UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q


(Mark  One)
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the quarterly period ended June 30, 1997, or

[ ]  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: 0-13459

                               DH Technology, Inc.
             (Exact name of registrant as specified in its charter)


California                                                            94-2917470
(State or other jurisdiction of                                  (I.R.S.Employer
incorporation or organization)                               Identification No.)



              15070 Avenue of Science, San Diego, California 92128
                     (Address of principal executive office)

       Registrant's telephone number, including area code: (619) 451-3485




Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 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 XXX No____

As of June 30, 1997 there were 7,994,402 shares of the registrant's Common Stock
outstanding.


<PAGE>


                      DH TECHNOLOGY, INC. AND SUBSIDIARIES

                                      INDEX

PART I.  FINANCIAL INFORMATION                                       PAGE NO.

     ITEM 1 - Financial Statements

         Condensed Consolidated Balance Sheets                           1
                  June 30, 1997, and December 31, 1996

         Condensed Consolidated Statements of Income                     2
                  Three months and six months ended
                  June 30, 1997, and June 30, 1996

         Condensed Consolidated Statements of Cash Flows                 3
                  Six months ended June 30, 1997, and June 30, 1996

         Notes to Condensed Consolidated Financial Statements            4

     ITEM 2 -

         Management's Discussion and Analysis of                         5
                  Financial Condition and Results of Operations


PART II.  OTHER INFORMATION

         Item 4 - Submission of Matters to a Vote of Security Holders    10

         Item 6 - Exhibits and Reports on Form 8-K                       10


SIGNATURES                                                               11


EXHIBITS INDEX                                                           12


<PAGE>



<TABLE>
<CAPTION>
                                                           


                                             PART 1 - FINANCIAL INFORMATION
                                                ITEM 1 - Financial Statements
                                          DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                          Condensed Consolidated Balance Sheets
                                                     (In thousands)
<S>                                                                             <C>                   <C>

                                                                                    June 30               December 31
                                                                                      1997                    1996
                                                                                  (Unaudited)

                                                         ASSETS

Current assets:
     Cash and cash equivalents                                                           $34,751                  $30,943
     Short-term investment securities held to maturity                                    11,160                   13,835
     Accounts receivable, net                                                             15,205                   16,006
     Inventories                                                                          12,947                   11,582
     Prepaid expenses and other current assets                                             2,855                    2,881
                                                                                -----------------      -------------------
         Total current assets                                                             76,918                   75,247
                                                                                -----------------      -------------------
     Fixed assets                                                                         25,947                   22,524
        Less accumulated depreciation and
        amortization                                                                      17,299                   14,274
                                                                                -----------------      -------------------
                                                                                           8,648                    8,250
     Intangibles                                                                           4,971                   12,464
     Other assets                                                                          3,254                    1,144
                                                                                =================      ===================
        Total assets                                                                     $93,791                  $97,105
                                                                                =================      ===================

                                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                     $6,005                   $4,587
     Current portion of long-term debt                                                       550                      577
     Accrued payroll, payroll taxes and benefits                                           2,547                    2,630
     Accrued expenses                                                                      3,533                    2,441
     Income taxes payable                                                                  2,631                    2,406
     Deferred revenue                                                                        266                      577
                                                                                -----------------      -------------------
        Total current liabilities                                                         15,532                   13,218
                                                                                -----------------      -------------------
Non-current portion of long-term debt                                                      2,339                    1,635
                                                                                -----------------      -------------------
        Total liabilities                                                                 17,871                   14,853
                                                                                -----------------      -------------------
Shareholders' equity:
     Preferred shares, no par value
        Authorized: 1,000,000 shares, none issued                                         --                      --
     Common shares:
        Common stock, authorized: 28,500,000
        shares; issued and outstanding:
        7,994,402 shares in 1997 and
        7,974,277 shares in 1996                                                          13,340                   13,168
     Foreign currency translation adjustment                                                 (10)                     393
     Retained earnings                                                                    62,590                   68,691
                                                                                -----------------      -------------------
        Total shareholders' equity                                                        75,920                   82,252
                                                                                -----------------      -------------------
        Total liabilities and shareholders' equity                                       $93,791                  $97,105
                                                                                =================      ===================
                                                                                

