UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

          [X]    QUARTERLY REPORT UNDER SECTION 13 0R 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       For the Quarter Ended May 31, 2000

                                       OR

          [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANCE ACT OF 1934

        For the transition period from               to
                                       -------------    ----------------

                         Commission File Number 0-22969

                                 Paladyne Corp.
                 (Name of Small Business Issuer in its charter)

                    Delaware                         59-3562953
          (State or other jurisdiction of         (I.R.S. Employer
          incorporation or organization)          Identification No.)


          610 Crescent Executive Court, Suite 124, Lake Mary, FL 32746
                    (Address of Principal Executive Offices)

                                  (407)333-2488
                           (Issuer's Telephone Number)

                                       N/A

              (Former name, former address and former fiscal year,
                          if changed since last report)


          Checked whether the issuer (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                    Yes  X         No
                       ----          ----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

          Class                                        Outstanding as of
                                                         June 1, 2000
Common Stock, $.001 PAR VALUE                              8,453,390

Transitional Small Business Disclosure Format (check one):  Yes     No  X
                                                               ----   ----

                                       1
<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

          PART I.   FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements                         3

          Condensed Consolidated Balance Sheet - May 31, 2000                 4

          Condensed Consolidated Statements of Operations -
          three months ended May 31, 2000 and 1999                            5

          Condensed Consolidated Statements of Operations -
          nine months ended May 31, 2000 and 1999                             6

          Condensed Consolidated Statements of Cash Flows -
          nine months ended May 31, 2000 and 1999                             7

          Notes to Condensed Consolidated Financial Statements                8

Item 2.   Management's Discussion and Analysis
          and Results of Operations                                          11


          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                  15

Item 2    Changes in Securities and Use of Proceeds                          15

Item 6.   Exhibits and Reports                                               15

          SIGNATURES                                                         16


                                       2
<PAGE>


PART I.

ITEM 1.   FINANCIAL STATEMENTS

The following unaudited Condensed Consolidated Financial Statements for the
three and nine months ended May 31, 2000 and 1999 have been prepared by Paladyne
Corp., a Delaware corporation. Effective March 5, 1999, Synaptx Worldwide, Inc.,
a Utah Corp., merged with and into Paladyne Corp., in a migratory merger, and
Paladyne Corp. is the successor registrant pursuant to Rule 12g-3 under the
Securities Exchange Act of 1934. The financial statements in this report are of
Synaptx Worldwide Inc., for all periods through the date of the migratory
merger, and of Paladyne Corp. since that date.


                                       3
<PAGE>


PALADNYE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

                                             MAY 31, 2000         AUG 31, 1999
                                             (UNAUDITED)
                                           ---------------       ---------------
ASSETS
Current Assets:
     Cash                                   $    663,986           $    ---
     Short term investments                      484,508                ---
     Accounts receivable (net of
       allowance for doubtful accounts
       of $16,763 and $37,736)                 1,266,455              392,933
     Prepaid expenses and deposits                   867               32,641
                                           ---------------       ---------------
          Total Current Assets                 2,415,816              425,574

Property and equipment                           511,061              429,420
Less accumulated depreciation                   (355,722)            (301,035)
                                           ---------------       ---------------
     Net Property and Equipment                  155,339              128,385

Costs in excess of net assets acquired            88,497               77,367
Capitalized Software Development Costs           178,268                ---
Other assets                                      52,146               45,669
                                           ---------------       ---------------
Total Assets                                $  2,890,066           $  676,995
                                           ---------------       ---------------
                                           ---------------       ---------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable                       $    839,983           $  330,516
     Accrued expenses and taxes                  221,538              278,137
     Notes payable                                 ---                243,600
     Deferred revenue                              ---                 95,700
                                           ---------------       ---------------
          Total Current Liabilities            1,061,521              947,953

Note Payable to Stockholder                        ---                150,000
                                           ---------------       ---------------
Total Liabilities                              1,061,521            1,097,953

Stockholders' equity (deficit)
     Cumulative, convertible preferred stock;
      $.001 par value; 10,000,000 shares
      authorized, 137,143 issued and outstanding     137                 137
     Common stock; $.001 par value; 25,000,000
      shares authorized, 8,453,390 and
      6,782,229 issued and outstanding             8,453                6,782
     Additional paid in capital                6,926,967            4,766,419
     Accumulated deficit                      (5,107,012)          (5,194,296)
                                           ---------------       ---------------
     Total stockholders' equity (deficit)      1,828,545             (420,958)
                                           ---------------       ---------------
     Total liabilities and stockholders'
       equity                               $  2,890,066           $  676,995
                                           ---------------       ---------------

