44.9%,  from  $2,279,000 to $1,256,000  for the three months ended June 30, 2001
compared to the three months ended June 30, 2000.

         Telecommunication  Headsets and Amplifiers  and Telephone  Accessories.
Sales of  telecommunication  headsets and amplifiers  and telephone  accessories
decreased $435,000, or 27.8%, from $1,565,000 to $1,130,000 for the three months
ended June 30,  2001  compared to the three  months  ended June 30,  2000.  This
decrease is primarily  related to decreases in sales of the Company's  telephone
headsets and  amplifiers of $217,000,  shoulder  rest  products of $71,000,  and
$147,000 in other telephone accessory  products.  Overall gross margins for this
product  line  decreased to 52.7% from 53.2% for the three months ended June 30,
2001  compared to the three months ended June 30, 2000, as a result of the sales
mix.

         Flashlights.  Flashlight  revenues decreased  $433,000,  or 83.8%, from
$517,000 to $84,000  for the three  months  ended June 30, 2001  compared to the
three months ended June 30, 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 0.7% to 19.0%
for the three  months ended June 30, 2001 when  compared to June 30, 2000,  as a
result of a decrease in material  costs of the  products  due to a change in the
manufacturer.

         Hardware/houseware.  Hardware/houseware revenues decreased $155,000, or
78.7%,  from  $197,000  to $42,000  for the three  months  ended  June 30,  2001
compared to the three  months  ended June 30,  2000.  The  decrease is primarily
attributable to the loss of the Company's main customer in the doorstops product



                                       14
<PAGE>

line as a result of an increase in the Company's pricing.  Overall gross margins
for products in this category increased from 33.7% to 43.8% for the three months
ended June 30, 2001  compared to June 30,  2000,  as a result of the increase in
pricing.


Operating Costs and Expenses

         Selling Expenses.  Selling expenses decreased $284,000,  or 36.4%, from
$781,000 to $497,000 for the three  months  ended June 30, 2001  compared to the
three months ended June 30, 2000.  This decrease is due in part to a decrease in
salaries  for sales  personnel  of $107,000  due to a reduction  in force of the
sales  staff,  as  well as  decreases  in  commissions  paid  to  outside  sales
representatives of $63,000, freight expenses of $57,000, travel related expenses
of $17,000, consulting fees of $16,000 and royalties of $12,000.

         General  and  Administrative   Expenses.   General  and  administrative
expenses decreased  $145,000,  or 23.3%, from $623,000 to $478,000 for the three
months ended June 30, 2001 compared to the three months ended June 30, 2000. The
decrease in general and  administrative  expenses was  primarily the result of a
decrease  in legal and  accounting  fees of  $75,000,  as well as a decrease  of
$30,000 in salaries  paid as a result of the Company's  reductions  in force,  a
decrease in office and computer supplies of $24,000, consulting fees of $18,000,
employee  recruitment and education expenses of $7,000 and a decrease of $16,000
in travel related  expenses.  These decreases were offset in part by an increase
in bank charges of $13,000 and bad debt expense of $12,000.

         Research  and  Development.   Research  and  development  decreased  by
$57,000,  or 100.0%,  from  $57,000 to $-0- for the three  months ended June 30,
2001  compared  to the three  months  ended  June 30,  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  $486,000,  or 33.3%,  from  $1,461,000  to $975,000 for the three
months ended June 30, 2001 compared to the three months ended June 30, 2000, for
the reasons discussed above.

         Interest Expense.  Interest expense decreased  $32,000,  or 20.4%, from
$157,000 to $125,000 for the three  months  ended June 30, 2001  compared to the
three months ended June 30, 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 5 to  the  accompanying  condensed  consolidated
financial statements).

         Equity in loss of affiliate.  Equity in loss of affiliate  increased by
$40,000 from -0- to $(40,000)  for the three months ended June 30, 2001 compared
to the three months ended June 30, 2000.  This decrease is  attributable  to the
Company's  joint  venture  with  Sarkat  International,  LLC (see  note 5 to the
accompanying condensed consolidated financial statements).