                 The accompanying notes are an integral part of
                     these condensed consolidated financial
                                   statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                 DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                             Condensed Consolidated Statements of Income
                                                          (June 30, 1997 and 1996)
                                                    (In thousands, except per share data)

<S>                                                               <C>             <C>              <C>             <C>

                                                                        THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                              June 30                          June 30
                                                                            (Unaudited)                      (Unaudited)
                                                                        ----------------                 ----------------
                                                                   -----------------------------    -----------------------------
                                                                       1997            1996             1997            1996
                                                                   -----------------------------    -----------------------------

Net sales                                                               $25,468         $29,210          $44,653         $57,406
Cost of net sales                                                        16,815          18,971           29,342          37,441
                                                                   -------------   -------------    -------------   -------------
Gross margin                                                              8,653          10,239           15,311          19,965

Operating expenses:
     Selling, general and administrative                                  4,356           3,944            8,319           7,905
     Research and development                                             1,482           1,414            2,933           2,702
     In process technology, intangible assets,
       acquisition integration and other charges                            390              --           11,680              --
                                                                   -------------   -------------    -------------   -------------
Total operating expenses                                                  6,228           5,358           22,932          10,607

Income (loss) from operations                                             2,425           4,881           (7,621)          9,358

Interest income                                                             394             389              816             719
Interest expense                                                             40              44               81              90
                                                                   -------------   -------------    -------------   -------------

Income (loss) before income taxes                                         2,779           5,226           (6,886)          9,987

Income taxes                                                                996           1,935             (786)          3,662
                                                                   -------------   -------------    -------------   -------------

Net income (loss)                                                        $1,783          $3,291          ($6,100)         $6,325
                                                                   =============   =============    =============   =============


Net income (loss) per share                                               $0.22            $.39           ($0.76)           $.75


Weighted average number of shares outstanding
Per share (primary and fully diluted):                                    8,282           8,521            7,994           8,490






                 The accompanying notes are an integral part of
                these condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                        DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                                   Condensed Consolidated Statements of Cash Flows
                                                                   (In thousands)

                                                                                                         SIX MONTHS ENDED
                                                                                                              June 30    
<S>                                                                                                     <C>                 <C>   
                                                     
                                                                                                           (Unaudited)
                                                                                               -------------------------------------
                                                                                                         1997                1996
                                                                                               -------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM:

Operating activities:
   Net income (loss)                                                                                     ($6,100)            $6,325
   Adjustments to reconcile net income to net cash provided by operations:
     Depreciation and amortization                                                                         1,480              1,524
     Write down of acquired in-process technology                                                          2,440                 --
     Intangible writedown related to previous acquisition                                                  7,193                 --
     Provision for loss on accounts receivable                                                                24                 57
     Undepreciated value of asset disposals                                                                    8                 55
     Changes in assets and liabilities excluding effect of acquisitions                                    4,310                510
     Provision for deferred income taxes                                                                  (2,104)                --
                                                                                               -------------------------------------

Net cash provided by operating activities                                                                  7,251              8,471

Investing activities:
   Net (increase) decrease in short-term investment securities held to maturity                            2,675             (9,805)
   Capital expenditures                                                                                     (955)            (2,851)
   Payment for acquisition purchases, net of cash acquired                                                (4,850)                --
                                                                                               -------------------------------------

Net cash used in investing activities                                                                     (3,130)           (12,656)

Financing activities:
   Principal repayments on long-term debt                                                                   (121)              (481)
   Proceeds from the exercise of stock options                                                               172                429
                                                                                               -------------------------------------

Net cash provided by (used in) financing activities                                                           51                (52)

Effect of exchange rate changes on cash                                                                     (364)                89

Net increase (decrease) in cash and cash equivalents                                                       3,808             (4,148)

Cash and cash equivalents at beginning of period                                                          30,943             28,971
                                                                                               -------------------------------------

Cash and cash equivalents at end of period                                                              $34,751             $24,823
                                                                                               =====================================

Supplemental Cashflow Disclosures:
   Interest paid on debt                                                                                    $30                 $55
   Income taxes paid                                                                                       $770              $2,717

Supplementary disclosure of noncash investing activity:
   Fair market value of assets acquired                                                                   $3,181                 --
   Cash paid                                                                                                  --                 --
   Liabilities assumed                                                                                    $3,181                 --