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


                                       4
<PAGE>


PALADYNE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 31, 2000 AND MAY 31, 1999


                                                2000                  1999
                                            (UNAUDITED)           (UNAUDITED)
                                           ---------------       ---------------
Total Revenues                                 1,581,445              775,463

Cost of Revenues                                 984,022              792,171
                                           ---------------       ---------------
Gross Profit(Loss)                               597,423              (16,708)

Selling, general and administrative expenses     553,049              352,030
Depreciation and amortization                     36,728               23,160
                                           ---------------       ---------------
Income(Loss) From Operations                       7,646             (391,898)

Other expense:
     Interest expense                              4,950               25,412
                                           ---------------       ---------------
Net Income(loss) from Continuing Operations        2,696             (417,310)

Discontinued Operations
     Loss from operations
     of sales rep subsidiaries                     ---               (829,437)

     Gain on disposal                              ---                 63,501
                                           ---------------       ---------------
     Loss from Discontinued Operations             ---               (765,936)
                                           ---------------       ---------------
Net Income(Loss)                                   2,696           (1,183,246)

Preferred Stock Dividends                       ( 10,200)            ( 10,200)
                                           ---------------       ---------------
Net loss applicable to common stockholders   $    (7,504)         $(1,193,446)
                                           ---------------       ---------------
                                           ---------------       ---------------
Weighted average shares outstanding:
     Basic                                     8,404,334            6,657,556
     Diluted                                   8,404,334            6,657,556

Loss per share
     Basic                                   $    ---             $      (.18)
     Diluted                                 $    ---             $      (.18)


                                       5
<PAGE>


PALADYNE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MAY 31, 2000 AND MAY 31, 1999


                                                 2000                 1999
                                             (UNAUDITED)          (UNAUDITED)
                                           ---------------       ---------------
Total Revenues                               $ 3,828,405          $ 2,860,381

Cost of Revenues                               2,202,820            2,403,955
                                           ---------------       ---------------
Gross Profit                                   1,625,585              456,426

Selling, general and administrative expenses   1,438,330              968,391
Depreciation and amortization                     75,553               67,320
                                           ---------------       ---------------
Income(Loss) From Operations                     111,702            ( 579,285)

Other expense:
     Interest expense                             24,418               49,196
                                           ---------------       ---------------
Net Income(Loss) from Continuing Operations       87,284             (628,481)

Discontinued Operations
     Loss from operations
     of sales rep subsidiaries                     ---               (682,614)

     Gain on disposal                              ---                 63,501
                                           ---------------       ---------------
     Loss from discontinued operations             ---               (619,113)
                                           ---------------       ---------------
Net Income (Loss)                                 87,284           (1,247,594)

Preferred Stock Dividends                        (30,600)            ( 30,600)
                                           ---------------       ---------------
Net Income (Loss) applicable to
  common stockholders                        $    56,684          $(1,278,194)
                                           ---------------       ---------------
                                           ---------------       ---------------
Weighted average shares outstanding
     Basic                                     7,499,172            6,526,481
     Diluted                                   9,446,679            6,526,481

 Earnings(Loss) per share
     Basic                                   $       .01          $     ( .20)
     Diluted                                 $       .01          $     ( .20)


                                       6
<PAGE>


PALADYNE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 2000 AND MAY 31, 1999


                                                  2000                  1999
                                              (UNAUDITED)          (UNAUDITED)

Net cash used in operating activities         $  (529,907)        $ ( 517,080)

Cash flows from investing activities
     Purchase of short term investments          (484,508)              ---
     Additions to property, plant & equipment     (81,641)           ( 77,635)
     Cash acquired in business acquisition
       and disposal, net                             --                99,078
     Reductions in (additions to) other assets     (6,477)             76,669
                                              -------------      --------------
Net cash provided by (used in) investing
  activities                                     (572,626)             98,112

Cash flows from financing activities

     Repayments of bank lines of credit          (243,600)           ( 41,899)
     Repayments of long-term debt                (150,000)           (115,257)
     Additions/(Reductions) in short-term debt       --                66,438
     Sale of common stock                       2,160,119             383,154
                                              -------------      --------------
Net cash provided by financing activities       1,766,519             292,436

Net increase(decrease) in cash                    663,986            (126,532)