         Other income  (expense).  Other income (expense)  decreased by $113,000
from  $(169,000)  to $(56,000) for the three months ended June 30, 2001 compared
to the three  months  ended June 30,  2000.  The increase is due to the one time
non-cash  expense of $169,000 related to the April 4, 2000 recognition as having
been previously  issued of 208,000 shares of the Company's  common stock as well
as an increase in the gain on sale of assets of $16,000.  These  increases  were
offset  in  part  by  $70,000  of  accrued  severance  expenses  related  to the
termination of the Company's former Sr. Vice President of Sales.

         Discontinued operations.  Income from discontinued operations decreased
$110,000  from $110,000 to -0- for the three months ended June 30, 2001 compared
to the three months ended June 30, 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 $195,000,  or 24.0%,  from $813,000
to  $618,000  for the three  months  ended June 30,  2001  compared to the three
months ended June 30, 2000 due to the factors described above.

The following are explanations of significant  period-to-period  changes for the
six months ended June 30, 2001 and 2000:

                                       15
<PAGE>

Revenues

         Total Product  Sales.  Total  product sales  decreased by $1,732,000 or
35.1% from  $4,930,000  to  $3,198,000  for the six months  ended June 30,  2001
compared to the six months ended June 30, 2000.

         Telecommunication  Headsets and Amplifiers  and Telephone  Accessories.
Sales of  telecommunication  headsets and amplifiers  and telephone  accessories
decreased  $587,000,  or 17.1%, from $3,431,000 to $2,844,000 for the six months
ended June 30,  2001  compared  to the six  months  ended  June 30,  2000.  This
decrease is primarily  related to decreases in sales of the  Company's  shoulder
rest products of $311,000,  and telephone  headsets and  amplifiers of $379,000.
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 $103,000 in the  Company's  Twisstop and other  telephone  accessory
products.  Overall gross  margins for this product line  decreased to 53.3% from
55.5% for the six months ended June 30, 2001  compared to the three months ended
June 30, 2000, as a result of the sales mix.

         Flashlights.  Flashlight  revenues decreased  $820,000,  or 74.2%, from
$1,105,000  to $285,000 for the six months  ended June 30, 2001  compared to the
six months ended June 30, 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  decreased from 8.2% to 7.5%
for the six months  ended June 30,  2001 when  compared to June 30,  2000,  as a
result of an  increase  in  overseas  freight  charges to  expedite  delivery of
product from the Company's foreign supplier.

         Hardware/houseware.  Hardware/houseware revenues decreased $325,000, or
82.5%,  from $394,000 to $69,000 for the six months ended June 30, 2001 compared
to the six months ended June 30, 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 19.5% to 44.7% for the six months ended
June 30, 2001 when  compared to June 30,  2000,  as a result of the  increase in
pricing.


Operating Costs and Expenses

         Selling Expenses.  Selling expenses decreased $600,000,  or 35.4%, from
$1,696,000 to $1,096,000  for the six months ended June 30, 2001 compared to the
six months  ended June 30, 2000.  This  decrease is due in part to a decrease in
salaries  for sales  personnel  of $118,000  due to a reduction  in force of the
sales  staff,  as  well as  decreases  in  commissions  paid  to  outside  sales
representatives  of  $128,000,  freight  expenses of  $103,000,  travel  related
expenses  of $67,000,  consulting  fees of  $66,000,  product  samples and sales
literature of $64,000, royalties of $32,000, and trade show expenses of $22,000.

         General  and  Administrative   Expenses.   General  and  administrative
expenses decreased $366,000, or 25.8%, from $1,421,000 to $1,055,000 for the six
months ended June 30, 2001  compared to the six months ended June 30, 2000.  The
decrease in general and  administrative  expenses was  primarily the result of a
decrease  in legal and  accounting  fees of  $129,000,  as well as a decrease of
$88,000 in salaries  paid as a result of the Company's  reductions  in force,  a
decrease in office and computer supplies of $71,000, consulting fees of $59,000,
employee recruitment and education expenses of $28,000 and a decrease of $35,000
in travel related  expenses.  These decreases were offset in part by an increase
in bank charges of $27,000 and bad debt expense of $17,000.

         Research  and  Development.   Research  and  development  decreased  by
$152,000,  or 100.0%,  from  $152,000 to $-0- for the six months  ended June 30,
2001 compared to the six months ended June 30, 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  $1,118,000,  or 34.2%,  from  $3,269,000 to $2,151,000 for the six
months ended June 30, 2001  compared to the six months ended June 30, 2000,  for
the reasons discussed above.