                                         The accompanying notes are an integral part of these
                                              condensed consolidated financial statements
</TABLE>
<PAGE>



                      DH TECHNOLOGY, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (June 30, 1997 - Unaudited)

Note 1:  Basis of Presentation

The accompanying  condensed consolidated financial statements have been prepared
in  accordance  with  S.E.C.  requirements  for  interim  financial  statements.
Therefore,  they do not include all  disclosures  that would be presented in the
Company's Annual Report on Form 10-K. The financial statements should be read in
conjunction  with the financial  statements  contained in the  Company's  Annual
Report on Form 10-K for the year ended December 31, 1996.

The information  furnished  reflects all adjustments  (consisting only of normal
recurring adjustments) which are, in the opinion of management,  necessary for a
fair presentation of financial position,  results of operations,  and changes in
cash position for the interim period.  The results of operations for the periods
presented are not necessarily  indicative of results to be expected for the full
year.


Note 2:  Inventories

The  composition of inventories at June 30, 1997, and December 31, 1996, were as
follows:

                                                   June 30        December 31
                                                    1997              1996
                                               -------------      ------------
      Raw Materials                             $8,664,000         $6,810,000
      Work in Process                              764,000            934,000
      Finished Goods                             3,539,000          3,838,000
                                               -------------      ------------
         Totals                                $12,947,000        $11,582,000
                                               =============      ============


Note 3:  Operations subject to Purchase and Sale Agreements

In October,  1995 the Company  acquired  certain  assets and  liabilities of Mos
Magnetics, a privately held company in San Diego, California, for $752,000 cash.
Mos Magnetics designs,  manufactures,  and markets magnetic read and write heads
and modules for credit card and debit card readers,  check readers,  and airline
ticket readers. This acquisition was accounted for using the purchase method. In
conjunction  with  this  acquisition,  the  Company  has  recorded  goodwill  of
$239,000, which is being amortized over 25 years using the straight-line method.

In March,  1997 the Company purchased certain assets and liabilities of the card
reader  business  of  American  Magnetics  Corporation  (AMC),  a  wholly  owned
subsidiary of Group 4 Securitas Holding (A) BV headquartered in The Netherlands.
AMC designs,  manufactures  and markets card reader modules and stand-alone card
readers,  including  both  magnetics  and chip  card  products.  Based on fourth
quarter 1996 revenues the card reader business has  approximately $12 million in
annualized revenues. The business was profitable in 1996.

This  acquisition  was accounted for under the purchase  method,  which requires
that the  purchase  price be  allocated  to the fair market  value of the assets
acquired.  Of the total consideration of $5.7 million,  which consisted of $4.85
million  paid in cash plus  additional  payments  of  $800,000  due to  American
Magnetics  payable in the years 2000 and 2001, $3.2 million was allocated to net
assets  acquired  based on their  estimated  fair  values,  and $2.5 million was
written down as in-process technology. In conjunction with the acquisition,  the
Company also incurred $1.2 million of integration  costs as discussed below. AMC
is referred to as the Card Reader Division of DH Technology, Inc.
<PAGE>


Note 4: Non-Recurring Charges

In the  first  quarter  of 1997,  the  Company  incurred  non-recurring  charges
totaling $11.3 million  consisting of the items discussed  below. In conjunction
with the  acquisition  of AMC discussed  above,  the Company wrote down acquired
in-process technology (projects that had not reached  technological  feasibility
and  had  no  future   alternative   use)  that  was  valued  at  $2.5  million.
Additionally,  the Company  incurred  one-time,  pre-tax charges of $1.2 million
which included  severance,  relocation and other integration  charges associated
with the  acquisition.  This  amount is  included  in  accrued  expenses  and is
expected to be paid out over the next 12 months.

In the first  quarter  of 1997,  based on a review of the  operating  results of
Cognitive  Solutions,  Inc., which was acquired by the Company in August , 1994,
and projections for subsequent  quarters,  the Company  evaluated the intangible
assets  associated  with the  acquisition in accordance  with SFAS 121. Based on
management's  analysis of future  undiscounted  cashflows the Company determined
that the intangible  assets were impaired.  Accordingly,  the Company wrote down
$7.2 million of intangibles,  which represented the excess of the carrying value
over the  estimated  fair value of those  assets,  in the first quarter of 1997.
Also, the Company  incurred an unrelated  $400,000 charge in connection with the
discontinuance of certain product lines.