Cash at beginning of period                          --               126,532
                                              -------------      --------------
Cash at end of period                         $   663,986         $     ---
                                              -------------      --------------
                                              -------------      --------------
Supplemental Cash Flow Information
     Cash paid for interest                   $    24,418         $    52,500
     Issuance of common stock as payment
       of debt                                     99,400               ---
     Accrual of preferred stock dividend           98,600               ---


                                       7
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL SATATEMENTS
UNAUDITED

NOTE 1.   BASIS OF PRESENTATION

The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which, in the opinion of management, are necessary for a fair
statement of results for this interim period. The accompanying financial
statements include estimated amounts and disclosures based on management's
assumptions about future events. Actual results may differ from those estimates.
The results of operations for the interim periods are not necessarily indicative
of the results to be expected for the full year.

The condensed consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make information presented not misleading.

These financial statements should be read in conjunction with the financial
statements included in the Company's Form 10-KSB for the fiscal year ended
August 31, 1999, and the Company's Form 10-QSB for the first quarter ended
November 30, 1999 and second quarter ended February 29, 2000 as filed with the
Securities and Exchange Commission and available under the EDGAR reporting
system or from the Company.

The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. As with any new venture, concerns must be considered
in light of the normal problems, expenses and complications encountered by
entrance into established markets and the competitive environment in which the
Company operates. The financial statements do not include, nor does management
feel it necessary, any adjustments to reflect any possible future effects on the
recoverablilty and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.

The Company recognizes revenue at point at which the product is delivered to the
customer, for software, and for services when theses services are performed, not
necessarily when it is billed or collected. The contractual relationship with
its clients dictates the recognition of revenue by the Company. The Company
classifies any revenue billed but not yet earned as deferred revenue on its
balance sheet.

During Fiscal Year 1999, the Company changed its strategy from one of acquiring
and growing mainly distribution companies to one of building upon internal
strengths and acquiring organizations focused on developing technology that
enables the rapid development of high data integrity databases within the
customer relationship management segment. Customer relationship management in
the context of what the Company does, is broadly defined as processes that
enable companies to identify, acquire, and maintain desirable customers. This
shift is a result of what management feels is greater opportunity and a greater
opportunity to achieve profitable operations on a long-term basis. In pursuit of
this shift in strategy, the Company has discontinued its focus on manufacturer's
representative firms. The Company has either closed or sold the five firms of
this type and disclosed losses from disposal of these operations in the August
31, 1999 10-KSB. In addition, the Company acquired Bradas in February, 1999 as
part of its strategic plan to enter into the above mentioned markets. Bradas was
a small software development company located in Virginia. Bradas was acquired as
an operating division of Synaptx, which became Paladyne on April 1, 1999.


                                       8
<PAGE>


NOTE 2.   PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of the
Company. The Company had no active subsidiaries since September 1, 1999.

NOTE 3.   CAPITAL STOCK

On August 19, 1999 the Board of Directors authorized a private placement of up
to $400,000 priced at $0.50 per unit, with a unit consisting of one share of the
Company's common stock and a callable stock warrant to purchase the Company's
common stock at $1.00 per share but callable at $0.05 per share if the closing
trading price of the Company's common stock closes at or above $2.00 per share
for sixty consecutive trading days when 25,000 shares trade. The period of this
placement extended through September 30, 1999. This offering resulted in
proceeds of $125,000, for which 250,000 units were issued, through August 31,
1999, and an additional $286,000 and 604,000 units subsequent to year-end 1999,
for a total of $411,000 and 854,000 units being issued in total. On January 21,
2000 the Board of Directors authorized a private placement of up to 500,000
units priced at $2.375 per unit, with a unit consisting of one share of the
Company's common stock and a callable stock warrant to purchase the Company's
common stock at $3.00 per share but callable at $0.05 per share if the closing
trading price of the Company's common stock closes at or above $6.00 per share
for 20 consecutive trading days. Total proceeds received from this placement as
of May 31, 2000 were $1,697,751 net of offering expenses of $85,130. This
resulted in the issuance of 751,129 shares of common stock and the same number
of warrants.

The holders of the Company's preferred stock are entitled to receive, out of the
net profits of the Company, annual dividends at the rate of $.2975 per share. If
the net profits of the Company are not sufficient to pay the preferred dividend,
then any unpaid portion of the dividend will be included in accrued expenses.
The Company accrued the cumulative preferred stock dividend of $98,600 through
May 31, 2000.