         Interest Expense.  Interest expense decreased  $41,000,  or 14.0%, from
$292,000 to $251,000 for the six months ended June 30, 2001  compared to the six
months  ended  June 30,  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 5 to  the  accompanying  condensed  consolidated
financial statements).

                                       16
<PAGE>

         Equity in loss of affiliate.  Equity in loss of affiliate  increased by
$59,000 from -0- to $(59,000) for the six months ended June 30, 2001 compared to
the six  months  ended June 30,  2000.  This  decrease  is  attributable  to the
Company's  joint  venture  with  Sarkat  International,  LLC (see  note 5 to the
accompanying condensed consolidated financial statements).

         Other income (expense). Other income (expense) decreased $112,000, from
$(167,000)  to $(55,000)  for the six months ended June 30, 2001 compared to the
six months  ended June 30, 2000.  The  decrease is due to the one time  non-cash
expense of  $169,000  related to the April 4, 2000  recognition  as having  been
previously issued of 208,000 shares of the Company's common stock. As well as an
increase in the gain on sale of assets of $16,000.  These  decreases were offset
in part by $70,000 of accrued  severance  expenses related to the termination of
the Company's former Sr. Vice President of Sales.

         Net Loss. The net loss decreased by $343,000, or 26.0%, from $1,321,000
to $978,000  for the six months  ended June 30, 2001  compared to the six months
ended June 30, 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 a secured revolving
credit  facility.  On June 5, 2001 the Company entered into an Account  Purchase
Agreement  with a national  financial  institution  to sell and assign its trade
accounts  receivable.  (see note 2 to the  accompanying  condensed  consolidated
financial  statements).  The proceeds of these sales were used  primarily to pay
off the Company's secured revolving credit facility.

         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.  As of August 2, 2001,
the Company owes Sarkat $120,000 in principal and $5,093 in interest. Sarkat has
been paid $40,564 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.

         June 30, 2001 Compared to December 31, 2000

         As of June 30,  2001 the  Company  had  liquid  assets  (cash  and cash
equivalents and trade accounts  receivable) of $184,000, a decrease of 80.3%, or
$751,000,  from  December  31,  2000 when  liquid  assets  were  $935,000.  Cash
decreased  $112,000,  or 87.5%,  to $16,000 at June 30,  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
decreased  $639,000,  or 79.3%,  to $167,000  at June 30, 2001 from  $806,000 at
December 31, 2000.  This decrease is primarily the result of the Company's  sale
of its trade accounts  receivable to a financial  institution (see note 2 to the
accompanying condensed consolidated financial statements).

         Current assets  decreased by $979,000,  or 39.7%, to $1,487,000 at June
30, 2001 from  $2,466,000 at December 31, 2000.  This decrease was primarily the
result of a  decrease  in cash of  $112,000,  discussed  above,  a  decrease  in
inventory by $193,000 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  accounts  receivable-other  of
$155,000 as a result of reserves  held by the financial  institution  for monies
not yet collected against trade accounts  receivable  purchased by the financial
institution.



                                       17
<PAGE>

         Long-term assets decreased $313,000, or 8.2%, to $3,495,000 at June 30,
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  decreased by $302,000,  or 9.9%, to $2,736,000 at
June 30, 2001 from  $3,038,000 at December 31, 2000. This decrease was primarily
due to a decrease of $358,000 in notes payable-short term and $81,000 in current
portion of long-term  debt as a result of the pay-off of the  Company's  secured
revolving  credit  facility,  as well as a decrease  in accrued  advertising  of
$102,000.  These  decreases  were  offset  in  part  by  an  increase  in  notes
payable-related  party of $120,000 as a result of the  Company's  February  2001
agreement with Sarkat,  an increase in accrued  royalties of $68,000,  and trade
accounts payable of $44,000.

         The Company's working capital deficit increased by $677,000, or 118.4%,
to  ($1,249,000)  at June 30, 2001 from ($572,000) at December 31, 2000, for the
reasons described above.

         The Company  provided  net cash of $33,000  from  continuing  operating
activities  during  the six  months  ended  June 30,  2001,  primarily  from the
decrease in accounts  receivable-trade  and the  decrease in  inventory  levels,
offset in part by the net loss  incurred  during the  period  and a decrease  in
accrued advertising.