In the  second  quarter  of 1997 the  Company  incurred  non-recurring  expenses
totaling  $390,000 related to the definitive  merger agreement with Axiohm.  See
Note 5 of Notes to Condensed Consolidated Financial Statements.

Note 5:  Subsequent Event

On July 14, 1997, DH Technology,  Inc. and Axiohm S.A., a private French company
(Axiohm),   entered  into  a  definitive   merger  agreement  to  combine  their
operations.  Under the terms of the  agreement,  AX Acquisition  Corporation,  a
wholly-owned  subsidiary  of Axiohm,  commenced a cash tender  offer on July 16,
1997 to acquire no less than 6,500,000  shares and no more than 7,000,000 shares
of the  outstanding  stock  of the  Company  at $25  per  share.  The  offer  is
conditioned  upon the valid  tender of at least  6,500,000 DH  Technology,  Inc.
shares,  the expiration of termination of the waiting  periods under  applicable
antitrust and competition laws, and certain other matters. Axiohm has received a
commitment  from Lehman  Brothers,  Inc. to provide up to $199 million in tender
offer  financing,  subject  to certain  conditions,  including  negotiation  and
execution  of  satisfactory  documents.  If the tender offer is  completed,  the
merger agreement provides for a subsequent merger of AX Acquisition  Corporation
into the Company and certain related  transactions which, if they are completed,
will result in Axiohm  becoming a  wholly-owned  subsidiary of the Company.  The
Company will be required to use  substantially all of its existing cash and cash
equivalents  at the time of the  merger to pay down a portion  of the  financing
incurred by Axiohm to finance the tender  offer.  Upon the closing of the merger
the  Company  will have  access to a $35 million  revolving  credit  facility to
finance  operations.  The transaction  will be accounted for as a reverse merger
using the purchase method of accounting whereby DH Technology,  Inc. will be the
acquired  entity.  In such event, the financial  statement  presentation for the
third quarter of 1997 will consist of historical and current  results for Axiohm
and results for DH  Technology,  Inc. only for the period of time  subsequent to
the  acquisition  date.  Axiohm  manufactures  thermal  and  impact  transaction
printers,  thermal  printheads and  mechanisms  for use by customers  engaged in
retail, banking, and industrial activities. For additional information regarding
the transaction see the Company's Schedule 14D-9 dated July 16, 1997, as amended
to  date,  filed  by the  Company  with the SEC in  connection  with the  Axiohm
transaction.

<PAGE>

ITEM 2 -

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

The following  discussion  and analysis  should be read in  conjunction  with DH
Technology,  Inc.'s condensed  consolidated  financial  statements and the notes
related thereto included herein.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1997, COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

Net sales of $25.5 million for the quarter ended June 30, 1997,  decreased 12.8%
compared  to net sales of $29.2  million  for the same  period  last  year.  The
decrease  was  primarily  due to a slowing of orders  from  several  significant
customers and no sales in the second quarter of 1997 to one large 1996 customer.
This was  offset to a degree by the  inclusion  of results  for the Card  Reader
Division which was acquired from AMC in March 1997.

Cost of net sales increased to 66.0% of net sales for the second quarter of 1997
from  64.9% of net sales for the same  period  of 1996 due to  relatively  fixed
overhead costs applied to decreased revenue, as well as the inclusion of results
for the  Card  Reader  Division  which  operated  at  gross  margins  below  the
historical average for the Company.

Selling, general, and administrative expenses increased to 17.1% of net sales in
the  second  quarter  of 1997 from  13.5% in the same  period in 1996 due to the
inclusion of results for the Card Reader  Division for the entire second quarter
of 1997 and to a foreign  exchange  gain  resulting  from an  intercompany  cash
transaction in the second quarter of 1996. These expenses  increased in absolute
dollars to $4.4 million in the first half of 1997 from $3.9 million in the first
half of 1996.