NOTE 4.   DISCONTINUED OPERATONS

After evaluating the Company's sales representative subsidiaries and their
relation to the overall strategic direction of the Company, given the change to
a customer relationship management, database driven strategy, the Board of
Directors made the decision to discontinue the sales representative line of
business in the third quarter of fiscal 1999. Prior to this decision in the
third quarter of fiscal 1999, the Company had already disposed of two divisions
that were under performing. The disposition of discontinued operations which
were written off in fiscal 1999 are discussed and the financial impact are shown
in the Company's August 31, 1999 year-end 10-KSB. This discontinued business and
this gain on disposal is reflected as discontinued operations for the three and
nine months ended May 31, 1999.

NOTE 5.   EARNINGS PER SHARE

The reconciliation of basic earnings per share to diluted earnings per share is
shown below. Diluted earnings per share for the three months ended May 31, 2000
and the three and nine months ended May 31, 1999 is not presented since the
effects of potential common shares is antidilutive.

                                  Weighted      Net Income             Earnings
                                  Average       Applicable to            Per
                                  Shares        Common Stockholders     Share
                                  Outstanding
                                  ------------  --------------------  ----------
Nine months ended May 31, 2000:
------------------------------
Basic Earnings Per Share           7,499,172    $      56,683         $     .01

Dilutive Stock Options               810,315

Dilutive Stock Warrants            1,137,192
                                  ------------  ---------------       ----------
Diluted Earnings Per Share         9,446,679    $      56,683           $    .01
                                  ------------  ---------------       ----------
                                  ------------  ---------------       ----------


                                       9
<PAGE>


NOTE 6.   CAPITALIZED SOFTWARE DEVELOPMENT COSTS

Costs incurred to establish the technological feasibility of computer software
products are charged to expense as incurred. Costs of producing product masters
subsequent to establishing technological feasibility, including coding and
testing, are capitalized. Capitalization of computer software costs ceases when
the product is available for general release to customers. Capitalized costs for
the nine months ended May 31, 2000 for the development of the Datagration
product was $190,464 which was released in March 2000. The amortized development
cost for the nine months ended May 31, 2000 was $20,866. Since the product was
not available for general release to customers until February 29, 2000 there
were no amortized costs for the first and second quarter of fiscal year 2000.
These capitalized software development costs will be amortized using either the
straight-line method over the estimated economic life of the product (which is
estimated to be three years) or the ratio of current revenues to current and
anticipated revenues for the product whichever results in the greater amount of
amortization. Unamortized capitalized costs of a computer software product in
excess of its estimated net realizable value are expensed.


                                       10
<PAGE>


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


Overview
--------

Paladyne Corp. (the "Company") provides software products and ancillary services
that enable companies to quickly build databases with high data integrity, thus
cutting long implementation times and eliminating the risk of building the
database with poor quality data. Paladyne data quality solutions and services
support desktop marketers and developers of data warehouses and data marts.
Paladyne software is based on an open, multi-tiered, cross-platform architecture
within the customer relationship management segment. The Company intends to
build its business through internal growth as well as seek acquisitions of
existing companies. Currently, the Company has no agreements or understandings
regarding possible future acquisitions. The Company acquired Bradas in February,
1999 as part of its strategic plan to enter into this segment.

The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. As with any new venture, concerns must be considered
in light of the normal problems, expenses and complications encountered by
entrance into established markets and the competitive environment in which the
Company operates. The financial statements do not include, nor does management
feel it necessary, any adjustments to reflect any possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.

During Fiscal Year 1999, the Company changed its strategy from one of acquiring
and growing mainly distribution companies to one of building upon internal
strengths and acquiring organizations focused on developing technology that
enables the rapid development of high data integrity databases within the
customer relationship management segment. Customer relationship management in
the context of what the Company does, is broadly defined as processes that
enable companies to identify, acquire, and maintain desirable customers. This
shift is a result of what management feels is greater opportunity and a greater
opportunity to achieve profitable operations on a long-term basis. In pursuit of
this shift in strategy, the Company has discontinued its focus on manufacturer's
representative firms. The Company has either closed or sold the five firms of
this type and disclosed losses from disposal of these operations in the August
31, 1999 10-KSB. The results of operations for the three and nine months ended
May 31, 2000 discussed herein exclude the discontinued operations.


                                       11
<PAGE>


RESULTS OF OPERATIONS
---------------------

The following table sets forth the percentage relationship to the total revenues
of principal items contained in the Company's Condensed Consolidated Statements
of Operations for the three and nine months ended May 31, 2000 and 1999,
respectively. The percentages discussed throughout this analysis are stated on
an approximate basis.