         The Company provided net cash of $13,000 in investing activities during
the six months ended June 30,  2000,  primarily  from the net proceeds  from the
sale of  assets,  offset  in part  by  capital  expenditures  for  property  and
equipment.

         The Company used net cash of $356,000 from financing  activities during
the six months  ended June 30, 2001  primarily  as a result of the net  payments
made  on the  Company's  line  of  credit,  long-term  debt  and  capital  lease
obligations during the period, offset in part by proceeds from the related party
note payable.

         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 $120,000 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 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.  On August 14, 2001 due to
cash flow  constraints the Company reduced its workforce by  approximately  60%.
This  reduction in force will  adversely  affect the  Company's  ability 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.

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

                                       18
<PAGE>

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.



                                       19
<PAGE>

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings
--------------------------

         In July 2001,  Lloyd M. Taggart  filed suit against the Company in Utah
state court for alleged  breach of an employment  agreement  between the Company
and Mr.  Taggart.  Mr. Taggart seeks money damages from the Company in excess of
$380,000 and other  unspecified  damages and remedies.  Mr. Taggart alleges that
his employment was  terminated by the Company  without cause,  as defined in his
employment  agreement.  The Company has  answered the  Complaint  and intends to
vigorously defend the lawsuit.

         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 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 WAC Action on August 29, 2000
and on October 19, 2000. The Company's complaint,  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  also
includes claims for damages  stemming from WAC's alleged patent misuse,  failure
of consideration,  unjust enrichment and additional declaratory relief. On March
27, 2001, WAC filed a counterclaim  against the Company. The 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") alleging
that  Nordic  is  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 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

                                       20
<PAGE>

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.  During the period ended June
30,  2001,  Grandur  and the Company  settled  this  litigation,  which has been
dismissed by the court.

         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. During the period ended June 30,
2001, the Company  entered into a settlement  agreement with Alpha Tech pursuant
to which the Alpha Tech litigation will be dismissed.

         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
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.
During the period  ended June 30,  2001,  the Company  entered into a settlement
agreement with Mr. Wood pursuant to which his lawsuit will be dismissed.

         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.  During the period ended June 30, 2001,  the
Company  entered into a settlement  agreement  with Alpha Tech pursuant to which
the Alpha Tech litigation will be dismissed.

                                       21
<PAGE>

         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.

Item 2. Changes in Securities and Use of Proceeds
-------------------------------------------------

         Item 2(c). Recent Sales of Unregistered Securities

         On May 29, 2001 the Company issued a warrant to purchase 200,000 shares
of its  restricted  common  stock  at an  exercise  price  of  $.07 as part of a
settlement  of a lawsuit  brought by its  former  Chairman  and Chief  Executive
Officer.  The  warrant,  and any shares of common stock issued upon its exercise
were issued without  registration  under the Securities Act of 1933, as amended,
in reliance on an exemption from the registration requirement under section 4(2)
of the  Securities  Act.  The warrant and any shares of common stock issued upon
its  exercise  bear  and  will  bear a  legend  restricting  transfers  of  such
securities  except upon  compliance  with the  registration  requirements of the
Securities Act or an exemption there from.

         On June 7, 2001 the Company  issued  350,000  shares of its  restricted
common stock as part of a settlement of a lawsuit brought by a product supplier.
The warrant  shares of common stock were issued without  registration  under the
Securities  Act of 1933,  as  amended,  in  reliance  on an  exemption  from the
registration  requirement  under  section  4(2)  of  the  Securities  Act .  The
certificates  representing such common stock bear a legend restricting transfers
of such securities except upon compliance with the registration  requirements of
the Securities Act or an exemption  there from.  Item 6. Exhibits and Reports on
Form 8-K

                                       22
<PAGE>

(a)    Exhibits

         No.      Description
         --------------------

         10.1     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.)

         10.2     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).

         10.3     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.)

         10.4     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.)

         10.5     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.)

         10.6     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).

         10.7     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).

         10.8     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).

         10.9     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)

         10.10    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


                                       23
<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.                    August 20, 2001
---------------------------------                    ---------------
Frederick W. Volcansek, Sr.                              Date
Chairman & CEO



  /s/ Mark W. Sperry                                 August 20, 2001
--------------------                                 ---------------
Mark W. Sperry                                           Date
Vice President & Chief Accounting Officer




                                       24
<PAGE>