Research and development  expenses as a percentage of sales increased to 5.8% in
the second quarter of 1997 compared to 4.8% in the second quarter of 1996. Total
dollars expended for research and development  increased  modestly in the second
quarter of 1997  compared to the second  quarter of 1996.  The Company  believes
that the continued  timely  development of new products and  enhancements to its
existing  products  are  essential  to  maintaining  the  Company's  competitive
position.  Accordingly, the Company anticipates that such expenses will increase
in absolute dollars during 1997.

In the  second  quarter  of 1997 the  Company  incurred  non-recurring  expenses
totaling  $390,000 related to the negotiation of the definitive merger agreement
with Axiohm.

Income from  operations as a percentage of net income  decreased to 9.5% for the
quarter  ended June 30, 1997,  compared to 16.7% for the same period in 1996 due
primarily to lower gross margins,  higher operating  expenses as a percentage of
revenue, and the non-recurring charges discussed above.

Interest  income  increased  to  $394,000  in the  second  quarter  of 1997 from
$389,000 in the second  quarter of 1996 as a result of higher  cash  balances in
the second quarter of 1997.

Interest expense decreased to $40,000 in the second quarter of 1997 from $44,000
for the same  period in 1996 due to a $500,000  payment  of debt in August  1996
related to the Cognitive acquisition.

Income taxes as a percentage of income  before  income taxes  decreased to 35.8%
for the second quarter of 1997 compared to 37.0% for the same period in 1996 due
to the effects of a decrease in income as discussed above, an increase in exempt
interest as a percentage  of pre-tax  income,  and  increased  benefits from the
federal research and development tax credit.
<PAGE>

SIX MONTHS ENDED JUNE 30, 1997, COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Net sales of $44.7 million for six-months  ended June 30, 1997,  decreased 22.2%
compared  to net sales of $57.4  million  for the same  period  last  year.  The
decrease was primarily due to a slowing in orders from several  customers and no
sales in the first half of 1997 to one large 1996 customer. This was offset to a
degree by the  inclusion  of  results  for the Card  Reader  Division  which was
acquired from AMC in March 1997.

Cost of net sales increased slightly to 65.7% of net sales for the first half of
1997 from 65.2% of net sales for the same period of 1996 due to relatively fixed
overhead costs applied to decreased  revenue,  as well as the inclusion of three
months of results for the Card Reader  Division  which operates at gross margins
below  the  historical   average  for  the  Company.   Selling,   general,   and
administrative  expenses  increased  to 19.5% of net sales in the first  half of
1997 from 13.8% in the same period in 1996 due to the  inclusion  of results for
the  Card  Reader  Division  for the  second  quarter  of 1997.  These  expenses
increased  in  absolute  dollars to $8.7  million in the first half of 1997 from
$7.9 million in the first half of 1996.

Research and development  expenses as a percentage of sales increased to 6.6% in
the first half of 1997 compared to 4.7% in the first half of 1996. Total dollars
expended  for research  and  development  increased to $2.9 million in the first
half of 1997  compared to $2.7 million in the same period of 1996  primarily due
to the inclusion of results for the Card Reader  Division.  The Company believes
that the continued  timely  development of new products and  enhancements to its
existing  products  are  essential  to  maintaining  the  Company's  competitive
position.  Accordingly, the Company anticipates that such expenses will increase
in absolute dollars during 1997.

In the first half of 1997 the Company  incurred  non-recurring  charges totaling
$11.7 million  consisting of the items discussed  below. In conjunction with the
acquisition  of certain  assets and  liabilities  of AMC  discussed in Note 3 of
Notes to Condensed  Consolidated  Financial  Statements,  the Company wrote down
acquired in-process technology that was valued at $2.5 million. The Company also
incurred  one-time,  pre-tax  charges of $1.2 million which included  severance,
relocation and other integration  charges associated with the acquisition.  This
amount is included in accrued  expenses  and is expected to be paid out over the
next 12 months. Additionally, the Company incurred one-time, non-cash charges of
$7.2  million  to  write  down  intangible   assets  related  to  the  Cognitive
acquisition,  and a $400,000  charge in connection  with the  discontinuance  of
certain  product  lines.  In  the  first  half  of  1997  the  Company  incurred
non-recurring  expenses  totaling  $390,000  related  to the  definitive  merger
agreement with Axiohm. See Note 5 of Notes to Condensed  Consolidated  Financial
Statements.