                              Three Months Ended           Nine Months Ended
                                    May 31                           May 31
                             2000           1999          2000          1999
                            ----------------------        ----------------------
                                  (UNAUDITED)                   (UNAUDITED)

Total revenues                100%           100%           100%           100%

Cost of revenues               62%           102%            58%            84%
                             -----          -----          -----          -----
Gross Profit (loss)            38%           (2)%            42%            16%

Operating expenses             38%            50%            40%            37%
                             -----          -----          -----          -----
Operating  (loss) income        0%           (52%)            2%           (21%)

Interest expense                0%             3%             1%             2%
                             -----          -----          -----          -----
Net income(loss) from
  continuing operations         0%           (55%)            1%           (23%)


COMPARISON OF NINE MONTHS ENDED MAY 31, 2000 TO NINE MONTHS ENDED MAY 31, 1999.
------------------------------------------------------------------------------

For the nine month period ended May 31, 2000 total revenues from continuing
operations increased by $968,024 to $3,828,405, representing a 34% increase for
the corresponding comparative nine month period. The increase was attributable
to an increased focus on the customer relationship management database segment
and the discontinued focus of the sales representative segments which were
discontinued in the third quarter of fiscal 1999.

Gross profit increased by $1,169,159 for the nine month period from $456,426 to
$1,625,585. As a percentage of sales, gross profit increased to 42% during the
nine month period ended May 31, 2000 compared to 16% for the same period in
1999. This increase is attributable to the higher margin obtained in the current
software database projects.

During the nine months ended May 31, 2000 the Company capitalized $190,464 of
costs related to the development of the Datagration product which was released
in March 2000. The Company plans to significantly advance development of the
next version of Datagration and will continue to focus on major upgrades.

Operating expenses, including depreciation and amortization, increased slightly
as a percentage of sales to 40% through the first nine months of 2000 from 37%
for the corresponding comparative nine month period. This increase is due to


                                       12
<PAGE>


additional personnel hired in sales, marketing, and customer support to
introduce the Datagration product in the market. The Company closed its Elgin,
IL office in November 1999 and moved all administrative functions to its Lake
Mary, FL Corporate Offices which will have the effect of reducing facility costs
in future reporting periods.

The reduction in interest expense for the first nine months of 2000 as compared
to the same period in 1999 can be attributed to a decrease in the average debt
outstanding. On February 28, 2000, the Company repaid the entire line of credit
of $250,000 to The Huntington National Bank thereby reducing future interest
expense. In April 2000, the Company repaid its outstanding obligation to a
stockholder also reducing interest expense.

Accounts receivables have increased from $392,933 at August 31, 1999 to
$1,266,455 at May 31, 2000. This increase is due to increased sales and the
incorporation and billing to US West for a new negotiated statement of work for
database services.

The Company has accumulated significant net operating loss carryforwards as of
May 31, 2000, which may be offset against taxable income and income taxes in
future years. The use of these losses to reduce future income taxes will depend
on the generation of sufficient taxable income prior to the expiration of the
net operating loss carryforwards. The carryforwards expire at various dates
through 2019. No defined tax benefit has been reported in the financial
statements for the nine months ended May 31, 2000 since it is reduced by a
valuation allowance due to the uncertainty associated with the realization of
the net deferred tax asset.


COMPARISON OF THE THREE MONTHS ENDED MAY 31, 2000 TO THREE MONTHS ENDED
-----------------------------------------------------------------------
MAY 31, 1999
------------

Revenues for the three months ended May 31, 2000 from continuing operations
increased $805,992 to $1,581,445 from the same corresponding three month period
in fiscal 1999. This increase is due to increased focus on the software database
products previously discussed.

Gross profits increased by $614,131 for the three month period ended May 31,
2000 from $(16,708) to $597,423. As a percentage of sales, gross profit
increased to 38% during the three month period ended May 31, 2000 from (2%) for
the same period in 1999. This increase is attributable to revenues generated by
customer orders that have greater contribution margins. For the three months
ended May 31, 2000 gross profit decreased by 4% from the nine months ended May
31, 2000. This decrease is due to higher costs of sales attributable to software
services.

Operating expenses, including depreciation and amortization, have decreased as
percentage of revenue from 50% to 38% for the three months ended May 31, 2000
from the three months ended May 31, 1999. This decrease is attributable to
greater management focus and attention to controlling these costs.