Income from  operations  as a percentage  of net sales  excluding  the effect of
non-recurring charges discussed above decreased to 9.1% for the six months ended
June 30,  1997,  compared to 16.3% for the same period in 1996 due  primarily to
higher operating expenses as a percentage of revenue as discussed above.  Income
(loss) from  operations  as a percentage  of net sales  including  the effect of
non-recurring  charges  decreased to (15.4%) for the period ended June 30, 1997,
compared  to 17.4%  for the same  period  in 1996  due to the  one-time  charges
discussed above.

Interest income increased to $816,000 in the first half of 1997 from $719,000 in
the first half of 1996 as a result of higher cash  balances and higher  interest
rates in the first half of 1997.

Interest expense decreased to $81,000 in the first half of 1997 from $90,000 for
the same period in 1996 due to a $500,000 payment of debt in August 1996 related
to the Cognitive acquisition.

Income taxes as a percentage of income (loss) before income taxes  excluding the
effect of  non-recurring  charges,  would  have been 35.0% for the first half of
1997  compared  to 36.7%  for the same  period in 1996 due to the  effects  of a
decrease in income as  discussed  above,  an  increase  in exempt  interest as a
percentage of pre-tax income,  and increased  benefits from the federal research
and  development tax credit.  Income taxes  (benefits) as a percentage of income
(loss) before  income taxes  (benefits)  including  the effect of  non-recurring
charges  decreased  to 11.4% for the first  half of 1997 from 36.7% for the same
period  in  1996  due  to  a  portion  of  the   non-recurring   charges   being
non-deductible for tax purposes.
<PAGE>

Certain Factors That May Affect Future Results

The  Company's  representatives  may  from  time to time  make  forward  looking
statements. The factors set forth below are among certain important factors that
could cause actual results to differ materially from those projected in any such
forward looking statements.

Future Operating Results Subject to Fluctuation. The Company's operating results
may  fluctuate in the future as a result of a number of factors,  including  the
timing of customer orders,  timing of completion of existing customer contracts,
variations  in the  Company's  sales  channels  or the mix of products it sells,
changes  in  pricing  policies  by  the  Company's  suppliers,  fluctuations  in
manufacturing  yields, the market acceptance of new and enhanced versions of the
Company's products and the timing of acquisitions of other businesses,  products
and technologies and any associated charges to earnings.  In 1996,  purchases of
transaction  printers by a single customer  accounted for  approximately  13% of
total  revenue,  or  $15,042,000.  The Company  generated  no revenue  from this
customer in the first half of 1997 and does not expect to  generate  any revenue
from this  customer  in the third  quarter of 1997.  To the extent that sales to
this or  other  customers  decline  and are not  replaced  with  sales  to other
customers,  sales from the introduction of new products, or sales generated from
acquired  companies,  the  Company's  results of  operations  will be  adversely
affected.

Further,  the  Company's  expense  levels are based in part on  expectations  of
future revenues.  The Company has established a program to decrease  expenses in
light of the anticipated reduction in revenue previously discussed. However, the
rate of new orders may vary significantly from month to month; consequently,  if
anticipated  sales and  shipments  in any  quarter do not occur  when  expected,
operating expenses and inventory levels could be disproportionately high and the
Company's  operating  results  for that  quarter,  and  potentially  for  future
quarters,  would be adversely  affected.  The Company's  operating results could
also be affected  by general  economic  conditions.  Fluctuations  in  operating
results  are likely to cause  volatility  in the price of the  Company's  Common
Stock.

Management of Acquisitions.  Historically, the Company has achieved a portion of
its growth  through  acquisitions  of other  businesses  and continues to pursue
additional  acquisitions as part of its growth  strategy.  There are a number of
risks  associated  with any acquisition or business  combination,  including the
substantial  time and  attention  required  from  management  of the  Company in
connection  with such  transactions,  the  difficulty of predicting  whether the
operations  will  perform  as  expected  and other  problems  inherent  with any
transition of one business organization into another.  There can be no assurance
that the anticipated  benefits of any acquisition will be realized. A failure by
the Company to manage any such  acquisitions  effectively  could  materially and
adversely  affect the Company's  business and operating  results.  Additionally,
there may be future  acquisitions  which could  result in  potentially  dilutive
issuances  of  equity   securities,   the  incurrence  of  debt  and  contingent
liabilities and  amortization  expenses related to goodwill and other intangible
assets associated with the acquisitions of other businesses,  any of which could
materially  adversely  affect the  Company's  operating  results  and  financial
condition. Presently, the Company has entered into a definitive merger agreement
with  Axiohm  S.A. In the event the merger is  consummated  long-term  debt will
increase  by  approximately  $157  million.  See Note 5 of  Notes  to  Condensed
Consolidated Financial Statements.