On June 5, 2000 the Company announced a change by US West in its marketing
approach for selling high-speed internet access that resulted in a termination
of its agreement with the Company effective June 1, 2000. The Company had been
supporting this effort as part of service provided to US West. Revenue impact
for the fiscal year ended August 31, 2000 will be less than 20% of the full year
value of approximately $1.2 million. This early termination of the contract will
be offset by termination receipts of approximately $200,000.

Interest expense has decreased as a result of repayment of long term debt and
the Company not utilizing its current line of credit.


                                       13
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's principal cash requirements are for operating expenses, including
employee costs, outside consultants such as independent contractors who provide
database and professional marketing and sales consulting services, funding of
accounts receivable, capital expenditures and funding of the operations in
Chantilly, VA. The Company's primary sources of cash have been from private
placements of the Company's common stock, a bank line of credit, and cash
derived from operations. The Company believes there is sufficient cash on hand
to stabilize the operation. There is no assurance that the Company will not look
for any additional financing or that any additional equity infusion will not be
dilutive to stockholders. Management believes that internal cash flows, current
cash position, current credit facility and possible private equity infusions
should be adequate to meet the Company's capital needs for the next twelve
months.

In April 1999, the Company entered into an expanded credit facility providing a
line of credit up to $250,000 at a rate of prime plus 1 1/4% and renewable six
months from the date of the original agreement. The line of credit was extended
to December 31, 1999. On February 28, 2000 the Company repaid the entire line of
credit of $250,000. The Company negotiated a new line of credit with The
Huntington National Bank in May 2000. The line of credit is for $500,000 secured
by the receivables of the Company. The rate is prime plus 1 1/2 %. As of June
26, 2000, the Company has not used any proceeds from the line of credit.


YEAR 2000 ISSUE
---------------

The Company evaluated all its computer systems in the later half of 1999. It was
determined and reported in the August 31, 1999 10-KSB that the Company believed
that the computer systems utilized were Y2K compliant. There have been no known
Y2K problems as of June 23, 2000 with and of the Company's vendors or customers
and management believes that none will be encountered.


INFLATION
---------

In the opinion of management, inflation has not had a material effect on the
operations of the Company.


RISK FACTORS AND CAUTIONARY STATEMENTS
--------------------------------------

Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: the ability of the Company to provide for its debt obligations and to
provide for working capital needs from operating revenue, and other risks
detailed in the Company's periodic report filings with the Securities and
Exchange Commission.


                                       14
<PAGE>


                                     PART II


ITEM 1.   LEGAL PROCEEDINGS

In November 1999, the Company terminated its relationship with its Vice
President of Sales. Subsequent to this termination, the employee has filed a
lawsuit claiming additional compensation is warranted in the Superior Court of
Fulton County, in the State of Georgia and is seeking payment of $178,750. The
Court issued a summary default judgment on behalf of the plaintiff in June 2000.
The Company has filed a motion to reopen this default judgment order in July
2000. The Company does not agree with the assertion and fully intends to defend
itself vigorously against this claim. No reserve has been accrued in these
financial statements as the Company believes there is no merit to the claim.

ITEM 3.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     (c)  During the nine months ended May 31, 2000, the Company engaged in
          private placements of its securities described in Note 3 to the
          Condensed Consolidated Financial Statements elsewhere in this filing.
          These placements were claimed exempt from the registration
          requirements of the Securities Act of 1933 by reason of Section 4 (2)
          thereof.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On April 11, 2000, the Company held its Annual Meeting of Stockholders. The only
item of business at the Meeting was the election of two Class I directors.
Messrs. John D. Foster and Kenneth W. Horn were re-elected as Class I directors
for a term expiring at the 2003 Annual Meeting of Stockholders.

ITEM 6.   EXHIBITS AND REPORTS

(a)  Exhibits
     Exhibit 27 - Financial Data Schedule


                                       15
<PAGE>


                                   SIGNATURES

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



                                        PALADYNE CORP.


Date:  July 17, 2000                    By /s/ Ronald L. Weindruch
                                        ---------------------------------------
                                        Ronald L. Weindruch
                                        President

Date:  July 17, 2000                    By /s/ Joseph H. Landis
                                        ---------------------------------------
                                        Joseph H. Landis
                                        Vice President - Controller


                                       16
<PAGE>


                                  EXHIBIT INDEX
                                  -------------

Exhibit        Description
-------        -----------

27             Financial Data Schedule


                                       17