Technological Change;  Competition;  Dependence on New Products. The markets for
some of the  Company's  products  are  characterized  by  frequent  new  product
introductions and declining average selling prices over product life cycles. The
Company's  future  success is highly  dependent  upon the timely  completion and
introduction  of  new  products  at  competitive  price/performance  levels.  In
addition,  the Company  must respond to current  competitors,  who may choose to
increase their presence in the Company's  markets,  and to new competitors,  who
may choose to enter  those  markets.  If the  Company  is unable to make  timely
introduction of new products or respond to competitive threats, its business and
operating results could be materially adversely affected.

Fluctuation in Demand. The Company's  customers encounter uncertain and changing
demand for their products.  They typically order products from the Company based
on their forecasts.  If demand falls below customers' forecasts, or if customers
do not control  their  inventories  effectively,  they may cancel or  reschedule
shipments  previously  ordered  from the  Company.  The  Company has in the past
experienced,  and  may at  any  time  and  with  minimal  notice  in the  future
experience, cancellations and postponements of orders.
<PAGE>




FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

The  Company's  primary  source of liquidity has been cash flow  generated  from
operations. Cash, cash equivalents, and short-term investment securities held to
maturity totaled approximately $45.9 million on June 30, 1997, compared to $44.8
million on December 31, 1996.

OPERATING ACTIVITIES

For the six months ended June 30, 1997, the Company generated approximately $7.3
million  in  net  cash  from  operating  activities  primarily  as a  result  of
approximately  $6.1 million in net loss,  offset by $1.5 million in depreciation
and amortization, $2.5 million write down of in-process technology, $7.2 million
intangible write down related to the Cognitive  acquisition,  an increase in net
operating  assets of $4.3 million,  and a provision for deferred income taxes of
$2.1 million.

INVESTING ACTIVITIES

The Company's  principal  investing  activities in the six months ended June 30,
1997  were the $4.9  million  payment  for  acquisition  purchases,  net of cash
acquired offset by a decrease in short-term  securities held to maturity . As of
June 30, 1997, the Company had no material commitments for capital expenditures.
However,  the Company  anticipates  capital  expenditures of $3 to $4 million in
1997, principally for new product tooling and manufacturing equipment.

The  Company is also  required  to make  additional  payments,  not to exceed an
aggregate of $3 million,  to the former  shareholder of Cognitive based upon the
attainment of specified net sales of a particular  Cognitive  product line.  The
Company does not expect the payments to be material in 1997.


FINANCING ACTIVITIES

The Company's major  financing  activities in the six months ended June 30, 1997
were the  principal  repayment of debt and  proceeds  from the exercise of stock
options.  As of June 30, 1997, the Company had $2.9 million in debt  outstanding
of which the current portion was approximately $600,000. This debt includes $1.5
million  payable to the former  owner of  Cognitive  in annual  installments  of
$500,000 each due in 1997 through 1999.  The debt also includes  $800,000 due to
American  Magnetics  payable in the years 2000 and 2001. The Company has entered
into a definitive  merger  agreement with Axiohm S.A. In the event the merger is
consummated long-term debt will increase by approximately $157 million. See Note
5 of Notes to Condensed Consolidated Financial Statements.


The Company  currently  expects that cash  generated  from  operations and a $35
million  revolving  credit facility to be made available upon consumation of the
merger with Axiohm will adequately fund the Company's anticipated cash needs for
the next 12 months.  The  financing  involved  to combine the  operations  of DH
Technology,  Inc.  and Axiohm  would  result in the use of all of the  Company's
current  cash  and cash  equivalents.  Please  see Note 5 of Notes to  Condensed
Consolidated Financial Statements.

The Company reviews  potential foreign currency risks on an ongoing basis and to
date has been able to  effectively  manage this risk  without the use of hedging
instruments.



<PAGE>


PART II.  OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders

         (a)      The 1997 Annual Meeting of the Shareholders of DH Technology, 
                  Inc. was held at the Sheraton Hotel West Tower on Harbor 
                  Island, San Diego, California, 92101, on April 24, 1997,
                  at 10:00 a.m. (the "Annual Meeting").


         (b)      At the Annual Meeting, the following five persons were elected
                  to the Company's Board of Directors,  constituting all members
                  of the Board of Directors:

<TABLE>
<CAPTION>
                                                                                    Number of Votes
                                                      -----------------------------------------------------------------------------
<S>                        <C>                              <C>                         <C>                        <C>  


                                                                                   Withheld or Against             Broker
                            Nominees                          Cast For                                            Non-Votes
                            ------------------------- -------------------------- ------------------------- ------------------------

                            William J. Bowers                 7,358,723                   10,735                      0
                            William H. Gibbs                  7,358,708                   10,750                      0
                            Bruce G. Klaas                    7,302,716                   66,742                      0
                            Don M. Lyle                       7,358,723                   10,735                      0
                            George M. Ryan                    7,358,723                   10,735                      0

</TABLE>


         (c)      Additional  proposals considered at the Annual Meeting are set
                  forth  below,  each of which  was  approved  according  to the
                  respective vote of the shareholders:
<TABLE>
<CAPTION>

                  (1)      Ratification and approval of the appointment of KPMG Peat Marwick LLP as the
                           Company' s independent accountants for the current fiscal year.
<S>                              <C>                            <C>                        <C>  

                                    Cast For                     Against                    Abstentions or Broker Non-Votes
                            ------------------------- ------------------------------ ----------------------------------------------

                                   7,362,888                      6,570                                    0
</TABLE>


Item 6 -   Exhibits and reports on Form 8-K

                  (a)      Exhibits:

                           Exhibit 11      Computation of Net Income Per Share.

                           Exhibit 27      Financial Data Schedule.

                  (b)      Reports on Form 8-K
                           No report on Form 8-K was filed  during  the  quarter
                           ended June 30, 1997.


                  (c)  Agreement  and Plan of  Merger  among  Axiohm  S. A.,  AX
                       Acquisition  Corporation and DH Technology,  Inc., dated 
                       as of July 14, 1997  (incorporated  by reference from 
                       Exhibit (c)(1) to the  Company's  Schedule  14D-9,  
                       dated July 16,  1997,  as amended, relating to the 
                       Axiohm transaction).

<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.


DH Technology, Inc. by:


    August 12, 1997                          /s/Janet W. Shanks
----------------------             -----------------------------------------
         Date                      Janet W. Shanks, Chief Accounting Officer
                                        (Chief Accounting Officer)


<PAGE>



                               DH TECHNOLOGY, INC.
                    EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 1997



                                                                  SEQUENTIALLY
EXHIBIT                     DESCRIPTION                           NUMBERED PAGE
-------------------------------------------------------------------------------

         11           Computation of Net Income Per Share               13



<PAGE>



<TABLE>
<CAPTION>


                                                         EXHIBIT 11

                                            DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                            Computation of Net Income Per Share
                                           (In thousands, except per share data)


<S>                                                         <C>           <C>                <C>            <C>

                                                                  THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                        June 30                          June 30

                                                             -----------   -----------        -----------    -----------
                                                             -------------------------        --------------------------
                                                                1997          1996               1997           1996
                                                             -------------------------        --------------------------

Primary and fully diluted:*

Average shares outstanding                                        7,991         7,955              7,994          7,910

Net effect of dilutive stock
options and warrants based on
the treasury stock method using
average market price                                                291           566                 --            580
                                                             -----------   -----------        -----------    -----------

Average common and common
equivalent shares outstanding                                     8,282         8,521              7,994          8,490

Net income (loss)                                                $1,783        $3,291            ($6,100)        $6,325

Per share (primary and fully diluted)
                                                             ===========   ===========        ===========    ===========
Net income (loss) per share                                        $.22          $.39              ($.76)          $.75
                                                             ===========   ===========        ===========    ===========







* There is no significant  difference between primary and fully diluted earnings
per share.



</TABLE>
<PAGE>